Filed pursuant to Rule 424(b)(5)
Registration No. 333-08328
THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT IS NOT COMPLETE AND MAY BE
CHANGED. THIS PRELIMINARY PROSPECTUS SUPPLEMENT IS NOT AN OFFER TO SELL THESE
SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN
ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT MAY BE AMENDED OR COMPLETED,
DATED FEBRUARY 18, 2004
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED FEBRUARY 18, 2004)
$900,610,000 (APPROXIMATE)
COMM 2004-LNB2
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
GERMAN AMERICAN CAPITAL CORPORATION
LASALLE BANK NATIONAL ASSOCIATION
ABN AMRO BANK N.V.
MORTGAGE LOAN SELLERS
---------------------
The COMM 2004-LNB2 Commercial Mortgage Pass-Through Certificates will
represent beneficial ownership interests in the COMM 2004-LNB2 Mortgage Trust.
The trust's assets will primarily be 91 fixed-rate mortgage loans secured by
first liens on 255 commercial, multifamily and mobile home park properties. The
COMM 2004-LNB2 Commercial Mortgage Pass-Through Certificates are not obligations
of Deutsche Bank AG, Deutsche Mortgage & Asset Receiving Corporation, the
mortgage loan sellers or any of their respective affiliates, and neither the
certificates nor the underlying mortgage loans are insured or guaranteed by any
governmental agency.
---------------------
Certain characteristics of the offered certificates include:
- ------------------------------------------------------------------------------------------------------------------------------------
INITIAL S&P/FITCH/DBRS
INITIAL PASS-THROUGH ASSUMED FINAL ANTICIPATED
CERTIFICATE BALANCE(1) RATE DISTRIBUTION DATE(3) RATINGS
- ------------------------------------------------------------------------------------------------------------------------------------
Class A-1 $135,894,000 % December 10, 2008 AAA/AAA/AAA
- ------------------------------------------------------------------------------------------------------------------------------------
Class A-2 $138,594,000 December 10, 2010 AAA/AAA/AAA
- ------------------------------------------------------------------------------------------------------------------------------------
Class A-3 $108,197,000 August 10, 2013 AAA/AAA/AAA
- ------------------------------------------------------------------------------------------------------------------------------------
Class A-4 $454,979,000 March 10, 2014 AAA/AAA/AAA
- ------------------------------------------------------------------------------------------------------------------------------------
Class B $ 25,420,000 (2) March 10, 2014 AA/AA/AA
- ------------------------------------------------------------------------------------------------------------------------------------
Class C $ 9,684,000 (2) March 10, 2014 AA-/AA-/AA (low)
- ------------------------------------------------------------------------------------------------------------------------------------
Class D $ 19,368,000 (2) October 10, 2015 A/A/A
- ------------------------------------------------------------------------------------------------------------------------------------
Class E $ 8,474,000 (2) December 10, 2018 A-/A-/A (low)
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------
(FOOTNOTES ON PAGE S-3)
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED THAT THIS
PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS ARE TRUTHFUL OR COMPLETE.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
INVESTING IN THE OFFERED CERTIFICATES INVOLVES RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE S-27 OF THIS PROSPECTUS SUPPLEMENT AND PAGE 8 OF THE
PROSPECTUS.
Deutsche Bank Securities Inc. and ABN AMRO Incorporated are acting as
co-lead managers and underwriters of the offering and Banc of America Securities
LLC, Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner &Smith
Incorporated are acting as co-managers of the offering. Deutsche Bank Securities
Inc. is sole bookrunner of all the offered certificates. The underwriters will
offer the offered certificates to the public in negotiated transactions at
varying prices to be determined at the time of sale.
Deutsche Bank Securities Inc., ABN AMRO Incorporated, Banc of America
Securities LLC, Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner
&Smith Incorporated are required to purchase the offered certificates (in the
amounts set forth in this prospectus supplement) from Deutsche Mortgage & Asset
Receiving Corporation, subject to certain conditions. Deutsche Mortgage & Asset
Receiving Corporation expects to receive from the sale of the offered
certificates approximately ___% of the initial aggregate certificate balance of
the offered certificates, plus accrued interest, before deducting expenses
payable by it. The underwriters expect to deliver the offered certificates to
purchasers on or about March ___, 2004.
DEUTSCHE BANK SECURITIES ABN AMRO INCORPORATED
Sole Book Running Manager and Co-Lead Manager Co-Lead Manager
BANC OF AMERICA SECURITIES LLC CITIGROUP MERRILL LYNCH & CO.
Co-Manager Co-Manager Co-Manager
THE DATE OF THIS PROSPECTUS SUPPLEMENT IS FEBRUARY __, 2004
COMM 2004-LNB2
Commercial Mortgage Pass-Through Certificates
[GRAPHIC OMMITTED]
[PHOTO]
Tysons Corner Center - Exterior
McLean, VA
[PHOTO]
Tysons Corner Center - Interior
McLean, VA
[PHOTO]
321 West 44th Street
New York, NY
[PHOTO]
The Watergate/600 New Hampshire Avenue
Washington, DC
[PHOTO]
Fairstone at Riverview
Taylorsville, UT
[PHOTO]
Bank of America Center-Chicago
Chicago, IL
[PHOTO]
Jacksonville Operations Center
Jacksonville, FL
[PHOTO]
Albany Main Office
Albany, GA
[PHOTO]
Richland
Richland, WA
[PHOTO]
Bank of American Center-Phoenix
Phoenix, AZ
[PHOTO]
Shoppes at Grand Prairie
Peoria, IL
[PHOTO]
Wiener Portfolio III
Bronx, NY
[PHOTO]
Wenatchee Valley Mall
East Wenatchee, WA
[PHOTO]
Meadows Mall
Las Vegas, NV
The footnotes to the table on the cover page are as follows:
- -----------------
(1) Approximate, subject to adjustment as described in this prospectus
supplement.
(2) The pass-through rates on the Class B, Class C, Class D and Class E
Certificates will equal one of the following rates: (i) a fixed rate, (ii)
a rate equal to the lesser of the initial Pass-Through Rate for such Class
and the Weighted Average Net Mortgage Pass-Through Rate (as defined in this
prospectus supplement), (iii) a rate equal to the Weighted Average Net
Mortgage Pass-Through Rate less a specified percentage or (iv) a rate equal
to the Weighted Average Net Mortgage Pass-Through Rate.
(3) The "Assumed Final Distribution Date" with respect to any class of offered
certificates is the distribution date on which the final distribution would
occur for such class of certificates based upon the assumption that no
mortgage loan is prepaid prior to its stated maturity date or anticipated
repayment date, as applicable, and otherwise based on modeling assumptions
described in this prospectus supplement. The actual performance and
experience of the mortgage loans will likely differ from such assumptions.
The Rated Final Distribution Date (as defined in this prospectus
supplement) for each class of offered certificates is the distribution date
in March 2039. See "Yield and Maturity Considerations" and "Ratings" in
this prospectus supplement.
------------------------
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
Information about the offered certificates is contained in two separate
documents that progressively provide more detail: (a) the accompanying
prospectus, which provides general information, some of which may not apply to
the offered certificates; and (b) this prospectus supplement, which describes
the specific terms of the offered certificates. If the terms of the offered
certificates vary between this prospectus supplement and the accompanying
prospectus, you should rely on the information in this prospectus supplement.
In addition, we have filed with the Securities and Exchange Commission a
registration statement under the Securities Act of 1933, as amended, with
respect to the offered certificates. This prospectus supplement and the
accompanying prospectus form a part of that registration statement. However,
this prospectus supplement and the accompanying prospectus do not contain all of
the information contained in our registration statement. For further information
regarding the documents referred to in this prospectus supplement and the
accompanying prospectus, you should refer to our registration statement and the
exhibits to it. Our registration statement and the exhibits to it can be
inspected and copied at prescribed rates at the public reference facilities
maintained by the SEC at its public reference section, 450 Fifth Street, N.W.,
Washington, D.C. 20549. Copies of these materials can also be obtained
electronically through the SEC's internet website (http://www.sec.gov).
You should rely only on the information contained in this prospectus
supplement and the accompanying prospectus. We have not authorized anyone to
provide you with information that is different from that contained in this
prospectus supplement and the prospectus. The information in this prospectus
supplement is accurate only as of the date of this prospectus supplement.
This prospectus supplement and the accompanying prospectus include cross
references to sections in these materials where you can find further related
discussions. The Tables of Contents in this prospectus supplement and the
prospectus identify the pages where these sections are located.
Certain capitalized terms are defined and used in this prospectus
supplement and the prospectus to assist you in understanding the terms of the
offered certificates and this offering. The capitalized terms used in this
prospectus supplement are defined on the pages indicated under the caption
"Index of Principal Terms" beginning on page S-167 in this prospectus
supplement. The capitalized terms used in the prospectus are defined on the
pages indicated under the caption "Index of Principal Terms" beginning on page
108 in the prospectus.
------------------------
In this prospectus supplement, the terms "Depositor," "we," "us" and "our"
refer to Deutsche Mortgage & Asset Receiving Corporation.
------------------------
S-3
NOTICE TO RESIDENTS OF THE UNITED KINGDOM
The trust fund (the "Trust Fund") described in this prospectus supplement
is a collective investment scheme as defined in the Financial Services and
Markets Act 2000 ("FSMA") of the United Kingdom. It has not been authorized, or
otherwise recognized or approved by the United Kingdom's Financial Services
Authority and, as an unregulated collective investment scheme, accordingly
cannot be marketed in the United Kingdom to the general public.
The distribution of this prospectus supplement (A) if made by a person who
is not an authorized person under the FSMA, is being made only to, or directed
only at persons who (1) are outside the United Kingdom, or (2) have professional
experience in matters relating to investments, or (3) are persons falling within
Article 49(2)(a) through (d) ("high net worth companies, unincorporated
associations, etc.") of the Financial Services and Market Act 2000 (Financial
Promotion) Order 2001 (all such persons together being referred to as "FPO
Persons"), and (B) if made by a person who is an authorized person under the
FSMA, is being made only to, or directed only at, persons who (1) are outside
the United Kingdom, or (2) have professional experience in participating in
unregulated collective investment schemes, or (3) are persons falling within
Article 22(2)(a) through (d) ("high net worth companies, unincorporated
associations, etc.") of the Financial Services and Market Act 2000 (Promotion of
Collective Investment Schemes) (Exemptions) Order 2001 (all such persons
together being referred to as "PCIS Persons" and together with the FPO Persons,
the "Relevant Persons"). This prospectus supplement must not be acted on or
relied on by persons who are not Relevant Persons. Any investment or investment
activity to which this prospectus supplement relates, including the offered
certificates, is available only to Relevant Persons and will be engaged in only
with Relevant Persons.
Potential investors in the United Kingdom are advised that all, or most, of
the protections afforded by the United Kingdom regulatory system will not apply
to an investment in the Trust Fund and that compensation will not be available
under the United Kingdom Financial Services Compensation Scheme.
S-4
EXECUTIVE SUMMARY
This Executive Summary does not include all of the information you need to
consider in making your investment decision. You are advised to carefully read,
and should rely solely on, the detailed information appearing elsewhere in this
prospectus supplement and the prospectus relating to the offered certificates
and the underlying mortgage loans.
THE CERTIFICATES
INITIAL APPROXIMATE
ANTICIPATED CERTIFICATE APPROXIMATE DESCRIPTION ASSUMED INITIAL WEIGHTED
RATINGS BALANCE OR PERCENT OF APPROXIMATE OF PASS- FINAL PASS- AVERAGE
(S&P/FITCH/ NOTIONAL TOTAL CREDIT THROUGH DISTRIBUTION THROUGH LIFE PRINCIPAL
CLASS DBRS) BALANCE(2) CERTIFICATES SUPPORT RATE DATE RATE (YRS.)(7) WINDOW(7)
- ------------------------------------------------------------------------------------------------------------------------------------
OFFERED CERTIFICATES
- ------------------------------------------------------------------------------------------------------------------------------------
Class A-1 AAA/AAA/AAA $135,894,000 14.033% 13.500%(4) Fixed 12/10/08 ___% 3.90 4/04-12/08
- ------------------------------------------------------------------------------------------------------------------------------------
Class A-2 AAA/AAA/AAA $138,594,000 14.312 13.500%(4) Fixed 12/10/10 ___% 5.50 12/08-12/10
- ------------------------------------------------------------------------------------------------------------------------------------
Class A-3 AAA/AAA/AAA $108,197,000 11.173 13.500%(4) Fixed 8/10/13 ___% 7.50 12/10-8/13
- ------------------------------------------------------------------------------------------------------------------------------------
Class A-4 AAA/AAA/AAA $454,979,000 46.983 13.500%(4) Fixed 3/10/14 ___% 9.80 8/13-3/14
- ------------------------------------------------------------------------------------------------------------------------------------
Class B AA/AA/AA $25,420,000 2.625 10.875% Fixed(5) 3/10/14 ___% 9.98 3/14-3/14
- ------------------------------------------------------------------------------------------------------------------------------------
Class C AA-/AA-/AA (low) $9,684,000 1.000 9.875% Fixed(5) 3/10/14 ___% 9.98 3/14-3/14
- ------------------------------------------------------------------------------------------------------------------------------------
Class D A/A/A $19,368,000 2.000 7.875% Fixed(5) 10/10/15 ___% 10.09 3/14-10/15
- ------------------------------------------------------------------------------------------------------------------------------------
Class E A-/A-/A (low) $8,474,000 0.875 7.000% Fixed(5) 12/10/18 ___% 13.59 10/15-12/18
- ------------------------------------------------------------------------------------------------------------------------------------
PRIVATE CERTIFICATES(1)
- ------------------------------------------------------------------------------------------------------------------------------------
Class X-1 AAA/AAA/AAA $968,398,042 NA NA Variable
Interest
Only(3) 4/10/28 ___% NA NA
- ------------------------------------------------------------------------------------------------------------------------------------
Class X-2 AAA/AAA/AAA $935,698,000 NA NA Variable
Interest
Only(3) 3/10/11 ___% NA NA
- ------------------------------------------------------------------------------------------------------------------------------------
Class F BBB+/BBB+/BBB (high) $9,684,000 1.000 6.000% Fixed(5) 12/10/18 ___% 14.73 12/18-12/18
- ------------------------------------------------------------------------------------------------------------------------------------
Class G BBB/BBB/BBB $10,894,000 1.125 4.875% Fixed(5) 12/10/18 ___% 14.73 12/18-12/18
- ------------------------------------------------------------------------------------------------------------------------------------
Class H BBB-/BBB-/BBB (low) $10,895,000 1.125 3.750% Fixed(5) 12/10/18 ___% 14.73 12/18-12/18
- ------------------------------------------------------------------------------------------------------------------------------------
Class J BB+/BB+/BB (high) $4,842,000 0.500 3.250% Fixed(6) 12/10/18 ___% 14.73 12/18-12/18
- ------------------------------------------------------------------------------------------------------------------------------------
Class K BB/BB/BB $6,052,000 0.625 2.625% Fixed(6) 12/10/18 ___% 14.73 12/18-12/18
- ------------------------------------------------------------------------------------------------------------------------------------
Class L BB-/BB-/BB (low) $3,632,000 0.375 2.250% Fixed(6) 12/10/18 ___% 14.73 12/18-12/18
- ------------------------------------------------------------------------------------------------------------------------------------
Class M B+/B+/B (high) $4,842,000 0.500 1.750% Fixed(6) 12/10/18 ___% 14.73 12/18-12/18
- ------------------------------------------------------------------------------------------------------------------------------------
Class N B/B/B $2,421,000 0.250 1.500% Fixed(6) 1/10/19 ___% 14.73 12/18-1/19
- ------------------------------------------------------------------------------------------------------------------------------------
Class O B-/B-/B (low) $1,210,000 0.125 1.375% Fixed(6) 1/10/19 ___% 14.81 1/19-1/19
- ------------------------------------------------------------------------------------------------------------------------------------
Class P NR/NR/NR $13,316,042 1.375 0.000% Fixed(6) 4/10/28 ___% 15.55 1/19-4/28
- ------------------------------------------------------------------------------------------------------------------------------------
- -------------------------
(1) Not offered hereby.
(2) Approximate; subject to a variance of plus or minus 5%.
(3) The Class X-1 and Class X-2 Certificates will not have a certificate
balance. Interest will accrue on such classes of certificates at the
applicable pass-through rate, determined as described in this prospectus
supplement, on their notional balances. With respect to two mortgage loans
representing approximately 9.26% of the aggregate principal balance of the
pool of mortgage loans as of the cut-off date, the related mortgaged
properties also secure a subordinate note. The Class X-1 and Class X-2
Certificates were structured assuming that the AFR/Bank of America
Portfolio B Loan absorbs any loss prior to the AFR/Bank of America
Portfolio Senior Loans. For more information regarding this loan, see
"Description of the Mortgage Pool--Split Loan Structures--The AFR/Bank of
America Portfolio Loan" in this prospectus supplement.
(4) Represents the approximate credit support for the Class A-1, Class A-2,
Class A-3 and Class A-4 Certificates in the aggregate.
(5) The pass-through rates on the Class B, Class C, Class D, Class E, Class F,
Class G and Class H Certificates will equal one of the following rates: (i)
a fixed rate, (ii) a rate equal to the lesser of the initial Pass-Through
Rate for such class and the Weighted Average Net Mortgage Pass-Through Rate
(as defined in this prospectus supplement), (iii) a rate equal to the
Weighted Average Net Mortgage Pass-Through Rate less a specified percentage
or (iv) a rate equal to the Weighted Average Net Mortgage Pass-Through
Rate.
(6) The pass-through rates on the Class J, Class K, Class L, Class M, Class N,
Class O and Class P Certificates will equal a fixed rate subject to a cap
of the Weighted Average Net Mortgage Pass-Through Rate.
(7) The weighted average life and principal window during which distributions
of principal would be received as set forth in the table with respect to
each class of certificates is based on (i) modeling assumptions and
prepayment assumptions described in this prospectus supplement, (ii)
assumptions that there are no prepayments or losses on the mortgage loans,
and (iii) assumptions that there are no extensions of maturity dates and
that the mortgage loans with an anticipated repayment date are paid off on
the their respective anticipated repayment dates.
The Class Q, Class R and Class LR Certificates are not represented in this
table.
S-5
The following table shows information regarding the mortgage loans and the
mortgaged properties as of the cut-off date. All weighted averages set forth
below are based on the principal balances of the mortgage loans as of such date.
THE MORTGAGE POOL
Initial Outstanding Pool Balance(1) ............................. $968,398,042
Number of Mortgage Loans ........................................ 91
Number of Mortgaged Properties .................................. 255
Average Mortgage Loan Balance ................................... $10,641,737
Weighted Average Mortgage Rate .................................. 5.583%
Weighted Average Remaining Term to Maturity (in months)(2) ...... 109
Weighted Average Debt Service Coverage Ratio(3) ................. 1.53x
Weighted Average Loan-to-Value Ratio(3) ......................... 66.72%
- --------------------
(1) Subject to a permitted variance of plus or minus 5%.
(2) Calculated with respect to the anticipated repayment date for one mortgage
loan, representing 0.48% of the outstanding pool balance as of the cut-off
date.
(3) In the case of three mortgage loans with one or more companion loans that
are not included in the Trust, DSCR and LTV have been calculated with
respect to the mortgage loans included in the Trust and the mortgage loans
that are not included in the Trust but are pari passu in right of payment
with the mortgage loans included in the Trust.
S-6
TABLE OF CONTENTS
EXECUTIVE SUMMARY ............................... S-5 Advances ..................................... S-120
SUMMARY OF THE PROSPECTUS Accounts ..................................... S-124
SUPPLEMENT ................................... S-8 Enforcement of "Due-on-Sale" and
RISK FACTORS .................................... S-27 "Due-on-Encumbrance" Clauses ............... S-125
Risks related to the Mortgage Loans .......... S-27 Inspections .................................. S-127
Conflicts of Interest ........................ S-47 Insurance Policies ........................... S-127
Risks Related to the Offered Certain Matters Regarding the
Certificates ............................... S-50 Depositor, the Servicer and the
DESCRIPTION OF THE MORTGAGE Special Servicer ........................... S-130
POOL ......................................... S-55 Events of Default ............................ S-131
General ...................................... S-55 Rights Upon Event of Default ................. S-133
Security for the Mortgage Loans .............. S-55 Amendment .................................... S-134
The Mortgage Loan Sellers .................... S-56 Voting Rights ................................ S-134
Certain Underwriting Matters ................. S-57 Sale of Defaulted Mortgage Loans ............. S-135
Underwriting Standards ....................... S-59 Realization Upon Defaulted Mortgage
GACC's Underwriting Standards ................ S-59 Loans ...................................... S-136
LaSalle's Underwriting Standards ............. S-60 Modifications ................................ S-138
ABN AMRO Bank's Underwriting Optional Termination ......................... S-140
Standards .................................. S-62 The Trustee and the Bond
Split Loan Structures ........................ S-63 Administrator .............................. S-141
ARD Loan ..................................... S-68 Duties of the Trustee ........................ S-142
Additional Loan Information .................. S-68 The Servicer ................................. S-143
Certain Terms and Conditions of the Servicing Compensation and
Mortgage Loans ............................. S-78 Payment of Expenses ........................ S-143
Changes in Mortgage Pool Special Servicing ............................ S-144
Characteristics ............................ S-85 Certain Rights of the Holder of
DESCRIPTION OF THE OFFERED the Walgreens-Riverside B Loan ............. S-149
CERTIFICATES ................................. S-86 Servicing of the Non-Serviced
General ...................................... S-86 Mortgage Loans ............................. S-150
Distributions ................................ S-87 Servicer and Special Servicer
Realized Losses .............................. S-96 Permitted to Buy Certificates .............. S-157
Prepayment Interest Shortfalls ............... S-97 Reports to Certificateholders; Available
Subordination ................................ S-98 Information ................................ S-157
Appraisal Reductions ......................... S-99 Other Information ............................ S-159
Delivery, Form and Denomination .............. S-101 USE OF PROCEEDS ................................. S-160
Book-Entry Registration ...................... S-102 CERTAIN FEDERAL INCOME TAX CONSEQUENCES ......... S-160
Definitive Certificates ...................... S-104 ERISA CONSIDERATIONS ............................ S-162
YIELD AND MATURITY LEGAL INVESTMENT ................................ S-164
CONSIDERATIONS ............................... S-105 METHOD OF DISTRIBUTION .......................... S-164
Yield Considerations ......................... S-105 LEGAL MATTERS ................................... S-166
Weighted Average Life ........................ S-107 RATINGS ......................................... S-166
Certain Price/Yield Tables ................... S-112 INDEX OF PRINCIPAL TERMS ........................ S-167
THE POOLING AND SERVICING
AGREEMENT .................................... S-115 ANNEX A Certain Characteristics of the
General ...................................... S-115 Mortgage Loans ............................... A-1
Assignment of the Mortgage Loans ............. S-115 ANNEX B Structural and Collateral Term
Representations and Warranties; Sheet ........................................ B-1
Repurchase; Substitution ................... S-115 ANNEX C Global Clearance, Settlement
Servicing of the Mortgage Loans; and Tax Documentation Procedures ............. C-1
Collection of Payments ..................... S-118
S-7
SUMMARY OF THE PROSPECTUS SUPPLEMENT
THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THIS PROSPECTUS
SUPPLEMENT AND DOES NOT INCLUDE ALL OF THE RELEVANT INFORMATION YOU NEED TO
CONSIDER IN MAKING YOUR INVESTMENT DECISION. YOU ARE ADVISED TO CAREFULLY READ,
AND SHOULD RELY SOLELY ON, THE DETAILED INFORMATION APPEARING ELSEWHERE IN THIS
PROSPECTUS SUPPLEMENT AND IN THE ACCOMPANYING PROSPECTUS.
Title of Certificates ............ COMM 2004-LNB2 Commercial Mortgage
Pass-Through Certificates.
RELEVANT PARTIES AND DATES
Depositor ........................ Deutsche Mortgage & Asset Receiving
Corporation.
Servicer ......................... GMAC Commercial Mortgage Corporation, a
California corporation, with respect to all
of the mortgage loans other than two
mortgage loans known as the AFR/Bank of
America Portfolio Loan and the Meadows Mall
Loan (collectively, the "Non-Serviced
Mortgage Loans"). The AFR/Bank of America
Portfolio Loan will be serviced by the
GMACCM 2003-C3 Servicer (as defined in this
prospectus supplement), which will initially
be GMAC Commercial Mortgage Corporation,
pursuant to a separate pooling and servicing
agreement. The Meadows Mall Loan will be
serviced by the Wachovia 2003-C9 Servicer
(as defined in this prospectus supplement),
which will initially be Wachovia Bank,
National Association, pursuant to a separate
pooling and servicing agreement. GMAC
Commercial Mortgage Corporation's address is
200 Witmer Road, Horsham, Pennsylvania
19044. Wachovia Bank, National Association's
principal servicing office is located at NC
1075, 8739 Research Drive-URP 4, Charlotte,
North Carolina 28262-1075. See "The Pooling
and Servicing Agreement--The Servicer" in
this prospectus supplement.
Special Servicer ................. Lennar Partners, Inc., a Florida
corporation, with respect to all of the
mortgage loans other than the Non-Serviced
Mortgage Loans. The AFR/Bank of America
Portfolio Loan will be specially serviced by
the GMACCM 2003-C3 Special Servicer (as
defined in this prospectus supplement),
which initially will be Midland Loan
Services, Inc., pursuant to a separate
pooling and servicing agreement. The Meadows
Mall Loan will be specially serviced by the
Wachovia 2003-C9 Special Servicer (as
defined in this prospectus supplement),
which initially will be Lennar Partners,
Inc., pursuant to a separate pooling and
servicing agreement. Lennar Partners, Inc.'s
address is 1601 Washington Avenue, Suite
800, Miami Beach, Florida 33139. Midland
Loan Services, Inc.'s principal address is
10851 Mastin Street, Building 82, Suite 700,
Overland Park, Kansas 66210. See "The
Pooling and Servicing Agreement--Special
Servicing--The Special Servicer" in this
prospectus supplement.
Trustee .......................... Wells Fargo Bank, N.A., a national banking
association. The trustee's address is 9062
Old Annapolis Road, Columbia, Maryland
21045-1951, Attention: Corporate Trust
Services (COMM 2004-LNB2). See "The Pooling
and Servicing Agreement--The Trustee and the
Bond Administrator" in this prospectus
supplement.
S-8
Bond Administrator ............... LaSalle Bank National Association, a
national banking association. See "The
Pooling and Servicing Agreement--The Trustee
and the Bond Administrator" in this
prospectus supplement.
Mortgage Loan Sellers ............ German American Capital Corporation, an
affiliate of Deutsche Bank Securities Inc.,
an underwriter, and LaSalle Bank National
Association and ABN AMRO Bank N.V., Chicago
Branch, each an affiliate of ABN AMRO
Incorporated, an underwriter. See
"Description of the Mortgage Pool--The
Mortgage Loan Sellers" in this prospectus
supplement.
The mortgage loans were originated or
purchased by the mortgage loan sellers as
follows:
% OF
NUMBER INITIAL CUT-OFF
OF OUTSTANDING DATE
MORTGAGE POOL PRINCIPAL
MORTGAGE LOAN SELLER LOANS BALANCE BALANCE
- --------------------- ---------- ------------ ------------
German American Capital Corporation ..... 33 70.98% $687,416,676
LaSalle Bank National Association ....... 57 23.27% $225,394,294
ABN AMRO Bank N.V., Chicago Branch ...... 1 5.74% $ 55,587,072
Underwriters ..................... Deutsche Bank Securities Inc., ABN AMRO
Incorporated, Banc of America Securities
LLC, Citigroup Global Markets Inc. and
Merrill Lynch, Pierce, Fenner &Smith
Incorporated. The underwriters are required
to purchase the offered certificates from
the Depositor (in the amounts set forth in
this prospectus supplement under "Method of
Distribution"), subject to certain
conditions. See "Method of Distribution" in
this prospectus supplement.
Cut-off Date ..................... March 1, 2004.
Closing Date ..................... On or about March ___, 2004.
Distribution Date ................ The 10th day of each month, or if such 10th
day is not a business day, the business day
immediately following such 10th day,
commencing in April 2004.
Record Date ...................... With respect to any distribution date, the
close of business on the last business day
of the preceding month.
Determination Date ............... The earlier of (i) the sixth day of the
month in which the related distribution date
occurs, or if such sixth day is not a
business day, then the immediately preceding
business day, and (ii) the fourth business
day prior to the related distribution date.
Collection Period ................ With respect to a distribution date, the
period that begins immediately following the
determination date in the calendar month
preceding the month in which such
distribution date occurs (or, in the case of
the initial distribution date, immediately
following the cut-off date) and ends on the
determination date in the calendar month in
which such distribution date occurs.
Interest Accrual Period .......... With respect to any distribution date, the
calendar month immediately preceding the
month in which such distribution date
occurs.
S-9
OFFERED CERTIFICATES
General .......................... The Depositor is offering the following
eight classes of COMM 2004-LNB2 Commercial
Mortgage Pass-Through Certificates
(collectively, the "Offered Certificates")
as part of the trust:
o Class A-1
o Class A-2
o Class A-3
o Class A-4
o Class B
o Class C
o Class D
o Class E
The trust created by the Depositor (the
"Trust") will consist of a total of 23
classes, the following 15 of which are not
being offered through this prospectus
supplement and the accompanying prospectus:
Class X-1, Class X-2, Class F, Class G,
Class H, Class J, Class K, Class L, Class M,
Class N, Class O, Class P, Class Q, Class R
and Class LR (collectively, the "Private
Certificates").
The Offered Certificates and the Private
Certificates will represent beneficial
ownership interests in the Trust created by
the Depositor. The Trust's assets will
primarily consist of 91 mortgage loans
secured by first liens on 255 commercial,
multifamily and mobile home park properties.
Certificate Balances ............. Your certificates have the approximate
aggregate initial certificate balance set
forth below, subject to a permitted variance
of plus or minus 5%.
Class A-1 .................. $ 135,894,000
Class A-2 .................. $ 138,594,000
Class A-3 .................. $ 108,197,000
Class A-4 .................. $ 454,979,000
Class B .................... $ 25,420,000
Class C .................... $ 9,684,000
Class D .................... $ 19,368,000
Class E .................... $ 8,474,000
The Private Certificates (other than the
Class Q, Class R and Class LR Certificates)
will have the initial aggregate certificate
balances or notional balances, as
applicable, as set forth under "Executive
Summary--The Certificates" in this
prospectus supplement.
See "Description of the Offered
Certificates--General" and "--Distributions"
in this prospectus supplement.
Pass-Through Rates ............... The certificates will accrue interest at an
annual rate called a "Pass-Through Rate"
which is set forth below.
o The Pass-Through Rate applicable to the
Class A-1, Class A-2, Class A-3 and Class
A-4 Certificates are fixed at ___%, ___%,
___% and ___% respectively per annum.
S-10
o The Pass-Through Rates applicable to the
Class B, Class C, Class D, Class E, Class
F, Class G and Class H Certificates will
equal one of the following rates: (i) a
fixed rate, (ii) a rate equal to the
lesser of the initial Pass-Through Rate
for such class (as described in
"Executive Summary--The Certificates" in
this prospectus supplement) and the
Weighted Average Net Mortgage
Pass-Through Rate, each with the initial
Pass-Through Rate described in "Executive
Summary--The Certificates" in this
prospectus supplement, (iii) a rate equal
to the Weighted Average Net Mortgage
Pass-Through Rate less a specified
percentage or (iv) a rate equal to the
Weighted Average Net Mortgage
Pass-Through Rate.
o The Pass-Through Rates applicable to the
Class J, Class K, Class L, Class M, Class
N, Class O and Class P Certificates will,
at all times, be equal to a fixed rate
per annum subject to a cap of the
Weighted Average Net Mortgage
Pass-Through Rate.
o The Class Q, Class R and Class LR
Certificates will not have Pass-Through
Rates. See "Description of the Offered
Certificates--Distributions--Method,
Timing and Amount" and "--Payment
Priorities" in this prospectus
supplement.
o The Pass-Through Rate applicable to the
Class X-1 Certificates for the initial
distribution date will equal
approximately ___% per annum. The
Pass-Through Rate applicable to the Class
X-2 Certificates for the initial
distribution date will equal
approximately ___% per annum. The
Pass-Through Rate applicable to the Class
X-1 and Class X-2 Certificates for each
distribution date subsequent to the
initial distribution date generally will
be equal in the aggregate to the
difference between the Weighted Average
Net Mortgage Pass-Through Rate and the
Weighted Average Pass-Through Rate of the
Principal Balance Certificates (based on
their certificate balances).
Distributions .................... On each distribution date, you will be
entitled to receive interest and principal
distributions from available funds in an
amount equal to your certificate's interest
and principal entitlement, subject to:
(i) payment of the respective interest
entitlement for any class of
certificates bearing an earlier
alphabetical designation (except in
respect of the distribution of
interest among the Class A-1, Class
A-2, Class A-3, Class A-4, Class X-1
and Class X-2 Certificates, which will
have the same senior priority), and
(ii) if applicable, payment of the
respective principal entitlement for
such distribution date to outstanding
classes of certificates having an
earlier alphanumeric designation.
S-11
A description of the principal and interest
entitlement of each class of Offered
Certificates for each distribution date can
be found in "Description of the Offered
Certificates--Distributions--Method, Timing
and Amount," "--Payment Priorities" and
"--Distribution of Available Funds" in this
prospectus supplement. The Class X-1 and
Class X-2 Certificates will not be entitled
to any distributions of principal.
Prepayment Premiums;
Yield Maintenance Charges ...... Prepayment premiums and yield maintenance
charges will be allocated as described in
"Description of the Offered
Certificates--Distributions--Prepayment
Premiums; Yield Maintenance Charges" in this
prospectus supplement.
Prepayment and Yield
Considerations ................. The yield to investors will be sensitive to
the timing of prepayments, repurchases or
purchases of mortgage loans, and the
magnitude of losses on the mortgage loans
due to liquidations. The yield to maturity
on each class of the Offered Certificates
will be sensitive to the rate and timing of
principal payments (including both voluntary
and involuntary prepayments, defaults and
liquidations) on the mortgage loans and
payments with respect to repurchases thereof
that are applied in reduction of the
certificate balance of such class. See "Risk
Factors--Risks Related to the Offered
Certificates--Risks Related to Prepayments
and Repurchases" and "--Yield
Considerations" and "Yield and Maturity
Considerations" in this prospectus
supplement and "Yield and Maturity
Considerations" in the prospectus.
S-12
Subordination; Allocation of
Losses and Certain
Expenses ....................... The chart below describes the manner in
which the rights of various classes will be
senior to the rights of other classes. This
subordination will be effected in two ways:
entitlement to receive principal and
interest on any distribution date is in
descending order and loan losses are
allocated in ascending order. (However, no
principal payments or principal losses will
be allocated to the Class X-1 and Class X-2
Certificates, although loan losses will
reduce the notional balances of the Class
X-1 and Class X-2 Certificates and,
therefore, the amount of interest those
classes accrue.)
-----------------------------------
Class A-1, Class A-2, Class A-3
Class A-4, Class X-1 and Class X-2*
-----------------------------------
|
---------------
Class B
---------------
|
---------------
Class C
---------------
|
---------------
Class D
---------------
|
---------------
Class E
---------------
|
---------------
Class F
---------------
|
---------------
Class G
---------------
|
---------------
Class H
---------------
|
---------------
Class J
---------------
|
---------------
Class K
---------------
|
---------------
Class L
---------------
|
---------------
Class M
---------------
|
---------------
Class N
---------------
|
---------------
Class O
---------------
|
---------------
Class P
---------------
- -----------------
* The Class X-1 and Class X-2 Certificates are not offered hereby and are not
entitled to distributions of principal.
NO OTHER FORM OF CREDIT ENHANCEMENT WILL BE AVAILABLE FOR THE BENEFIT OF THE
HOLDERS OF THE OFFERED CERTIFICATES.
S-13
Shortfalls in mortgage loan interest that
are the result of the timing of prepayments
and that are in excess of the sum of (x) the
servicing fee payable to the Servicer and
(y) the amount of mortgage loan interest
that accrues and is collected with respect
to any principal prepayment that is made
after the date on which interest is due will
be allocated to, and be deemed distributed
to, each class of certificates, PRO RATA,
based upon amounts distributable in respect
of interest to each such class. See
"Description of the Offered
Certificates--Prepayment Interest
Shortfalls" in this prospectus supplement.
Shortfalls in Available Funds .... The following types of shortfalls in
available funds will be allocated in the
same manner as mortgage loan losses: (i)
shortfalls resulting from additional
servicing compensation which the Servicer or
Special Servicer is entitled to receive;
(ii) shortfalls resulting from interest on
advances made by the Servicer, the Special
Servicer or the Trustee (to the extent not
covered by default interest and late payment
fees paid by the borrower); (iii) shortfalls
resulting from unanticipated expenses of the
Trust (including, but not limited to,
expenses relating to environmental
assessments, appraisals, any administrative
or judicial proceeding, management of REO
properties, maintenance of insurance
policies, and permissible indemnification);
and (iv) shortfalls resulting from a
reduction of a mortgage loan's interest rate
by a bankruptcy court or from other
unanticipated or default-related expenses of
the Trust.
S-14
THE M4ORTGAGE POOL
CHARACTERISTICS OF THE MORTGAGE POOL
A. General ....................... For a more complete description of the
mortgage loans, see the following sections
in this prospectus supplement:
o Description of the Mortgage Pool; and
o Annex A (Certain Characteristics of the
Mortgage Loans).
All numerical information provided in this
prospectus supplement with respect to the
mortgage loans is approximate. All weighted
average information regarding the mortgage
loans reflects weighting of the mortgage
loans by their respective principal balances
as of the cut-off date.
Number of Mortgage Loans ......... 91
Number of Mortgaged
Properties ..................... 255
Number of Balloon Mortgage Loans . 89
Number of Hyper-Amortizing Loans . 1
Number of Fully Amortizing
Mortgage Loans ................. 1
Aggregate Initial Principal
Balance (plus or minus 5%) ..... $968,398,042
Range of Mortgage Loan
Principal Balances ............. $997,050 to $147,500,000
Average Mortgage Loan
Principal Balance .............. $10,641,737
Range of Mortgage Rates .......... 4.930% to 6.780%
Weighted Average Mortgage Rate ... 5.583%
Range of Remaining Terms
to Maturity(1) ................. 55 months to 289 months
Weighted Average Remaining
Term to Maturity(1) ............ 109 months
Range of Remaining
Amortization Term .............. 289 months to 360 months
Weighted Average Remaining
Amortization Term .............. 352 months
Weighted Average Loan-to-Value
Ratio(2)(3) .................... 66.72%
Weighted Average Debt
Service Coverage Ratio(2)(3) ... 1.53x
- ---------------
(1) Calculated with respect to the anticipated repayment date for 1 mortgage
loan, representing 0.48% of the outstanding pool balance as of the cut-off
date.
(2) In the case of three mortgage loans with one or more companion loans that
are not included in the Trust, DSCR and LTV have been calculated based on
the mortgage loans included in the Trust and the mortgage loans that are
not included in the Trust but are PARI PASSU in right of payment with the
mortgage loans included in the Trust.
(3) Calculated based on loan principal balance, as of the cut-off date, after
netting out holdback amounts for four mortgage loans, representing
approximately 6.47% of the outstanding pool balance as of the cut-off date.
S-15
B. Split Loan Structures ......... The mortgaged properties securing the
mortgage loans known as "Tysons Corner
Center loan," "AFR/Bank of America Portfolio
loan," "Meadows Mall loan" and
"Walgreens-Riverside loan" also secure
companion loans that are not included in the
mortgage pool.
The mortgage loan known as the "Tysons
Corner Center loan" (the "Tysons Corner
Center Loan"), representing 15.23% of the
outstanding pool balance as of the cut-off
date and with an outstanding principal
balance as of the cut-off date of
$147,500,000, is secured by a mortgaged
property that also secures three other
companion loans (collectively, the "Tysons
Corner Center Pari Passu Loans" and together
with the Tysons Corner Center Loan, the
"Tysons Corner Center Whole Loan") that are
not included in the Trust. The Tysons Corner
Center Pari Passu Loans are PARI PASSU in
right of payment with the Tysons Corner
Center Loan and have an outstanding
principal balance as of the cut-off date of
$95,000,000, $35,000,000 and $62,500,000,
respectively. The Tysons Corner Center Pari
Passu Loans are currently held by German
American Capital Corporation, one of the
mortgage loan sellers, and may be sold at
any time. Servicing of the Tysons Corner
Center Whole Loan will be governed by the
Pooling and Servicing Agreement. For
additional information regarding the Tysons
Corner Center Loan see "Description of the
Mortgage Pool--Split Loan Structures--The
Tysons Corner Center Loan" in this
prospectus supplement and "The Tysons Corner
Center Loan" in Annex B to this prospectus
supplement.
The mortgage loan known as the "AFR/Bank of
America Portfolio loan" (the "AFR/Bank of
America Portfolio Loan"), representing 8.78%
of the outstanding pool balance as of the
cut-off date and with an outstanding
principal balance as of the cut-off date of
$85,000,000, is secured by mortgaged
properties that also secure four companion
loans that are not included in the Trust.
Three of the companion loans (the "AFR/Bank
of America Portfolio PARI PASSU Loans" and
together with the AFR/Bank of America
Portfolio Loan, the "AFR/Bank of America
Portfolio Senior Loans") are PARI PASSU in
right of payment with the AFR/Bank of
America Portfolio Loan and have an
outstanding principal balance as of the
cut-off date of $100,000,000, $75,000,000
and $80,000,000, respectively. The other
companion loan (the "AFR/Bank of America
Portfolio B Loan" and together with the
AFR/Bank of America Portfolio Senior Loans,
the "AFR/Bank of America Portfolio Whole
Loan") is subordinate in right of payment to
the AFR/Bank of America Portfolio Senior
Loans and has an outstanding principal
balance as of the cut-off date of
$100,000,000. The AFR/Bank of America
Portfolio Pari Passu Loan with an
outstanding principal balance as of the
cut-off date of $75,000,000 was deposited
into the GE Commercial Mortgage Corporation
Commercial Mortgage Pass-Through
Certificates, Series 2004-C1 securitization.
The AFR/Bank of America Portfolio Pari Passu
Loan with an outstanding principal balance
as of the cut-off date of $100,000,000 and
the AFR/Bank of America Portfolio B Loan
were deposited into the GMAC Commercial
Mortgage Securities, Inc., Series 2003-C3
Mortgage
S-16
Pass-Through Certificates securitization.
The other AFR/Bank of America Portfolio Pari
Passu Loan is currently held by German
American Capital Corporation, one of the
mortgage loan sellers, and may be sold at
any time. The AFR/Bank of America Portfolio
Whole Loan is being serviced and
administered by GMAC Commercial Mortgage
Corporation, as master servicer (the "GMACCM
2003-C3 Servicer") and by Midland Loan
Services, Inc., as special servicer (the
"GMACCM 2003-C3 Special Servicer"), pursuant
to a separate pooling and servicing
agreement (the "GMACCM 2003-C3 Pooling and
Servicing Agreement") entered into in
connection with the issuance of the GMAC
Commercial Mortgage Securities, Inc., Series
2003-C3 Mortgage Pass-Through Certificates.
See "Description of the Mortgage Pool--Split
Loan Structures--The AFR/Bank of America
Portfolio Loan" in this prospectus
supplement and "The AFR/Bank of America
Portfolio Loan" in Annex B to this
prospectus supplement.
The holder of the AFR/Bank of America
Portfolio B Loan has certain rights with
respect to the AFR/Bank of America Portfolio
Whole Loan as described under "Description
of the Mortgage Pool--Split Loan
Structures--The AFR/Bank of America
Portfolio Loan" and "The Pooling and
Servicing Agreement--Servicing of the
Non-Serviced Mortgage Loans--The AFR/Bank of
America Portfolio Whole Loan--Rights of the
Holder of the AFR/Bank of America Portfolio
B Loan" in this prospectus supplement. See
also "The AFR/Bank of America Portfolio
Loan" in Annex B to this prospectus
supplement.
The mortgage loan known as the "Meadows Mall
loan"(the "Meadows Mall Loan"), representing
5.74% of the outstanding pool balance as of
the cut-off date and with an outstanding
principal balance as of the cut-off date of
$55,587,072, is secured by a mortgaged
property that also secures one companion
loan (the "Meadows Mall Pari Passu Loan" and
together with the Meadows Mall Loan, the
"Meadows Mall Whole Loan") that is not
included in the Trust. The Meadows Mall Pari
Passu Loan is PARI PASSU in right of payment
with the Meadows Mall Loan and has an
outstanding principal balance as of the
cut-off date of $55,587,072. The Meadows
Mall Pari Passu Loan is included in the
Wachovia Commercial Mortgage Securities,
Inc. Commercial Mortgage Pass-Through
Certificates, Series 2003-C9 securitization
(the "Wachovia 2003-C9 Securitization"). The
Meadows Mall Pari Passu Loan is being
serviced and administered by Wachovia Bank,
National Association, as master servicer
(the "Wachovia 2003-C9 Servicer") pursuant
to a separate pooling and servicing
agreement (the "Wachovia 2003-C9 Pooling and
Servicing Agreement") entered into in
connection with the Wachovia 2003-C9
Securitization. For additional information
regarding the Meadows Mall Loan, see
"Description of the Mortgage Pool--Split
Loan Structures--The Meadows Mall Loan" and
"The Pooling and Servicing
Agreement--Servicing of the Non-Serviced
Mortgage Loans--Servicing of the Meadows
Mall Whole Loan" in this prospectus
S-17
supplement. See also "The Meadows Mall Loan"
in Annex B to this prospectus supplement.
The mortgage loan known as the
"Walgreens-Riverside loan" (the
"Walgreens-Riverside Loan"), representing
0.48% of the outstanding pool principal
balance as of the cut-off date and with an
outstanding principal balance as of the
cut-off date of $4,637,107, is secured by a
mortgaged property that also secures one
companion loan (the "Walgreens-Riverside B
Loan" and together with the
Walgreens-Riverside Loan, the
"Walgreens-Riverside Whole Loan") that is
generally subordinate in right of payment
with the Walgreens-Riverside Loan, has an
outstanding principal balance as of the
cut-off date of $560,811 and is not included
in the Trust. The Walgreens-Riverside B Loan
is currently held by Capital Lease Funding,
LLC, an entity not affiliated with the
seller of the Walgreens-Riverside Loan. For
additional information regarding the
Walgreens-Riverside Loan, see "Description
of the Mortgage Pool--Split Loan
Structures--The Walgreens-Riverside Loan"
and "The Pooling and Servicing
Agreement--Certain Rights of the Holder of
the Walgreens-Riverside B Loan" in this
prospectus supplement.
The Tysons Corner Center Pari Passu Loans,
the AFR/Bank of America Portfolio Pari Passu
Loans, the AFR/Bank of America Portfolio B
Loan, the Meadows Mall Pari Passu Loan and
the Walgreens-Riverside B Loan are
collectively referred to as the "Companion
Loans" and each a "Companion Loan." Each
mortgage loan and its related Companion
Loans are referred to as a "Whole Loan." The
Tysons Corner Center Pari Passu Loans and
the Walgreens-Riverside B Loan are sometimes
collectively referred to as the "Serviced
Companion Loans." Each mortgage loan and its
related Serviced Companion Loans are
referred to as a "Serviced Whole Loan." The
AFR/Bank of America Portfolio B Loan and the
Walgreens-Riverside B Loan are each referred
to as a "B Loan."
C. Nonrecourse ................... Substantially all of the mortgage loans are
or should be considered nonrecourse
obligations. No mortgage loan will be
insured or guaranteed by any governmental
entity or private insurer, or by any other
person.
D. Fee Simple/Leasehold Estate ... Each mortgage loan is secured by, among
other things, a first mortgage lien on the
borrower's fee simple estate (or in the case
of 17 mortgaged properties, securing
mortgage loans which represent 20.58% of the
outstanding pool balance as of the cut-off
date, either (a) a leasehold estate in a
portion of the mortgaged property and a fee
estate in the remainder of the mortgaged
property or (b) a leasehold estate of the
mortgaged property and no mortgage on the
related fee estate) in an income-producing
real property.
S-18
E. Property Purpose .............. The number of mortgaged properties, and the
approximate percentage of the outstanding
pool balance as of the cut-off date of the
mortgage loans secured thereby, for each
indicated purpose are:
NUMBER OF AGGREGATE PRINCIPAL
MORTGAGED BALANCE OF THE PERCENTAGE OF
PROPERTY TYPE PROPERTIES MORTGAGE LOANS POOL(1)
------------- ---------- ------------------- -------------
Office .................... 139 $ 334,850,586 34.58%
Retail .................... 13 306,331,612 31.63
ANCHORED ................ 11 297,351,278 30.71
SHADOW ANCHORED ......... 2 8,980,334 0.93
Multifamily ............... 62 304,251,002 31.42
MULTIFAMILY ............. 41 255,784,941 26.41
MOBILE HOME PARK ........ 21 48,466,061 5.00
Mixed Use(2) .............. 39 14,666,006 1.51
Industrial ................ 2 8,298,837 0.86
------- --------------- -------
Total ..................... 255 $ 968,398,042 100.00%
======= =============== =======
-----------------
(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 (which amounts, if not
specified in the related mortgage loan
documents, are based on the appraised
values or square footage of each
mortgaged property and/or each
mortgaged property's underwritten net
cash flow).
(2) Includes office and retail spaces.
F. Property Location ............. The number of mortgaged properties, and the
approximate percentage of the outstanding
pool balance as of the cut-off date of
mortgage loans secured thereby, that are
located in the five states with the highest
concentrations of mortgaged properties are:
NUMBER OF AGGREGATE PRINCIPAL
MORTGAGED BALANCE OF THE PERCENTAGE OF
STATE PROPERTIES MORTGAGE LOANS POOL(1)
----- ---------- ------------------- -------------
Virginia .................. 10 $159,071,194 16.43%
District of Columbia ...... 2 80,800,000 8.34
Florida ................... 39 75,778,462 7.83
North Carolina ............ 17 69,505,715 7.18
New York .................. 5 67,483,123 6.97
Other(2) .................. 182 515,759,549 53.26
------- -------------- -------
Total ..................... 255 $968,398,042 100.00%
======= ============== =======
-----------------
(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 (which amounts, if not
specified in the related mortgage loan
documents, are based on the appraised
values or square footage of each
mortgaged property and/or each
mortgaged property's underwritten net
cash flow).
(2) This reference consists of 28 states.
See "Description of the Mortgage
Pool--Additional Loan Information" in this
prospectus supplement.
S-19
G. Amortization Types ............ The mortgage loans provide for one of the
following:
o Eighty-Nine mortgage loans, representing
99.24% of the outstanding pool balance as
of the cut-off date, provide for
regularly scheduled payments of interest
and principal based on an amortization
period longer than the term of the
mortgage loan and therefore have an
expected balloon balance at the maturity
date.
o Eleven mortgage loans, representing
46.36% of the outstanding pool balance as
of the cut-off date, provide for payments
of interest only for the first 8 to 35
months following the cut-off date and
thereafter provide for regularly
scheduled payments of interest and
principal based on an amortization period
longer than the remaining term of the
mortgage loan and therefore have an
expected balloon balance at the maturity
date.
o One mortgage loan, representing 0.48% of
the outstanding pool balance as of the
cut-off date, provides for an increase in
the related interest rate after a certain
date, the anticipated repayment date. The
anticipated repayment date is prior to
the maturity date of such mortgage loan.
Therefore this mortgage loan is expected
to have a balloon balance at its
anticipated repayment date. The interest
accrued in excess of the original rate,
together with any interest on that
accrued interest, will be deferred and
will not be paid until the principal
balance of the related mortgage loan has
been paid. Any amount received in respect
of that deferred interest will be
distributed to the holders of the Class Q
Certificates.
o One mortgage loan, representing 0.28% of
the outstanding pool balance as of the
cut-off date, is fully amortizing.
H. Prepayment Provisions;
Defeasance Loans .............. As of the cut-off date, all of the mortgage
loans (other than the AFR/Bank of America
Portfolio Loan) prohibit voluntary
prepayment or defeasance until at least two
years after the closing date. See
"Description of the Mortgage Pool--Certain
Terms and Conditions of the Mortgage
Loans--Prepayment Provisions" and
"--PropertY Releases" in this Prospectus
Supplement.
One of the mortgage loans, representing
2.68% of the outstanding pool balance as of
the cut-off date, provides for a period,
following the initial prepayment lock-out
period, when the loan is prepayable together
with a yield maintenance charge (which may
in no event be less than 1% of the prepaid
amount), but does not permit defeasance.
The mortgage loans generally provide for a
period prior to maturity (generally one to
seven months) during which prepayments may
be made without penalty or yield maintenance
charge.
With respect to the AFR/Bank of America
Portfolio Loan, prior to December 18, 2005,
up to 13.6% of the AFR/Bank of America
Portfolio Whole Loan may be prepaid (subject
to a yield
S-20
maintenance charge) in connection with the
release of certain designated properties.
Yield maintenance charges will be allocated
ratably in proportion to the outstanding
principal balance of the AFR/Bank of America
Portfolio Loan, the AFR/Bank of America Pari
Passu Loans and the AFR/Bank of America
Portfolio B Loan. On or after December 18,
2005 (the date that is two years after the
start-up date of the AFR/Bank of America
Portfolio Loan REMIC), defeasance is
permitted with respect to any of the
mortgaged properties securing the AFR/Bank
of America Portfolio Loan. The AFR/Bank of
America Portfolio Loan may be prepaid
(without a yield maintenance charge) on and
after August 1, 2013.
All of the mortgage loans that permit
prepayments require that the prepayment be
made on the due date or, if on a different
date, that any prepayment be accompanied by
the interest that would be due on the next
due date.
I. Mortgage Loans with
Related Borrowers ............. Several groups of mortgage loans have
related borrowers that are affiliated with
one another through partial or complete
direct or indirect common ownership, with
the three largest of these groups
representing 2.73%, 1.82% and 1.60%,
respectively, of the outstanding pool
balance as of the cut-off date.
ADVANCES
A. General ....................... The Servicer is required to advance
delinquent monthly mortgage loan payments
(each, a "P&I Advance") if it determines
that the advance will be recoverable from
proceeds of the related mortgage loan. A P&I
Advance will generally equal the delinquent
portion of the monthly mortgage loan
payment. The Servicer will not be required
to advance interest in excess of a loan's
regular interest rate (I.E., not including
any default rate). The Servicer also is not
required to advance prepayment premiums or
yield maintenance charges, or balloon
payments. If an advance is made, the
Servicer will defer rather than advance
servicing fees, but will advance the
Trustee's and the Bond Administrator's fees.
The Servicer will not be required to make
P&I Advances on any Companion Loan.
If a borrower fails to pay amounts due on
the maturity date of the related mortgage
loan, the Servicer will be required on and
after such date and until final liquidation
thereof, to advance only an amount equal to
the interest (at the loan's regular interest
rate, as described above) and principal
portion of the constant mortgage loan
payment due immediately prior to the
maturity date, subject to a recoverability
determination.
In addition to P&I Advances, the Servicer
will also be obligated (subject to the
limitations described herein and except with
respect to the Non-Serviced Mortgage Loans)
to make property advances (each, a "Property
Advance" and together with a P&I Advance, an
"Advance") to pay delinquent real estate
taxes, assessments and hazard insurance
premiums and to cover other similar costs
and expenses necessary to preserve the
priority of the related
S-21
mortgage, enforce the terms of any mortgage
loan or to protect, manage and maintain each
related mortgaged property. In addition, the
Special Servicer may under certain
circumstances make Property Advances on an
emergency basis with respect to the mortgage
loans that have been transferred to special
servicing. The Servicer will also be
required to make Property Advances with
respect to the mortgaged properties securing
the Tysons Corner Center Whole Loan and the
Walgreens-Riverside Whole Loan, but will not
be required to make Property Advances with
respect to any other Whole Loan.
The GMACCM 2003-C3 Servicer will be
obligated to make Property Advances with
respect to the AFR/Bank of America Portfolio
Whole Loan in accordance with the terms of
the GMACCM 2003-C3 Pooling and Servicing
Agreement, and the Wachovia 2003-C9 Servicer
will be obligated to make Property Advances
with respect to the Meadows Mall Whole Loan
in accordance with the terms of the Wachovia
2003-C9 Pooling and Servicing Agreement.
If the Servicer fails to make any required
Advance, the Trustee will be required to
make the Advance. The obligation of the
Servicer and the Trustee to make an Advance
will also be subject to a determination of
recoverability. The Trustee will be entitled
to conclusively rely on the determination of
recoverability made by the Servicer.
P&I Advances are intended to maintain a
regular flow of scheduled interest and
principal payments to the certificateholders
and are not intended to guarantee or insure
against losses. Advances which cannot be
reimbursed out of collections on, or in
respect of, the related mortgage loans will
be generally reimbursed directly from any
other collections on the mortgage loans as
provided in this prospectus supplement and
thus will cause losses to be borne by
certificateholders in the priority specified
in this prospectus supplement. The Servicer
and the Trustee, as the case may be, will be
entitled to interest on any Advances made,
such interest accruing at the rate and
payable under the circumstances described in
this prospectus supplement. Interest accrued
on outstanding Advances may result in
reductions in amounts otherwise available
for payment on the certificates.
See "The Pooling and Servicing
Agreement--Advances" in this prospectus
supplement.
B. Appraisal Reduction Event
Advances ...................... Certain adverse events affecting a mortgage
loan, called "Appraisal Reduction Events,"
will require the Special Servicer to obtain
a new appraisal (or, with respect to
mortgage loans having a principal balance
under $2,000,000, at the Special Servicer's
option, an estimate of value prepared by the
Special Servicer or with the consent of the
Directing Certificateholder (as defined in
this prospectus supplement), an appraisal)
on the related mortgaged property (except
with respect to mortgaged properties
securing the Non-Serviced Mortgage Loans).
Based on the estimate of value or appraised
value in such appraisal, as applicable, it
may be
S-22
necessary to calculate an "Appraisal
Reduction Amount." The amount required to be
advanced in respect of a mortgage loan that
has been subject to an Appraisal Reduction
Event will be reduced so that the Servicer
will not be required to advance interest on
the Appraisal Reduction Amount (as described
in this prospectus supplement). Due to the
payment priorities described above, this
will reduce the funds available to pay
interest on the most subordinate class or
classes of certificates then outstanding.
The AFR/Bank of America Portfolio Loan and
the Meadows Mall Loan are subject to
provisions in the GMACCM 2003-C3 Pooling and
Servicing Agreement and the Wachovia 2003-C9
Pooling and Servicing Agreement,
respectively, relating to appraisal
reductions that are substantially similar
but not identical to the provisions set
forth above. The existence of an appraisal
reduction under (i) the GMACCM 2003-C3
Pooling and Servicing Agreement in respect
of the AFR/Bank of America Portfolio Loan
and (ii) the Wachovia 2003-C9 Pooling and
Servicing Agreement in respect of the
Meadows Mall Loan, will proportionately
reduce the Servicer's or the Trustee's, as
the case may be, obligation to make P&I
Advances on the AFR/Bank of America
Portfolio Loan and the Meadows Mall Loan.
See "Description of the Offered
Certificates--Appraisal Reductions" in this
prospectus supplement.
S-23
ADDITIONAL CONSIDERATIONS
Optional Termination ............. On any distribution date on which the
remaining aggregate principal balance of the
mortgage loans is less than 1% of the
outstanding pool balance as of the cut-off
date, each of (i) the Directing
Certificateholder (as defined in this
prospectus supplement), (ii) the Servicer or
(iii) the Special Servicer may exercise an
option, in that order, to purchase all of
the mortgage loans (and all property
acquired through exercise of remedies in
respect of any mortgage loan). Exercise of
this option will effect the termination of
the Trust and retirement of the
then-outstanding certificates. The Trust
could also be terminated in connection with
an exchange by a sole remaining
certificateholder of all the then
outstanding certificates, excluding the
Class Q, Class R and Class LR Certificates
(PROVIDED, HOWEVER, that the Class A through
Class E Certificates are no longer
outstanding), for the mortgage loans
remaining in the Trust.
See "The Pooling and Servicing
Agreement--Optional Termination" in this
prospectus supplement and "Description of
the Certificates--Termination" in the
prospectus.
Certain Federal Income
Tax Consequences ................ Elections will be made to treat the Trust
(exclusive of interest that is deferred
after the anticipated repayment date on the
mortgage loan that has an anticipated
repayment date and the related distribution
account for this deferred interest) as two
separate REMICs--the "Lower-Tier REMIC" and
the "Upper-Tier REMIC"--for federal income
tax purposes. In addition, a separate REMIC
election will be made with respect to the
AFR/Bank of America Portfolio Loan (the
"Loan REMIC"). The portion of the Trust
representing the deferred interest described
above will be treated as a grantor trust for
federal income tax purposes. In the opinion
of counsel, the Trust will qualify for this
treatment pursuant to its election.
Federal income tax consequences of an
investment in the Offered Certificates
include:
o Each class of Offered Certificates will
constitute a class of "regular interests"
in the Upper-Tier REMIC.
o The regular interests will be treated as
newly originated debt instruments for
federal income tax purposes.
o Beneficial owners of the Offered
Certificates will be required to report
income on the Offered Certificates in
accordance with the accrual method of
accounting.
o It is anticipated that the Offered
Certificates will be issued [at a
premium].
See "Certain Federal Income Tax
Consequences" in this prospectus supplement
and "Certain Federal Income Tax
Consequences--Federal Income Tax
Consequences for REMIC Certificates" in the
prospectus.
S-24
ERISA Considerations ............. A fiduciary of a Plan should review with its
legal advisors whether the purchase or
holding of Offered Certificates could give
rise to a transaction that is prohibited or
is not otherwise permitted under either
ERISA or Section 4975 of the Internal
Revenue Code of 1986, as amended (the
"Code"), or whether there exists any
statutory, regulatory or administrative
exemption applicable thereto. The United
States Department of Labor has granted to
each of the underwriters an administrative
exemption (Deutsche Bank Securities Inc., as
Department Final Authorization Number
97-03E, as amended by Prohibited Transaction
Exemption ("PTE") 2002-41 (the "DBS
Exemption"), and ABN AMRO Incorporated, as
Department Final Authorization Number
98-08E, as amended by PTE 2002-41 (the "ABN
Exemption" and collectively with the DBS
Exemption, the "Exemption")), which
generally exempts from the application of
certain of the prohibited transaction
provisions of Section 406 of ERISA and the
excise taxes imposed on such prohibited
transactions by Sections 4975(a) and (b) of
the Code, transactions relating to the
purchase, sale and holding of pass-through
certificates underwritten by the
underwriters and the servicing and operation
of the related asset pool, PROVIDED that
certain conditions are satisfied.
The Depositor expects that the Exemption
will generally apply to the Offered
Certificates, PROVIDED that certain
conditions are satisfied. See "ERISA
Considerations" in this prospectus
supplement and "Certain ERISA
Considerations" in the prospectus.
Ratings .......................... It is a condition to their issuance that the
Offered Certificates receive from Standard &
Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., Fitch, Inc. and
Dominion Bond Rating Service Limited
(collectively, the "Rating Agencies" and
each a "Rating Agency"), the credit ratings
indicated below.
S&P FITCH DBRS
------- ------- -------
Class A-1 .... AAA AAA AAA
Class A-2 .... AAA AAA AAA
Class A-3 .... AAA AAA AAA
Class A-4 .... AAA AAA AAA
Class B ...... AA AA AA
Class C ...... AA- AA- AA(low)
Class D ...... A A A
Class E ...... A- A- A(low)
See "Ratings" in this prospectus supplement
and in the prospectus for a discussion of
the basis upon which ratings are given, the
limitations of and restrictions on the
ratings, and the conclusions that should not
be drawn from a rating.
Legal Investment ................. None of the certificates will constitute
"mortgage related securities" within the
meaning of the Secondary Mortgage Market
Enhancement Act of 1984, as amended. The
appropriate characterization of the Offered
Certificates under various legal
S-25
investment restrictions, and thus the
ability of investors subject to these
restrictions to purchase the Offered
Certificates, may be subject to significant
interpretative uncertainties. Investors
should consult their own legal advisors to
determine whether and to what extent the
Offered Certificates constitute legal
investments for them. See "Legal Investment"
in this prospectus supplement and in the
prospectus.
Denominations; Clearance
and Settlement .................. The Offered Certificates will be issuable in
registered form, in minimum denominations of
certificate balance of (i) $10,000 with
respect to the Class A-1, Class A-2, Class
A-3 and Class A-4 Certificates and (ii)
$25,000 with respect to the Class B, Class
C, Class D and Class E Certificates.
Investments in excess of the minimum
denominations may be made in multiples of
$1.
You may hold your certificates through (i)
The Depository Trust Company ("DTC") (in the
United States) or (ii) Clearstream Banking,
societe anonyme ("Clearstream") or The
Euroclear System ("Euroclear") (in Europe).
Transfers within DTC, Clearstream or
Euroclear will be in accordance with the
usual rules and operating procedures of the
relevant system. See "Description of the
Offered Certificates--Delivery, Form and
Denomination," "--Book-Entry Registration"
and "--Definitive Certificates" in this
prospectus supplement and "Description of
the Certificates--Book-Entry Registration
and Definitive Certificates" in the
prospectus.
S-26
RISK FACTORS
You should carefully consider the risks before making an investment
decision. In particular, the timing and amount of distributions on your
certificates will depend on payments received on and other recoveries with
respect to the mortgage loans. Therefore, you should carefully consider the risk
factors relating to the mortgage loans and the mortgaged properties.
The risks and uncertainties described below are not the only ones relating
to your certificates. Additional risks and uncertainties not presently known to
us or that we currently deem immaterial may also impair your investment.
If any of the following risks actually occur, your investment could be
materially and adversely affected.
This prospectus supplement also contains forward-looking statements that
involve risks and uncertainties. Actual results could differ materially from
those anticipated in these forward-looking statements as a result of certain
factors, including the risks described below and elsewhere in this prospectus
supplement.
RISKS RELATED TO THE MORTGAGE LOANS
MORTGAGE LOANS ARE NONRECOURSE AND ARE NOT INSURED OR GUARANTEED
Payments under the mortgage loans are not insured or guaranteed by any
person or entity.
Substantially all of the mortgage loans are or should be considered to be
nonrecourse loans. If a default occurs, the lender's remedies generally are
limited to foreclosing against the borrower and/or the specific mortgaged
properties and other assets that have been pledged to secure the mortgage loan,
subject to customary nonrecourse carveouts either to the borrower or its
sponsor. Even if a mortgage loan is recourse to the borrower (or if a
nonrecourse carveout to the borrower applies), in most cases, the borrower's
assets are limited primarily to its interest in the related mortgaged property.
Payment of amounts due under the mortgage loan prior to the maturity date or the
anticipated repayment date, as applicable, is consequently dependent primarily
on the sufficiency of the net operating income of the mortgaged property.
Payment of the mortgage loan at the maturity date or the anticipated repayment
date, as applicable, is primarily dependent upon the borrower's ability to sell
or refinance the mortgaged property for an amount sufficient to repay the
mortgage loan.
All of the mortgage loans were originated within 20 months prior to the
cut-off date. Consequently, the mortgage loans do not have a long-standing
payment history.
COMMERCIAL LENDING IS DEPENDENT UPON NET OPERATING INCOME
The mortgage loans are secured by various types of income-producing
commercial properties. Commercial mortgage loans are generally thought to expose
a lender to greater risk than one-to-four family residential loans.
The repayment of a commercial loan is typically dependent upon the ability
of the applicable property to produce cash flow. Even the liquidation value of a
commercial property is determined, in substantial part, by the amount of the
mortgaged property's cash flow (or its potential to generate cash flow).
However, net operating income and cash flow can be volatile and may be
insufficient to cover debt service on the loan at any given time. Lenders
typically look to the debt service coverage ratio (that is, the ratio of net
cash flow to debt service) of a mortgage loan secured by income-producing
property as an important measure of the risk of default of such mortgage loan.
The net operating income, cash flow and property value of the mortgaged
properties may be adversely affected by a large number of factors. Some of these
factors relate to the property itself, such as:
o the age, design and construction quality of the mortgaged property;
o perceptions regarding the safety, convenience and attractiveness of
the mortgaged property;
S-27
o the proximity and attractiveness of competing properties;
o the adequacy of the mortgaged property's management and maintenance;
o increases in operating expenses at the mortgaged property and in
relation to competing properties;
o an increase in the capital expenditures needed to maintain the
mortgaged property or make improvements;
o the dependence upon a single tenant, or a concentration of tenants in
a particular business or industry;
o a decline in the financial condition of a major tenant;
o an increase in vacancy rates; and
o a decline in rental rates as leases are renewed or entered into with
new tenants.
Others factors are more general in nature, such as:
o national, regional or local economic conditions (including plant
closings, military base closings, industry slowdowns and unemployment
rates);
o local real estate conditions (such as an oversupply of competing
properties, space or multifamily housing);
o demographic factors;
o decreases in consumer confidence;
o changes in consumer tastes and preferences;
o retroactive changes in building codes;
o changes or continued weakness in specific industry segments; and
o the public's perception of safety for customers and clients.
The volatility of net operating income will be influenced by many of the
foregoing factors, as well as by:
o the length of tenant leases;
o the creditworthiness of tenants;
o tenant defaults;
o in the case of rental properties, the rate at which new rentals occur;
and
o the mortgaged property's "operating leverage" (I.E., the percentage of
total property expenses in relation to revenue, the ratio of fixed
operating expenses to those that vary with revenues, and the level of
capital expenditures required to maintain the property and to retain
or replace tenants).
A decline in the real estate market or in the financial condition of a
major tenant will tend to have a more immediate effect on the net operating
income of mortgaged properties with short-term revenue sources and may lead to
higher rates of delinquency or defaults under mortgage loans.
SOME MORTGAGED PROPERTIES MAY NOT BE READILY CONVERTIBLE TO ALTERNATIVE USES
Some of the mortgaged properties may not be readily convertible to
alternative uses if those properties were to become unprofitable for any reason.
Converting commercial properties to alternate uses generally requires
substantial capital expenditures. In addition, zoning or other restrictions also
may prevent alternative uses. The liquidation value of any such mortgaged
property consequently may be substantially less than would be the case if the
property were readily adaptable to other uses.
S-28
With respect to the mortgage loans known as the "Keesler Apartments loan,"
"Fox Den loan," "Wyndover loan," "Forest Grove loan," "Chapman Pointe loan,"
"Village Crossing loan" and "Arbor Point Apartments loan," collectively
representing 1.43% of the outstanding pool balance as of the cut-off date, deed
restrictions were recorded requiring low income housing occupancy at the related
mortgaged properties in order for such mortgaged properties to remain eligible
for the low-income housing tax credits currently in effect.
PROPERTY VALUE MAY BE ADVERSELY AFFECTED EVEN WHEN CURRENT OPERATING INCOME
IS NOT
Various factors may adversely affect the value of the mortgaged properties
without affecting the properties' current net operating income. These factors
include, among others:
o changes in governmental regulations, fiscal policy, zoning or tax
laws;
o potential environmental legislation or liabilities or other legal
liabilities;
o the availability of refinancing; and
o changes in interest rate levels.
TENANT CONCENTRATION ENTAILS RISK
A deterioration in the financial condition of a tenant can be particularly
significant if a mortgaged property is leased to a single tenant, or a small
number of tenants. Mortgaged properties leased to a single tenant, or a small
number of tenants, also are more susceptible to interruptions of cash flow if a
tenant fails to renew its lease. This is so because: (i) the financial effect of
the absence of rental income may be severe; (ii) more time may be required to
re-lease the space; and (iii) substantial capital costs may be incurred to make
the space appropriate for replacement tenants.
In the case of the four mortgage loans known as the "Walgreens-Riverside
loan," "Walgreens-Kill Devil Hill loan," "CVS Atlanta loan" and "Walgreens
College Station loan", collectively representing 1.39% of the outstanding pool
balance as of the cut-off date, such mortgage loans are secured by liens on
mortgaged properties that are 100% leased to a single tenant.
In the case of the AFR/Bank of America Portfolio Loan, representing
approximately 8.78% of the outstanding pool balance as of the cut-off date, the
mortgage loan is secured by 152 mortgaged properties, 66 of which are leased to
the same single tenant and 67 of which are greater than 50% leased to the same
single tenant pursuant to a lease that provides that single tenant with certain
rights to relocate between buildings and to exercise certain limited termination
rights. Although the mortgaged properties securing such mortgage loan are not
leased to a single tenant, this mortgage loan has significant tenant
concentration risk.
The underwriting of single-tenant mortgage loans is based primarily upon
the monthly rental payments due from the tenant under the lease at the related
mortgaged property. In addition, the loan underwriting for certain single-tenant
mortgage loans took into account the creditworthiness of the tenants under the
applicable leases. Accordingly, such single-tenant mortgage loans may have
higher loan-to-value ratios and lower debt service coverage ratios than other
types of mortgage loans. However, there can be no assurance that the assumptions
made when underwriting such loans will be correct, that the tenant will re-let
the premises or that such tenant will maintain its creditworthiness.
Retail and office properties also may be adversely affected if there is a
concentration of a particular tenant or type of tenant among the mortgaged
properties or of tenants in a particular business or industry. In such cases,
industry wide concerns or a problem with such particular tenant could have a
disproportionately large impact on the pool of mortgage loans and adversely
affect distributions to certificateholders.
MORTGAGED PROPERTIES LEASED TO MULTIPLE TENANTS ALSO HAVE RISKS
If a mortgaged property has multiple tenants, re-leasing expenditures may
be more frequent than in the case of mortgaged properties with fewer tenants,
thereby reducing the cash flow available for debt
S-29
service payments. Multi-tenanted mortgaged properties also may experience higher
continuing vacancy rates and greater volatility in rental income and expenses.
RISKS RELATED TO LOAN CONCENTRATION
Several of the mortgage loans have cut-off date balances that are
substantially higher than the average cut-off date balance. In general,
concentrations in mortgage loans with larger-than-average balances can result in
losses that are more severe, relative to the size of the pool, than would be the
case if the aggregate balance of the pool were more evenly distributed. The ten
largest mortgage loans represent approximately 53.80% of the outstanding pool
balance as of the cut-off date. Losses on any of these loans may have a
particularly adverse effect on the Offered Certificates.
The ten largest loans are described in Annex B to this prospectus
supplement.
Each of the other mortgage loans represents no more than 2.32% of the
outstanding pool balance as of the cut-off date.
RISKS RELATED TO BORROWER CONCENTRATION
Several groups of mortgage loans are made to the same borrower or have
related borrowers that are affiliated with one another through partial or
complete direct or indirect common ownership, with the three largest of these
groups representing 2.73%, 1.82% and 1.49%, respectively, of the outstanding
pool balance as of the cut-off date. A concentration of mortgage loans with the
same borrower or related borrowers also can pose increased risks. For instance,
if a borrower that owns several mortgaged properties experiences financial
difficulty at one mortgaged property, or another income-producing property that
it owns, it could attempt to avert foreclosure by filing a bankruptcy petition
that might have the effect of interrupting monthly payments for an indefinite
period on all of the related mortgage loans.
RISKS RELATING TO PROPERTY TYPE CONCENTRATION
A concentration of mortgage loans secured by the same mortgaged property
types can increase the risk that a decline in a particular industry or business
would have a disproportionately large impact on the pool of mortgage loans.
The following are certain property type concentrations of the pool of
mortgage loans as of the cut-off date:
o office properties securing mortgage loans representing 34.58% of the
outstanding pool balance as of the cut-off date;
o retail properties securing mortgage loans representing 31.63% of the
outstanding pool balance as of the cut-off date;
o multifamily properties securing mortgage loans representing 31.42% of
the outstanding pool balance as of the cut-off date;
o mixed use properties securing mortgage loans representing 1.51% of the
outstanding pool balance as of the cut-off date;
o industrial properties securing mortgage loans representing 0.86% of
the outstanding pool balance as of the cut-off date; and
GEOGRAPHIC CONCENTRATION ENTAILS RISKS
As of the cut-off date, the mortgaged properties are located in 32 states
and the District of Columbia. Ten, two and 39 mortgaged properties securing
mortgage loans representing 16.43%, 8.34% and 7.83% of the outstanding pool
balance as of the cut-off date are located in Virginia, Washington D.C. and
Florida, respectively. See the table entitled "Geographic Concentration of
Mortgage Loans" under "Description of the Mortgage Pool" in this prospectus
supplement. Except as set forth above, no state contains more
S-30
than 7.18% of the mortgaged properties (based on the principal balance as of the
cut-off date of the related mortgage loans or, in the case of mortgage loans
secured by multiple mortgaged properties, on the portion of principal amount of
the related mortgage loan allocated to such mortgaged property).
The economy of any state or region in which a mortgaged property is located
may be adversely affected more than that of other areas of the country by:
o certain developments particularly affecting industries concentrated in
such state or region;
o conditions in the real estate markets where the mortgaged properties
are located;
o changes in governmental rules and fiscal policies;
o acts of nature (which may result in uninsured losses); and
o other factors which are beyond the control of the borrowers.
For example, improvements on mortgaged properties located in California may
be more susceptible to certain types of special hazards not fully covered by
insurance (such as earthquakes) than properties located in other parts of the
country. To the extent that general economic or other relevant conditions in
states or regions in which concentrations of mortgaged properties securing
significant portions of the aggregate principal balance of the mortgage loans
are located decline and result in a decrease in commercial property, housing or
consumer demand in the region, the income from and market value of the mortgaged
properties and repayment by borrowers may be adversely affected.
OFFICE PROPERTIES HAVE SPECIAL RISKS
One hundred thirty-nine of the mortgaged properties, which represent
security for 34.58% of the outstanding pool balance as of the cut-off date, are
office properties.
Various factors may adversely affect the value of office properties,
including:
o the quality of an office building's tenants;
o an economic decline in the business operated by the tenants;
o the diversity of an office building's tenants (or reliance on a single
or dominant tenant);
o the physical attributes of the building in relation to competing
buildings (E.G., age, condition, design, location, access to
transportation and ability to offer certain amenities, including,
without limitation, current business wiring requirements);
o the desirability of the area as a business location;
o the strength and nature of the local economy (including labor costs
and quality, tax environment and quality of life for employees); and
o an adverse change in population, patterns of telecommuting or sharing
of office space, and employment growth (which creates demand for
office space).
Moreover, the cost of refitting office space for a new tenant is often
higher than the cost of refitting other types of property.
RETAIL PROPERTIES HAVE SPECIAL RISKS
Thirteen of the mortgaged properties, which represent security for 31.63%
of the outstanding pool balance as of the cut-off date, are retail properties.
Of these, 11 mortgaged properties, representing security for 30.71% of the
outstanding pool balance as of the cut-off date, are considered anchored
properties and 2 mortgaged properties representing 0.93% of the outstanding pool
balance as of the cut-off date are considered shadow anchored properties. The
quality and success of a retail property's tenants significantly affect the
property's value. For example, if the sales of retail tenants were to decline,
rents tied to a percentage of gross sales may decline and those tenants may be
unable to pay their rent or other occupancy costs. Certain tenants at various
mortgaged properties have rents tied to a percentage of gross sales.
S-31
The presence or absence of an "anchor tenant" or a "shadow anchor" in or
near a shopping center also can be important, because anchors play a key role in
generating customer traffic and making a center desirable for other tenants. An
"anchor tenant" is usually proportionately larger in size than most other
tenants in the mortgaged property, is vital in attracting customers to a retail
property and is located on the related mortgaged property. A "shadow anchor" is
usually proportionally larger in size than most tenants in the mortgaged
property, is important in attracting customers to a retail property and is
located sufficiently close and convenient to the mortgaged property, but not on
the mortgaged property, so as to influence and attract potential customers. The
economic performance of an anchored or shadow anchored retail property will
consequently be adversely affected by:
o an anchor tenant's or shadow anchor tenant's failure to renew its
lease;
o termination of an anchor tenant's or shadow anchor tenant's lease, or
if the anchor tenant or shadow anchor owns its own site, a decision to
vacate;
o the bankruptcy or economic decline of an anchor tenant, shadow anchor
or self-owned anchor; or
o the cessation of the business of an anchor tenant, a shadow anchor
tenant or of a self-owned anchor (notwithstanding its continued
payment of rent).
If an anchor store in a mortgaged property were to close, the related
borrower may be unable to replace that anchor in a timely manner or without
suffering adverse economic consequences. Furthermore, certain of the anchor
stores at the retail properties have co-tenancy clauses in their leases or
operating agreements which permit those anchors to cease operating if certain
other stores are not operated at those locations. The breach of various other
covenants in anchor store leases or operating agreements also may permit those
stores to cease operating. Certain non-anchor tenants at retail properties also
may be permitted to terminate their leases if certain other stores are not
operated or if those tenants fail to meet certain business objectives. Certain
tenants at various mortgaged properties are closed for business or otherwise not
in occupancy and/or have co-tenancy clauses or other termination provisions in
their leases. These and other similar situations could adversely affect the
performance of the related mortgage loan and adversely affect distributions to
certificateholders.
Retail properties also face competition from sources outside a given real
estate market. For example, all of the following compete with more traditional
retail properties for consumer business:
o factory outlet centers;
o discount shopping centers and clubs;
o catalogue retailers;
o home shopping networks;
o internet web sites; and
o telemarketers.
Continued growth of these alternative retail outlets (which often have
lower operating costs) could adversely affect the rents collectible at the
retail properties included in the mortgage pool, as well as the income from, and
market value of, the mortgaged properties. Moreover, additional competing retail
properties have been and may in the future be built in the areas where the
retail properties are located. Such competition could adversely affect the
performance of the related mortgage loan and adversely affect distributions to
certificateholders.
In the case of the Tysons Corner Center Loan, the related mortgage loan
documents permit the borrower to renovate and expand a portion of the mall at
its own expense. Construction of the project is underway and is expected to be
completed on or before the fourth quarter of 2005. The scope of work approved
under the mortgage loan documents includes (a) the redevelopment of the
currently vacant JC Penney building containing approximately 230,000 square feet
of gross building area and the construction of a new attached building
containing approximately 288,000 square feet of gross building area and the
leasing of such space to a theater (approximately 105,000 square feet of net
rentable area on level three), food court, restaurants and additional tenants
and (b) the construction of an adjacent
S-32
multi-level parking garage, having approximately 1,612 parking spaces. The
expansion and renovation, if completed, will provide additional collateral for
the Tysons Corner Center Loan, but no income from such space was included in the
underwriting of the mortgage loan. The mortgage loan documents do not require a
reserve or completion guaranty in connection with the project. Although
construction has commenced, no assurance can be given as to the timing of
completion or leasing of the project.
MULTIFAMILY PROPERTIES HAVE SPECIAL RISKS
Sixty-two of the mortgaged properties (including 21 mobile home park
properties), which represent security for 31.42% of the outstanding pool balance
as of the cut-off date, are multifamily properties. Of these, 41 mortgaged
properties, representing security for 26.41% of the outstanding pool balance as
of the cut-off date, are conventional multifamily properties and 21 mortgaged
properties, representing security for 5.00% of the outstanding pool balance as
of the cut-off date, are mobile home park properties. Four of these mortgaged
properties, representing 2.64% of the outstanding pool balance as of the cut-off
date, provide housing for students in all or a majority of its units.
A large number of factors may adversely affect the value and successful
operation of a multifamily property, including:
o the physical attributes of the apartment building (E.G., its age,
appearance and construction quality);
o the location of the property (E.G., a change in the neighborhood over
time);
o the ability of management to provide adequate maintenance and
insurance;
o the types of services the property provides;
o the property's reputation;
o the level of mortgage interest rates (which may encourage tenants to
purchase rather than rent housing);
o in the case of student housing facilities, which may be more
susceptible to damage or wear and tear than other types of multifamily
housing, the reliance on the financial well-being of the college or
university to which it relates, competition from on-campus housing
units, which may adversely affect occupancy, the physical layout of
the housing, which may not be readily convertible to traditional
multifamily use, and that student tenants have a higher turnover rate
than other types of multifamily tenants, which in certain cases is
compounded by the fact that student leases are available for periods
of less than 12 months;
o the presence of competing properties in the local market;
o the tenant mix, particularly if the tenants are predominantly
students, personnel from or workers related to a military base or
workers from a particular business or industry;
o adverse local or national economic conditions, which may limit the
amount of rent that can be charged and may result in a reduction in
timely rent payments or a reduction in occupancy;
o state and local regulations;
o government assistance/rent subsidy programs; and
o national, state, or local politics.
Certain states regulate the relationship of an owner and its tenants.
Commonly, these laws require a written lease, good cause for eviction,
disclosure of fees, and notification to residents of changed land use, while
prohibiting unreasonable rules, retaliatory evictions, and restrictions on a
resident's choice of unit vendors. Apartment building owners have been the
subject of suits under state "Unfair and Deceptive Practices Acts" and other
general consumer protection statutes for coercive, abusive or unconscionable
leasing and sales practices. A few states offer more significant protection. For
example, there are provisions that limit the basis on which a landlord may
terminate a tenancy or increase its rent or prohibit a landlord from terminating
a tenancy solely by reason of the sale of the owner's building.
S-33
In addition to state regulation of the landlord-tenant relationship,
numerous counties and municipalities, including those in which certain of the
mortgaged properties, are located, impose rent control on apartment buildings.
These ordinances may limit rent increases to fixed percentages, to percentages
of increases in the consumer price index, to increases set or approved by a
governmental agency, or to increases determined through mediation or binding
arbitration. In many cases, the rent control laws do not permit vacancy
decontrol. Local authority to impose rent control is pre-empted by state law in
certain states, and rent control is not imposed at the state level in those
states. In some states, however, local rent control ordinances are not
pre-empted for tenants having short-term or month-to-month leases, and
properties there may be subject to various forms of rent control with respect to
those tenants. Any limitations on a borrower's ability to raise property rents
may impair such borrower's ability to repay its multifamily loan from its net
operating income or the proceeds of a sale or refinancing of the related
multifamily property.
Certain of the mortgage loans may be secured now by mortgaged properties
that are eligible (or become eligible in the future) for and have received low
income housing tax credits pursuant to Section 42 of the Internal Revenue Code
in respect of various units within the mortgaged property or have tenants that
rely on rent subsidies under various government-funded programs, including the
Section 8 Tenant-Based Assistance Rental Certificate Program of the United
States Department of Housing and Urban Development. There is no assurance that
such programs will be continued in their present form or that the level of
assistance provided will be sufficient to generate enough revenues for the
related borrower to meet its obligations under the related mortgage loans.
MOBILE HOME PARK PROPERTIES HAVE SPECIAL RISKS
Twenty-one of the mortgaged properties, which represent security for 5.00%
of the outstanding pool balance as of the cut-off date, are mobile home park
properties. Loans secured by liens on mobile home park properties pose risks not
associated with loans secured by liens on other types of income-producing real
estate.
The successful operation of a mobile home park property may depend upon the
number of other competing residential developments in the local market, such as:
o other mobile home park properties;
o apartment buildings; and
o site-built single family homes.
Other factors may also include:
o the physical attributes of the community, including its age and
appearance;
o location of the mobile home park property;
o the ability of management to provide adequate maintenance and
insurance;
o the type of services or amenities it provides;
o the property's reputation; and
o state and local regulations, including rent control and rent
stabilization.
The mobile home park properties are "special purpose" properties that could
not be readily converted to general residential, retail or office use. Thus, if
the operation of any of the mobile home park properties becomes unprofitable due
to competition, age of the improvements or other factors such that the borrower
becomes unable to meet its obligations on the related mortgage loan, the
liquidation value of that mobile home park property may be substantially less,
relative to the amount owing on the related mortgage loan, than would be the
case if the mobile home park property were readily adaptable to other uses.
S-34
CREDIT TENANT LEASE PROPERTIES HAVE SPECIAL RISKS
A credit tenant lease property secures one of the mortgage loans,
representing approximately 0.28% of the outstanding pool balance as of the
cut-off date. The credit tenant lease loan is secured by a mortgaged property
subject to credit lease obligations of a certain tenant which is subject to
certain offset and other rights for landlord defaults. Such mortgaged property
is leased to Walgreens (whose published long-term unsecured debt is rated, as of
February 11, 2004, "A+" by S&P and "Aa3" by Moody's). Such rating reflects the
rating agency's assessment of the long-term unsecured obligations of such entity
only, and do not imply an assessment of the likelihood that the credit tenant
leases will not be terminated or such loans repaid. In addition, the
underwriting for the mortgage loan secured by the credit tenant lease property
may have taken into account the creditworthiness of the tenant under the lease.
Accordingly, such mortgage loan may have higher loan-to-value ratios and lower
debt service coverage ratios than other types of mortgage loans.
PROPERTIES WITH CONDOMINIUM OWNERSHIP HAVE SPECIAL RISKS
Two mortgage loans, representing 1.94% of the outstanding pool balance as
of the cut-off date, are secured, in whole or in part, by the related borrower's
fee simple ownership interest in one or more condominium units. The management
and operation of a condominium is generally controlled by a condominium board
representing the owners of the individual condominium units, subject to the
terms of the related condominium rules or by-laws. Generally, the consent of a
majority of the board members is required for any actions of the condominium
board. The condominium board is generally responsible for administration of the
affairs of the condominium, including providing for maintenance and repair of
common areas, adopting rules and regulations regarding common areas, and
obtaining insurance and repairing and restoring the common areas of the property
after a casualty. Notwithstanding the insurance and casualty provisions of the
related mortgage loan documents, the condominium board may have the right to
control the use of casualty proceeds. In addition, the condominium board
generally has the right to assess individual unit owners for their share of
expenses related to the operation and maintenance of the common elements. In the
event that an owner of another unit fails to pay its allocated assessments, the
related borrower may be required to pay such assessments in order to properly
maintain and operate the common elements of the property. Although the
condominium board generally may obtain a lien against any unit owner for common
expenses that are not paid, such lien generally is extinguished if a mortgagee
takes possession pursuant to a foreclosure. Each unit owner is responsible for
maintenance of its respective unit and retains essential operational control
over its unit.
The mortgage loan known as the "Tantra Lake Apartments loan," representing
1.76% of the outstanding pool balance as of the cut-off date, is secured by 185
condominium units in a complex consisting of 301 condominium units. The borrower
controls the condominium board with its approximately 61.5% voting interest and
is responsible for that percentage interest in common charges. Affiliates of the
borrower own most of the other units in the condominium. The condominium
association is required to give the lender notice of default and an opportunity
to cure.
One of the mortgage loans known as the "Dolphin Cove loan", representing
0.18% of the aggregate outstanding pool balance as of the cut-off date, is
secured by the borrower's interest in 100% of the residential condominium units
in a residential condominium complex. As such, the borrower has control over all
decisions affecting the condominium regime.
Due to the nature of condominiums and a borrower's ownership interest
therein, a default on a loan secured by the borrower's interest in one or more
condominium units may not allow the holder of the mortgage loan the same
flexibility in realizing upon the underlying real property as is generally
available with respect to properties that are not condominiums. The rights of
any other unit owners, the governing documents of the owners' association and
state and local laws applicable to condominiums must be considered and
respected. Consequently, servicing and realizing upon such collateral could
subject the Trust to greater expense and risk than servicing and realizing upon
collateral for other loans that are not condominiums.
S-35
CERTAIN ADDITIONAL RISKS RELATED TO TENANTS
The income from, and market value of, the mortgaged properties leased to
various tenants would be adversely affected if:
o space in the mortgaged properties could not be leased or re-leased;
o tenants were unable to meet their lease obligations;
o a significant tenant were to become a debtor in a bankruptcy case; or
o rental payments could not be collected for any other reason.
Repayment of the mortgage loans secured by retail, office and industrial
properties will be affected by the expiration of leases and the ability of the
respective borrowers to renew the leases or relet the space on comparable terms.
In this regard, the three largest tenants and their respective lease expiration
dates for retail, office, and industrial properties are set forth on Annex A to
this prospectus supplement. Certain of the significant tenants have lease
expiration dates that occur prior to the loan maturity date. Certain of the
mortgaged properties may be leased in whole or in part by government-sponsored
tenants who may have the right to cancel their leases at any time or for lack of
appropriations. Additionally, mortgage loans may have concentrations of leases
expiring at varying rates in varying percentages prior to the related maturity
date and in some situations, all of the leases at a mortgaged property may
expire prior to the related maturity date.
Even if vacated space is successfully relet, the costs associated with
reletting, including tenant improvements and leasing commissions, could be
substantial and could reduce cash flow from the mortgaged properties. Moreover,
if a tenant defaults in its obligations to a borrower, the borrower may incur
substantial costs and experience significant delays associated with enforcing
its rights and protecting its investment, including costs incurred in renovating
and reletting the mortgaged property.
Additionally, in certain jurisdictions, if tenant leases are subordinated
to the liens created by the mortgage but do not contain attornment provisions
(provisions requiring the tenant to recognize a successor owner following
foreclosure as landlord under the lease), the leases may terminate at the
tenant's option upon the transfer of the property to a foreclosing lender or
purchaser at foreclosure. Accordingly, if a mortgaged property is located in
such a jurisdiction and is leased to one or more desirable tenants under leases
that are subordinate to the mortgage and do not contain attornment provisions,
such mortgaged property could experience a further decline in value if such
tenants' leases were terminated.
Certain of the mortgaged properties are leased to tenants under leases that
provide such tenant with a right of first refusal to purchase the related
mortgaged property upon a sale of the mortgaged property. Such provisions, if
not waived, may impede the mortgagee's ability to sell the related mortgaged
property at foreclosure or adversely affect the foreclosure bid price.
Certain of the mortgaged properties may have tenants that are related to or
affiliated with a borrower. In such cases a default by the borrower may coincide
with a default by the affiliated tenants. Additionally, even if the property
becomes an REO property, it is possible that an affiliate of the borrower may
remain as a tenant.
TENANT BANKRUPTCY ENTAILS RISKS
The bankruptcy or insolvency of a major tenant, or a number of smaller
tenants, in retail, office and industrial properties may adversely affect the
income produced by a mortgaged property. Under the Bankruptcy Code, a tenant has
the option of assuming or rejecting any unexpired lease. If the tenant rejects
the lease, the landlord's claim for breach of the lease would be a general
unsecured claim against the tenant (absent collateral securing the claim). The
claim would be limited to the unpaid rent under the lease for the periods prior
to the bankruptcy petition (or earlier surrender of the leased premises), plus
the rent under the lease for the greater of one year, or 15% (not to exceed
three years), of the remaining term of such lease.
S-36
ENVIRONMENTAL LAWS ENTAIL RISKS
Various environmental laws may make a current or previous owner or operator
of real property liable for the costs of removal, remediation or containment of
hazardous or toxic substances on, under, in, or emanating from such property.
Those laws often impose liability whether or not the owner or operator knew of,
or was responsible for, the presence of the hazardous or toxic substances. For
example, certain laws impose liability for release of asbestos-containing
materials ("ACMs") into the air or require the removal or containment of ACMs;
polychlorinated biphenyls ("PCBs") in hydraulic or electrical equipment are
regulated as hazardous or toxic substances; and the United States Environmental
Protection Agency has identified health risks associated with elevated radon gas
levels in buildings. In some states, contamination of a property may give rise
to a lien on the property for payment of the costs of addressing the condition.
This lien may have priority over the lien of a pre-existing mortgage.
Additionally, third parties may seek recovery from owners or operators of real
properties for personal injury or property damages associated with exposure to
hazardous or toxic substances related to the properties.
Federal law requires owners of certain residential housing constructed
prior to 1978 to disclose to potential residents or purchasers any condition on
the property that causes exposure to lead-based paint. Contracts for the
purchase and sale of an interest in residential housing constructed prior to
1978 must contain a "Lead Warning Statement" that informs the purchaser of the
potential hazards to pregnant women and young children associated with exposure
to lead-based paint. The ingestion of lead-based paint chips and/or the
inhalation of dust particles from lead-based paint by children can cause
permanent injury, even at low levels of exposure. Property owners may be held
liable for injuries to their tenants resulting from exposure to lead-based paint
under common law and various state and local laws and regulations that impose
affirmative obligations on property owners of residential housing containing
lead-based paint.
The owner's liability for any required remediation generally is not limited
by law and could accordingly exceed the value of the property and/or the
aggregate assets of the owner. The presence of hazardous or toxic substances
also may adversely affect the owner's ability to refinance the property or to
sell the property to a third party. The presence of, or strong potential for
contamination by, hazardous substances consequently can have a materially
adverse effect on the value of the property and a borrower's ability to repay
its mortgage loan.
In addition, under certain circumstances, a lender (such as the Trust)
could be liable for the costs of responding to an environmental hazard. See
"Certain Legal Aspects of Mortgage Loans--Environmental Considerations" in the
prospectus.
In certain cases where the environmental consultant recommended that action
be taken in respect of a materially adverse or potentially material adverse
environmental condition at the related mortgaged property, then:
o an environmental consultant investigated those conditions and
recommended no further investigations or remedial action;
o a responsible third party was identified as being responsible for the
remedial action; or
o the related originator of the subject underlying mortgage loan
generally required the related borrower to:
(a) to take investigative and/or remedial action;
(b) to carry out an operation and maintenance plan or other specific
remedial action measures post-closing and/or to establish an escrow reserve in
an amount sufficient for effecting that plan and/or the remedial action;
(c) to monitor the environmental condition and/or to carry out additional
testing, in the manner and within the time frame specified by the environmental
consultant;
(d) to obtain or seek a letter from the applicable regulatory authority
stating that no further action was required; or
S-37
(e) to obtain environmental insurance (in the form of a secured creditor
impaired property policy or other form of environmental insurance) or provide an
indemnity from an individual or an entity.
POTENTIAL TRUST LIABILITY RELATED TO A MATERIALLY ADVERSE ENVIRONMENTAL
CONDITION
The mortgage loan sellers have represented to the Depositor that all of the
mortgaged properties have been subject to environmental site assessments or an
update of a previously conducted assessment or an update of an assessment based
upon information in an established database or studies within the 12 months
preceding the cut-off date. In the case of five mortgaged properties, securing
2.72% of the outstanding pool balance as of the cut-off date, environmental
insurance was obtained in addition to subjecting such mortgaged properties to an
environmental site assessment. Each environmental insurance policy insures the
Trust against losses resulting from certain known and unknown environmental
conditions at the related mortgaged property or properties during the applicable
policy period. See "Description of the Mortgage Pool--Certain Underwriting
Matters--Environmental Site Assessments" in this prospectus supplement. There
can be no assurance that any such assessment, study or review revealed all
possible environmental hazards. Each mortgage loan seller has informed the
Depositor that no assessment, study or review revealed any environmental
condition or circumstance that such mortgage loan seller believes will have a
material adverse impact on the value of the related mortgaged property or the
borrower's ability to pay its debt. The environmental assessments relating to
certain of the mortgage loans revealed the existence of friable or non-friable
ACMs, lead-based paint, radon gas, leaking underground storage tanks, PCB
contamination, ground water contamination or other material environmental
conditions. Each mortgage loan seller has informed the Depositor that where such
conditions were identified, either (i) the condition has been remediated in all
material respects, (ii) the borrower has escrowed funds to effect the
remediation, (iii) a responsible party is currently taking or required to take
actions as have been recommended by the environmental assessment or by the
applicable governmental authority, (iv) an operations and maintenance plan has
been or will be implemented, (v) environmental insurance has been obtained with
respect to such condition, (vi) a "no further action" letter or other evidence
has been obtained stating that the applicable governmental authority has no
current intention of requiring any action be taken by the borrower or any other
person with respect to such condition or (vii) upon further investigation, an
environmental consultant recommended no further investigation or remediation.
For more information regarding environmental considerations, see "Certain Legal
Aspects of Mortgage Loans--Environmental Considerations" in the prospectus.
The Pooling and Servicing Agreement requires that the Special Servicer
obtain an environmental site assessment of a mortgaged property prior to
acquiring title thereto on behalf of the Trust or assuming its operation. Such
requirement may effectively preclude realization of the security for the related
note until a satisfactory environmental site assessment is obtained (or until
any required remedial action is thereafter taken), but will decrease the
likelihood that the Trust will become liable under any environmental law.
However, there can be no assurance that the requirements of the Pooling and
Servicing Agreement will effectively insulate the Trust from potential liability
under environmental laws. See "The Pooling and Servicing Agreement--Realization
Upon Defaulted Mortgage Loans" in this prospectus supplement and "Certain Legal
Aspects of Mortgage Loans--Environmental Considerations" in the prospectus.
BORROWER MAY BE UNABLE TO REPAY THE REMAINING PRINCIPAL BALANCE ON MATURITY DATE
OR ANTICIPATED REPAYMENT DATE
Eighty-nine mortgage loans, representing 99.24% of the outstanding pool
balance as of the cut-off date, are "Balloon Loans" which provide for payments
of interest and principal and then have substantial payments of principal
("Balloon Payments") due at their stated maturities unless previously prepaid.
One mortgage loan, representing 0.48% of the outstanding pool balance as of the
cut-off date, is expected to have substantial principal balance outstanding at
its anticipated repayment date (the "ARD Loan"). Fifty mortgage loans,
representing 40.38% of the outstanding pool balance as of the cut-off date, have
a maturity date in the year 2014.
S-38
Balloon Loans and the ARD Loan involve a greater risk to the lender than
fully amortizing loans because a borrower's ability to repay a Balloon Loan or
the ARD Loan on its maturity date or anticipated repayment date, as applicable,
typically will depend upon its ability either to refinance the mortgage loan or
to sell the mortgaged property at a price sufficient to permit repayment. A
borrower's ability to achieve either of these goals will be affected by a number
of factors, including:
o the availability of, and competition for, credit for commercial real
estate projects;
o prevailing interest rates;
o the fair market value of the related properties;
o the borrower's equity in the related properties;
o the borrower's financial condition;
o the operating history and occupancy level of the property;
o tax laws; and
o prevailing general and regional economic conditions.
The availability of funds in the credit markets fluctuates over time.
RISKS RELATED TO MODIFICATION OF MORTGAGE LOANS WITH BALLOON PAYMENTS
In order to maximize recoveries on defaulted mortgage loans, the Pooling
and Servicing Agreement enables the Special Servicer to extend and modify the
terms of mortgage loans (other than the Non-Serviced Mortgage Loans) that are in
material default or as to which a payment default (including the failure to make
a Balloon Payment) is reasonably foreseeable, subject, however, to the
limitations described under "The Pooling and Servicing Agreement--Servicing of
the Mortgage Loans; Collection of Payments" in this prospectus supplement. The
Servicer and the Special Servicer may extend the maturity date of a mortgage
loan under limited circumstances. See "The Pooling and Servicing
Agreement--Modifications" in this prospectus supplement. There can be no
assurance, however, that any such extension or modification will increase the
present value of recoveries in a given case. Neither the Servicer nor the
Special Servicer will have the ability to extend or modify the AFR/Bank of
America Portfolio Loan or the Meadows Mall Loan because each such loan is being
serviced by another servicer and special servicer pursuant to separate pooling
and servicing agreements. Any delay in collection of a Balloon Payment that
would otherwise be distributable in respect of a class of Offered Certificates,
whether such delay is due to borrower default or to modification of the related
mortgage loan by the Special Servicer or the applicable special servicer
servicing the Non-Serviced Mortgage Loans, will likely extend the weighted
average life of such class of Offered Certificates. See "Yield and Maturity
Considerations" in this prospectus supplement and in the prospectus.
RISKS RELATING TO BORROWERS' ORGANIZATION OR STRUCTURE
Although the mortgage loan documents generally contain covenants
customarily employed to ensure that a borrower is a single-purpose entity, in
many cases the borrowers are not required to observe all covenants and
conditions which typically are required in order for them to be viewed under
standard rating agency criteria as "special-purpose entities." In general, the
borrowers' organizational documents or the terms of the mortgage loans limit
their activities to the ownership of only the related mortgaged property or
properties and limit the borrowers' ability to incur additional indebtedness.
These provisions are designed to mitigate the possibility that the borrowers'
financial condition would be adversely impacted by factors unrelated to the
mortgaged property and the mortgage loan in the pool. However, we cannot assure
you that the related borrowers will comply with these requirements. Also,
although a borrower may currently be a single-purpose entity, in certain cases,
the borrowers previously owned property other than the related mortgaged
property and/or did not observe all covenants and conditions which typically are
required to view a borrower as a "single purpose entity." There can be no
assurance that circumstances that arose when the borrower did not observe the
required covenants and conditions will not impact the borrower or the mortgaged
property. In addition, many of the
S-39
borrowers and their owners do not have an independent director whose consent
would be required to file a voluntary bankruptcy petition on behalf of such
borrower. One of the purposes of an independent director of the borrower (or of
a special-purpose entity having an interest in the borrower) is to avoid a
bankruptcy petition filing which is intended solely to benefit an affiliate and
is not justified by the borrower's own economic circumstances. Borrowers (and
any special purpose entity having an interest in any such borrowers) that do not
have an independent director may be more likely to file a voluntary bankruptcy
petition and therefore less likely to repay the related mortgage loan. The
bankruptcy of a borrower, or the general partner or the managing member of a
borrower, may impair the ability of the lender to enforce its rights and
remedies under the related mortgage.
With respect to ten mortgage loans, representing 19.23% of the outstanding
pool balance as of the cut-off date, two or more borrowers own the related
mortgaged property as tenants-in-common. As a result, if a borrower exercises
its right of partition, the related mortgage loans may be subject to prepayment.
In most cases, the related tenant-in-common borrower waived its right to
partition, reducing the risk of partition. However, there can be no assurance
that, if challenged, this waiver would be enforceable. In addition, the
tenant-in-common structure may cause delays in the enforcement of remedies
because each time a tenant-in-common borrower files for bankruptcy, the
bankruptcy court stay will be reinstated. In most cases, the related
tenant-in-common borrower is a special purpose entity (in some cases
bankruptcy-remote), reducing the risk of bankruptcy. In some cases, the related
mortgage loan documents provide for full recourse to the related
tenant-in-common borrower and the guarantor if a tenant-in-common files for
bankruptcy. There can be no assurance that a bankruptcy proceeding by a single
tenant-in-common borrower will not delay enforcement of this mortgage loan.
Additionally, in some cases, subject to the terms of the related loan documents,
the tenant-in-common borrowers may assign their interests to one or more
tenant-in-common borrowers. Such increase in the number of tenant-in-common
borrowers increases the risks related to this ownership structure.
RISKS RELATED TO ADDITIONAL DEBT
The mortgage loans generally prohibit the borrower from incurring any
additional debt secured by the mortgaged property without the consent of the
lender. Generally, none of the Depositor, the mortgage loan sellers, the
underwriters, the Servicer, the Special Servicer, the Bond Administrator or the
Trustee have made any investigations, searches or inquiries to determine the
existence or status of any subordinate secured financing with respect to any of
the mortgaged properties at any time following origination of the related
mortgage loan. However, the mortgage loan sellers have informed us that they are
aware of the actual or potential additional indebtedness secured by a mortgaged
property with respect to the mortgage loans described under "Description of the
Mortgage Pool--Other Financing."
Except to the extent set forth in the last sentence of this paragraph, all
of the mortgage loans either prohibit future unsecured subordinated debt that is
not incurred in the ordinary course of business, or require lender's consent in
connection therewith. Moreover, in general, any borrower that does not meet
single-purpose entity criteria may not be prohibited from incurring additional
debt. Such additional debt may be secured by other property owned by such
borrower. Certain of these borrowers may have already incurred additional debt.
The mortgage loan sellers have informed us that they are aware of actual or
potential unsecured indebtedness with respect to the mortgage loans described
under "Description of the Mortgage Pool--Other Financing."
Additionally, although the mortgage loans generally restrict the transfer
or pledging of general partnership and managing member equity interests in a
borrower subject to certain exceptions, the terms of the mortgage loans
generally permit, subject to certain limitations, the transfer or pledge of less
than a certain specified portion of the limited partnership or non-managing
membership equity interests in a borrower. Moreover, in general, the parent
entity of any borrower that does not meet single purpose entity criteria may not
be restricted in any way from incurring mezzanine debt secured by pledges of
their equity interests in such borrower. The mortgage loan sellers have informed
us that they are aware of potential mezzanine indebtedness with respect to the
mortgage loans described under "Description of the Mortgage Pool--Other
Financing."
S-40
Although, except as provided above, the terms of the mortgage loans
generally prohibit additional indebtedness of the borrowers, and indebtedness
secured by ownership interests in the borrowers, it has not been confirmed
whether or not any of the borrowers have incurred additional secured or
unsecured debt, or have permitted encumbrances on the ownership interests in
such borrowers. There can be no assurance that the borrowers have complied with
the restrictions on indebtedness.
When a borrower (or its constituent members) also has one or more other
outstanding loans (even if subordinated or mezzanine loans), the Trust is
subjected to additional risk. The borrower may have difficulty servicing and
repaying multiple loans. The existence of another loan generally also will make
it more difficult for the borrower to obtain refinancing of the mortgage loan
and may thereby jeopardize repayment of the mortgage loan. Moreover, the need to
service additional debt may reduce the cash flow available to the borrower to
operate and maintain the mortgaged property.
Additionally, if the borrower (or its constituent members) defaults on the
mortgage loan and/or any other loan, actions taken by other lenders could impair
the security available to the Trust. If a junior lender files an involuntary
petition for bankruptcy against the borrower (or the borrower files a voluntary
petition to stay enforcement by a junior lender), the Trust's ability to
foreclose on the property would be automatically stayed, and principal and
interest payments might not be made during the course of the bankruptcy case.
The bankruptcy of another lender also may operate to stay foreclosure by the
Trust.
Further, if another loan secured by the mortgaged property is in default,
the other lender may foreclose on the mortgaged property, absent an agreement to
the contrary, thereby causing a delay in payments and/or an involuntary
repayment of the mortgage loan prior to maturity date or the anticipated
repayment date, as applicable. The Trust may also be subject to the costs and
administrative burdens of involvement in foreclosure proceedings or related
litigation.
BANKRUPTCY PROCEEDINGS ENTAIL CERTAIN RISKS
Under the Bankruptcy Code, the filing of a petition in bankruptcy by or
against a borrower will stay the sale of the real property owned by that
borrower, as well as the commencement or continuation of a foreclosure action.
In addition, even if a court determines that the value of the mortgaged property
is less than the principal balance of the mortgage loan it secures, the court
may prevent a lender from foreclosing on the mortgaged property (subject to
certain protections available to the lender). As part of a restructuring plan, a
court also may reduce the amount of secured indebtedness to the then-current
value of the mortgaged property. This action would make the lender a general
unsecured creditor for the difference between the then-current value and the
amount of its outstanding mortgage indebtedness. A bankruptcy court also may:
o grant a debtor a reasonable time to cure a payment default on a
mortgage loan;
o reduce monthly payments due under a mortgage loan;
o change the rate of interest due on a mortgage loan; or
o otherwise alter the mortgage loan's repayment schedule.
Moreover, the filing of a petition in bankruptcy by, or on behalf of, a
junior lienholder may stay the senior lienholder from taking action to foreclose
on the junior lien. Additionally, the borrower's trustee or the borrower, as
debtor-in-possession, has certain special powers to avoid, subordinate or
disallow debts. In certain circumstances, the claims of the Trustee may be
subordinated to financing obtained by a debtor-in-possession subsequent to its
bankruptcy.
Under the Bankruptcy Code, the lender will be stayed from enforcing a
borrower's assignment of rents and leases. The Bankruptcy Code also may
interfere with the Trustee's ability to enforce any lockbox requirements. The
legal proceedings necessary to resolve these issues can be time consuming and
may significantly delay the lender's receipt of rents. Rents also may escape an
assignment to the extent they are used by the borrower to maintain the mortgaged
property or for other court authorized expenses.
S-41
As a result of the foregoing, the Trustee's recovery with respect to
borrowers in bankruptcy proceedings may be significantly delayed, and the
aggregate amount ultimately collected may be substantially less than the amount
owed.
LACK OF SKILLFUL PROPERTY MANAGEMENT ENTAIL RISKS
The successful operation of a real estate project depends upon the property
manager's performance and viability. The property manager is generally
responsible for:
o responding to changes in the local market;
o planning and implementing the rental structure;
o operating the property and providing building services;
o managing operating expenses; and
o assuring that maintenance and capital improvements are carried out in
a timely fashion.
Properties deriving revenues primarily from short-term sources, such as
self-storage facilities, are generally more management intensive than properties
leased to creditworthy tenants under long-term leases.
A good property manager, by controlling costs, providing appropriate
service to tenants and seeing to the maintenance of improvements, can improve
cash flow, reduce vacancy, leasing and repair costs and preserve the building's
value. On the other hand, management errors can, in some cases, impair
short-term cash flow and the long-term viability of an income-producing
property.
No representation or warranty can be made as to the skills or experience of
any present or future managers. Many of the property managers are affiliated
with the borrower and, in some cases, such property managers may not manage any
other properties. Additionally, there can be no assurance that the related
property manager will be in a financial condition to fulfill its management
responsibilities throughout the terms of its respective management agreement.
RISKS OF INSPECTIONS RELATING TO PROPERTY
Licensed engineers or consultants inspected the mortgaged properties in
connection with the origination of the mortgage loans to assess items such as
structure, exterior walls, roofing, interior construction, mechanical and
electrical systems and general condition of the site, buildings and other
improvements. However, there is no assurance that all conditions requiring
repair or replacement were identified.
RISKS TO THE MORTGAGED PROPERTIES RELATING TO TERRORIST ATTACKS
On September 11, 2001, the United States was subjected to multiple
terrorist attacks, resulting in the loss of many lives and massive property
damage and destruction in New York City, the Washington, D.C. area and
Pennsylvania. The terrorist attacks may adversely affect the revenues or costs
of operation of the mortgaged properties. It is possible that any further
terrorist attacks could (i) lead to damage to one or more of the mortgaged
properties, (ii) result in higher costs for insurance premiums or diminished
availability of insurance coverage for losses related to terrorist attacks,
particularly for large mortgaged properties, which could adversely affect the
cash flow at such mortgaged property, or (iii) impact leasing patterns or
shopping patterns which could adversely impact leasing revenue, retail traffic
and percentage rent. In particular, the decrease in air travel may have a
negative effect on certain of the mortgaged properties, including those
mortgaged properties in tourist areas, which could reduce the ability of such
mortgaged properties to generate cash flow. These disruptions and uncertainties
could materially and adversely affect the value of, and an investor's ability to
resell, the certificates. See "--Property Insurance" below.
S-42
RECENT DEVELOPMENTS MAY INCREASE THE RISK OF LOSS ON THE MORTGAGE LOANS
The government of the United States has implemented full scale military
operations against Iraq. In addition, the government of the United States has
stated that it is likely that future acts of terrorism may take place. It is
impossible to predict the extent to which any such military operations or any
future terrorist activities, either domestically or internationally, may affect
the economy and investment trends within the United States and abroad. These
disruptions and uncertainties could materially and adversely affect the
borrowers' abilities to make payments under the mortgage loans, the ability of
each transaction party to perform their respective obligations under the
transaction documents to which they are a party, the value of the certificates
and the ability of an investor to resell the certificates.
PROPERTY INSURANCE
Subject to certain exceptions including where the mortgage loan documents
permit the borrower to rely on self-insurance provided by a tenant, the mortgage
loan documents for the mortgage loans require the related borrower to maintain,
or cause to be maintained, property and casualty insurance. However, the
mortgaged properties may suffer losses due to risks which were not covered by
insurance or for which the insurance coverage is inadequate. Specifically,
certain of the insurance policies may specifically exclude coverage for losses
due to mold, certain acts of nature, terrorist activities or other insurable
conditions or events. In addition, 10, 39, 17, 29, 54 and 17 of the mortgaged
properties, representing security for 16.43%, 7.83%, 7.18%, 6.94%, 6.15% and
3.95% of the outstanding pool balance as of the cut-off date, are located in
Virginia, Florida, North Carolina, Texas, California and Washington,
respectively, areas that have historically been at greater risk regarding acts
of nature (such as earthquakes, hurricanes and floods) than other states. These
properties may not have adequate coverage should such an act of nature occur.
There is no assurance that borrowers will maintain the insurance required
under the mortgage loan documents or that such insurance will be adequate.
Moreover, if reconstruction or any major repairs are required, changes in laws
may materially affect the borrower's ability to effect any reconstruction or
major repairs or may materially increase the costs of the reconstruction or
repairs.
Following the September 11, 2001 terrorist attacks, many reinsurance
companies (which assume some of the risk of policies sold by primary insurers)
indicated an intention to eliminate acts of terrorism from their reinsurance
coverage. Absent such coverage, primary insurers would have had to assume this
risk themselves causing insurers to either eliminate such coverage, increase the
amount of deductible for acts of terrorism or charge higher premiums. In order
to redress the potential lack of terrorism insurance coverage, Congress passed
the Terrorism Risk Insurance Act of 2002 (the "Terrorism Risk Insurance Act"),
thereby establishing the Terrorism Insurance Program.
The Terrorism Insurance Program is administered by the Secretary of the
Treasury and provides insurers with financial assistance from the United States
government in the event a qualifying terrorist attack results in insurance
claims. Pursuant to the provisions of the Terrorism Risk Insurance Act, the
federal share of compensation equals 90% of the portion of insured loss that
exceeds an applicable deductible paid by the insurer during each program year.
The federal share in the aggregate in any program year may not exceed $100
billion. An insurer that has paid its deductible will not be liable for the
payment of any aggregate losses that exceed $100 billion, regardless of the
terms of the individual insurance contracts.
The Terrorism Insurance Program provides that any commercial property and
casualty terrorism insurance exclusion that was in force on November 26, 2002 is
automatically voided to the extent that it excludes losses that would otherwise
be insured losses. It also provides that any state approval of terrorism
insurance exclusions that were in force on November 26, 2002 is also voided. The
statute does not require policy holders to purchase terrorism coverage nor does
it stipulate the pricing of such coverage. There can be no assurance that each
borrower under the mortgage loans has purchased terrorism coverage.
The Terrorism Risk Insurance Act only applies to acts that are committed by
an individual or individuals acting on behalf of a foreign person or foreign
interest in an effort to influence or coerce
S-43
United States civilians or the United States government, and does not cover acts
of purely domestic terrorism. Further, any such act must be certified as an "act
of terrorism" by the federal government, which decision is not subject to
judicial review.
Under its own terms, the Terrorism Insurance Program will terminate on
December 31, 2004 (with a potential to extend to December 31, 2005). There can
be no assurance that this temporary program will create any long-term changes in
the availability and cost of terrorism insurance. Moreover, there can be no
assurance that such program will be renewed or subsequent terrorism insurance
legislation will be passed upon its expiration.
The various forms of insurance maintained with respect to any of the
mortgaged properties, including casualty insurance, environmental insurance and
earthquake insurance, may be provided under a blanket insurance policy. Such a
blanket insurance policy may also cover other real properties, some of which may
not secure mortgage loans in the Trust. As a result of total limits under any of
such blanket policies, losses at other properties covered by the blanket
insurance policy may reduce the amount of insurance coverage with respect to a
mortgaged property securing one of the mortgage loans in the Trust.
With respect to certain of the mortgage loans, the "all-risk" policy
specifically excludes terrorism insurance from its coverage. In those cases,
some borrowers obtained supplemental terrorism insurance. In other cases, the
lender waived the requirement that such insurance be maintained or the mortgage
loan documents do not contain such a requirement.
With respect to certain of the mortgage loans that we intend to include in
the Trust, the related mortgage loan documents generally provide that the
borrowers are required to maintain comprehensive all-risk casualty insurance but
may not specify the nature of the specific risks required to be covered by such
insurance policies.
Even if the mortgage loan documents specify that the related borrower must
maintain all-risk casualty insurance or other insurance that covers acts of
terrorism, the borrower may fail to maintain such insurance and the Servicer or
Special Servicer may not enforce such default or cause the borrower to obtain
such insurance if the Special Servicer has determined, in accordance with the
servicing standards, that either (a) such insurance is not available at any rate
or (b) such insurance is not available at commercially reasonable rates (which
determination, with respect to terrorism insurance, will be subject to consent
of the Directing Certificateholder) and that such hazards are not at the time
commonly insured against for properties similar to the mortgaged property and
located in or around the geographic region in which such mortgaged property is
located. Additionally, if the related borrower fails to maintain such insurance,
the Servicer or the Special Servicer, as applicable, will not be required to
maintain such terrorism insurance coverage if the Special Servicer determines,
in accordance with the servicing standards, that such insurance is not available
for the reasons set forth in (a) or (b) of the preceding sentence. Furthermore,
at the time existing insurance policies are subject to renewal, there is no
assurance that terrorism insurance coverage will be available and covered under
the new policies or, if covered, whether such coverage will be adequate. Most
insurance policies covering commercial real properties such as the mortgaged
properties are subject to renewal on an annual basis. If such coverage is not
currently in effect, is not adequate or is ultimately not continued with respect
to some of the mortgaged properties and one of those properties suffers a
casualty loss as a result of a terrorist act, then the resulting casualty loss
could reduce the amount available to make distributions on your certificates.
As a result of any of the foregoing, the amount available to make
distributions on your certificates could be reduced.
APPRAISALS AND MARKET STUDIES HAVE CERTAIN LIMITATIONS
An appraisal or other market analysis was conducted with respect to the
mortgaged properties in connection with the origination or acquisition of the
related mortgage loans. The resulting estimates of value are the bases of the
cut-off date Loan-to-Value Ratios referred to in this prospectus supplement.
Those estimates represent the analysis and opinion of the person performing the
appraisal or market
S-44
analysis and are not guarantees of present or future values. There can be no
assurance that another appraiser would not have arrived at a different
evaluation, even if such appraiser used the same general approach to, and the
same method of, appraising the mortgaged property. Moreover, the values of the
mortgaged properties may have fluctuated significantly since the appraisal or
market study was performed. In addition, appraisals seek to establish the amount
a typically motivated buyer would pay a typically motivated seller. Such amount
could be significantly higher than the amount obtained from the sale of a
mortgaged property under a distress or liquidation sale. Information regarding
the values of mortgaged properties available to the Depositor as of the cut-off
date is presented in Appendix A to this prospectus supplement for illustrative
purposes only. See "Description of the Mortgage Pool" in this prospectus
supplement.
TAX CONSIDERATIONS RELATED TO FORECLOSURE
If the Trust acquires a mortgaged property pursuant to a foreclosure or
deed in lieu of foreclosure, the Special Servicer will generally retain an
independent contractor to operate the mortgaged property.
Among other things, the independent contractor generally will not be able
to perform construction work, other than repair, maintenance or certain types of
tenant build-outs, unless the construction was at least 10% completed when
default on the mortgage loan becomes imminent. Furthermore, any net income from
such operation (other than qualifying "rents from real property"), or any rental
income based on the net profits of a tenant or sub-tenant or allocable to a
non-customary service, will subject the Lower-Tier REMIC (or Loan REMIC, if
applicable) to federal tax on such income at the highest marginal corporate tax
rate (currently 35%) and possibly state or local tax. "Rents from real property"
does not include any rental income based on the net profits of a tenant or
sub-tenant or allocable to a service that is non-customary in the area and for
the type of building involved. In such event, the net proceeds available for
distribution to certificateholders will be reduced. The Special Servicer may
permit the Lower-Tier REMIC (or Loan REMIC, if applicable) to earn "net income
from foreclosure property" that is subject to tax if it determines that the net
after-tax benefit to certificateholders is greater than under another method of
operating or leasing the mortgaged property. See "The Pooling and Servicing
Agreement--Realization Upon Defaulted Mortgage Loans" in this prospectus
supplement.
In addition, if the Trust were to acquire one or more mortgaged properties
pursuant to a foreclosure or deed in lieu of foreclosure, upon acquisition of
those mortgaged properties, the Trust may in certain jurisdictions, particularly
in New York, be required to pay state or local transfer or excise taxes upon
liquidation of such properties. Such state or local taxes may reduce net
proceeds available for distribution with respect to the Offered Certificates.
RISKS RELATED TO ENFORCEABILITY
All of the mortgages permit the lender to accelerate the debt upon default
by the borrower. The courts of all states will enforce acceleration clauses in
the event of a material payment default. Courts, however, may refuse to permit
foreclosure or acceleration if a default is deemed immaterial or the exercise of
those remedies would be unjust or unconscionable.
If a mortgaged property has tenants, the borrower typically assigns its
income as landlord to the lender as further security, while retaining a license
to collect rents as long as there is no default. If the borrower defaults, the
license terminates and the lender is entitled to collect rents. In certain
jurisdictions, such assignments may not be perfected as security interests until
the lender takes actual possession of the property's cash flow. In some
jurisdictions, the lender may not be entitled to collect rents until the lender
takes possession of the property and secures the appointment of a receiver. In
addition, as previously discussed, if bankruptcy or similar proceedings are
commenced by or for the borrower, the lender's ability to collect the rents may
be adversely affected.
STATE LAW LIMITATIONS ENTAIL CERTAIN RISKS
Ten mortgage loans, representing 14.58% of the outstanding pool balance as
of the cut-off date, are secured by more than one mortgaged property.
S-45
Some states (including California) have laws prohibiting more than one
"judicial action" to enforce a mortgage obligation. Some courts have construed
the term "judicial action" broadly. In the case of a mortgage loan secured by
mortgaged properties located in multiple states, the Special Servicer may be
required to foreclose first on mortgaged properties located in states where such
"one action" rules apply (and where non-judicial foreclosure is permitted)
before foreclosing on properties located in states where judicial foreclosure is
the only permitted method of foreclosure. As a result, the ability to realize
upon the mortgage loans may be limited by the application of state laws.
Foreclosure actions may also, in certain circumstances, subject the Trust to
liability as a "lender-in-possession" or result in the equitable subordination
of the claims of the trustee to the claims of other creditors of the borrower.
The Special Servicer may take these state laws into consideration in deciding
which remedy to choose following a default by a borrower.
LEASEHOLD INTERESTS ENTAIL CERTAIN RISKS
Seventeen mortgaged properties, which represent security for 20.58% of the
outstanding pool balance as of the cut-off date, are secured by a mortgage on
(i) the borrower's leasehold interest in the related mortgaged property and not
the related fee interest or (ii) the borrower's leasehold interest in a portion
of the related mortgaged property and the borrower's fee simple interest in the
remainder of the related mortgaged property.
Leasehold mortgage loans are subject to certain risks not associated with
mortgage loans secured by a lien on the fee estate of the borrower. The most
significant of these risks is that if the borrower's leasehold interest were to
be terminated upon a lease default, the leasehold mortgagee would lose its
security in such leasehold interest. Generally, the related ground lease
requires the lessor to give the leasehold mortgagee notice of lessee defaults
and an opportunity to cure them, permits the leasehold estate to be assigned to
the leasehold mortgagee or the purchaser at a foreclosure sale, and contains
certain other protective provisions typically included in a "mortgageable"
ground lease. The AFR/Bank of America Portfolio Loan is partially secured by
several ground leases which were mortgaged as additional collateral, but for
which no loan allocations were assigned, and certain short-term leases for
parking lots or motor bank facilities serving the mortgaged properties. These
additional leases do not include such lender protections and may have shorter
terms.
Upon the bankruptcy of a lessor or a lessee under a ground lease, the
debtor entity has the right to assume or reject the lease. If a debtor lessor
rejects the lease, the lessee has the right to remain in possession of its
leased premises under the rent under the lease for the term of the lease
(including renewals). If a debtor lessee/borrower rejects any or all of its
leases, the leasehold lender could succeed to the lessee/borrower's position
under the lease only if the lessor specifically grants the lender such right. If
both the lessor and the lessee/borrowers are involved in bankruptcy proceedings,
the Trustee may be unable to enforce the bankrupt lessee/borrower's obligation
to refuse to treat a ground lease rejected by a bankrupt lessor as terminated.
In such circumstances, a lease could be terminated notwithstanding lender
protection provisions contained therein or in the mortgage.
Most of the ground leases securing the mortgaged properties provide that
the ground rent payable thereunder increases during the term of the lease. These
increases may adversely affect the cash flow and net income of the borrower from
the mortgaged property.
POTENTIAL ABSENCE OF ATTORNMENT PROVISIONS ENTAILS RISKS
In some jurisdictions, if tenant leases are subordinate to the liens
created by the mortgage and do not contain attornment provisions (I.E.,
provisions requiring the tenant to recognize a successor owner following
foreclosure as landlord under the lease), the leases may terminate upon the
transfer of the property to a foreclosing lender or purchaser at foreclosure.
Not all leases were reviewed to ascertain the existence of attornment or
subordination provisions. Accordingly, if a mortgaged property is located in
such a jurisdiction and is leased to one or more desirable tenants under leases
that are subordinate to the mortgage and do not contain attornment provisions,
such mortgaged property could experience a further decline in value if such
tenants' leases were terminated. This is particularly likely if such tenants
were paying above-market rents or could not be replaced.
S-46
If a lease is not subordinate to a mortgage, the Trust will not possess the
right to dispossess the tenant upon foreclosure of the mortgaged property
(unless it has otherwise agreed with the tenant). If the lease contains
provisions inconsistent with the mortgage (E.G., provisions relating to
application of insurance proceeds or condemnation awards) or which could affect
the enforcement of the lender's rights (E.G., a right of first refusal to
purchase the property), the provisions of the lease will take precedence over
the provisions of the mortgage.
RISKS RELATED TO ZONING LAWS
Due to changes in applicable building and zoning ordinances and codes which
have come into effect after the construction of improvements on certain of the
mortgaged properties, some improvements may not comply fully with current zoning
laws (including density, use, parking and set-back requirements) but qualify as
permitted non-conforming uses. Such changes may limit the ability of the related
mortgagor to rebuild the premises "as is" in the event of a substantial casualty
loss. Such limitations may adversely affect the ability of the mortgagor to meet
its mortgage loan obligations from cash flow. Insurance proceeds may not be
sufficient to pay off such mortgage loan in full. In addition, if the mortgaged
property was to be repaired or restored in conformity with then-current law, its
value could be less than the remaining balance on the mortgage loan and it may
produce less revenue than before such repair or restoration.
In addition, certain of the mortgaged properties that do not conform to
current zoning laws may not be "legal non-conforming uses" or "legal
non-conforming structures." The failure of a mortgaged property to comply with
zoning laws or to be a "legal non-conforming use" or "legal non-conforming
structure" may adversely affect market value of the mortgaged property or the
borrower's ability to continue to use it in the manner it is currently being
used or may necessitate material additional expenditures to remedy
non-conformities. Violations may be known to exist at a particular mortgaged
property, but the related mortgage loan sellers have informed us that, to their
knowledge, there are no violations that they consider material.
RISKS RELATED TO LITIGATION
There may be pending or threatened legal proceedings against the borrowers
and managers of the mortgaged properties and their respective affiliates arising
out of the ordinary business of the borrowers, managers and affiliates, which
litigation could have a material adverse effect on your investment.
RISKS RELATED TO COMPLIANCE WITH AMERICANS WITH DISABILITIES ACT
Under the Americans with Disabilities Act of 1990 ("ADA"), all public
accommodations are required to meet certain federal requirements related to
access and use by disabled persons. Borrowers may incur costs complying with the
ADA. In addition, noncompliance could result in the imposition of fines by the
federal government or an award of damages to private litigants.
CONFLICTS OF INTEREST
DIRECTING CERTIFICATEHOLDER MAY DIRECT SPECIAL SERVICER ACTIONS
The Special Servicer is generally given considerable latitude in
determining whether and in what manner to liquidate or modify defaulted mortgage
loans. The Directing Certificateholder has certain rights to advise and direct
the Special Servicer to take or refrain from taking certain actions with respect
to the mortgage loans (generally, excluding the Whole Loans). The Directing
Certificateholder is also entitled to remove the Special Servicer with or
without cause (generally, except with respect to the Whole Loans). The Directing
Certificateholder will be controlled by the Controlling Class. See "The Pooling
and Servicing Agreement--Special Servicing--The Directing Certificateholder" in
this prospectus supplement. The Controlling Class is the most subordinated (or,
under certain circumstances, the next most subordinated) class of certificates
outstanding from time to time, and such holders may have interests in conflict
with those of the holders of the other certificates. For
S-47
instance, the holders of certificates of the Controlling Class might desire to
mitigate the potential for loss to that class from a troubled mortgage loan by
deferring enforcement in the hope of maximizing future proceeds. However, the
interests of the Trust may be better served by prompt action, since delay
followed by a market downturn could result in less proceeds to the Trust than
would have been realized if earlier action had been taken. The Directing
Certificateholder has no duty to act in the interests of any class other than
the Controlling Class.
RELATED PARTIES MAY ACQUIRE CERTIFICATES
Affiliates of the Depositor, the mortgage loan sellers, the Servicer or the
Special Servicer may purchase a portion of the certificates. This could cause a
conflict between the Servicer's or the Special Servicer's respective duties to
the Trust under the Pooling and Servicing Agreement and their respective
interests as a holder of a certificate. In addition, the Directing
Certificateholder generally has the right to remove the Special Servicer
(except, generally with respect to the Non-Serviced Mortgage Loans) and appoint
a successor, which may be an affiliate of such holder. The Depositor expects
that the Special Servicer or affiliates thereof will be the holder of the
Controlling Class. However, the Pooling and Servicing Agreement provides that
the mortgage loans are required to be administered in accordance with the
Servicing Standard without regard to ownership of any certificate by a servicer
or any of its affiliates. See "Servicing of the Mortgage Loans--Servicing of the
Mortgage Loans; Collection of Payments" in this prospectus supplement.
Additionally, any of those parties may, especially if it or an affiliate
holds a Subordinate Certificate, or has financial interests in or other
financial dealings with a borrower or sponsor under any of the mortgage loans,
have interests when dealing with the mortgage loans that are in conflict with
those of holders of the Offered Certificates. For instance, if the Special
Servicer or an affiliate holds a Subordinate Certificate, such Special Servicer
could seek to reduce the potential for losses allocable to those certificates
from a troubled mortgage loan by deferring acceleration in hope of maximizing
future proceeds. The Special Servicer might also seek to reduce the potential
for such losses by accelerating earlier than necessary in order to avoid advance
interest or additional trust fund expenses. Either action could result in less
proceeds to the Trust than would be realized if alternate action had been taken.
In general, a servicer is not required to act in a manner more favorable to the
Offered Certificates or any particular class of Offered Certificates than to the
Private Certificates.
Additionally, the Servicer services and will, in the future, service, in
the ordinary course of its business, existing and new loans for third parties,
including portfolios of loans similar to the mortgage loans that will be
included in the Trust. The real properties securing these other loans may be in
the same markets as, and compete with, certain of the real properties securing
the mortgage loans that will be included in the Trust. Consequently, personnel
of the Servicer and the Special Servicer may perform services, on behalf of the
Trust, with respect to the mortgage loans at the same time as they are
performing services, on behalf of other persons, with respect to other mortgage
loans secured by properties that compete with the mortgaged properties securing
the mortgage loans. This may pose inherent conflicts for the Servicer or the
Special Servicer.
The activities of the mortgage loan sellers or their affiliates may involve
properties which are in the same markets as the mortgaged properties underlying
the certificates. In such cases, the interests of such mortgage loan sellers or
such affiliates may differ from, and compete with, the interests of the Trust,
and decisions made with respect to those assets may adversely affect the amount
and timing of distributions with respect to the certificates. Conflicts of
interest may arise between the Trust and each of the mortgage loan sellers or
their affiliates that engage in the acquisition, development, operation,
financing and disposition of real estate if such sellers acquire any
certificates. In particular, if certificates held by a mortgage loan seller or
an affiliate are part of a class that is or becomes the Controlling Class, the
mortgage loan seller or its affiliate as a holder of the Controlling Class would
have the ability to influence certain actions of the Special Servicer under
circumstances where the interests of the Trust conflict with the interests of
the mortgage loan seller or its affiliates as acquirors, developers, operators,
financers or sellers of real estate related assets.
S-48
CONFLICTS BETWEEN MANAGERS AND THE MORTGAGE LOAN BORROWERS
A substantial number of the mortgaged properties are managed by property
managers affiliated with the respective mortgagors. In addition, substantially
all of the property managers for the mortgaged properties (or their affiliates)
manage additional properties, including properties that may compete with the
mortgaged properties. Affiliates of the managers, and certain of the managers
themselves, also may own other properties, including competing properties. The
managers of the mortgaged properties may accordingly experience conflicts of
interest in the management of such mortgaged properties.
CONFLICTS BETWEEN CERTIFICATEHOLDERS AND HOLDERS OF COMPANION LOANS
With respect to the Tysons Corner Center Loan, any decision to be made with
respect to the Tysons Corner Center Whole Loan that requires the approval of the
Directing Certificateholder or otherwise requires approval under the related
intercreditor agreement (excluding the termination of a special servicer and
appointment of a successor special servicer with respect to the related Whole
Loan) will require the approval of the holders of the Tysons Corner Center Whole
Loan then holding a majority of the outstanding principal balance of the Tysons
Corner Center Whole Loan. If such holders cannot agree on a course of action
within a certain period of time, the Directing Certificateholder under the
Pooling and Servicing Agreement will be entitled to direct the Servicer or the
Special Servicer with respect to which course of action it should follow. See
"Description of the Mortgage Pool--Split Loan Structures--The Tysons Corner
Center Loan" in this prospectus supplement. The interests of the holders of the
Tysons Corner Center Pari Passu Loans may conflict with and their decisions may
adversely affect the holders of one or more classes of Offered Certificates. As
a result, approvals to proposed actions of the Servicer or the Special Servicer
may not be granted in all instances, thereby potentially adversely affecting
some or all of the classes of Offered Certificates.
With respect to the AFR/Bank of America Portfolio Loan, prior to an
AFR/Bank of America Portfolio Change of Control Event (as defined in this
prospectus supplement), the majority certificateholder of the commercial
mortgage pass-through securities backed by the AFR/Bank of America Portfolio B
Loan will have the right (i) under certain circumstances, to advise and direct
the GMACCM 2003-C3 Master Servicer and the GMACCM 2003-C3 Special Servicer and
with respect to various servicing matters affecting the related Whole Loan and
(ii) to terminate the GMACCM 2003-C3 Special Servicer and appoint a successor
special servicer. Upon the occurrence of an AFR/Bank of America Portfolio Change
of Control Event, any decision to be made with respect to the AFR/Bank of
America Portfolio Loan that requires the approval of the majority of holders of
the then controlling class of a securitization or otherwise requires approval
under the related intercreditor agreement (including the termination of the
GMACCM 2003-C3 Special Servicer and appointment of a successor special servicer
with respect to the related Whole Loan) will require the approval of the holders
of the AFR/Bank of America Portfolio Senior Loans then holding a majority of the
outstanding principal balance of the AFR/Bank of America Portfolio Senior Loans.
If such holders cannot agree on a course of action within a certain period of
time, the majority certificateholder of the controlling class under the GMACCM
2003-C3 Pooling and Servicing Agreement will be entitled to direct the GMACCM
2003-C3 Servicer or the GMACCM 2003-C3 Special Servicer with respect to which
course of action it should follow. See "Description of the Mortgage Pool--Split
Loan Structures--The AFR/Bank of America Portfolio Loan" in this prospectus
supplement. The interests of the holders of the AFR/Bank of America Portfolio
Pari Passu Loans and the AFR/Bank of America Portfolio B Loan may conflict with
and the decisions of the holders thereof may adversely affect the holders of one
or more classes of certificates. As a result, approvals to proposed actions of
the GMACCM 2003-C3 Servicer or the GMACCM 2003-C3 Special Servicer or to
proposed actions of the Wachovia 2003-C9 Servicer or the Wachovia 2003-C9
Special Servicer may not be granted in all instances, thereby potentially
adversely affecting some or all of the classes of Offered Certificates.
With respect to the Meadows Mall Loan, in accordance with the terms of the
related intercreditor agreement, the Wachovia 2003-C9 Majority Subordinate
Certificateholder (as defined in this prospectus supplement) and the Directing
Certificateholder may jointly consent at any time to the removal of the Wachovia
2003-C9 Special Servicer. Any successor special servicer will be required to
have the
S-49
Wachovia 2003-C9 Required Special Servicer Rating (as defined in this prospectus
supplement) and will be appointed by both the Wachovia 2003-C9 Majority
Subordinate Certificateholder and the Directing Certificateholder. If the
holders of each of the Meadows Mall Pari Passu Loan and the Meadows Mall Loan
cannot agree on the course of action with respect to any action over which the
Wachovia 2003-C9 Majority Subordinate Certificateholder and the Directing
Certificateholder have consent rights, then Anthracite Capital, Inc. or any
other third party operating advisor mutually acceptable to the related holders
of the Meadow Mall Pari Passu Loan and the Meadows Mall Loan will be appointed
jointly by the Wachovia 2003-C9 Majority Subordinate Certificateholder and the
Directing Certificateholder with respect to the Meadows Mall Whole Loan. As a
result, approvals to proposed actions of the Wachovia 2003-C9 Servicer or the
Wachovia 2003-C9 Special Servicer may not be granted in all instances, thereby
potentially adversely affecting some or all of the classes of Offered
Certificates. The interests and the decisions made with respect to the Meadows
Mall Pari Passu Loan or the Meadows Mall Loan may conflict with the interests
of, and may adversely affect, the holders of one or more classes of Offered
Certificates.
In addition, the holder of the Walgreens-Riverside B Loan will be entitled
to exercise certain rights with respect to the Walgreens-Riverside Whole Loan.
See "The Pooling and Servicing Agreement--Certain Rights of the Holder of the
Walgreens-Riverside B Loan" in this prospectus supplement.
No certificateholder may take any action against any holder of a Companion
Loan (or its designee) for having acted solely in its respective interest.
YOU WILL HAVE LESS CONTROL OVER THE SERVICING OF THE NON-SERVICED MORTGAGE LOANS
The AFR/Bank of America Portfolio Loan and the Meadows Mall Loan are
secured by mortgaged properties that also secure mortgage loans that are not
assets of the Trust. The AFR/Bank of America Portfolio Loan and the Meadows Mall
Loan are serviced and administered by the GMACCM 2003-C3 Servicer and the
Wachovia 2003-C9 Servicer, respectively, and, if applicable, the GMACCM 2003-C3
Special Servicer and the Wachovia 2003-C9 Special Servicer, respectively, in
each case pursuant to the GMACCM 2003-C3 Pooling and Servicing Agreement and the
Wachovia 2003-C9 Pooling and Servicing Agreement, respectively. Each of those
other pooling and servicing agreements provides for servicing arrangements that
are similar but not identical to those under the Pooling and Servicing
Agreement. As a result, you will have less control over the servicing of the
AFR/Bank of America Portfolio Loan and the Meadows Mall Loan than you would have
if such mortgage loans were being serviced by the Servicer and the Special
Servicer pursuant to the terms of the Pooling and Servicing Agreement. See "The
Pooling and Servicing Agreement--Servicing of the Non-Serviced Mortgage Loans"
in this prospectus supplement.
RISKS RELATED TO THE OFFERED CERTIFICATES
RISKS RELATED TO PREPAYMENTS AND REPURCHASES
The yield to maturity on your certificates will depend, in significant
part, upon the rate and timing of principal payments on the mortgage loans. For
this purpose, principal payments include both voluntary prepayments, if
permitted, and involuntary prepayments, such as prepayments resulting from
casualty or condemnation of mortgaged properties, defaults and liquidations by
borrowers, or repurchases upon a mortgage loan seller's breach of
representations or warranties.
In addition, although the borrower under the ARD Loan may have certain
incentives to prepay the ARD Loan on its anticipated repayment date, we cannot
assure you that the borrower will be able to prepay the ARD Loan on its
anticipated repayment date. The failure of a borrower to prepay the ARD Loan on
its anticipated repayment date will not be an event of default under the terms
of the ARD Loan, and, pursuant to the terms of the Pooling and Servicing
Agreement, neither the Servicer nor the Special Servicer will be permitted to
take any enforcement action with respect to the borrower's failure to pay
interest at an increased rate, other than requests for collection, until the
scheduled maturity of the ARD Loan; PROVIDED that the Servicer or the Special
Servicer, as the case may be, may take action to enforce the Trust Fund's right
to apply excess cash flow to principal in accordance with the terms of the
documents of the ARD Loan. See "--Borrower May Be Unable to Repay the Remaining
Principal Balance on Maturity Date or Anticipated Repayment Date" above.
S-50
The investment performance of your certificates may vary materially and
adversely from your expectations if the actual rate of prepayment is higher or
lower than you anticipate.
Voluntary prepayments under certain mortgage loans may require payment of a
yield maintenance charge unless the prepayment is made within a specified number
of days of the stated maturity date or the anticipated repayment date, as
applicable. In addition one mortgage loan permits partial prepayment in
connection with the release of certain identified parcels during the related
lock-out period. See "Description of the Mortgage Pool--Certain Terms and
Conditions of the Mortgage Loans--Prepayment Provisions" and "--Property
Releases" in this prospectus supplement and "AFR/Bank of America Portfolio
Loan--Release Provisions" in Annex B to this prospectus supplement.
Nevertheless, there is no assurance that the related borrowers will refrain from
prepaying their mortgage loans due to the existence of a yield maintenance
charge or a prepayment premium. There is no assurance that involuntary
prepayments will not occur. The rate at which voluntary prepayments occur on the
mortgage loans will be affected by a variety of factors, including:
o the terms of the mortgage loans;
o the length of any prepayment lock-out period;
o the level of prevailing interest rates;
o the availability of mortgage credit;
o the applicable yield maintenance charges or prepayment premiums;
o the Servicer's or Special Servicer's ability to enforce those charges
or premiums;
o the occurrence of casualties or natural disasters; and
o economic, demographic, tax, legal or other factors.
Generally, no yield maintenance charge or prepayment premium will be
required for prepayments in connection with a casualty or condemnation unless,
in the case of most of the mortgage loans, an event of default has occurred and
is continuing. In addition, if a mortgage loan seller repurchases any mortgage
loan from the Trust due to a breach of a representation or warranty or as a
result of a document defect in the related mortgage file, the repurchase price
paid will be passed through to the holders of the certificates with the same
effect as if the mortgage loan had been prepaid in part or in full, except that
no prepayment premium or yield maintenance charge would be payable. Such a
repurchase may therefore adversely affect the yield to maturity on your
certificates. Furthermore, with regard to mortgage loans that are secured by one
or more mortgaged properties that also secure a Companion Loan that is not
included in the Trust, yield maintenance charges will not be payable if the
holder of a subordinate Companion Loan purchases the related mortgage loan due
to certain default circumstances under such mortgage loan.
RISKS RELATED TO ENFORCEABILITY OF PREPAYMENT PREMIUMS, YIELD MAINTENANCE
CHARGES AND DEFEASANCE PROVISIONS
Provisions requiring yield maintenance charges, prepayment premiums and
lock-out periods may not be enforceable in some states and under federal
bankruptcy law. Those provisions for charges and premiums also may constitute
interest for usury purposes. Accordingly, we cannot assure you that the
obligation to pay a yield maintenance charge or prepayment premium or to
prohibit prepayments will be enforceable. There is no assurance that the
foreclosure proceeds will be sufficient to pay an enforceable yield maintenance
charge or prepayment premium. Additionally, although the collateral substitution
provisions related to defeasance do not have the same effect on the
certificateholders as prepayment, there is no assurance that a court would not
interpret those provisions as requiring a yield maintenance charge or prepayment
premium. In certain jurisdictions those collateral substitution provisions might
therefore be deemed unenforceable under applicable law, or usurious.
S-51
YIELD CONSIDERATIONS
The yield on any Offered Certificate will depend on (i) the price at which
such certificate is purchased by an investor and (ii) the rate, timing and
amount of distributions on such certificate. The rate, timing and amount of
distributions on any certificate will, in turn, depend on, among other things:
o the interest rate for such Offered Certificate;
o the rate and timing of principal payments (including principal
prepayments) and other principal collections on or in respect of the
mortgage loans and the extent to which such amounts are to be applied
or otherwise result in a reduction of the certificate balance of such
certificate;
o the rate, timing and severity of losses on or in respect of the
mortgage loans or unanticipated expenses of the Trust;
o the timing and severity of any interest shortfalls resulting from
prepayments;
o the timing and severity of any appraisal reductions; and
o the extent to which prepayment premiums are collected and, in turn,
distributed on such certificate.
The investment performance of the Offered Certificates may be materially
different from what you expected if the assumptions you made with respect to the
factors listed above are incorrect.
RISKS RELATED TO BORROWER DEFAULT
The rate and timing of delinquencies or defaults on the mortgage loans will
affect:
o the aggregate amount of distributions on the Offered Certificates;
o their yield to maturity;
o the rate of principal payments; and
o their weighted average life.
Unless your certificates are Class A-1, Class A-2, Class A-3 or Class A-4
Certificates, your right to receive certain payments of principal and interest
otherwise payable on your certificates will be subordinated to such rights of
the holders of the more senior certificates having an earlier alphabetical class
designation and to such rights of the holders of the Class X-1 and Class X-2
Certificates. See "Description of the Offered Certificates--Distributions" in
this prospectus supplement. Losses on the mortgage loans will be allocated to
the Class P, Class O, Class N, Class M, Class L, Class K, Class J, Class H,
Class G, Class F, Class E, Class D, Class C and Class B Certificates, in that
order, reducing amounts otherwise payable to each class. Any remaining losses
would then be allocated to the Class A-1, Class A-2, Class A-3 and Class A-4
Certificates, PRO RATA, and with respect to interest losses only, the Class X-1
and Class X-2 Certificates based on their respective entitlements.
Each class of certificates (other than the Class P, Class Q, Class R and
Class LR Certificates) is senior to certain other classes of certificates in
respect of the right to receive distributions and to be allocated losses. If
losses on the mortgage loans exceed the aggregate principal amount of the
classes of certificates subordinated to such class, that class, other than Class
X-1 and Class X-2, will suffer a loss equal to the full amount of such excess
(up to the outstanding certificate balance of such class).
If you calculate your anticipated yield based on assumed rates of default
and losses that are lower than the default rate and losses actually experienced
and such losses are allocable to your certificates, your actual yield to
maturity will be lower than the assumed yield. Under certain extreme scenarios,
such yield could be negative. In general, the earlier a loss borne by your
certificates occurs, the greater the effect on your yield to maturity.
Even if losses on the mortgage loans are not borne by your certificates,
those losses may affect the weighted average life and yield to maturity of your
certificates. This may be so because those losses cause your certificates to
have a higher percentage ownership interest in the Trust (and therefore
S-52
related distributions of principal payments on the mortgage loans) than would
otherwise have been the case. The effect on the weighted average life and yield
to maturity of your certificates will depend upon the characteristics of the
remaining mortgage loans.
Additionally, delinquencies and defaults on the mortgage loans may
significantly delay the receipt of distributions by you on your certificates,
unless P&I Advances are made to cover delinquent payments or the subordination
of another class of certificates fully offsets the effects of any such
delinquency or default.
RISKS RELATED TO CERTAIN PAYMENTS
To the extent described in this prospectus supplement, the Servicer, the
Special Servicer or the Trustee, as applicable, will be entitled to receive
interest on unreimbursed Advances. This interest will generally accrue from the
date on which the related Advance is made or the related expense is incurred to
the date of reimbursement. In addition, under certain circumstances, including
delinquencies in the payment of principal and interest, a mortgage loan will be
specially serviced, and the Special Servicer is entitled to compensation for
special servicing activities. The right to receive interest on Advances or
special servicing compensation is senior to the rights of certificateholders to
receive distributions and may lead to shortfalls in amounts otherwise
distributable on your certificates.
RISKS OF LIMITED LIQUIDITY AND MARKET VALUE
There is currently no secondary market for the Offered Certificates. While
the Underwriters have advised that they currently intend to make a secondary
market in the Offered Certificates, they are under no obligation to do so. There
is no assurance that a secondary market for the Offered Certificates will
develop. Moreover, if a secondary market does develop, we cannot assure you that
it will provide you with liquidity of investment or that it will continue for
the life of the Offered Certificates. The Offered Certificates will not be
listed on any securities exchange. Lack of liquidity could result in a
precipitous drop in the market value of the Offered Certificates. In addition,
the market value of the Offered Certificates at any time may be affected by many
factors, including then prevailing interest rates, and no representation is made
by any person or entity as to the market value of any Offered Certificate at any
time.
SUBORDINATION OF SUBORDINATE OFFERED CERTIFICATES
As described in this prospectus supplement, unless your Offered
Certificates are the Class A-1, Class A-2, Class A-3 or Class A-4 Certificates,
your rights to receive distributions of amounts collected or advanced on or in
respect of the mortgage loans will be subordinated to those of the holders of
the Offered Certificates with an earlier alphabetical designation and the Class
X-1 and Class X-2 Certificates. See "Description of the Offered
Certificates--Distributions" and "--Subordination" in this prospectus
supplement.
RISK OF LIMITED ASSETS
The Offered Certificates will represent interests solely in the assets of
the Trust and will not represent an interest in or an obligation of any other
entity or person. Distributions on any of the certificates will depend solely on
the amount and timing of payments on the mortgage loans.
RISKS RELATING TO LACK OF CERTIFICATEHOLDER CONTROL OVER TRUST
You generally do not have a right to vote, except with respect to required
consents to certain amendments to the Pooling and Servicing Agreement.
Furthermore, you will generally not have the right to make decisions concerning
trust administration. The Pooling and Servicing Agreement gives the Servicer,
the Special Servicer, the Bond Administrator or the REMIC Administrator, as
applicable, certain decision-making authority concerning trust administration.
These parties may make decisions different than those that holders of any
particular class of Offered Certificates would have made, and which may
negatively affect those holders' interests.
S-53
DIFFERENT TIMING OF MORTGAGE LOAN AMORTIZATION POSES CERTAIN RISKS
As principal payments or prepayments are made on a mortgage loan that is
part of a pool of loans, the pool may be subject to more risk with respect to
the decreased diversity of mortgaged properties, types of mortgaged properties,
geographic location and number of borrowers and affiliated borrowers, as
described above. Classes that have a later sequential designation or a lower
payment priority are more likely to be exposed to this concentration risk than
are classes with an earlier sequential designation or higher priority. This is
so because principal on the Offered Certificates is generally payable in
sequential order, and no class entitled to distribution of principal generally
receives principal until the principal amount of the preceding class or classes
entitled to receive principal have been reduced to zero.
OTHER RISKS
"Risk Factors" in the prospectus describes other risks and special
considerations that may apply to your investment in certificates.
S-54
DESCRIPTION OF THE MORTGAGE POOL
GENERAL
A trust (the "Trust") to be created by Deutsche Mortgage & Asset Receiving
Corporation (the "Depositor") will consist primarily of a pool (the "Mortgage
Pool") of 91 fixed-rate mortgage loans (each a "Mortgage Loan," and
collectively, the "Mortgage Loans") secured by first liens on 255 commercial,
multifamily and mobile home park properties (each a "Mortgaged Property," and
collectively, the "Mortgaged Properties"). The Mortgage Pool has an aggregate
principal balance as of March 1, 2004 (the "Cut-off Date") of approximately
$968,398,042 (the "Initial Outstanding Pool Balance"). The principal balances of
the Mortgage Loans as of the Cut-off Date (each, a "Cut-off Date Balance") will
range from $997,050 to $147,500,000 and the average Cut-off Date Balance will be
$10,641,737 subject to a variance of plus or minus 5%. All numerical information
provided herein with respect to the Mortgage Loans is provided on an approximate
basis. All percentages of the Mortgage Pool, or of any specified sub-group
thereof, referred to herein without further description are approximate
percentages of the Initial Outstanding Pool Balance. Descriptions of the terms
and provisions of the Mortgage Loans are generalized descriptions of the terms
and provisions of the Mortgage Loans in the aggregate. Many of the individual
Mortgage Loans have specific terms and provisions that deviate from the general
description.
Each Mortgage Loan is evidenced by one or more promissory notes (each, a
"Note") and secured by one or more mortgages, deeds of trust or other similar
security instruments (each, a "Mortgage"). Each of the Mortgages creates a first
lien on the interests of the related borrower in the related Mortgaged Property,
as set forth on the following table:
% OF INITIAL OUTSTANDING
INTEREST OF BORROWER ENCUMBERED POOL BALANCE(1)
------------------------------- ------------------------
Fee Simple Estate(2) ........................ 79.42%
Combined Fee/Leasehold Estate ............... 20.04%
Leasehold ................................... 0.54%
-------
TOTAL ....................................... 100.00%
- -------------------
(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 (which amounts, if not specified in the related Mortgage Loan
Documents, are based on the appraised values or square footage of each
Mortgaged Property and/or each Mortgaged Property's underwritten net cash
flow).
(2) Includes Mortgage Loans secured by the borrower's leasehold interest in
100% of the Mortgaged Property together with (i) an affiliate of the
borrower's corresponding fee interest in such Mortgaged Property or (ii)
the borrower's corresponding fee interest in such Mortgaged Property.
SECURITY FOR THE MORTGAGE LOANS
None of the Mortgage Loans are insured or guaranteed by the United States,
any governmental agency or instrumentality, any private mortgage insurer or by
the Depositor, any of German American Capital Corporation ("GACC"), LaSalle Bank
National Association ("LaSalle") or ABN AMRO Bank N.V., Chicago Branch ("ABN
AMRO Bank" and together with LaSalle and GACC, the "Mortgage Loan Sellers"), the
Servicer, the Special Servicer, the Trustee or the Bond Administrator or any of
their respective affiliates. Each Mortgage Loan is or should be considered to be
nonrecourse. In the event of a default under any Mortgage Loan, the lender's
remedies generally are limited to foreclosing against the specific Mortgaged
Property or Mortgaged Properties securing such Mortgage Loan and such limited
other assets as may have been pledged to secure such Mortgage Loan subject to
customary nonrecourse carveouts either to the borrower or its sponsor. Even if a
Mortgage Loan is recourse to the borrower (or if a nonrecourse carveout to the
borrower applies), in most cases, the borrower's assets are limited primarily to
its interest in the related Mortgaged Property. Each Mortgage Loan is secured by
one or more Mortgages and an assignment of the related borrower's interest in
the leases, rents, issues and profits of the related Mortgaged Properties. In
certain instances, additional collateral exists in
S-55
the nature of partial indemnities or guaranties, or in the establishment and
pledge of one or more reserve or escrow accounts (such accounts, "Reserve
Accounts"). Each Mortgage constitutes a first lien on a fee or leasehold
interest in a Mortgaged Property, subject generally only to (i) liens for real
estate and other taxes and special assessments not yet due and payable, (ii)
covenants, conditions, restrictions, rights of way, easements and other
encumbrances whether or not of public record as of the date of recording of the
related Mortgage, such exceptions having been acceptable to the related Mortgage
Loan Seller in connection with the purchase or origination of the related
Mortgage Loan, and (iii) such other exceptions and encumbrances on Mortgaged
Properties as are reflected in the related title insurance policies.
THE MORTGAGE LOAN SELLERS
The Depositor will purchase the Mortgage Loans to be included in the
Mortgage Pool on or before the Closing Date from GACC, LaSalle and ABN AMRO Bank
pursuant to three separate Mortgage Loan Purchase Agreements (each, a "Mortgage
Loan Purchase Agreement"), to be dated the Closing Date between the related
Mortgage Loan Seller and the Depositor.
GACC. Thirty-three Mortgage Loans, which represent security for 70.98% of
the Initial Outstanding Pool Balance, will be sold to the Depositor by GACC.
GACC is a wholly-owned subsidiary of Deutsche Bank Americas Holding Corp., which
in turn is a wholly-owned subsidiary of Deutsche Bank AG, a German corporation.
GACC is also an affiliate of Deutsche Bank Securities Inc., one of the
Underwriters and an affiliate of Deutsche Mortgage & Asset Receiving
Corporation, the Depositor. GACC engages primarily in the business of purchasing
and holding mortgage loans pending securitization, repackaging or other
disposition. GACC also acts from time to time as the originator of mortgage
loans. Although GACC purchases and sells mortgage loans for its own account, it
does not act as a broker or dealer in connection with any such loans. The
principal offices of GACC are located at 60 Wall Street, New York, New York
10005.
LASALLE. Fifty-seven Mortgage Loans, which represent security for 23.27% of
the Initial Outstanding Pool Balance, will be sold to the Depositor by LaSalle.
Two Mortgage Loans, representing 0.83% of the Initial Outstanding Pool Balance,
were originated pursuant to LaSalle's underwriting guidelines by another entity
and were purchased by LaSalle immediately upon the funding of each Mortgage
Loan. LaSalle is a national banking association whose principal offices are in
Chicago, Illinois. LaSalle is a subsidiary of LaSalle Bank Corporation, which is
a subsidiary of ABN AMRO North America Holding Company, which is a subsidiary of
ABN AMRO Bank N.V., a bank organized under the laws of The Netherlands. LaSalle
is a commercial bank offering a wide range of banking services to customers in
the United States. Its business is subject to examination and regulation by
Federal banking authorities. LaSalle is also an affiliate of ABN AMRO
Incorporated, one of the Underwriters. LaSalle is also acting as Bond
Administrator and as paying agent and certificate registrar with respect to the
Certificates.
ABN AMRO BANK. One Mortgage Loan, which represents security for 5.74% of
the Initial Outstanding Pool Balance, will be sold to the Depositor by ABN AMRO
Bank. ABN AMRO Bank is a public company with limited liability that is engaged
in the business of originating and securitizing U.S. commercial mortgage loans.
ABN AMRO Bank N.V., Chicago Branch, is a subsidiary of ABN AMRO Bank N.V., a
bank organized under the laws of The Netherlands. As of December 31, 2003, ABN
AMRO Bank had total assets of approximately $27.6 billion on a U.S. GAAP basis.
ABN AMRO Bank is an affiliate of (i) ABN AMRO Incorporated, one of the
Underwriters and (ii) LaSalle, which is acting as a Mortgage Loan Seller, Bond
Administrator and paying agent.
Each of the Mortgage Loan Sellers will make certain representations and
warranties with respect to the Mortgage Loans sold by it, and with respect to
any breach of any representation or warranty that materially and adversely
affects the value of such a Mortgage Loan, the related Mortgaged Property or the
interests of the Trustee or any holders of the Certificates therein will be
required to cure such breach or repurchase or substitute for such Mortgage Loan.
See "The Pooling and Servicing Agreement--Representations and Warranties;
Repurchase; Substitution" in this prospectus supplement.
S-56
The information set forth herein concerning the Mortgage Loan Sellers and
the underwriting conducted by each of the Mortgage Loan Sellers with respect to
the related Mortgage Loans has been provided by the respective Mortgage Loan
Sellers, and none of the Depositor, the Underwriters or the other Mortgage Loan
Seller make any representation or warranty as to the accuracy or completeness of
such information.
CERTAIN UNDERWRITING MATTERS
ENVIRONMENTAL SITE ASSESSMENTS. Environmental site assessments or updates
of a previously conducted assessment based on information in an established
database or studies, were conducted on all of the Mortgaged Properties. Such
environmental site assessments, updates or reviews were conducted within the
12-month period prior to the Cut-off Date. In some cases these assessments or
updates revealed the existence of material environmental conditions (for more
information regarding environmental conditions, see "Risk Factors--Risks Related
to the Mortgage Loans--Potential Trust Liability Related to a Materially Adverse
Environmental Condition" in this prospectus supplement). The Mortgage Loan
Sellers have informed the Depositor that where such conditions were identified,
either (i) the condition has been remediated in all material respects, (ii) the
borrower has escrowed funds to effect the remediation, (iii) a responsible party
is currently taking or required to take actions as have been recommended by the
environmental assessment or by the applicable governmental authority, (iv) an
operations and maintenance plan has been or will be implemented, (v)
environmental insurance has been obtained with respect to such condition, (vi) a
"no further action" letter or other evidence has been obtained stating that the
applicable governmental authority has no current intention of requiring any
action be taken by the borrower or any other person with respect to such
condition or (vii) upon further investigation, an environmental consultant
recommended no further investigation or remediation.
In the case of five Mortgaged Properties securing 2.72% of the Initial
Outstanding Pool Balance, environmental insurance for such Mortgage Loans were
obtained in addition to environmental site assessments performed with respect to
each of the underlying Mortgaged Properties. Each environmental insurance policy
insures the Trust against losses resulting from certain known and unknown
environmental conditions at the related Mortgaged Property during the applicable
policy period. Subject to certain conditions and exclusions, the insurance
policies generally provide coverage against (i) losses resulting from default
under the applicable Mortgage Loan, up to the outstanding principal balance of
the Mortgage Loan, if on-site environmental conditions are discovered at the
Mortgaged Property during the policy period and no foreclosure of the Mortgaged
Property has taken place, (ii) losses from third-party claims against the lender
during the policy period for bodily injury, property damage or clean-up costs
resulting from environmental conditions at or emanating from the Mortgaged
Property and (iii) after foreclosure, costs of clean-up of environmental
conditions discovered during the policy period to the extent required by
applicable law, including any court order or other governmental directive.
The information contained herein regarding environmental conditions at the
Mortgaged Properties is based on the environmental site assessments or similar
studies and has not been independently verified by the Depositor, the Mortgage
Loan Sellers, the Underwriters, the Servicer, the Special Servicer, the Trustee,
the Bond Administrator or any of their respective affiliates. There can be no
assurance that the environmental site assessments or studies, as applicable,
identified all environmental conditions and risks, or that any such
environmental conditions will not have a material adverse effect on the value or
cash flow of the related Mortgaged Property.
PROPERTY CONDITION ASSESSMENTS. The Mortgage Loan Sellers have informed the
Depositor that inspections of substantially all of the Mortgaged Properties (or
updates of previously conducted inspections) were conducted by independent
licensed engineers or other representatives or designees of the related Mortgage
Loan Seller within 12 months of the Cut-off Date. Such inspections were
commissioned to inspect the exterior walls, roofing, interior construction,
mechanical and electrical systems (in most cases) and general condition of the
site, buildings and other improvements located at a Mortgaged Property. With
respect to certain of the Mortgage Loans, the resulting reports indicated a
variety of deferred maintenance items and recommended capital expenditures. The
estimated cost of
S-57
the necessary repairs or replacements at a Mortgaged Property was included in
the related property condition assessment. In some (but not all) instances, cash
reserves were established to fund such deferred maintenance and/or replacement
items.
APPRAISALS AND MARKET ANALYSIS. The Mortgage Loan Sellers have informed the
Depositor that an appraisal or market analysis for all of the Mortgaged
Properties was performed (or an existing appraisal was updated) on behalf of the
related Mortgage Loan Seller within 12 months of the Cut-off Date. See Annex A
to this prospectus supplement. Each such appraisal was conducted by an
independent appraiser that is state certified and/or designated as a Member of
the Appraisal Institute ("MAI"), in order to establish that the appraised value
of the related Mortgaged Property or Properties exceeded the original principal
balance of the Mortgage Loan (or, in the case of a set of related Mortgage Loans
(as defined in this prospectus supplement), the aggregate original principal
balance of such set). In general, such appraisals represent the analysis and
opinions of the respective appraisers at or before the time made, and are not
guarantees of, and may not be indicative of, present or future value. There can
be no assurance that another appraiser would not have arrived at a different
valuation, even if such appraiser used the same general approach to and same
method of appraising the property. In addition, appraisals seek to establish the
amount a typically motivated buyer would pay a typically motivated seller. Such
amount could be significantly higher than the amount obtained from the sale of a
Mortgaged Property under a distress or liquidation sale. See "Risk
Factors--Risks Related to the Mortgage Loans--Appraisals and Market Studies Have
Certain Limitations" in this prospectus supplement.
PROPERTY, LIABILITY AND OTHER INSURANCE. The Mortgage Loan Documents
generally require that: (i) the Mortgaged Property be insured by a property
insurance policy in an amount (subject to a customary deductible) at least equal
to the lesser of the outstanding principal balance of the related Mortgage Loan,
100% of the full insurable replacement cost of the improvements located on the
related Mortgaged Property or, with respect to certain Mortgage Loans, the full
insurable actual cash value of the Mortgaged Property; or (ii) the Mortgaged
Property be insured by property insurance in such other amounts as was required
by the related originators and if applicable, the related property insurance
policy contains appropriate endorsements to avoid the application of
co-insurance and does not permit reduction in insurance proceeds for
depreciation. In addition, if any portion of the improvements to a Mortgaged
Property securing any Mortgage Loan was, at the time of the origination of such
Mortgage Loan, in an area identified in the "Federal Register" by the Federal
Emergency Management Agency as having special flood hazards, and flood insurance
was available, a flood insurance policy meeting the requirements of the
then-current guidelines of the Federal Insurance Administration is in effect
with a generally acceptable insurance carrier, in an amount representing
coverage not less than the least of (1) the outstanding principal balance of
such Mortgage Loan and with respect to any Mortgage Loan related to a Serviced
Companion Loan, the outstanding principal balance of the Whole Loan, (2) the
full insurable actual cash value of such Mortgaged Property, (3) the maximum
amount of insurance required by the terms of the related Mortgage and available
for the related Mortgaged Property under the National Flood Insurance Act of
1968, as amended and (4) 100% of the replacement cost of the improvements
located in the special flood hazard area on the related Mortgaged Property
except in certain cases where self insurance was permitted. In general, the
standard form of property insurance policy covers physical damage to, or
destruction of, the improvements on the Mortgaged Property by fire, lightning,
explosion, smoke, windstorm and hail, riot or strike and civil commotion,
subject to the conditions and exclusions set forth in each policy.
Each Mortgage generally also requires the related borrower to maintain
comprehensive general liability insurance against claims for personal and bodily
injury, death or property damage occurring on, in or about the related Mortgaged
Property. Each Mortgage generally further requires the related borrower to
maintain business interruption or rent loss insurance in an amount not less than
100% of the projected rental income from the related Mortgaged Property for not
less than six months. In general, the Mortgaged Properties are not insured for
earthquake risk, floods and other water-related causes, landslides and mudflow,
vermin, nuclear reaction or war. In some cases, the Mortgage Loan Documents
permit the related borrower to rely on self-insurance provided by a tenant in
lieu of an insurance policy.
S-58
UNDERWRITING STANDARDS
GACC'S UNDERWRITING STANDARDS
GENERAL. All of the Mortgage Loans sold to the Depositor by GACC were
originated by GACC, or an affiliate of GACC, in each case, generally in
accordance with the underwriting criteria described herein. GACC originates
loans secured by retail, multifamily, office, self storage and industrial
properties as well as mobile home park properties located in the United States.
LOAN ANALYSIS. In connection with the origination of the Mortgage Loans,
GACC conducted extensive review of the related Mortgaged Property, including an
analysis of the appraisal, environmental report, property operating statements,
financial data, rent rolls and related information or statements of occupancy
rates provided by the borrower and, with respect to the Mortgage Loans secured
by retail and office properties, certain major tenant leases and the tenant's
credit. The credit of the borrower and certain key principals of the borrower
are examined for financial strength and character prior to approval of the
Mortgage Loan through a review of historical tax returns, third party credit
reports, judgment, lien, bankruptcy and pending litigation searches and, if
applicable, the loan payment history of the borrower and principals of the
borrower. Generally, borrowers are required to be single-purpose entities. A
member of the GACC underwriting or due diligence team visits the Mortgaged
Property for a site inspection to confirm the occupancy rates of the Mortgaged
Property, analyze the Mortgaged Property's market and the utility of the
Mortgaged Property within the market. Unless otherwise specified herein, all
financial occupancy and other information contained herein is based on such
information and there can be no assurance that such financial, occupancy and
other information remains accurate.
LOAN APPROVAL. Prior to commitment, all mortgage loans must be approved by
GACC's credit committee (the make-up of which varies by loan size) in accordance
with its credit policies. The credit committee may approve a mortgage loan as
recommended, request additional due diligence, modify the loan terms or decline
a loan transaction.
DEBT SERVICE COVERAGE RATIO AND LTV RATIO. GACC's underwriting standards
generally require the following minimum debt service coverage ratios for each of
the indicated property types:
PROPERTY TYPE DSCR GUIDELINE LTV RATIO GUIDELINES
-------------- ---------------- --------------------
Anchored Retail ........... 1.25x 75%
Unanchored Retail ......... 1.30x 70%
Office .................... 1.25x 75%
Multifamily ............... 1.20x 80%
Self storage .............. 1.30x 70%
Industrial/Warehouse ...... 1.25x 75%
Mobile Home Park .......... 1.20x 80%
The debt service coverage ratio guidelines listed above are calculated
based on Underwritten Net Cash Flow at origination and, with respect to the
Whole Loans, are calculated (unless otherwise specified) without regard to any
subordinate Companion Loan, if any, but including each Mortgage Loan and any
related Pari Passu Companion Loan). Therefore, the debt service coverage ratio
for each mortgage loan as reported elsewhere in this prospectus supplement and
Annex A may differ from the amount calculated at the time of origination. In
addition, GACC's underwriting guidelines generally permit a maximum amortization
period of 30 years. However, notwithstanding the foregoing, in certain
circumstances the actual debt service coverage ratios and loan-to-value ratios
for the mortgage loans originated by GACC may vary from these guidelines. See
"Description of the Mortgage Pool" in this prospectus supplement and Annex A to
this prospectus supplement.
ESCROW REQUIREMENTS. GACC generally requires a borrower to fund various
escrows for taxes and insurance, replacement reserves, re-tenanting expenses and
capital expenses, and in some cases only during periods when certain debt
service coverage ratio tests are not satisfied. In some cases, the borrower is
permitted to post a letter of credit or guaranty in lieu of funding a given
reserve or escrow. Generally, the required escrows for mortgage loans originated
by GACC are as follows:
S-59
o TAXES AND INSURANCE--Typically, an initial deposit and monthly escrow
deposits equal to 1/12 of the annual property taxes (based on the most
recent property assessment and the current millage rate) and annual
insurance premium are required to provide GACC with sufficient funds
to satisfy all taxes and insurance bills prior to their respective due
dates.
o REPLACEMENT RESERVES--Monthly deposits generally based on the greater
of the amount recommended pursuant to a building condition report
prepared for GACC or the following minimum amounts:
Retail .................. $0.20 per square foot of in-line space
Office .................. $0.20 per square foot
Multifamily ............. $250 per unit
Self storage ............ $0.15 per square foot
Industrial/Warehouse .... $0.20 per square foot
Mobile Home Park ........ $50 per pad
o RE-TENANTING--Certain major tenants and a significant number of
smaller tenants have lease expirations within the Mortgage Loan term.
To mitigate this risk, reserves may be established to be funded either
at closing and/or during the Mortgage Loan term to cover certain
anticipated leasing commissions and/or tenant improvement costs which
may be associated with re-leasing the space occupied by these tenants.
o DEFERRED MAINTENANCE/ENVIRONMENTAL REMEDIATION--Generally, an initial
deposit, upon funding of the mortgage loan, in an amount equal to at
least 125% of the estimated costs of the recommended substantial
repairs or replacements pursuant to the building condition report
completed by a licensed third-party engineer and the estimated costs
of environmental remediation expenses as recommended by an independent
environmental assessment. In some cases, borrowers are permitted to
substitute environmental insurance policies in lieu of reserves for
environmental remediation.
Mortgage Loans originated by GACC generally conform to the above described
underwriting guidelines. However, there can be no assurance that each Mortgage
Loan originated by GACC conforms in its entirety to the guidelines described
above.
LASALLE'S UNDERWRITING STANDARDS
GENERAL. LaSalle has developed guidelines establishing certain procedures
with respect to underwriting the Mortgage Loans originated or purchased by it
that are generally consistent with those described below. All of the Mortgage
Loans were generally originated in accordance with such guidelines. Two Mortgage
Loans, representing 0.83% of the Initial Outstanding Pool Balance, were
originated by another entity, and LaSalle re-underwrote such Mortgage Loans. In
some instances, one or more provisions of the guidelines were waived or modified
by LaSalle where it was determined not to adversely affect the Mortgage Loans
originated by it in any material respect.
PROPERTY ANALYSIS. LaSalle generally performs or causes to be performed a
site inspection to evaluate the location and quality of the related Mortgaged
Properties. Such inspection generally includes an evaluation of functionality,
design, attractiveness, visibility and accessibility, as well as convenience to
major thoroughfares, transportation centers, employment sources, retail areas
and educational or recreational facilities. LaSalle assesses the submarket in
which the Mortgaged Property is located to evaluate competitive or comparable
properties as well as market trends. In addition, LaSalle evaluates the
property's age, physical condition, operating history, lease and tenant mix, and
management.
CASH FLOW ANALYSIS. LaSalle reviews, among other things, historical
operating statements, rent rolls, tenant leases and/or budgeted income and
expense statements provided by the mortgagor and makes adjustments in order to
determine a DSCR. See "Description of the Mortgage Pool--Additional Mortgage
Loan Information" in this prospectus supplement.
S-60
APPRAISAL AND LOAN-TO-VALUE RATIO. For each Mortgaged Property, LaSalle
obtains a current full narrative appraisal conforming at least to the
requirements of the Financial Institutions Reform, Recovery, and Enforcement Act
of 1989 ("FIRREA"). The appraisal must be based on the highest and best use of
the Mortgaged Property and must include an estimate of the current market value
of the Mortgaged Property in its current condition. LaSalle then determines the
LTV Ratio of the Mortgage Loan at the date of origination based on the value set
forth in the appraisal.
EVALUATION OF MORTGAGOR. LaSalle evaluates the mortgagor and its principals
with respect to credit history and prior experience as an owner and operator of
commercial real estate properties. The evaluation will generally include
obtaining and reviewing a credit report or other reliable indication of the
mortgagor's financial capacity; obtaining and verifying credit references and/or
business and trade references; and obtaining and reviewing certifications
provided by the mortgagor as to prior real estate experience and current
contingent liabilities. Finally, although the Mortgage Loans are nonrecourse in
nature, in the case of certain Mortgage Loans, the mortgagor and/or certain
principals, which may be entities thereof, may be required to assume legal
responsibility for liabilities relating to fraud, misrepresentation,
misappropriation of funds and breach of environmental or hazardous waste
requirements. LaSalle evaluates the financial capacity of the mortgagor and such
principals to meet any obligations that may arise with respect to such
liabilities.
ENVIRONMENTAL SITE ASSESSMENT. Prior to origination, LaSalle either (i)
obtains or updates an environmental site assessment ("ESA") for a Mortgaged
Property prepared by a qualified environmental firm or (ii) obtains an
environmental insurance policy for a Mortgaged Property. If an ESA is obtained
or updated, LaSalle reviews the ESA to verify the absence of reported violations
of applicable laws and regulations relating to environmental protection and
hazardous waste. In cases in which the ESA identifies such violations, LaSalle
requires the mortgagor to carry out satisfactory remediation activities prior to
the origination of the Mortgage Loan, to establish an operations and maintenance
plan or to place sufficient funds in escrow at the time of origination of the
Mortgage Loan to complete such remediation within a specified period of time, or
to obtain an environmental insurance policy for the Mortgaged Property or to
execute an indemnity agreement with respect to such condition.
PHYSICAL ASSESSMENT REPORT. Prior to origination (or in certain limited
cases, after origination with respect to certain PARs), LaSalle obtains a
physical assessment report ("PAR") for each Mortgaged Property prepared by a
qualified structural engineering firm. However, in certain cases a PAR is not
obtained if the Mortgaged Property is determined to be a new construction.
LaSalle reviews the PAR to verify that the property is reported to be in
satisfactory physical condition, and to determine the anticipated costs of
necessary repair, replacement and major maintenance or capital expenditure needs
over the term of the Mortgage Loan. In cases in which the PAR identifies
material repairs or replacements needed immediately, LaSalle generally requires
the mortgagor to carry out such repairs or replacements prior to the origination
of the Mortgage Loan, or to place sufficient funds in escrow at the time of
origination of the Mortgage Loan to complete such repairs or replacements within
not more than 12 months.
TITLE INSURANCE POLICY. The mortgagor is required to provide, and LaSalle
reviews, a title insurance policy for each Mortgaged Property. The title
insurance policy must meet the following requirements: (a) the policy must be
written by a title insurer licensed to do business in the jurisdiction where the
Mortgaged Property is located, (b) the policy must be in an amount equal to the
original principal balance of the Mortgage Loan, (c) the protection and benefits
must run to the mortgagee and its successors and assigns, (d) the policy should
be written on a standard policy form of the American Land Title Association or
equivalent policy promulgated in the jurisdiction where the Mortgaged Property
is located and (e) the legal description of the Mortgaged Property in the title
policy must conform to that shown on the survey of the Mortgaged Property, where
a survey has been required.
PROPERTY INSURANCE. The mortgagor is required to provide, and LaSalle
reviews, certificates of required insurance with respect to the Mortgaged
Properties where self-insurance is not permitted. Such insurance generally may
include: (1) commercial general liability insurance for bodily injury or death
and property damage; (2) an "All Risk of Physical Loss" policy; (3) if
applicable, boiler and machinery
S-61
coverage; (4) if the Mortgaged Property is located in a flood hazard area, flood
insurance; and (5) such other coverage as LaSalle may require based on the
specific characteristics of the Mortgaged Property.
ABN AMRO BANK'S UNDERWRITING STANDARDS
ABN AMRO Bank has developed guidelines establishing certain procedures with
respect to underwriting the Mortgage Loans originated or purchased by it that
are generally consistent with those described below. In some instances, one or
more provisions of the guidelines were waived or modified by ABN AMRO Bank where
it was determined not to adversely affect the Mortgage Loan in any material
respect.
PROPERTY ANALYSIS. ABN AMRO Bank performs a site inspection to evaluate the
location and quality of a Mortgaged Property. Such inspection generally includes
an evaluation of functionality, design, attractiveness, visibility and
accessibility, as well as convenience to major thoroughfares, transportation
centers, employment sources, retail areas and educational or recreational
facilities. ABN AMRO Bank assesses the submarket in which a Mortgaged Property
is located to evaluate competitive or comparable properties as well as market
trends. In addition, ABN AMRO Bank evaluates the property's age, physical
condition, operating history, tenant mix, and management.
CASH FLOW ANALYSIS. ABN AMRO Bank reviews, among other things, historical
operating statements, rent rolls, tenant leases and/or budgeted income and
expense statements provided by the mortgagor and makes adjustments according to
generally accepted underwriting standards in order to determine a DSCR. See
"Description of the Mortgage Pool--Additional Mortgage Loan Information" in this
prospectus supplement.
APPRAISAL AND LOAN-TO-VALUE RATIO. For each Mortgaged Property, ABN AMRO
Bank obtains a current full narrative appraisal conforming at least to the
requirements of FIRREA. The appraisal must be based on the highest and best use
of a Mortgaged Property and must include an estimate of the current market value
of a Mortgaged Property in its current condition. ABN AMRO Bank then determines
the LTV Ratio of the Mortgage Loan at the date of origination based on the value
set forth in the appraisal.
EVALUATION OF MORTGAGOR. ABN AMRO Bank evaluates the mortgagor and its
principals/sponsors with respect to credit history and prior experience as an
owner and operator of commercial real estate properties. The evaluation will
generally include obtaining and reviewing a credit report or other reliable
indication of the mortgagor's financial capacity; obtaining and verifying credit
references and/or business and trade references; and obtaining and reviewing
certifications provided by the mortgagor as to prior real estate experience and
current contingent liabilities. Finally, although a Mortgage Loan is nonrecourse
in nature, in the case of certain Mortgage Loans, the mortgagor and/or certain
principals/sponsors thereof may be required to assume legal responsibility for
liabilities relating to fraud, misrepresentation, misappropriation of funds and
breach of environmental or hazardous waste requirements. ABN AMRO Bank evaluates
the financial capacity of the mortgagor and such principals/sponsors to meet any
obligations that may arise with respect to such liabilities.
ENVIRONMENTAL SITE ASSESSMENT. ABN AMRO Bank obtains or updates an ESA for
a Mortgaged Property prepared by a qualified environmental engineering firm. ABN
AMRO Bank reviews the ESA to verify the absence of reported violations of
applicable laws and regulations relating to environmental protection and
hazardous waste. In cases in which the ESA identifies such violations, ABN AMRO
Bank would require the mortgagor to perform any of the following steps according
to the ESA recommendations: (a) carry out satisfactory remediation activities
prior to the origination of the Mortgage Loan; (b) establish an operations and
maintenance plan; (c) place sufficient funds in escrow at the time of
origination of the Mortgage Loan to complete such remediation within a specified
period of time; (d) obtain an environmental insurance policy for the Mortgaged
Property; or (e) to execute an indemnity agreement with respect to such
condition.
PHYSICAL ASSESSMENT REPORT. ABN AMRO Bank obtains a physical assessment
report ("PAR") for each Mortgaged Property prepared by a qualified structural
engineering firm. ABN AMRO Bank reviews the PAR to verify that the Mortgaged
Property is reported to be in satisfactory physical condition, and to
S-62
determine the anticipated costs of necessary repair, replacement and major
maintenance or capital expenditure needs over the term of a Mortgage Loan. In
cases in which the PAR identifies material repairs or replacements needed
immediately, ABN AMRO Bank generally requires the mortgagor to carry out such
repairs or replacements prior to the origination of a Mortgage Loan, or to place
sufficient funds in escrow at the time of origination of a Mortgage Loan to
complete such repairs or replacements within not more than 12 months.
TITLE INSURANCE POLICY. The mortgagor is required to provide, and ABN AMRO
Bank reviews, a title insurance policy for each Mortgaged Property. The title
insurance policy must meet the following requirements: (a) the policy must be
written by a title insurer licensed to do business in the jurisdiction where a
Mortgaged Property is located; (b) the policy must be in an amount equal to the
original principal balance of a Mortgage Loan; (c) the protection and benefits
must run to the mortgagee and its successors and assigns; (d) the policy should
be written on a standard policy form of the American Land Title Association or
equivalent policy promulgated in the jurisdiction where a Mortgaged Property is
located; and (e) the legal description of a Mortgaged Property in the title
policy must conform to that shown on the survey of a Mortgaged Property, where a
survey has been required.
PROPERTY INSURANCE. The mortgagor is required to provide, and ABN AMRO Bank
reviews, certificates of required insurance with respect to Mortgaged
Properties.
SPLIT LOAN STRUCTURES
THE TYSONS CORNER CENTER LOAN
With respect to the Mortgage Loan known as the "Tysons Corner Center loan"
(the "Tysons Corner Center Loan"), representing approximately 15.23% of the
Initial Outstanding Pool Balance and with a Cut-off Date Balance of
$147,500,000, the related Mortgaged Property also secures three other mortgage
loans (the "Tysons Corner Center Pari Passu Loans" and, together with the Tysons
Corner Center Loan, the "Tysons Corner Center Whole Loan"). The Tysons Corner
Center Pari Passu Loans are pari passu in right of payment with the Tysons
Corner Center Loan and have Cut-off Date Balances of $95,000,000, $35,000,000
and $62,500,000, respectively. Only the Tysons Corner Center Loan is included in
the Trust. The Tysons Corner Center Companion Loans are not assets of the Trust.
With respect to the Tysons Corner Center Loan, for purposes of calculating
the loan-to-value ratios and debt service coverage ratios in this prospectus
supplement, the aggregate principal balance of the Tysons Corner Center Whole
Loan is included.
As of the Cut-off Date, the Tysons Corner Center Pari Passu Loans are owned
by GACC, one of the Mortgage Loan Sellers, but may be sold at any time.
The holders of the Tysons Corner Center Loan and the Tysons Corner Center
Pari Passu Loans have entered into an intercreditor agreement. Pursuant to the
terms of the intercreditor agreement:
o the Tysons Corner Center Loan and the Tysons Corner Center Pari Passu
Loans are of equal priority with each other and no portion of any of
them will have priority or preference over the other;
o all payments, proceeds and other recoveries on or in respect of the
Tysons Corner Center Loan and/or the Tysons Corner Center Pari Passu
Loans (in each case, subject to the rights of the Servicer and the
Trustee under the Pooling and Servicing Agreement, and any other
service providers with respect to any Tysons Corner Center Pari Passu
Loan to payments and reimbursements pursuant to and in accordance with
the terms of the Pooling and Servicing Agreement) will be applied to
the Tysons Corner Center Loan and the Tysons Corner Center Pari Passu
Loans on a PARI PASSU basis according to their respective outstanding
principal balances;
o the Pooling and Servicing Agreement will exclusively govern the
servicing and administration of the Tysons Corner Center Whole Loan
(and all decisions, consents, waivers, approvals and other actions on
the part of any holder of the Tysons Corner Center Whole Loan will be
effected in accordance with the Pooling and Servicing Agreement); and
S-63
o any decision to be made with respect to the Tysons Corner Center Whole
Loan that requires the approval of the Directing Certificateholder or
otherwise requires approval under the related intercreditor agreement
(excluding the termination of the Special Servicer and the appointment
of a successor special servicer) will require the approval of
noteholders then holding a majority of the outstanding principal
balance of the Tysons Corner Center Whole Loan. If noteholders then
holding a majority of the outstanding principal balance of the Tysons
Corner Center Whole Loan are not able to agree on a course of action
that satisfies the Servicing Standard within 30 days after receipt of
a request for consent to any action by the Servicer or the Special
Servicer, as applicable, the Directing Certificateholder will be
entitled to direct the Servicer or the Special Servicer, as
applicable, on a course of action to follow that satisfies the
requirements set forth in the Pooling and Servicing Agreement
(PROVIDED, that such action does not violate the Servicing Standard or
any other provision of the Pooling and Servicing Agreement, the
related Mortgage Loan Documents or the REMIC provisions), and the
Servicer or the Special Servicer, as applicable, will be required to
implement the course of action in accordance with the Servicing
Standard set forth in the Pooling and Servicing Agreement. Each
noteholder may consult separately with the Servicer or the Special
Servicer, as applicable, about a particular course of action. Except
as described in the second sentence of this bullet, the noteholders
then holding a majority of the outstanding principal balance of the
Tysons Corner Center Whole Loan will be entitled to approve the
following:
(i) any modification or amendment of, or waiver with respect to, the
Tysons Corner Center Whole Loan or the Mortgage Loan Documents that would
result in the extension of the applicable maturity date; a reduction in the
applicable Mortgage Rate borne thereby or the monthly payment, which
relates to any prepayment premium, exit fee or Yield Maintenance Charge
payable thereon or a deferral or forgiveness of interest on or principal of
the Tysons Corner Center Whole Loan, modification or waiver of any other
monetary term of the Tysons Corner Center Whole Loan relating to the timing
or amount of any payment of principal and interest (other than default
interest) or a modification or waiver of any provision of the Tysons Corner
Center Whole Loan which restricts the borrower from incurring additional
indebtedness or from transferring a Mortgage Property or any transfer of
direct or indirect equity interests in the borrower;
(ii) any modification or amendment of, or waiver with respect to the
related Mortgage Loan Documents that would result in a discounted pay-off;
(iii) any proposed or actual foreclosure upon or comparable conversion
(which may include acquisitions of an REO property) of the ownership of the
related Mortgaged Property securing such specially serviced mortgage loan
or any acquisition of the related mortgage loan by deed in lieu of
foreclosure;
(iv) any proposed or actual sale of the related REO property or
mortgage loan (other than in connection with the termination of the Trust
as described under `'The Pooling and Servicing Agreement--Optional
Termination in this prospectus supplement or pursuant to a purchase option
as described above under `'The Pooling and Servicing Agreement--Sale of
Defaulted Mortgage Loans");
(v) any release of the related borrower, any guarantor or other
obligor from liability;
(vi) any waiver of a `'due-on-sale" or `'due-on-encumbrance" clause
(unless such clause is not exercisable under applicable law or such
exercise is reasonably likely to result in successful legal action by the
related borrower);
(vii) any action to bring the related REO property into compliance
with applicable environmental laws or to otherwise address hazardous
materials located at an REO property;
(viii) any substitution or release of collateral or acceptance of
additional collateral;
(ix) for such mortgage loan (other than any release made in connection
with the grant of a non-material easement or right-of-way or other
non-material release such as a `'curb-cut") unless required by the
underlying Mortgage Loan Documents;
(x) any adoption or approval of a plan in a bankruptcy of the related
borrower;
S-64
(xi) consenting to any "new lease" or "lease modification" at any
mortgaged property securing the Tysons Corner Center Whole Loan, to the
extent the lender's approval is required under the related Mortgage Loan
Documents;
(xii) any renewal or replacement of the then-existing insurance
policies (to the extent the lender's approval is required under the related
Mortgage Loan Documents) or any waiver, modification or amendment of any
insurance requirements under the related mortgage loan documents; and
(xiii) any consent, waiver or approval with respect to any change in
the property manager at any mortgaged property securing the Tysons Corner
Center Whole Loan.
THE AFR/BANK OF AMERICA PORTFOLIO LOAN
With respect to the Mortgage Loan known as the "AFR/Bank of America
Portfolio loan" (the "AFR/Bank of America Portfolio Loan"), representing
approximately 8.78% of the Initial Outstanding Pool Balance and with a Cut-off
Date Balance of $85,000,000, the related Mortgaged Properties also secure four
other mortgage loans (the "AFR/Bank of America Portfolio Companion Loans").
Three of the AFR/Bank of America Portfolio Companion Loans (the "AFR/Bank of
America Portfolio Pari Passu Loans" and together with the AFR/Bank of America
Portfolio Loan, the "AFR/Bank of America Portfolio Senior Loans") are PARI PASSU
in right of payment with the AFR/Bank of America Portfolio Loan and have Cut-off
Date Balances of $100,000,000, $75,000,000 and $80,000,000, respectively. The
other AFR/Bank of America Portfolio Companion Loan is subordinate in right of
payment to the AFR/Bank of America Portfolio Senior Loans (the "AFR/Bank of
America Portfolio B Loan" and, together with the AFR/Bank of America Portfolio
Senior Loans, the "AFR/Bank of America Portfolio Whole Loan") and has a Cut-off
Date Balance of $100,000,000. Only the AFR/Bank of America Portfolio Loan is
included in the Trust. The AFR/Bank of America Portfolio Companion Loans are not
assets of the Trust.
With respect to the AFR/Bank of America Portfolio Loan, for purposes of
calculating the loan-to-value ratios and debt service coverage ratios in this
prospectus supplement, the principal balances of the AFR/Bank of America
Portfolio Senior Loans are included and the principal balance of the AFR/Bank of
America Portfolio B Loan is excluded.
As of the Cut-off Date, the largest of the AFR/Bank of America Portfolio
Pari Passu Loans (the "AFR/Bank of America Portfolio Pari Passu Loan A-1") and
the AFR/Bank of America Portfolio B Loan are owned by a commercial mortgage
securitization trust created pursuant to the pooling and servicing agreement
related to the GMAC Commercial Mortgage Securities Inc., Series 2003-C3 Mortgage
Pass-Through Certificates securitization (the "GMACCM 2003-C3 Pooling and
Servicing Agreement"). As of the Cut-off Date, one of the other two AFR/Bank of
America Portfolio Pari Passu Loans was deposited into the GE Commercial Mortgage
Corporation, Commercial Mortgage Pass-Through Certificates, Series 2004-C1
securitization and the other AFR/Bank of America Portfolio Pari Passu Loan is
owned by GACC, one of the Mortgage Loan Sellers.
The holders of the AFR/Bank of America Portfolio Senior Loans and the
AFR/Bank of America Portfolio B Loan entered into an intercreditor agreement,
which sets forth the respective rights of each of the holders of the AFR/Bank of
America Portfolio Whole Loan. Pursuant to the terms of that intercreditor
agreement:
o if no monetary event of default or other material non-monetary event
of default has occurred and is continuing (or if a monetary event of
default or other material non-monetary event of default has occurred
and is continuing, the holder of the AFR/Bank of America Portfolio B
Loan has cured such monetary event of default or other material
non-monetary event of default in accordance with the terms of that
intercreditor agreement and the GMACCM 2003-C3 Pooling and Servicing
Agreement), the holder of the AFR/Bank of America Portfolio B Loan
will generally be entitled to receive its scheduled interest payments
after the holders of the AFR/Bank of America Portfolio Senior Loans
receive their scheduled interest payments (other than default
interest) and after any advances in respect of the AFR/Bank of America
Portfolio Senior Loans and the AFR/Bank of America Portfolio B Loan
are repaid in full, and the holders of the AFR/Bank of America
Portfolio
S-65
Senior Loans and the AFR/Bank of America Portfolio B Loan will be
entitled to receive their respective scheduled, involuntary and
voluntary payments of principal on a PRO RATA basis; and
o if a monetary event of default or other material non-monetary event of
default has occurred and is continuing (and has not been cured by the
holder of the AFR/Bank of America Portfolio B Loan exercising its cure
rights in accordance with the terms of the related intercreditor
agreement and the GMACCM 2003-C3 Pooling and Servicing Agreement), the
holder of the AFR/Bank of America Portfolio B Loan will not be
entitled to receive payments of principal and interest until the
holders of the AFR/Bank of America Portfolio Senior Loans receive all
their respective accrued scheduled interest and outstanding principal
in full.
In addition, the holders of the AFR/Bank of America Portfolio Senior Loans
entered into a separate intercreditor agreement. Pursuant to the terms of that
separate intercreditor agreement:
o each AFR/Bank of America Portfolio Senior Loan is of equal priority
with each other and no portion of any AFR/Bank of America Portfolio
Senior Loan will have priority or preference over the other; and
o all payments, proceeds and other recoveries on or in respect of the
AFR/Bank of America Portfolio Senior Loans (in each case, subject to
the rights of the master servicer, the special servicer and the
trustee under the GMACCM 2003-C3 Pooling and Servicing Agreement, the
Servicer and the Trustee under the Pooling and Servicing Agreement,
and any other service providers with respect to an AFR/Bank of America
Portfolio Pari Passu Loan to payments and reimbursements pursuant to
and in accordance with the terms of the GMACCM 2003-C3 Pooling and
Servicing Agreement) will be applied to the AFR/Bank of America
Portfolio Senior Loans on a pari passu basis according to their
respective outstanding principal balances.
The AFR/Bank of America Portfolio Loan will be serviced pursuant to the
terms of the GMACCM 2003-C3 Pooling and Servicing Agreement. However, P&I
Advances with respect to the AFR/Bank of America Portfolio Loan will be made by
the Servicer or the Trustee, as applicable, as described in "The Pooling and
Servicing Agreement--Advances" in this prospectus supplement. For more
information regarding the servicing of the AFR/Bank of America Portfolio Loan,
see "The Pooling and Servicing Agreement--Servicing of the Non-Serviced Mortgage
Loans--The AFR/Bank of America Portfolio Whole Loan" in this prospectus
supplement.
The AFR/Bank of America Portfolio Loan is referred to as such in this
prospectus supplement because it is secured by Mortgaged Properties at which
Bank of America is a tenant.
THE MEADOWS MALL LOAN
With respect to the Mortgage Loan known as the "Meadows Mall loan" (the
"Meadows Mall Loan"), representing approximately 5.74% of the Initial Pool
Balance and with a Cut-off Date Balance of $55,587,072, the related Mortgaged
Property also secures one other mortgage loan (the "Meadows Mall Pari Passu
Loan"). The Meadows Mall Pari Passu Loan is PARI PASSU in right of payment with
the Meadows Mall Loan and has a Cut-off Date Balance of $55,587,072. Together,
the Meadows Mall Pari Passu Loan and the Meadows Mall Loan comprise the "Meadows
Mall Whole Loan." Only the Meadows Mall Loan is included in the Trust. The
Meadows Mall Pari Passu Loan is not an asset of the Trust.
With respect to the Meadows Mall Loan, for purposes of calculating the
loan-to-value ratios and debt service coverage ratios in this prospectus
supplement, the aggregate principal balance of the Meadows Mall Whole Loan is
included.
As of the Cut-off Date, the Meadows Mall Pari Passu Loan is owned by the
commercial mortgage securitization trust created pursuant to the pooling and
servicing agreement related to the Wachovia Commercial Mortgage Securities,
Inc., Commercial Mortgage Pass-Through Certificates, Series 2003-C9
securitization (the "Wachovia 2003-C9 Pooling and Servicing Agreement").
The holders of the Meadows Mall Loan and the Meadows Mall Pari Passu Loan
have entered into an intercreditor agreement. Pursuant to the terms of the
intercreditor agreement:
S-66
o the Meadows Mall Loan and the Meadows Mall Pari Passu Loan are of
equal priority with each other and no portion of either will have
priority or preference over the other;
o any payment, whether principal or interest, or prepayment or other
amount collected will be distributed to the holders of each of the
Meadows Mall Pari Passu Loan and the Meadows Mall Loan on a PARI PASSU
basis; and
o decisions with respect to the Meadows Mall Whole Loan will be jointly
made by the Wachovia 2003-C9 Majority Subordinate Certificateholder
and the Directing Certificateholder, including with respect to the
removal of the Wachovia 2003-C9 Special Servicer. If the holders of
each of the Meadows Mall Pari Passu Loan and the Meadows Mall Loan
cannot agree on the course of action with respect to any action over
which the Wachovia 2003-C9 Majority Subordinate Certificateholder and
the Directing Certificateholder have consent rights, then an operating
advisor will be appointed with respect to the Meadows Mall Whole Loan,
who will consult with the related noteholders. The Wachovia 2003-C9
Majority Subordinate Certificateholder will have the right to
designate a replacement special servicer for any special servicer that
has resigned or ceased to serve as special servicer. If the Wachovia
2003-C9 Majority Subordinate Certificateholder has not replaced the
Wachovia 2003-C9 Special Servicer within thirty days of such Wachovia
2003-C9 Special Servicer's resignation or the date the Wachovia
2003-C9 Special Servicer ceased to serve in such capacity, the
Wachovia 2003-C9 Trustee will designate a successor special servicer
that meets the requirements set forth in the Wachovia 2003-C9 Pooling
and Servicing Agreement.
The Meadows Mall Loan will be serviced pursuant to the terms of the related
intercreditor agreement and the Wachovia 2003-C9 Pooling and Servicing
Agreement. However, P&I Advances with respect to the Meadows Mall Loan will be
made by the Servicer or the Trustee, as applicable, as described in "The Pooling
and Servicing Agreement--Advances" in this prospectus supplement. For more
information regarding the servicing of the Meadows Mall Loan, see "Servicing of
the Non-Serviced Mortgage Loan--The Meadows Mall Whole Loan" in this prospectus
supplement.
THE WALGREENS-RIVERSIDE LOAN
With respect to the Mortgage Loan known as the "Walgreens-Riverside loan"
(the "Walgreens-Riverside Loan"), representing approximately 0.48% of the
Initial Pool Balance, and with a Cut-off Date Balance of $4,637,107, the related
Mortgaged Property also secures one other mortgage loan (the
"Walgreens-Riverside B Loan"). The Walgreens-Riverside B Loan is generally
subordinate in right of payment with the Walgreens-Riverside Loan and has a
Cut-off Date Balance of $560,811. Together, the Walgreens-Riverside B Loan and
the Walgreens-Riverside Loan comprise the "Walgreens-Riverside Whole Loan,"
which has a Cut-off Date Balance of $5,197,918. Only the Walgreens-Riverside
Loan is included in the Trust. The Walgreens-Riverside B Loan is not an asset of
the Trust.
With respect to the Walgreens-Riverside Loan, for purposes of calculating
the loan-to-value ratios and debt service coverage ratios in this prospectus
supplement, the aggregate principal balance of the Walgreens-Riverside B Loan is
excluded.
The Walgreens-Riverside B Loan is currently held by Capital Lease Funding,
LLC, an entity not affiliated with the seller of the Walgreens-Riverside Loan,
and may be sold at any time.
The holders of the Walgreens-Riverside Loan and the Walgreens-Riverside B
Loan have entered into an intercreditor agreement. Pursuant to the terms of the
intercreditor agreement:
o Payments received in respect of the Walgreens-Riverside Whole Loan
(other than amounts representing prepayments of rent and the proceeds
of any defaulted lease claim) will generally be applied first to the
Walgreens-Riverside Loan and then to the Walgreens-Riverside B Loan.
o All proceeds resulting from a claim for accelerated future rent under
the lease following a default under the Walgreens lease, after taking
account of any reduction resulting from a mitigation of damages after
re-leasing of the related Mortgaged Property or any limitation arising
under Section 502(b)(6) of the Bankruptcy Code), will generally be
paid first to the holder of the Walgreens-Riverside B Loan and then to
the Walgreens-Riverside Loan.
S-67
The holder of the Walgreens-Riverside B Loan has certain rights with
respect to the servicing of the Walgreens-Riverside Whole Loan. See "The Pooling
and Servicing Agreement--Certain Rights of the Holder of the Walgreens-Riverside
B Loan" in this prospectus supplement.
ARD LOAN
One Mortgage Loan (the "ARD Loan"), representing 0.48% of the outstanding
pool balance as of the Cut-off Date, provides that if, after a certain date (the
"Anticipated Repayment Date"), the borrower has not prepaid such Mortgage Loan
in full, any principal outstanding on that date will accrue interest at an
increased interest rate (the "Revised Rate") rather than the stated Mortgage
Rate (the "Initial Rate"). The Anticipated Repayment Date for the ARD Loan is
120 months after the origination date for the ARD Loan. The Revised Rate for the
ARD Loan is equal to the greater of (i) the Initial Rate plus 2.5% per annum or
(ii) the average weekly yield for similar instruments as reported by the Federal
Reserve Board plus 2.5% per annum, which Initial Rate will increase by 0.25% per
annum each year as described in the related Mortgage Loan Documents. After the
Anticipated Repayment Date, the ARD Loan further requires that all cash flow
available from the related Mortgaged Property after payment of the constant
periodic payment required under the terms of the related Mortgage Loan Documents
and all escrows and property expenses required under the related Mortgage Loan
Documents be used to accelerate amortization of principal on the ARD Loan. While
interest at the Initial Rate continues to accrue and be payable on a current
basis on the ARD Loan after its Anticipated Repayment Date, the payment of
interest at the excess of the Revised Rate over the Initial Rate for the ARD
Loan will be deferred and will be required to be paid, with interest, only after
the outstanding principal balance of the ARD Loan has been paid in full. The
foregoing features, to the extent applicable, are designed to increase the
likelihood that the ARD Loan will be prepaid by the respective borrower on or
about its Anticipated Repayment Date. There can be no assurance that the related
borrower will prepay the ARD Loan on its Anticipated Repayment Date.
ADDITIONAL LOAN INFORMATION
GENERAL. The following tables set forth certain information with respect to
the Mortgage Loans and Mortgaged Properties. Such information is presented,
where applicable, as of the Cut-off Date for each Mortgage Loan and the related
Mortgaged Properties, as adjusted for the scheduled principal payments due on
the Mortgage Loans on or before the Cut-off Date. The statistics in such
schedule and tables were derived, in many cases, from information and operating
statements furnished by or on behalf of the respective borrowers. Such
information and operating statements were generally unaudited and have not been
independently verified by the Depositor, the applicable Mortgage Loan Seller or
the Underwriters or any of their respective affiliates or any other person. The
sum of the amounts in any column of any of the following tables or of Annex A to
this prospectus supplement may not equal the indicated total under such column
due to rounding.
Net income for a Mortgaged Property as determined in accordance with
generally accepted accounting principles ("GAAP") would not be the same as the
stated Underwritten Net Cash Flow for such Mortgaged Property as set forth in
the following schedule or tables. In addition, Underwritten Net Cash Flow is not
a substitute for or comparable to operating income as determined in accordance
with GAAP as a measure of the results of a property's operations or a substitute
for cash flows from operating activities determined in accordance with GAAP as a
measure of liquidity. No representation is made as to the future net cash flow
of the Mortgaged Properties, nor is the Underwritten Net Cash Flow set forth
herein with respect to any Mortgaged Property intended to represent such future
net cash flow.
DEFINITIONS. For purposes of this prospectus supplement, including the
following tables and Annex A to this prospectus supplement, the indicated terms
have the following meanings:
1. "Underwritten Net Cash Flow," "Underwritten NCF" or "UW NCF" with
respect to any Mortgaged Property, means an estimate of cash flow available for
debt service in a typical year of stable, normal operations as determined by the
related Mortgage Loan Seller. In general, it is the estimated revenue derived
from the use and operation of such Mortgaged Property less the sum of estimated
(a) operating expenses (such as utilities, administrative expenses, repairs and
maintenance, management
S-68
and franchise fees and advertising), (b) fixed expenses (such as insurance, real
estate taxes and, if applicable, ground lease payments), (c) capital
expenditures and reserves for capital expenditures, including tenant improvement
costs and leasing commissions, as applicable, and (d) an allowance for vacancies
and losses. Underwritten Net Cash Flow generally does not reflect interest
expense and non-cash items such as depreciation and amortization. The
Underwritten Net Cash Flow for each Mortgaged Property is calculated on the
basis of numerous assumptions and subjective judgments, which, if ultimately
proven erroneous, could cause the actual net cash flow for such Mortgaged
Property to differ materially from the Underwritten Net Cash Flow set forth
herein. Certain such assumptions and subjective judgments of each Mortgage Loan
Seller relate to future events, conditions and circumstances, including future
expense levels, the re-leasing of vacant space and the continued leasing of
occupied space, which will be affected by a variety of complex factors over
which none of the Depositor, the applicable Mortgage Loan Seller or the Servicer
have control. In some cases, the Underwritten Net Cash Flow set forth herein for
any Mortgaged Property is higher, and may be materially higher, than the annual
net cash flow for such Mortgaged Property based on historical operating
statements.
In determining Underwritten Net Cash Flow for a Mortgaged Property, the
applicable Mortgage Loan Seller generally relied on rent rolls and/or other
generally unaudited financial information provided by the respective borrowers;
in some cases the appraisal and/or local market information was the primary
basis for the determination. From that information, the applicable Mortgage Loan
Seller calculated stabilized estimates of cash flow that took into consideration
historical financial statements (where available), material changes in the
operating position of a Mortgaged Property of which the applicable Mortgage Loan
Seller was aware (E.G., current rent roll information including newly signed
leases, near term market rent steps, expirations of "free rent" periods, market
rents, and market vacancy data), and estimated capital expenditures, leasing
commission and tenant improvement reserves. In certain cases, the applicable
Mortgage Loan Seller's estimate of Underwritten Net Cash Flow reflected
differences from the information contained in the operating statements obtained
from the respective borrowers (resulting in either an increase or decrease in
the estimate of Underwritten Net Cash Flow derived therefrom) based upon the
applicable Mortgage Loan Seller's own analysis of such operating statements and
the assumptions applied by the respective borrowers in preparing such statements
and information. In certain instances, for example, property management fees and
other expenses may have been taken into account in the calculation of
Underwritten Net Cash Flow even though such expenses may not have been reflected
in actual historic operating statements. In most of those cases, the information
was annualized, with certain adjustments for items deemed not appropriate to be
annualized, before using it as a basis for the determination of Underwritten Net
Cash Flow. No assurance can be given with respect to the accuracy of the
information provided by any borrowers, or the adequacy of the procedures used by
any Mortgage Loan Seller in determining the presented operating information.
2. "Annual Debt Service" generally means, for any Mortgage Loan, 12 times
the monthly payment in effect as of the Cut-off Date for such Mortgage Loan or,
for certain Mortgage Loans that pay interest only for a period of time, 12 times
the monthly payment of principal and interest.
3. "UW NCF DSCR," "Underwritten NCF DSCR," "Debt Service Coverage Ratio" or
"DSCR" means, with respect to any Mortgage Loan, (a) the Underwritten Net Cash
Flow for the Mortgaged Property, divided by (b) the Annual Debt Service for such
Mortgage Loan. For purposes of calculating such amounts in the following tables
and in Annex A to this prospectus supplement, original balance and Cut-off Date
Balance are reduced by approximately $6,850,000, in the aggregate, for a
holdback amount for four Mortgage Loans, representing approximately 6.47% of the
Initial Outstanding Pool Balance. In the case of the Tysons Corner Center Loan,
the AFR/Bank of America Portfolio Loan and the Meadows Mall Loan, please refer
to the Footnotes to Annex A for more detailed information regarding the
calculation of DSCR.
In general, debt service coverage ratios are used by income property
lenders to measure the ratio of (a) cash currently generated by a property that
is available for debt service to (b) required debt service payments. However,
debt service coverage ratios only measure the current, or recent, ability of a
property to service mortgage debt. If a property does not possess a stable
operating expectancy (for instance, if it is subject to material leases that are
scheduled to expire during the loan term and that provide for above-market rents
and/or that may be difficult to replace), a debt service coverage ratio
S-69
may not be a reliable indicator of a property's ability to service the mortgage
debt over the entire remaining loan term. The Underwritten NCF DSCRs are
presented herein for illustrative purposes only and, as discussed above, are
limited in their usefulness in assessing the current, or predicting the future,
ability of a Mortgaged Property to generate sufficient cash flow to repay the
related Mortgage Loan. Accordingly, no assurance can be given, and no
representation is made, that the Underwritten NCF DSCRs accurately reflects that
ability.
4. "Appraised Value" means, for any Mortgaged Property, the appraiser's
adjusted value as stated in the most recent third party appraisal available to
the Depositor. In certain cases, the appraiser's adjusted value takes into
account certain repairs or stabilization of operations. In certain cases in
which the appraiser assumed the completion of repairs, such repairs were, in
general, either completed prior to the appraisal date or the applicable Mortgage
Loan Seller has taken reserves sufficient to complete such repairs. No
representation is made that any such value would approximate either the value
that would be determined in a current appraisal of the related Mortgaged
Property or the amount that would be realized upon a sale.
5. "Cut-off Date Loan-to-Value Ratio," "Loan-to-Value Ratio," "Cut-off Date
LTV," "Cut-off Date LTV Ratio," "Current LTV," or "LTV" means, with respect to
any Mortgage Loan, (a) the Cut-off Date Balance of such Mortgage Loan divided
(b) by the Appraised Value of the Mortgaged Property or Mortgaged Properties.
For purposes of calculating such amounts in the following tables and in
Annex A to this prospectus supplement, Cut-off Date Balance is reduced by
approximately $6,850,000, in the aggregate, which is a holdback amount for four
Mortgage Loans, representing approximately 6.47% of the Initial Outstanding Pool
Balance. In addition, in the case of three Mortgage Loans known as the "Tysons
Corner Center Loan," "AFR/Bank of America Portfolio Loan" and "Meadows Mall
Loan," please refer to the Footnotes to Annex A for more detailed information
regarding the calculation of loan-to-value ratio.
6. "Square Feet" or "Sq. Ft." means, in the case of a Mortgaged Property
operated as a retail center, office, industrial/warehouse facility, combination
retail office facility or other special purpose property, the square footage of
the net rentable or leasable area.
7. "Units," "Rooms" or "Pads" means: (i) in the case of a Mortgaged
Property operated as multifamily housing, the number of apartments, regardless
of the size of or number of rooms in such apartment, (ii) in the case of a
Mortgaged Property operated as a hospitality property, the number of guest rooms
and (iii) in the case of a Mortgaged Property operated as a mobile home park,
the number of mobile homes.
8. "Occupancy Rate" means the percentage of Square Feet or Units, as the
case may be, of a Mortgaged Property that was occupied or leased or, in the case
of certain properties, average units so occupied over a specified period, as of
a specified date (identified on Annex A to this prospectus supplement as the
"Occupancy As-of Date") or as specified by the borrower or as derived from the
Mortgaged Property's rent rolls, operating statements or appraisals or as
determined by a site inspection of such Mortgaged Property. Information on Annex
A to this prospectus supplement concerning the "Largest Tenant" is presented as
of the same date as of which the Occupancy Rate is specified.
9. "Balloon Balance" means, with respect to any Balloon Loan, the principal
amount that will be due at maturity for such Balloon Loan.
10. "LTV Ratio at Maturity" means, with respect to any Balloon Loan, the
Balloon Balance for such Mortgage Loan or with respect to the ARD Loan, its
outstanding principal balance as of the related Anticipated Repayment Date
divided by the Appraised Value of the related Mortgaged Property.
In the case of the Tysons Corner Center Loan, the AFR/Bank of America
Portfolio Loan and the Meadows Mall Loan, please refer to the Footnotes to Annex
A for more detailed information regarding the calculation of loan-to-value
ratio.
11. "Mortgage Rate" or "Interest Rate" means, with respect to any Mortgage
Loan, the Mortgage Rate in effect as of the Cut-off Date for such Mortgage Loan.
S-70
12. "Servicing Fee Rate" for each Mortgage Loan is the percentage rate per
annum set forth in Annex A for such Mortgage Loan that is payable in respect of
the administration of such Mortgage Loan (which includes the Master Servicing
Fee Rate, Trustee Fee Rate and Bond Administrator Fee Rate).
13. "Term to Maturity" means, with respect to any Mortgage Loan, the
remaining term, in months, from the Cut-off Date for such Mortgage Loan to the
related maturity date or the Anticipated Repayment Date, as applicable.
14. "GLA" means gross leasable area.
15. "U/W Revenue" means, with respect to any Mortgage Loan, the gross
potential rent, less vacancies and collection loss.
16. "NRA" means net rentable area.
S-71
RANGE OF CUT-OFF DATE BALANCES
WEIGHTED AVERAGES
% OF ------------------------------------------------------------
NUMBER OF AGGREGATE OUTSTANDING STATED
RANGE OF CUT-OFF MORTGAGE CUT-OFF DATE INITIAL POOL MORTGAGE REMAINING CUT-OFF DATE LTV RATIO AT
DATE BALANCES LOANS BALANCE BALANCE RATE TERM (MOS.) DSCR LTV RATIO MATURITY
- -------------- --------- ------------ ------------ -------- ----------- ----- ------------ ------------
$997,050 to 1,999,999 ......... 20 $ 29,794,752 3.08% 5.979% 115 1.71x 67.92% 55.77%
$2,000,000 to 2,999,999 ....... 14 35,810,549 3.70 5.998 127 1.47 71.48 54.99
$3,000,000 to 3,999,999 ....... 7 24,396,874 2.52 5.810 103 1.67 68.94 59.04
$4,000,000 to 5,999,999 ....... 19 95,322,307 9.84 5.795 105 1.48 72.90 62.50
$7,000,000 to 9,999,999 ....... 9 76,279,489 7.88 5.548 97 1.41 73.91 64.56
$10,000,000 to 14,999,999 ..... 7 90,109,216 9.30 5.733 112 1.29 76.92 65.77
$15,000,000 to 29,999,999 ..... 9 195,097,783 20.15 5.430 78 1.34 72.35 67.25
$30,000,000 to 49,999,999 ..... 2 65,000,000 6.71 5.549 99 1.28 77.18 70.72
$50,000,000 to 69,999,999 ..... 2 124,087,072 12.81 5.824 148 1.50 64.16 52.79
$70,000,000 to 147,500,000 .... 2 232,500,000 24.01 5.321 119 1.89 50.46 43.13
-- ------------ ------
TOTAL/WEIGHTED
AVERAGE ..................... 91 $968,398,042 100.00% 5.583% 109 1.53x 66.72% 58.01%
== ============ ======
S-72
TYPE OF MORTGAGED PROPERTIES
% OF CUT-OFF DATE
NUMBER OF AGGREGATE OUTSTANDING NUMBER BALANCE PER
MORTGAGED CUT-OFF DATE INITIAL OF UNITS OR # OF UNITS
PROPERTY TYPE PROPERTIES BALANCE POOL BALANCE(2) NRA OR NRA
- ------------- ---------- ------------ ------------ ----------- -----------
Office ............... 139 $334,850,585 34.58% 9,201,916 $ 36.39
Retail ............... 13 306,331,612 31.63 2,785,345 $ 109.98
ANCHORED ........... 11 297,351,278 30.71 2,704,989 $ 109.93
SHADOW ANCHORED .... 2 8,980,334 0.93 80,356 $ 111.76
Multifamily .......... 62 304,251,002 31.42 11,248 $ 27,049.34
MULTIFAMILY ........ 41 255,784,941 26.41 6,925 $ 36,936.45
MOBILE HOME PARK ... 21 48,466,061 5.00 4,323 $ 11,211.21
Mixed Use(1) ......... 39 14,666,006 1.51 578,721 $ 25.34
Industrial ........... 2 8,298,837 0.86 226,680 $ 36.61
--- ------------ ------
TOTAL/WEIGHTED AVERAGE 255 $968,398,042 100.00%
=== ============ ======
WEIGHTED AVERAGES
----------------------------------------------------------------
STATED CUT-OFF
MORTGAGE REMAINING DATE LTV LTV RATIO AT
RATE TERM (MOS.) OCCUPANCY DSCR RATIO MATURITY
-------- ----------- ---------- ----- -------- ------------
Office ............... 5.731% 116 92.81% 1.49x 65.11% 56.17%
Retail ............... 5.372 110 96.39 1.69 61.52 53.20
ANCHORED ........... 5.367 110 96.54 1.70 61.06 52.73
SHADOW ANCHORED .... 5.526 83 91.13 1.50 76.71 68.76
Multifamily .......... 5.614 101 94.75 1.41 73.54 64.79
MULTIFAMILY ........ 5.576 101 94.75 1.33 75.08 66.46
MOBILE HOME PARK ... 5.811 102 94.79 1.86 65.38 56.01
Mixed Use(1) ......... 5.737 118 97.73 1.56 65.04 54.87
Industrial ........... 6.007 101 90.06 1.35 76.17 66.61
TOTAL/WEIGHTED AVERAGE 5.583% 109 94.60% 1.53x 66.72% 58.01%
- ----------------------
(1) Includes office and retail spaces.
(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 (which amounts, if not specified in the related Mortgage Loan
Documents, are based on the appraised values or square footage of each
Mortgaged Property and/or each Mortgaged Property's underwritten net cash
flow).
S-73
MORTGAGED PROPERTIES BY STATE AND/OR LOCATION
WEIGHTED AVERAGES
% OF ---------------------------------------------------------
NUMBER OF AGGREGATE OUTSTANDING STATED
MORTGAGE CUT-OFF DATE INITIAL POOL MORTGAGE REMAINING CUT-OFF DATE LTV RATIO AT
STATE/LOCATION LOANS BALANCE BALANCE(2) RATE TERM (MOS.) DSCR LTV RATIO MATURITY
- -------------- --------- ------------- ------------ -------- ---------- ----- ------------ ------------
Virginia ............... 10 $159,071,194 16.43% 5.266% 120 1.91x 52.26% 45.03%
District Of Columbia ... 2 80,800,000 8.34 6.060 168 1.30 66.69 54.56
Florida ................ 39 75,778,462 7.83 5.715 114 1.59 62.03 55.94
North Carolina ......... 17 69,505,715 7.18 5.633 109 1.38 72.49 60.51
New York ............... 5 67,483,123 6.97 5.586 96 1.26 72.55 64.68
Texas .................. 29 67,190,981 6.94 5.732 92 1.44 72.33 61.36
Utah ................... 3 61,433,164 6.34 5.354 77 1.27 77.17 71.77
California(1) .......... 54 59,552,370 6.15 5.708 109 1.55 64.77 55.91
S. CALIFORNIA ........ 36 41,125,787 4.25 5.733 105 1.48 68.89 59.96
N. CALIFORNIA ........ 18 18,426,583 1.90 5.653 117 1.71 55.57 46.86
Nevada ................. 3 55,990,140 5.78 5.453 113 1.74 63.85 53.66
Illinois ............... 4 43,464,733 4.49 5.358 73 1.47 67.42 64.23
Washington ............. 17 38,251,788 3.95 5.541 89 1.60 63.41 57.01
Michigan ............... 6 31,882,812 3.29 5.509 118 1.43 78.63 65.55
Pennsylvania ........... 2 26,468,145 2.73 5.847 119 1.26 79.49 67.19
Georgia ................ 10 20,845,518 2.15 5.769 118 1.72 67.82 57.23
Colorado ............... 1 17,000,000 1.76 4.930 59 1.20 71.43 68.22
Louisiana .............. 1 14,368,535 1.48 5.520 82 1.38 79.83 71.60
Mississippi ............ 2 12,505,761 1.29 5.781 117 1.37 79.25 66.96
Maryland ............... 3 9,722,395 1.00 5.594 120 1.41 67.05 63.53
Alabama ................ 3 7,730,364 0.80 6.208 118 1.29 76.39 61.28
Tennessee .............. 4 7,691,732 0.79 6.232 118 1.30 71.58 61.24
Missouri ............... 14 6,947,301 0.72 5.335 72 1.63 71.58 65.45
Arizona ................ 8 6,817,898 0.70 5.476 104 1.81 54.49 47.34
Kansas ................. 3 6,185,356 0.64 6.233 119 1.72 63.16 49.55
Ohio ................... 3 6,139,844 0.63 5.789 119 1.37 79.74 61.40
Wisconsin .............. 1 4,626,436 0.48 5.850 81 1.39 79.08 71.47
Nebraska ............... 1 3,392,330 0.35 5.350 82 3.17 35.71 31.92
New Jersey ............. 1 3,226,843 0.33 5.730 80 1.41 74.18 66.95
Oklahoma ............... 3 1,856,503 0.19 5.903 118 1.35 77.38 60.15
Oregon ................. 1 1,447,046 0.15 5.890 118 3.40 31.05 26.30
New Mexico ............. 2 570,496 0.06 5.489 117 1.92 47.24 39.64
South Carolina ......... 1 189,752 0.02 5.489 117 1.92 47.24 39.64
Idaho .................. 1 171,149 0.02 5.489 117 1.92 47.24 39.64
Arkansas ............... 1 90,155 0.01 5.489 117 1.92 47.24 39.64
--- ------------ ------
TOTAL/WEIGHTED
AVERAGE .............. 255 $968,398,042 100.00% 5.583% 109 1.53x 66.72% 58.01%
==== ============ ======
- --------------
(1) Northern California properties have a zip code greater than or equal to
93600. Southern California properties have a zip code less than 93600.
(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 (which amounts, if not specified in the related Mortgage Loan
Documents, are based on the appraised values or square footage of each
Mortgaged Property and/or each Mortgaged Property's underwritten net cash
flow).
S-74
RANGE OF DEBT SERVICE COVERAGE RATIOS AS OF THE CUT-OFF DATE
WEIGHTED AVERAGES
% OF ------------------------------------------------------------
NUMBER OF AGGREGATE OUTSTANDING STATED
RANGE OF DEBT SERVICE MORTGAGE CUT-OFF DATE INITIAL POOL MORTGAGE REMAINING CUT-OFF DATE LTV RATIO AT
COVERAGE RATIOS LOANS BALANCE BALANCE RATE TERM (MOS.) DSCR LTV RATIO MATURITY
- ----------------- --------- ------------ ------------ -------- ----------- ----- ------------ ------------
1.16x+ to 1.19x .......... 1 $ 2,734,953 0.28% 6.780% 289 1.16x 74.52% --%
1.20x+ to 1.29x .......... 14 202,592,819 20.92 5.461 88 1.24 75.32 67.96
1.30x+ to 1.39x .......... 31 267,008,694 27.57 5.871 124 1.34 71.92 62.38
1.40x+ to 1.49x .......... 22 117,777,101 12.16 5.612 100 1.45 74.00 63.96
1.50x+ to 1.59x .......... 9 49,619,052 5.12 5.588 73 1.52 71.34 64.43
1.60x+ to 1.74x .......... 6 80,109,880 8.27 5.568 115 1.72 64.87 54.27
1.75x+ to 1.99x .......... 3 238,128,597 24.59 5.335 119 1.90 50.96 43.55
2.00x+ to 2.49x .......... 1 997,050 0.10 5.870 118 2.13 39.88 30.84
2.50x+ to 4.19x .......... 4 9,429,897 0.97 5.667 105 3.30 33.23 28.72
-- ------------ ------
TOTAL/WEIGHTED
AVERAGE ................ 91 $968,398,042 100.00% 5.583% 109 1.53x 66.72% 58.01%
== ============ ======
RANGE OF LTV RATIOS AS OF THE CUT-OFF DATE
WEIGHTED AVERAGES
% OF ------------------------------------------------------------
NUMBER OF AGGREGATE OUTSTANDING STATED
RANGE OF LTV RATIOS MORTGAGE CUT-OFF DATE INITIAL POOL MORTGAGE REMAINING CUT-OFF DATE LTV RATIO AT
AS OF THE CUT-OFF DATE LOANS BALANCE BALANCE RATE TERM (MOS.) DSCR LTV RATIO MATURITY
- ---------------------- --------- ------------ ------------ -------- ----------- ----- ------------ ------------
25.59% to 29.99% ........ 1 $ 1,995,879 0.21% 5.830% 118 4.19x 25.59% 21.64%
30.00% to 39.99% ........ 4 8,431,068 0.87 5.652 104 2.95 35.82 30.65
40.00% to 49.99% ........ 1 85,000,000 8.78 5.489 117 1.92 47.24 39.64
50.00% to 59.99% ........ 2 152,518,559 15.75 5.229 118 1.86 52.51 45.49
60.00% to 69.99% ........ 19 263,890,873 27.25 5.796 122 1.48 65.64 57.01
70.00% to 74.99% ........ 28 215,617,833 22.27 5.574 91 1.33 73.47 65.20
75.00% to 80.00% ........ 36 240,943,830 24.88 5.610 104 1.34 79.13 68.34
-- ------------ ------
TOTAL/WEIGHTED
AVERAGE ................ 91 $968,398,042 100.00% 5.583% 109 1.53x 66.72% 58.01%
== ============ ======
S-75
RANGE OF LTV RATIOS AS OF MATURITY DATES(1)
WEIGHTED AVERAGES
% OF ------------------------------------------------------------
NUMBER OF AGGREGATE OUTSTANDING STATED
RATIOS RANGE OF LTV AS MORTGAGE CUT-OFF DATE INITIAL POOL MORTGAGE REMAINING CUT-OFF DATE LTV RATIO AT
OF MATURITY DATES LOANS BALANCE BALANCE RATE TERM (MOS.) DSCR LTV RATIO MATURITY
- ---------------------- --------- ------------ ------------ -------- ----------- ----- ------------ ------------
0.00% to 29.99% ....... 3 $ 6,177,878 0.64% 6.265% 194 2.66x 48.53% 13.15%
30.00% to 39.99% ....... 4 91,984,022 9.50 5.498 116 1.99 46.45 39.03
40.00% to 49.99% ....... 1 147,500,000 15.23 5.224 120 1.88 52.31 45.14
50.00% to 59.99% ....... 24 223,630,819 23.09 5.861 137 1.46 66.72 54.50
60.00% to 69.99% ....... 48 373,767,119 38.60 5.655 98 1.37 73.80 65.36
70.00% to 75.30% ....... 11 125,338,205 12.94 5.324 69 1.33 78.31 73.63
-- ------------ ------
TOTAL/WEIGHTED
AVERAGE .............. 91 $968,398,042 100.00% 5.583% 109 1.53x 66.72% 58.01%
== ============ ======
- -------------
(1) With respect to one ARD Loan, representing 0.48% of the Initial Outstanding
Pool Balance, as of its Anticipated Repayment Date.
RANGE OF MORTGAGE RATES AS OF THE CUT-OFF DATE
WEIGHTED AVERAGES
% OF ------------------------------------------------------------
NUMBER OF AGGREGATE OUTSTANDING STATED
MORTGAGE CUT-OFF DATE INITIAL POOL MORTGAGE REMAINING CUT-OFF DATE LTV RATIO AT
RANGE OF MORTGAGE RATES LOANS BALANCE BALANCE RATE TERM (MOS.) DSCR LTV RATIO MATURITY
- ----------------------- --------- ------------ ------------ -------- ----------- ----- ------------ ------------
4.930% to 4.999% ...... 2 $ 40,911,302 4.22% 4.948% 57 1.21x 72.55% 68.05%
5.000% to 5.249% ...... 6 214,369,071 22.14 5.218 105 1.70 60.63 54.11
5.250% to 5.449% ...... 10 93,133,367 9.62 5.358 73 1.42 73.46 67.80
5.450% to 5.749% ...... 18 292,331,144 30.19 5.534 103 1.64 63.66 55.32
5.750% to 5.999% ...... 31 192,917,550 19.92 5.903 123 1.43 72.02 61.56
6.000% to 6.449% ...... 23 132,000,655 13.63 6.147 149 1.34 68.90 56.29
6.450% to 6.780% ...... 1 2,734,953 0.28 6.780 289 1.16 74.52 --
-- ------------ ------
TOTAL/WEIGHTED
AVERAGE ............. 91 $968,398,042 100.00% 5.583% 109 1.53x 66.72% 58.01%
== ============ ======
RANGE OF REMAINING TERMS TO MATURITY DATE IN MONTHS(1)
WEIGHTED AVERAGES
% OF ------------------------------------------------------------
NUMBER OF AGGREGATE OUTSTANDING STATED
RANGE OF REMAINING MORTGAGE CUT-OFF DATE INITIAL POOL MORTGAGE REMAINING CUT-OFF DATE LTV RATIO AT
TERMS (MOS.) LOANS BALANCE BALANCE RATE TERM (MOS.) DSCR LTV RATIO MATURITY
- ------------------ --------- ------------ ------------ -------- ----------- ----- ------------ ------------
55 to 59 ............ 14 $164,713,874 17.01% 5.258% 57 1.33x 73.63% 69.42%
60 to 84 ............ 10 111,221,933 11.49 5.448 81 1.42 73.67 67.37
85 to 114 ........... 3 62,020,698 6.40 5.510 113 1.70 65.33 55.00
115 to 119 .......... 55 350,566,035 36.20 5.785 118 1.56 66.37 56.47
120 to 139 .......... 5 191,000,000 19.72 5.351 120 1.76 57.35 49.52
140 to 199 .......... 3 86,140,549 8.90 6.087 178 1.30 67.43 53.21
200 to 289 .......... 1 2,734,953 0.28 6.780 289 1.16 74.52 --
-- ------------ ------
TOTAL/WEIGHTED
AVERAGE ........... 91 $968,398,042 100.00% 5.583% 109 1.53X 66.72% 58.01%
== ============ ======
- -------------
(1) With respect to one ARD Loan, representing 0.48% of the Initial Outstanding
Pool Balance, as of its Anticipated Repayment Date.
S-76
TEN LARGEST MORTGAGE LOANS
WEIGHTED AVERAGES
% OF ------------------------------------------------------
NUMBER OF NUMBER OF AGGREGATE OUTSTANDING STATED
MORTGAGE MORTGAGED CUT-OFF DATE INITIAL POOL MORTGAGE REMAINING CUT-OFF DATE LTV RATIO AT
MORTGAGE LOANS LOANS PROPERTIES BALANCE BALANCE RATE TERM (MOS.) DSCR LTV RATIO MATURITY
- -------------------- --------- ---------- ------------ ------------ -------- ----------- ---- ------------ ------------
Tysons Corner Center 1 1 $147,500,000 15.23% 5.224% 120 1.88x 52.31% 45.14%
AFR/Bank of America
Portfolio 1 152 85,000,000 8.78 5.489 117 1.92 47.24 39.64
The Watergate/
600 New Hampshire
Avenue 1 1 68,500,000 7.07 6.125 177 1.31 64.32 52.01
Meadows Mall 1 1 55,587,072 5.74 5.453 113 1.74 63.97 53.76
Fairstone at Riverview 1 1 35,000,000 3.61 5.240 83 1.25 79.37 74.76
321 West 44th Street 1 1 30,000,000 3.10 5.910 118 1.32 74.63 66.00
Wenatchee Valley Mall 1 1 26,000,000 2.68 5.540 80 1.49 68.42 62.46
Shoppes at Grand
Prairie 1 1 25,974,625 2.68 5.305 56 1.28 73.71 73.25
Wiener Portfolio III 1 2 23,911,302 2.47 4.960 56 1.21 73.35 67.93
1401 Enclave Pkwy 1 1 23,549,204 2.43 5.600 58 1.51 68.06 63.47
-- --- ------------ -----
TOTAL/WEIGHTED
AVERAGE 10 162 $521,022,203 53.80% 5.475% 113 1.63x 60.96% 53.40%
== === ============ =====
S-77
CERTAIN TERMS AND CONDITIONS OF THE MORTGAGE LOANS
CALCULATION OF INTEREST. 15.23% of the Mortgage Loans, based on the Initial
Outstanding Pool Balance, accrue interest on the basis of a 360-day year
consisting of twelve 30-day months, 84.77% of the Mortgage Loans, based on the
Initial Outstanding Pool Balance, accrue interest on the basis of the actual
number of days elapsed and a 360-day year.
AMORTIZATION OF PRINCIPAL. The Mortgage Loans provide for one of the
following:
Ninety Mortgage Loans, representing 99.72% of the Initial Outstanding Pool
Balance, provide for payments of interest and principal and then have an
expected Balloon Balance at the maturity date or the Anticipated Repayment Date,
as applicable.
One Mortgage Loan, representing 0.28% of the Initial Outstanding Pool
Balance, is fully amortizing.
Eleven Mortgage Loans, representing 46.36% of the Initial Outstanding Pool
Balance, provide for payments of interest only for the first 8 to 35 months
following the cut-off date and thereafter provide for regularly scheduled
payments of interest and principal based on an amortization period longer than
the remaining term of the related Mortgage Loan and therefore have an expected
Balloon Balance at the related maturity date.
One Mortgage Loan, representing 0.48% of the Initial Outstanding Pool
Balance, provides for an increase in the related interest rate after the
Anticipated Repayment Date. The Excess Interest will be deferred and will not be
paid until the principal balance and all other amounts related thereto of the
related Mortgage Loan have been paid. Any amount received in respect of that
deferred interest will be distributed to the holders of the Class Q
Certificates.
PREPAYMENT PROVISIONS. All of the Mortgage Loans (other than the AFR/Bank
of America Portfolio Loan) prohibit voluntary prepayment or defeasance as
described below under "--Property Releases" for a specified period (each, a
"Lock-Out Period") of at least two years from the Closing Date. The weighted
average Lock-Out Period remaining from the Cut-off Date for the Mortgage Loans
is approximately 25 months. Following the expiration of the Lock-Out Period,
each Mortgage Loan restricts voluntary prepayments in one of the following ways:
(1) Ninety of the Mortgage Loans, representing approximately 97.32% of
the Initial Outstanding Pool Balance, permit only defeasance after the
expiration of the Lock-out Period. In the case of certain Mortgage Loans
that are secured by multiple properties or separate parcels on the same
Mortgaged Property, partial defeasance is permitted, subject to certain
conditions in the related Mortgage Loan Documents.
(2) One of the Mortgage Loans, representing approximately 2.68% of the
Initial Outstanding Pool Balance, requires that any principal prepayment
made during a specified period of time after the Lock-Out Period (a "Yield
Maintenance Period"), be accompanied by a Yield Maintenance Charge.
The AFR/Bank of America Portfolio Loan permits the voluntary prepayment of
a specified portion of the Mortgage Loan (subject to payment of a Yield
Maintenance Charge) in connection with the sale and release of certain
identified Mortgaged Properties during its Lock-Out Period. From and after
December 18, 2005 (the date that is two years after the start-up date of the
Loan REMIC), defeasance is permitted with respect to any of the Mortgaged
Properties, subject to certain conditions in the Mortgage Loan Documents. From
and after August 1, 2013, the AFR/Bank of America Portfolio Loan may be prepaid
without payment of a Yield Maintenance Charge. A separate REMIC election will be
made with respect to the AFR/Bank of America Portfolio Loan.
"Yield Maintenance Charge" means:
o with respect to the AFR/Bank of America Portfolio Loan, representing
approximately 8.78% of the Initial Outstanding Pool Balance, such
Mortgage Loan's PRO RATA share (based on its principal balance) of the
product of (A) the excess, if any (expressed as a percentage of the
outstanding principal amount before any prepayment), of (i) the sum of
the present values of all remaining scheduled payments of principal
and interest, including the payment of principal and
S-78
interest scheduled to be outstanding on the maturity date, discounted
at a rate that equals the Treasury Rate (converted to a monthly
equivalent) over (ii) the outstanding principal amount immediately
before such prepayment and (B) the principal amount being repaid; and
o with respect to the Shoppes at Grand Prairie Loan, representing
approximately 2.68% of the Initial Outstanding Pool Balance, the
present value, as of the date of the related prepayment and based on a
discount rate equal to the Comparable Treasury Rate and trading
closest to par, of the excess of
(a) the total amount of interest that would accrue to the lender on
account of the unpaid principal balance of the Mortgage Loan as of the date
of the related prepayment through the last day of the Yield Maintenance
Period (which for this Mortgage Loan ends on the maturity date), assuming
no reduction of such unpaid principal balance between such dates and
assuming that such interest is paid on a 30/360 basis, over
(b) the total amount of investment income that would be earned by the
lender from the date of the related prepayment through the last day of the
yield maintenance period accruing on a 30/360 basis (which for this
Mortgage Loan ends on the maturity date), if the principal balance of the
Mortgage Loan (as of the date of the related prepayment) were invested in
United States government general issue Treasury Securities at the
Comparable Treasury Rate during the Yield Maintenance Period.
"Treasury Rate" means, as of any payment date, the yield, calculated by
linear interpolation (rounded to the nearest one-thousandth of one percent) of
the yields of non-callable United States Treasury obligations with terms (one
longer and one shorter) most nearly approximating the period from such payment
date to the anticipated repayment date, as determined on the basis of Federal
Reserve Statistical Release H.15 Selected Interest Rates under the heading U.S.
Governmental Security/Treasury Constant Maturities (or if such release is
unavailable, another recognized source).
"Comparable Treasury Rate" means the rate of interest which is equal to the
average yield (determined by the lender on the date that is seven days prior to
the date of the related prepayment) on then generally available United States
government general issue Treasury securities maturing nearest to the end of the
Yield Maintenance Period.
"Prepayment Premium" means, with respect to any Mortgage Loan, any premium,
fee or other additional amount (other than a Yield Maintenance Charge) paid or
payable, as the context requires, by a borrower in connection with a Principal
Prepayment on, or other early collection of principal of, that Mortgage Loan.
Prepayment Premiums and Yield Maintenance Charges are distributable as
described in this prospectus supplement under "Description of the
Certificates--Distributions--Prepayment Premiums."
Generally, all of the Mortgage Loans permit voluntary prepayment without
the payment of any penalty during the last one to seven scheduled payment dates
(including the scheduled payment on the stated maturity date). All of the
Mortgage Loans that permit prepayments require that the prepayment be made on
the Due Date or, if on a different date, that any prepayment be accompanied by
the interest that would be due on the next Due Date.
Certain Mortgage Loans require the payment of certain liquidated damages
specified in the related Mortgage Loan Documents in the event of a voluntary
prepayment during the Lock-Out Period in violation of the related Mortgage Loan
Documents.
Certain state laws limit the amounts that a lender may collect from a
borrower as an additional charge in connection with the prepayment of a Mortgage
Loan. Provided no event of default exists, none of the Mortgage Loans require
the payment of Yield Maintenance Charges in connection with a prepayment of the
related Mortgage Loan as a result of a total casualty or condemnation. Certain
of the Mortgage Loans may require the payment of Prepayment Premiums or Yield
Maintenance Charges in connection with an acceleration of the related Mortgage
Loan. There can be no assurance that the related borrowers will pay the
Prepayment Premiums or Yield Maintenance Charges. See "Risk Factors--Risks
Related to Enforceability of Prepayment Premiums, Yield Maintenance Charges and
S-79
Defeasance Provisions" in this prospectus supplement and "Certain Legal Aspects
of Mortgage Loans--Default Interest and Limitations on Prepayments" in the
prospectus.
In the case of most of the Mortgage Loans, if an award or loss resulting
from an event of condemnation or casualty is less than a specified percentage of
the original principal balance of the Mortgage Loan and if in the reasonable
judgment of the lender (i) the Mortgaged Property can be restored within six
months prior to the maturity of the related Note to a property no less valuable
or useful than it was prior to the condemnation or casualty, (ii) after a
restoration the Mortgaged Property would adequately secure the outstanding
balance of the related Note and (iii) no event of default has occurred or is
continuing, the proceeds or award may be applied by the borrower to the costs of
repairing or replacing the Mortgaged Property. In all other circumstances, the
Mortgage Loans provide generally that in the event of a condemnation or
casualty, the lender may apply the condemnation award or insurance proceeds to
the repayment of debt, without payment of a Prepayment Premium or a Yield
Maintenance Charge. In general, in the event that a condemnation award or
insurance proceeds are used to prepay a Specially Serviced Mortgage Loan, the
constant monthly payment due under the related Note will be revised based on the
remaining balance, amortization term and the applicable interest rate.
Certain Mortgage Loans provide that if casualty or condemnation proceeds
are above a specified amount, the borrower will be permitted to supplement such
proceeds with an amount sufficient to prepay the entire principal balance of the
Mortgage Loan. In such event, no Prepayment Premium or Yield Maintenance Charge
would be required to be paid.
Neither the Depositor nor any of the Mortgage Loan Sellers makes any
representation as to the enforceability of the provision of any Mortgage Loan
requiring the payment of a Prepayment Premium or a Yield Maintenance Charge, or
of the collectability of any Prepayment Premium or Yield Maintenance Charge. See
"Risk Factors--Risks Related to the Offered Certificates--Risk Related to
Prepayments and Repurchases" and "--Yield Considerations" in this prospectus
supplement and "Certain Legal Aspects of Mortgage Loans--Default Interest and
Limitations on Prepayments" in the prospectus.
PROPERTY RELEASES. Certain of the Mortgage Loans contain provisions which
permit the related borrower to release some or all of the Mortgaged Properties
securing such Mortgage Loans.
All of the Mortgage Loans (other than the Mortgage Loan known as the
"Shoppes at Grand Prairie loan") permit the applicable borrower to defease the
Mortgage Loan at any time after a specified period (the "Defeasance Lock-Out
Period"), PROVIDED no event of default exists, to obtain a release of the
Mortgaged Property from the lien of the related Mortgage ("Defeasance" or, the
option to cause a Defeasance, the "Defeasance Option"), PROVIDED that, among
other conditions, the borrower (a) pays on any Due Date (the "Release Date") (i)
all interest accrued and unpaid on the principal balance of the Note (or, with
respect to a partial Defeasance, a portion of the defeased Note) to and
including the Release Date and (ii) all other sums, excluding scheduled interest
or principal payments, due under the Mortgage Loan and all other Mortgage Loan
Documents executed in connection therewith, and (b) delivers "government
securities" (within the meaning of Section 2(a)(16) of the Investment Company
Act of 1940, as amended), that are acceptable to the Rating Agencies (the
"Defeasance Collateral") in an amount sufficient to make payments on or prior
to, but as close as possible to, all successive scheduled payment dates from the
Release Date to the related maturity date (or Anticipated Repayment Date, if
applicable), in amounts equal to the scheduled payments due on such dates under
the Mortgage Loan or the defeased amount thereof in the case of a partial
Defeasance. In addition, in connection with a Defeasance, the related borrower
is generally required to (i) pay any costs and expenses incurred in connection
with the Defeasance and (ii) deliver a security agreement granting the Trust a
first priority lien on the Defeasance Collateral and an opinion of counsel to
such effect.
Certain Mortgage Loans permit the release of individual Mortgaged
Properties upon the partial Defeasance of the related Mortgage Loan. Except as
described below, these Mortgage Loans generally require that (i) prior to the
release of a related Mortgaged Property, the borrower deliver Defeasance
Collateral at least equal to a specified percentage (generally 125%) of the
allocated loan amount for such Mortgaged Property to be defeased and (ii) that
the DSCR with respect to the remaining
S-80
Mortgaged Properties after the Defeasance be no less than the greater of (x) the
DSCR at origination and (y) the DSCR immediately prior to such defeasance.
In many cases, a successor borrower will assume the obligations of the
borrower exercising a Defeasance Option and such borrower will be released from
its obligations under the related Mortgage Loan Documents. If a Mortgage Loan is
partially defeased and the successor borrower will be assuming the borrowers
obligations, the related Note will generally be split and only the defeased
portion of the borrower's obligations will be transferred to the successor
borrower.
In addition to the release by substitution of a Mortgaged Property securing
a Mortgage Loan for Defeasance Collateral, certain of the Mortgage Loans permit
the release of a Mortgaged Property or portion thereof as follows:
o the release of a Mortgaged Property or a portion of a Mortgaged
Property where such property was given no or little value in
connection with loan origination and underwriting criteria;
o with respect to the Tysons Corner Center Loan, the borrower is
permitted to obtain the release of certain out-parcels and surface and
garage parking parcels subject to the satisfaction of certain
conditions specified in the related Mortgage Loan Documents (including
written confirmation from the Rating Agencies that such action would
not cause the then current rating of the Certificates to be qualified,
withdrawn or downgraded) but without the payment of a release payment.
o with respect to the AFR/Bank of America Portfolio Loan, the release of
certain designated Mortgaged Properties prior to the related
defeasance lock-out period, subject to payment of a Yield Maintenance
Charge and satisfaction of a DSCR test and payment of 110% of the
related allocated loan amount by the borrower; and after the related
defeasance lock-out period, the AFR Bank of America Portfolio Loan
requires that prior to the release of a related Mortgaged Property,
the borrower deliver Defeasance Collateral based on a release price
equal to a scaled percentage of the allocated loan amount for such
Mortgaged Property, which may vary between 110% and 125%.
The release price that is required to be paid for any release property
with an allocated loan amount will be:
RELEASE PRICE
TOTAL AMOUNT PREPAID/DEFEASED (% OF ALLOCATED LOAN AMOUNT)
-------------------------------- -----------------------------
$60,000,000 or less 110.0%
$60,000,001 - $100,000,000 117.5%
more than $100,000,000 125.0%
The release price that is required to be paid for any release property
that has no allocated loan amount will be the lesser of (i) the actual
consideration received by the borrower from Bank of America in the
event such individual property is transferred by the borrower to Bank
of America and (ii) 50% of the origination-date appraisal value of the
release property.
S-81
Designated Release Property List for the AFR/Bank of America Portfolio Whole
Loan:
- ------------------------------------------------------------------------------------------------------------------
ALLOCATED LOAN RELEASE
PROPERTY CITY STATE AMOUNT PRICE
- ------------------------------------------------------------------------------------------------------------------
One South Van Ness Boulevard San Francisco CA $34,878,437 $38,366,281
- ------------------------------------------------------------------------------------------------------------------
500 Ellinwood Way Pleasant Hill CA $2,780,450 $3,058,495
- ------------------------------------------------------------------------------------------------------------------
5875 NW 163rd Street Miami Lakes FL $7,368,684 $8,105,552
- ------------------------------------------------------------------------------------------------------------------
18305 Biscayne Boulevard Aventura FL $2,456,228 $2,701,851
- ------------------------------------------------------------------------------------------------------------------
801 Main Street Lynchburg VA $1,031,616 $1,134,777
- ------------------------------------------------------------------------------------------------------------------
204 East Rush Harrison AR $466,683 $513,352
- ------------------------------------------------------------------------------------------------------------------
606 Broad Street South Boston VA $356,153 $391,768
- ------------------------------------------------------------------------------------------------------------------
11755 Biscayne Boulevard North Miami FL $859,680 $945,648
- ------------------------------------------------------------------------------------------------------------------
128 South Washington Street Albany GA $540,370 $594,407
- ------------------------------------------------------------------------------------------------------------------
102 East Front Street Port Angeles WA $491,246 $540,370
- ------------------------------------------------------------------------------------------------------------------
7680 Girard Avenue La Jolla CA $2,407,103 $2,647,814
- ------------------------------------------------------------------------------------------------------------------
231 South Ridgewood Drive Sebring FL $515,808 $567,389
- ------------------------------------------------------------------------------------------------------------------
3415/17 Eastern Avenue Baltimore MD $392,996 $432,296
- ------------------------------------------------------------------------------------------------------------------
TOTAL $54,545,454 $60,000,000
- ------------------------------------------------------------------------------------------------------------------
The Depositor makes no representation as to the enforceability of the
defeasance provisions of any Mortgage Loan. See "Risk Factors--Risks Related to
the Offered Certificates--Risks Related to Prepayments and Repurchases" and
"--Yield Considerations" in this prospectus supplement.
ESCROWS. Certain of the Mortgage Loans provide for monthly escrows to cover
property taxes, insurance premiums, ground lease payments and ongoing capital
replacements. For information regarding certain escrows, see Annex A to this
prospectus supplement.
OTHER FINANCING. The applicable Mortgage Loan Sellers have informed us that
they are aware of the following actual or potential additional indebtedness
secured by a Mortgaged Property with respect to a Mortgage Loan:
o with respect to the Tysons Corner Center Loan, representing
approximately 15.23% of the Initial Outstanding Pool Balance, the
related Mortgaged Property also secures the Tysons Corner Center Pari
Passu Loans (with unpaid principal balances as of the Cut-off Date of
$95,000,000, $35,000,000 and $62,500,000, respectively). The Tysons
Corner Center Pari Passu Loans are not assets of the Trust. See
"--Split Loan Structures--The Tysons Corner Center Loan" above;
o with respect to the AFR/Bank of America Portfolio Loan, representing
approximately 8.78% of the Initial Outstanding Pool Balance, the
related Mortgaged Properties also secure the AFR/Bank of America
Portfolio Pari Passu Loans (with unpaid principal balances as of the
Cut-off Date of $100,000,000, $75,000,000 and $80,000,000,
respectively) and the AFR/Bank of America Portfolio B Loan (with an
unpaid principal balance as of the Cut-off Date of $100,000,000). The
AFR/Bank of America Portfolio Companion Loans are not assets of the
Trust. See "--Split Loan Structures--The AFR/Bank of America Portfolio
Loan" above;
o with respect to the Meadows Mall Loan, representing approximately
5.74% of the Initial Outstanding Pool Balance, the related Mortgaged
Property also secures the Meadows Mall Pari Passu Loan (with an unpaid
principal balance as of the Cut-off Date of $55,587,072). The Meadows
Mall Pari Passu Loan is not an asset of the Trust. See "--Split Loan
Structures--The Meadows Mall Loan" above; and
o with respect to the Walgreens-Riverside Loan, representing
approximately 0.48% of the Initial Outstanding Pool Balance, the
related Mortgaged Property also secures the Walgreens-Riverside B Loan
(with an unpaid principal balance as of the Cut-off Date of $560,811).
The
S-82
Walgreens-Riverside B Loan is not an asset of the Trust. See
"Split Loan Structures--The Wal-greens-Riverside Loan" above.
Substantially all of the Mortgage Loans permit or do not prohibit the
related borrower to incur limited unsecured indebtedness in the ordinary course
of business. In general, none of the Mortgage Loans permit secured indebtedness.
With respect to the Tysons Corner Center Loan representing 15.23% of the
Initial Outstanding Pool Balance, the related Mortgage Loan Documents permit the
related borrower to incur additional unsecured indebtedness in connection with
expansion and renovation of certain portions of the Mortgaged Property. See "The
Tysons Corner Center--The Property" in Annex B to this prospectus supplement.
With respect to the Mortgage Loan known as the "Huron Village Shopping
Center loan," representing 2.06% of the Initial Outstanding Pool Balance, the
related borrower presently has additional unsecured indebtedness in the original
principal amount of $3,250,000 from the Building Union Investment and Local
Development Fund of Michigan Trust (the "BUILD Loan"). The BUILD Loan matures on
March 22, 2012 and is guarantied by nonrecourse guaranties made by an individual
and a limited liability company owning directly or indirectly 92.5% of the
membership interests of the borrower, which nonrecourse guaranties are secured
by pledges of membership interests in such borrower. There is no intercreditor
agreement with respect to the BUILD Loan.
Except with respect to the AFR/Bank of America Portfolio Loan as described
below, the Mortgage Loan Documents generally prohibit the pledge or transfer of
ownership interests in the related borrower above certain percentage thresholds;
however, the Mortgage Loan Sellers have notified the Depositor that they are
aware of the following potential mezzanine debt:
o the Mortgage Loan known as the "Watergate/600 New Hampshire Avenue
loan," representing 7.07% of the Initial Outstanding Pool Balance,
permits the borrower to obtain mezzanine financing secured by
ownership interests in the borrower, subject to certain conditions,
including a loan-to-value ratio of not more than 75% and a debt
service coverage ratio of at least 1.35x (calculated taking into
account the combined principal balances of the Mortgage Loan and
related mezzanine loan), and confirmation that the Rating Agencies
will not qualify, withdraw or downgrade any of their then-current
ratings on the Certificates;
o the Mortgage Loan known as the "Tantra Lake Apartments loan,"
representing 1.76% of the Initial Outstanding Pool Balance, permits
the borrower to obtain mezzanine financing secured by ownership
interests in the borrower (other than direct interests in the borrower
held by a managing member or general partner of such borrower),
subject to certain conditions, including a loan-to-value ratio of not
more than 85% and a debt service coverage ratio of at least 1.10x
(each calculated taking into account the combined principal balances
of the Mortgage Loan and related mezzanine loan), and confirmation
that the Rating Agencies will not qualify, withdraw or downgrade any
of their then-current ratings on the Certificates;
o the Mortgage Loan known as the "Abbott Pointe Apartments loan,"
representing 0.47% of the Initial Outstanding Pool Balance, permits
the borrower to obtain mezzanine financing secured by not more than
49% of the non-managing members interests in the borrower, subject to
certain conditions including a loan-to-value ratio of not more than
85% and a debt service coverage ratio of at least 1.35x (each
calculated taking into account the combined principal balances of the
Mortgage Loan and related mezzanine loan); and
o the Mortgage Loan known as the "Morningside Plaza loan," representing
0.43% of the Initial Outstanding Pool Balance, permits the borrower to
obtain mezzanine financing secured by ownership interests in the
borrower subject to certain conditions including a loan-to-value ratio
of not more than 85% (calculated taking into account the combined
principal balances of the Mortgage Loan and related mezzanine loan).
With respect to the AFR/Bank of America Portfolio Loan, a transfer of the
borrower to certain of its affiliates will be permitted. In addition, under
certain circumstances a transfer of indirect interests in the
S-83
borrower to non-affiliates will be permitted in accordance with the terms of the
related Mortgage Loan Documents. See "The AFR/Bank of America Portfolio
Loan--Release Provisions" in Annex B to this prospectus supplement.
Certain risks relating to additional debt are described in "Risk
Factors--Risks Related to Additional Debt" in this prospectus supplement.
"DUE-ON-SALE" AND "DUE-ON-ENCUMBRANCE" PROVISIONS. The Mortgage Loans
generally contain "due-on-sale" and "due-on-encumbrance" clauses that, in each
case, permit the holder of the Mortgage Loan to accelerate the maturity of the
Mortgage Loan if the borrower sells or otherwise transfers or encumbers the
related Mortgaged Property without the consent of the mortgagee. The Servicer or
the Special Servicer (except with respect to the Non-Serviced Mortgage Loans),
as applicable, will determine, in a manner consistent with the Servicing
Standard, whether to exercise any right the mortgagee may have under any such
clause to accelerate payment of the related Mortgage Loan upon, or to withhold
its consent to, any transfer or further encumbrance of the related Mortgaged
Property. Certain of the Mortgage Loans provide that the mortgagee may condition
an assumption of the loan on the receipt of an assumption fee, which is in some
cases equal up to one percent of the then unpaid principal balance of the
applicable Note, in addition to the payment of all costs and expenses incurred
in connection with such assumption. Certain of the Mortgage Loans permit either:
(i) a transfer of the related Mortgaged Property if certain specified conditions
are satisfied or if the transfer is to a borrower reasonably acceptable to the
lender; or (ii) transfers to parties related to the borrower. See "Description
of the Pooling Agreements--Due-on-Sale and Due-on-Encumbrance Provisions" and
"Certain Legal Aspects of Mortgage Loans--Due-on-Sale and Due-on-Encumbrance
Provisions" in the prospectus. The Depositor makes no representation as to the
enforceability of any due-on-sale or due-on-encumbrance provision in any
Mortgage Loan.
SECTION 42 LOANS. Certain of the Mortgage Loans may be secured now or in
the future by Mortgaged Properties that are eligible for and have received low
income housing tax credits pursuant to Section 42 of the Internal Revenue Code
in respect of various units within the Mortgaged Property or have tenants that
rely on rent subsidies under various government-funded programs, including the
Section 8 Tenant-Based Assistance Rental Certificate Program of the United
States Department of Housing and Urban Development. The Depositor gives no
assurance that such programs will be continued in their present form or that the
level of assistance provided will be sufficient to generate enough revenues for
the related borrower to meet its obligations under the related Mortgage Loan.
DELINQUENCY. As of the Cut-off Date, none of the Mortgage Loans were 30
days or more delinquent, or had been 30 days or more delinquent during the 12
calendar months preceding the Cut-off Date.
BORROWER CONCENTRATIONS. Several groups of Mortgage Loans have related
borrowers ("Related Borrower Loan Groups") that are affiliated with one another
through partial or complete direct or indirect common ownership. The three
largest of these groups represent 2.73%, 1.82%, and 1.60%, respectively, of the
Initial Outstanding Pool Balance.
SINGLE-TENANT MORTGAGE LOANS. In the case of four Mortgage Loans,
representing 1.39% of the Initial Outstanding Pool Balance, one or more of the
related Mortgaged Properties are 100% leased to a single tenant (each such
Mortgage Loan, a "Single-Tenant Mortgage Loan"). The Mortgaged Property securing
each Single-Tenant Mortgage Loan is generally subject to a single space lease,
which generally have a primary lease term that expires on or after the scheduled
maturity date of the related Mortgage Loan. The amount of the monthly rental
payments payable by the tenant under the lease is equal to or greater than the
scheduled payment of all principal, interest and other amounts (other than any
Balloon Payment) due each month on the related Mortgage Loan. The AFR/Bank of
America Portfolio Loan, representing approximately 8.78% of the Initial
Outstanding Pool Balance, is secured by 152 Mortgaged Properties, 66 of which
are each leased to a single tenant and 67 of which are greater than 50% leased
to such single tenant pursuant to a lease that provides that tenant with the
right to relocate between buildings and to exercise certain limited termination
rights.
S-84
GEOGRAPHIC LOCATION. The Mortgaged Properties are located throughout 32
states and Washington D.C., with the largest concentrations by Initial
Outstanding Pool Balance in the Commonwealth of Virginia (ten Mortgaged
Properties, which represent security for 16.43% of the Initial Outstanding Pool
Balance) and Washington D.C. (two Mortgaged Properties, which represent security
for 8.34% of the Initial Outstanding Pool Balance). No other state has a
concentration of Mortgaged Properties that represents security for more than
7.83% of the Initial Outstanding Pool Balance.
CROSS-COLLATERALIZATION AND CROSS-DEFAULT. Seven of the Mortgage Loans,
collectively representing approximately 3.22% of the Initial Outstanding Pool
Balance, are cross-defaulted and cross-collateralized. The Mortgage Loans known
as the "Woodstock Apartments loan," "Dogwood Apartments loan" and "Kings Place
loan," collectively representing 0.71% of the Initial Outstanding Pool Balance
are cross-defaulted and cross-collateralized with each other; the Mortgage Loans
known as the "Glenwood Place Portfolio I loan" and "Glenwood Place Portfolio II
loan," collectively representing 1.49% of the Initial Outstanding Pool Balance
are cross-defaulted and cross-collateralized with each other; and the Mortgage
Loans known as the "112 Town Park Drive loan" and "114 Town Park Drive loan,"
collectively representing 1.01% of the Initial Outstanding Pool Balance are
cross-defaulted and cross-collateralized with each other, although in each case,
the borrowers are different entities. There can be no assurance that the
cross-collateralization and cross-default provisions in the related Mortgage
Loan Documents will be enforceable.
CHANGES IN MORTGAGE POOL CHARACTERISTICS
The description in this prospectus supplement, including Annex A, of the
Mortgage Pool and the Mortgaged Properties is based upon the Mortgage Pool as
expected to be constituted at the close of business on the Cut-off Date, as
adjusted for the scheduled principal payments due on the Mortgage Loans on or
before the Cut-off Date. Prior to the issuance of the Offered Certificates, a
Mortgage Loan may be removed from the Mortgage Pool if the Depositor deems such
removal necessary or appropriate or if it is prepaid. This may cause the range
of Mortgage Rates and maturities as well as the other characteristics of the
Mortgage Loans to vary from those described herein.
A Current Report on Form 8-K (the "Form 8-K") will be available to
purchasers of the Offered Certificates and will be filed by the Depositor,
together with the Pooling and Servicing Agreement, with the Securities and
Exchange Commission within 15 days after the initial issuance of the Offered
Certificates. In the event Mortgage Loans are removed from the Mortgage Pool as
set forth in the preceding paragraph, such removal will be noted in the Form
8-K. Such Form 8-K will be available to purchasers and potential purchasers of
the Offered Certificates.
S-85
DESCRIPTION OF THE OFFERED CERTIFICATES
GENERAL
The Certificates will be issued pursuant to the Pooling and Servicing
Agreement and will consist of 23 classes (each, a "Class") to be designated as
the Class X-1 Certificates, Class X-2 Certificates, Class A-1 Certificates,
Class A-2 Certificates, Class A-3 Certificates, Class A-4 Certificates, Class B
Certificates, Class C Certificates, Class D Certificates, Class E Certificates,
Class F Certificates, Class G Certificates, Class H Certificates, Class J
Certificates, Class K Certificates, Class L Certificates, Class M Certificates,
Class N Certificates, Class O Certificates, Class P Certificates, Class Q
Certificates, Class R Certificates and Class LR Certificates (collectively, the
"Certificates"). Only the Class A-1, Class A-2, Class A-3, Class A-4, Class B,
Class C, Class D and Class E Certificates (the "Offered Certificates") are
offered hereby. The Class X-1, Class X-2, Class F, Class G, Class H, Class J,
Class K, Class L, Class M, Class N, Class O, Class P, Class Q, Class R and Class
LR Certificates (the "Private Certificates") are not offered hereby.
The Certificates represent in the aggregate the entire beneficial ownership
interest in a Trust consisting of, among other things: (i) the Mortgage Loans
and all payments under and proceeds of the Mortgage Loans due after the Cut-off
Date; (ii) any Mortgaged Property acquired on behalf of the Trust through
foreclosure or deed in lieu of foreclosure (upon acquisition, an "REO
Property"); (iii) such funds or assets as from time to time are deposited in the
Collection Account, the Distribution Account, the Excess Liquidation Proceeds
Account, the Interest Reserve Account and any account established in connection
with REO Properties (an "REO Account"); (iv) the rights of the mortgagee under
all insurance policies with respect to the Mortgage Loans and the Mortgaged
Properties, to the extent of the Trust's interests therein; (v) the Depositor's
rights and remedies under the Mortgage Loan Purchase Agreements relating to
Mortgage Loan Document delivery requirements with respect to the Mortgage Loans
and the representations and warranties of the related Mortgage Loan Seller
regarding its Mortgage Loans; and (vi) all of the mortgagee's right, title and
interest in the Reserve Accounts and Lock Box Accounts, to the extent of the
Trust's interests therein.
Upon initial issuance, the Class A-1, Class A-2, Class A-3, Class A-4,
Class B, Class C, Class D, Class E, Class F, Class G, Class H, Class J, Class K,
Class L, Class M, Class N, Class O and Class P Certificates (collectively, the
"Principal Balance Certificates" and each a "Principal Balance Certificate")
will have the following aggregate principal balances (each, a "Certificate
Balance") (in each case, subject to a variance of plus or minus 5%):
APPROXIMATE
INITIAL AGGREGATE PERCENT OF INITIAL APPROXIMATE PERCENT
CLASS CERTIFICATE BALANCE OUTSTANDING POOL BALANCE OF CREDIT SUPPORT
----------- ------------------- --------------------- ----------------------
OFFERED CERTIFICATES
Class A-1 ......................... $135,894,000 14.033% 13.500%(1)
Class A-2 ......................... $138,594,000 14.312% 13.500%(1)
Class A-3 ......................... $108,197,000 11.173% 13.500%(1)
Class A-4 ......................... $454,979,000 46.983% 13.500%(1)
Class B ........................... $25,420,000 2.625% 10.875%
Class C ........................... $9,684,000 1.000% 9.875%
Class D ........................... $19,368,000 2.000% 7.875%
Class E ........................... $8,474,000 0.875% 7.000%
PRIVATE CERTIFICATES
Class F ........................... $9,684,000 1.000% 6.000%
Class G ........................... $10,894,000 1.125% 4.875%
Class H ........................... $10,895,000 1.125% 3.750%
Class J ........................... $4,842,000 0.500% 3.250%
Class K ........................... $6,052,000 0.625% 2.625%
Class L ........................... $3,632,000 0.375% 2.250%
Class M ........................... $4,842,000 0.500% 1.750%
Class N ........................... $2,421,000 0.250% 1.500%
Class O ........................... $1,210,000 0.125% 1.375%
Class P ........................... $13,316,042 1.375% 0.000%
- ------------
(1) Represents the approximate credit support for the Class A-1, Class A-2,
Class A-3 and Class A-4 Certificates in the aggregate.
S-86
The Class X-1 and Class X-2 Certificates will each have a notional balance
(the "Notional Balance"). The Class X-1 Certificate will have a Notional Balance
equal to the aggregate Certificate Balance of the Principal Balance Certificates
from time to time. The initial Notional Balance of the Class X-1 Certificates
will be $968,398,042. The initial Notional Balance of the Class X-2 Certificates
will be $935,698,000. The Notional Balance of each of the Class X-1 and Class
X-2 Certificates is used solely for the purpose of determining the amount of
interest to be distributed on such Certificates and does not represent the right
to receive any distributions of principal.
The Class Q, Class R and Class LR Certificates will not have Certificate
Balances or Notional Balances.
The Certificate Balance of any Class of Certificates outstanding at any
time represents the maximum amount which the holders thereof are entitled to
receive as distributions allocable to principal from the cash flow on the
Mortgage Loans and the other assets in the Trust; PROVIDED, HOWEVER, that in the
event that Realized Losses previously allocated to a Class of Certificates in
reduction of the Certificate Balance thereof are recovered subsequent to the
reduction of the Certificate Balance of such Class to zero, such Class may
receive distributions in respect of such recoveries in accordance with the
priorities set forth under "--Distributions--Payment Priorities" in this
prospectus supplement.
The respective Certificate Balance of each Class of Certificates (other
than the Class X-1, Class X-2, Class Q, Class R and Class LR Certificates) will
in each case be reduced by amounts actually distributed thereon that are
allocable to principal and by any Realized Losses allocated to such Class of
Certificates. The Class X-1 and Class X-2 Certificates represent a right to
receive interest accrued as described below on a Notional Balance. The Notional
Balance of the Class X-1 Certificates will be reduced to the extent of all
reductions in the aggregate Certificate Balance of the Principal Balance
Certificates. The Notional Balance of the Class X-2 Certificates will be reduced
to the extent of all reductions in the Certificate Balances of any Class of
Certificates included in the calculation of the Notional Balance of the Class
X-2 Certificates on the related Distribution Date.
DISTRIBUTIONS
METHOD, TIMING AND AMOUNT. Distributions on the Certificates will be made
on the 10th day of each month or, if such 10th day is not a business day, then
on the next succeeding business day, commencing in April 2004 (each, a
"Distribution Date"). All distributions (other than the final distribution on
any Certificate) will be made by the Bond Administrator to the persons in whose
names the Certificates are registered at the close of business on the last
business day of the calendar month immediately preceding the month in which such
Distribution Date occurs (the "Record Date"). Such distributions will be made by
wire transfer in immediately available funds to the account specified by the
Certificateholder at a bank or other entity having appropriate facilities
therefor, if such Certificateholder provides the Bond Administrator with wiring
instructions no less than five business days prior to the related Record Date,
or otherwise by check mailed to such Certificateholder. The final distribution
on any Offered Certificates will be made in like manner, but only upon
presentment or surrender (for notation that the Certificate Balance thereof has
been reduced to zero) of such Certificate at the location specified in the
notice to the holder thereof of such final distribution. All distributions made
with respect to a Class of Certificates on each Distribution Date will be
allocated PRO RATA among the outstanding Certificates of such Class based on
their respective Percentage Interests. The "Percentage Interest" evidenced by
any Offered Certificate is equal to the initial denomination thereof as of the
Closing Date divided by the initial Certificate Balance of the related Class.
The aggregate distribution to be made with respect to the Certificates on
any Distribution Date will equal the Available Funds. The "Available Funds" for
any Distribution Date will be the sum of (i) all previously undistributed
Monthly Payments or other receipts on account of principal and interest on or in
respect of the Mortgage Loans (including Unscheduled Payments and Net REO
Proceeds, if any, but excluding Excess Liquidation Proceeds) received by or on
behalf of the Servicer in the related Collection Period, (ii) all P&I Advances
made by the Servicer or the Trustee, as applicable, in respect of such
Distribution Date, (iii) all other amounts required to be deposited in the
Collection Account by the Servicer pursuant to the Pooling and Servicing
Agreement allocable to the Mortgage Loans for the
S-87
applicable Collection Period, (iv) without duplication, any payments received
after the end of the Collection Period relating to such Distribution Date but
prior to the close of business on the business day prior to the related Servicer
Remittance Date, (v) any amounts representing Prepayment Interest Shortfalls
remitted by the Servicer to the Collection Account (as described under
"--Prepayment Interest Shortfalls" below), and (vi) for the Distribution Date
occurring in each March, the Withheld Amounts then on deposit in the Interest
Reserve Account as described under "The Pooling and Servicing
Agreement--Accounts--Interest Reserve Account" below, but excluding the
following:
(a) amounts permitted to be used to reimburse the Servicer or the
Trustee, as applicable, for previously unreimbursed Advances and interest
thereon as described in this prospectus supplement under "The Pooling and
Servicing Agreement--Advances";
(b) the aggregate amount of the Servicing Fee (which includes the fees
for the Servicer, the Trustee, the Bond Administrator and fees for primary
servicing functions), and the other Servicing Compensation (e.g., Net
Prepayment Interest Excess, Net Default Interest, late payment fees (to the
extent not applied to the reimbursement of interest on Advances and certain
expenses, as provided in the Pooling and Servicing Agreement), assumption
fees, loan modification fees, extension fees, loan service transaction
fees, demand fees, beneficiary statement charges and similar fees) payable
to the Servicer, the Trustee and the Bond Administrator and the Special
Servicing Fee (and other amounts payable to the Special Servicer described
in this prospectus supplement under "The Pooling and Servicing
Agreement--Special Servicing--The Special Servicer), together with interest
thereon to the extent provided in the Pooling and Servicing Agreement and
reinvestment earnings on payments received with respect to the Mortgage
Loans which the Servicer or Special Servicer is entitled to receive as
additional servicing compensation, in each case in respect of such
Distribution Date;
(c) all amounts representing scheduled Monthly Payments due after the
related Due Date;
(d) to the extent permitted by the Pooling and Servicing Agreement,
that portion of net liquidation proceeds, net insurance proceeds and net
condemnation proceeds with respect to a Mortgage Loan which represents any
unpaid Servicing Fee and special servicing compensation together with
interest thereon as described in this prospectus supplement, to which the
Servicer, the Special Servicer, any subservicer, the Bond Administrator and
the Trustee are entitled;
(e) all amounts representing certain expenses reimbursable or payable
to the Servicer, the Special Servicer, the Trustee or the Bond
Administrator and other amounts permitted to be retained by the Servicer or
withdrawn pursuant to the Pooling and Servicing Agreement in respect of
various items, including interest thereon as provided in the Pooling and
Servicing Agreement;
(f) Prepayment Premiums;
(g) all amounts received with respect to each Mortgage Loan previously
purchased or repurchased from the Trust pursuant to the Pooling and
Servicing Agreement or a Mortgage Loan Purchase Agreement during the
related Collection Period and subsequent to the date as of which such
Mortgage Loan was purchased or repurchased;
(h) the amount reasonably determined by the Bond Administrator to be
necessary to pay any applicable federal, state or local taxes imposed on
the Upper-Tier REMIC or the Lower-Tier REMIC under the circumstances and to
the extent described in the Pooling and Servicing Agreement; and
(i) with respect to any Distribution Date occurring in each February,
and in any January occurring in a year that is not a leap year, in either
case, unless such Distribution Date is the final Distribution Date, the
Withheld Amounts to be deposited in the Interest Reserve Account and held
for future distribution.
The "Monthly Payment" with respect to any Mortgage Loan (other than any REO
Loan) and any Due Date is the scheduled monthly payment of principal (if any)
and interest at the Mortgage Rate, excluding any Balloon Payment (but not
excluding any constant Monthly Payment due on a Balloon Loan), which is payable
by the related borrower on the related Due Date. The Monthly Payment with
respect to an REO Loan for any Distribution Date is the monthly payment that
would otherwise have
S-88
been payable on the related Due Date had the related Note not been discharged,
determined as set forth in the Pooling and Servicing Agreement.
"Unscheduled Payments" are all net liquidation proceeds, net insurance
proceeds and net condemnation proceeds payable under the Mortgage Loans, the
repurchase price of any Mortgage Loan repurchased by a Mortgage Loan Seller due
to a breach of a representation or warranty made by it or as a result of a
document defect in the mortgage file or the purchase price paid by the parties
described in this prospectus supplement under "The Pooling and Servicing
Agreement--Optional Termination" and "--Realization Upon Defaulted Mortgage
Loans," and any other payments under or with respect to the Mortgage Loans not
scheduled to be made, including Principal Prepayments (but excluding Prepayment
Premiums). See "Yield and Maturity Considerations--Yield Considerations--Certain
Relevant Factors" in this prospectus supplement.
"Net REO Proceeds" with respect to any REO Property and any related REO
Loan are all revenues received by the Special Servicer with respect to such REO
Property or REO Loan, net of any insurance premiums, taxes, assessments and
other costs and expenses permitted to be paid therefrom pursuant to the Pooling
and Servicing Agreement.
"Principal Prepayments" are payments of principal made by a borrower on a
Mortgage Loan which are received in advance of the scheduled Due Date for such
payments and which are not accompanied by an amount of interest representing the
full amount of scheduled interest due on any date or dates in any month or
months subsequent to the month of prepayment, other than any amount paid in
connection with the release of the related Mortgaged Property through
defeasance.
The "Collection Period" with respect to a Distribution Date and each
Mortgage Loan, is the period that begins immediately following the Determination
Date in the calendar month preceding the month in which such Distribution Date
occurs (or, in the case of the initial Distribution Date, immediately following
the Cut-off Date) and ends on the Determination Date in the calendar month in
which such Distribution Date occurs.
The "Determination Date" will be the earlier of (i) the sixth day of the
month in which the related Distribution Date occurs, or if such sixth day is not
a business day, then the immediately preceding business day, and (ii) the fourth
business day prior to the related Distribution Date.
"Net Default Interest" with respect to any Mortgage Loan is any Default
Interest accrued on such Mortgage Loan less amounts required to pay the
Servicer, the Special Servicer or the Trustee, as applicable, interest on
Advances at the Advance Rate and to reimburse the Trust for certain expenses.
"Default Interest" with respect to any Mortgage Loan is interest accrued on
such Mortgage Loan at the excess of (i) the related Default Rate over (ii) the
related Mortgage Rate.
The "Default Rate" with respect to any Mortgage Loan is the per annum rate
at which interest accrues on such Mortgage Loan following any event of default
on such Mortgage Loan, including a default in the payment of a Monthly Payment
or a Balloon Payment.
PAYMENT PRIORITIES. As used below in describing the priorities of
distribution of Available Funds for each Distribution Date, the terms set forth
below will have the following meanings:
The "Interest Accrual Amount" with respect to any Distribution Date and any
Class of Certificates (other than the Class Q, Class R and Class LR
Certificates), is equal to interest for the related Interest Accrual Period at
the Pass-Through Rate for such Class on the related Certificate Balance or
Notional Balance (PROVIDED, that for interest accrual purposes any distributions
in reduction of Certificate Balance or reductions in Notional Balance as a
result of allocations of Realized Losses on the Distribution Date occurring in
an Interest Accrual Period will be deemed to have been made on the first day of
such Interest Accrual Period), as applicable, minus the amount of any Excess
Prepayment Interest Shortfall allocated to such Class with respect to such
Distribution Date. Calculations of interest due in respect of the Certificates
will be made on the basis of a 360-day year consisting of twelve 30-day months.
"Appraisal Reduction Amount" is the amount described under "--Appraisal
Reductions" below.
"Delinquency" means any failure of the borrower to make a scheduled payment
on a Due Date.
S-89
The "Interest Accrual Period" with respect to any Distribution Date is the
calendar month immediately preceding the month in which such Distribution Date
occurs.
An "Interest Shortfall" with respect to any Distribution Date for any Class
of Offered Certificates is any shortfall in the amount of interest required to
be distributed on such Class on such Distribution Date. No interest accrues on
Interest Shortfalls.
The "Pass-Through Rate" for any Class of Offered Certificates is the per
annum rate at which interest accrues on the Certificates of such Class during
any Interest Accrual Period. The Pass-Through Rate on the Class A-1, Class A-2,
Class A-3 and Class A-4 Certificates is a per annum rate equal to ___%, ___%,
___% and ___%, respectively. The Pass-Through Rates applicable to the Class B,
Class C, Class D, Class E, Class F, Class G and Class H Certificates will equal
one of the following rates: (i) a fixed rate, (ii) a rate equal to the lesser of
the initial Pass-Through Rate for such Class (as described in "Executive
Summary--The Certificates" in this prospectus supplement) and the Weighted
Average Net Mortgage Pass-Through Rate, each with the initial Pass-Through Rate
described in "Executive Summary--The Certificates" in this prospectus
supplement, (iii) a rate equal to the Weighted Average Net Mortgage Pass-Through
Rate less a specified percentage or (iv) a rate equal to the Weighted Average
Net Mortgage Pass-Through Rate. The Pass-Through Rates applicable to the Class
J, Class K, Class L, Class M, Class N, Class O and Class P Certificates will, at
all times, be equal to a fixed rate per annum subject to a cap of the Weighted
Average Net Mortgage Pass-Through Rate. The Pass-Through Rate applicable to the
Class X-1 Certificates for the initial distribution date will equal
approximately ___% per annum. The Pass-Through Rate applicable to the Class X-2
Certificates for the initial distribution date will equal approximately ___% per
annum. The Pass-Through Rate applicable to the Class X-1 and Class X-2
Certificates for each Distribution Date subsequent to the initial distribution
date generally will be equal in the aggregate to the difference between the
Weighted Average Net Mortgage Pass-Through Rate and the Weighted Average
Pass-Through Rate of the Principal Balance Certificates (based on their
certificate balances). The Class Q, Class R and Class LR Certificates will not
have Pass-Through Rates. The Class Q Certificates will not be entitled to
distributions in respect of interest other than Excess Interest.
The "Weighted Average Net Mortgage Pass-Through Rate" for any Distribution
Date is a per annum rate equal to a fraction (expressed as a percentage) the
numerator of which is the sum for all Mortgage Loans of the products of (i) the
Net Mortgage Pass-Through Rate of each such Mortgage Loan as of the immediately
preceding Distribution Date and (ii) the Stated Principal Balance of each such
Mortgage Loan, and the denominator of which is the sum of the Stated Principal
Balances of all such Mortgage Loans as of the immediately preceding Distribution
Date.
The "Due Date" with respect to any Mortgage Loan and any month, is the
first day of such month in the related Collection Period as specified in the
related Note for such Mortgage Loan.
The "Net Mortgage Pass-Through Rate" with respect to any Mortgage Loan and
any Distribution Date is the Mortgage Pass-Through Rate for such Mortgage Loan
for the related Interest Accrual Period minus the Servicing Fee Rate. For
purposes of calculating the Pass-Through Rate on the Certificates, the Net
Mortgage Pass-Through Rate of each Mortgage Loan which accrues interest on an
actual/360 basis for any one-month period preceding a related Due Date will be
the annualized rate at which interest would have to accrue in respect of the
Mortgage Loan on the basis of a 360-day year consisting of twelve 30-day months
in order to produce the aggregate amount of interest actually required to be
paid in respect of the Mortgage Loan during the one-month period at the related
Net Mortgage Pass-Through Rate; PROVIDED, HOWEVER, that the Net Mortgage
Pass-Through Rate for the one month period (1) prior to the Due Dates in January
and February in any year which is not a leap year or in February in any year
which is a leap year will be determined exclusive of the amounts withheld from
that month, and (2) prior to the Due Date in March, will be determined inclusive
of the amounts withheld from the immediately preceding February, and, if
applicable, January.
The "Mortgage Rate" with respect to each Mortgage Loan and any Interest
Accrual Period is the annual rate at which interest accrues on such Mortgage
Loan during such period (in the absence of a default), as set forth in the
related Note and on Annex A to this prospectus supplement; PROVIDED, HOWEVER,
that for purposes of calculating Pass-Through Rates, the Mortgage Rate for any
Mortgage
S-90
Loan will be determined without regard to any modification, waiver or amendment
of the terms of the Mortgage Loan, whether agreed to by the Servicer or
resulting from a bankruptcy, insolvency or similar proceeding involving the
related borrower.
The "Principal Distribution Amount" for any Distribution Date will be equal
to the sum of the following items without duplication:
(i) the principal component of all scheduled Monthly Payments (other
than Balloon Payments) due on the Mortgage Loans on or before the related
Due Date (if received or advanced);
(ii) the principal component of all Assumed Scheduled Payments due on
or before the related Due Date (if received or advanced) with respect to
any Mortgage Loan that is delinquent in respect of its Balloon Payment;
(iii) the Stated Principal Balance of each Mortgage Loan that was,
during the related Collection Period, repurchased from the Trust in
connection with the breach of a representation or warranty or a document
defect in the related mortgage file or purchased from the Trust as
described in this prospectus supplement under "The Pooling and Servicing
Agreement--Optional Termination";
(iv) the portion of Unscheduled Payments allocable to principal of any
Mortgage Loan which was liquidated during the related Collection Period;
(v) all Balloon Payments and any other principal payment on any
Mortgage Loan received on or after the maturity date thereof, to the extent
received during the related Collection Period;
(vi) all other Principal Prepayments received in the related
Collection Period; and
(vii) any other full or partial recoveries in respect of principal,
including net insurance proceeds, net liquidation proceeds and Net REO
Proceeds received in the related Collection Period, net of any related
outstanding P&I Advances allocable to principal).
The "Assumed Scheduled Payment" with respect to any Mortgage Loan that is
delinquent in respect of its Balloon Payment (including any REO Loan as to which
the Balloon Payment would have been past due) is an amount equal to the sum of
(a) the principal portion of the Monthly Payment that would have been due on
such Mortgage Loan on the related Due Date (or the portion thereof not received)
based on the constant payment required by the related Note or the original
amortization or payment schedule thereof (as calculated with interest at the
related Mortgage Rate), if applicable, assuming such Balloon Payment has not
become due after giving effect to any modification, and (b) interest at the
applicable Net Mortgage Pass-Through Rate.
An "REO Loan" is any Mortgage Loan (other than the Non-Serviced Mortgage
Loans) as to which the related Mortgaged Property has become an REO Property.
DISTRIBUTION OF AVAILABLE FUNDS. On each Distribution Date, prior to the
Crossover Date, the Available Funds for such Distribution Date will be
distributed in the following amounts and order of priority:
(i) FIRST, to pay interest, PRO RATA, on the Class A-1, Class A-2,
Class A-3, Class A-4, Class X-1 and Class X-2 Certificates from the
Available Funds for such Distribution Date up to an amount equal to the
aggregate Interest Accrual Amount for those Classes, in each case in
accordance with their interest entitlements. However, if on any
Distribution Date, the Available Funds (or applicable portion thereof) is
insufficient to pay in full the total amount of interest to be paid to any
of the Classes described above, the Available Funds for such Distribution
Date will be allocated among all those Classes PRO RATA, in accordance with
their interest entitlements;
(ii) SECOND, PRO RATA, to the Class A-1, Class A-2, Class A-3, Class
A-4, Class X-1 and Class X-2 Certificates, in respect of interest, up to an
amount equal to the aggregate unpaid Interest Shortfalls previously
allocated to such Classes;
(iii) THIRD, to the Class A-1, Class A-2, Class A-3 and Class A-4
Certificates, in reduction of the Certificate Balances thereof: (A) FIRST,
to the Class A-1 Certificates, in an amount equal to the Principal
Distribution Amount for such Distribution Date, until the Class A-1
Certificates are reduced
S-91
to zero, (B) SECOND, to the Class A-2 Certificates, in an amount equal to
the Principal Distribution Amount (or the portion of it remaining after
distributions on the Class A-1 Certificates) for such Distribution Date,
until the Class A-2 Certificates are reduced to zero, (C) THIRD, to the
Class A-3 Certificates, in an amount equal to the Principal Distribution
Amount (or the portion of it remaining after distributions on the Class A-2
Certificates) for such Distribution Date, until the Class A-3 Certificates
are reduced to zero and (D) FOURTH, to the Class A-4 Certificates, in an
amount equal to the Principal Distribution Amount (or the portion of it
remaining after distributions on the Class A-3 Certificates) for such
Distribution Date, until the Class A-4 Certificates are reduced to zero;
(iv) FOURTH, to the Class A-1, Class A-2, Class A-3 and Class A-4
Certificates, PRO RATA, to the extent not distributed pursuant to all prior
clauses, for the unreimbursed amounts of Realized Losses, if any, an amount
equal to the aggregate of such unreimbursed Realized Losses previously
allocated to such Class;
(v) FIFTH, to the Class B Certificates, in respect of interest, up to
an amount equal to the Interest Accrual Amount of such Class;
(vi) SIXTH, to the Class B Certificates, in respect of interest, up to
an amount equal to the aggregate unpaid Interest Shortfalls previously
allocated to such Class;
(vii) SEVENTH, to the Class B Certificates, in reduction of the
Certificate Balance thereof, an amount equal to the Principal Distribution
Amount less amounts of Principal Distribution Amount distributed pursuant
to all prior clauses, until the Certificate Balance of such Class is
reduced to zero;
(viii) EIGHTH, to the Class B Certificates, to the extent not
distributed pursuant to all prior clauses, for the unreimbursed amounts of
Realized Losses, if any, an amount equal to the aggregate of such
unreimbursed Realized Losses previously allocated to such Class;
(ix) NINTH, to the Class C Certificates, in respect of interest, up to
an amount equal to the Interest Accrual Amount of such Class;
(x) TENTH, to the Class C Certificates, in respect of interest, up to
an amount equal to the aggregate unpaid Interest Shortfalls previously
allocated to such Class;
(xi) ELEVENTH, to the Class C Certificates, in reduction of the
Certificate Balance thereof, an amount equal to the Principal Distribution
Amount less amounts of Principal Distribution Amount distributed pursuant
to all prior clauses, until the Certificate Balance of such Class is
reduced to zero;
(xii) TWELFTH, to the Class C Certificates, to the extent not
distributed pursuant to all prior clauses, for the unreimbursed amounts of
Realized Losses, if any, an amount equal to the aggregate of such
unreimbursed Realized Losses previously allocated to such Class;
(xiii) THIRTEENTH, to the Class D Certificates, in respect of
interest, up to an amount equal to the Interest Accrual Amount of such
Class;
(xiv) FOURTEENTH, to the Class D Certificates, in respect of interest,
up to an amount equal to the aggregate unpaid Interest Shortfalls
previously allocated to such Class;
(xv) FIFTEENTH, to the Class D Certificates, in reduction of the
Certificate Balance thereof, an amount equal to the Principal Distribution
Amount less amounts of Principal Distribution Amount distributed pursuant
to all prior clauses, until the Certificate Balance of such Class is
reduced to zero;
(xvi) SIXTEENTH, to the Class D Certificates, to the extent not
distributed pursuant to all prior clauses, for the unreimbursed amounts of
Realized Losses, if any, an amount equal to the aggregate of such
unreimbursed Realized Losses previously allocated to such Class;
(xvii) SEVENTEENTH, to the Class E Certificates, in respect of
interest, up to an amount equal to the Interest Accrual Amount of such
Class;
S-92
(xviii) EIGHTEENTH, to the Class E Certificates, in respect of
interest, up to an amount equal to the aggregate unpaid Interest Shortfalls
previously allocated to such Class;
(xix) NINETEENTH, to the Class E Certificates, in reduction of the
Certificate Balance thereof, an amount equal to the Principal Distribution
Amount less amounts of Principal Distribution Amount distributed pursuant
to all prior clauses, until the Certificate Balance of such Class is
reduced to zero;
(xx) TWENTIETH, to the Class E Certificates, to the extent not
distributed pursuant to all prior clauses, for the unreimbursed amounts of
Realized Losses, if any, an amount equal to the aggregate of such
unreimbursed Realized Losses previously allocated to such Class;
(xxi) TWENTY-FIRST, to the Class F Certificates, in respect of
interest, up to an amount equal to the Interest Accrual Amount of such
Class;
(xxii) TWENTY-SECOND, to the Class F Certificates, in respect of
interest, up to an amount equal to the aggregate unpaid Interest Shortfalls
previously allocated to such Class;
(xxiii) TWENTY-THIRD, to the Class F Certificates, in reduction of the
Certificate Balance thereof, an amount equal to the Principal Distribution
Amount less amounts of Principal Distribution Amount distributed pursuant
to all prior clauses, until the Certificate Balance of such Class is
reduced to zero;
(xxiv) TWENTY-FOURTH, to the Class F Certificates, to the extent not
distributed pursuant to all prior clauses, for the unreimbursed amounts of
Realized Losses, if any, an amount equal to the aggregate of such
unreimbursed Realized Losses previously allocated to such Class;
(xxv) TWENTY-FIFTH, to the Class G Certificates, in respect of
interest, up to an amount equal to the Interest Accrual Amount of such
Class;
(xxvi) TWENTY-SIXTH, to the Class G Certificates, in respect of
interest, up to an amount equal to the aggregate unpaid Interest Shortfalls
previously allocated to such Class;
(xxvii) TWENTY-SEVENTH, to the Class G Certificates, in reduction of
the Certificate Balance thereof, an amount equal to the Principal
Distribution Amount less amounts of Principal Distribution Amount
distributed pursuant to all prior clauses, until the Certificate Balance of
such Class is reduced to zero;
(xxviii) TWENTY-EIGHTH, to the Class G Certificates, to the extent not
distributed pursuant to all prior clauses, for the unreimbursed amounts of
Realized Losses, if any, an amount equal to the aggregate of such
unreimbursed Realized Losses previously allocated to such Class;
(xxix) TWENTY-NINTH, to the Class H Certificates, in respect of
interest, up to an amount equal to the Interest Accrual Amount of such
Class;
(xxx) THIRTIETH, to the Class H Certificates, in respect of interest,
up to an amount equal to the aggregate unpaid Interest Shortfalls
previously allocated to such Class;
(xxxi) THIRTY-FIRST, to the Class H Certificates, in reduction of the
Certificate Balance thereof, an amount equal to the Principal Distribution
Amount less amounts of Principal Distribution Amount distributed pursuant
to all prior clauses, until the Certificate Balance of such Class is
reduced to zero;
(xxxii) THIRTY-SECOND, to the Class H Certificates, to the extent not
distributed pursuant to all prior clauses, for the unreimbursed amounts of
Realized Losses, if any, an amount equal to the aggregate of such
unreimbursed Realized Losses previously allocated to such Class;
(xxxiii) THIRTY-THIRD, to the Class J Certificates, in respect of
interest, up to an amount equal to the Interest Accrual Amount of such
Class;
(xxxiv) THIRTY-FOURTH, to the Class J Certificates, in respect of
interest, up to an amount equal to the aggregate unpaid Interest Shortfalls
previously allocated to such Class;
S-93
(xxxv) THIRTY-FIFTH, to the Class J Certificates, in reduction of the
Certificate Balance thereof, an amount equal to the Principal Distribution
Amount less amounts of Principal Distribution Amount distributed pursuant
to all prior clauses, until the Certificate Balance of such Class is
reduced to zero;
(xxxvi) THIRTY-SIXTH, to the Class J Certificates, to the extent not
distributed pursuant to all prior clauses, for the unreimbursed amounts of
Realized Losses, if any, an amount equal to the aggregate of such
unreimbursed Realized Losses previously allocated to such Class;
(xxxvii) THIRTY-SEVENTH, to the Class K Certificates, in respect of
interest, up to an amount equal to the Interest Accrual Amount of such
Class;
(xxxviii) THIRTY-EIGHTH, to the Class K Certificates, in respect of
interest, up to an amount equal to the aggregate unpaid Interest Shortfalls
previously allocated to such Class;
(xxxix) THIRTY-NINTH, to the Class K Certificates, in reduction of the
Certificate Balance thereof, an amount equal to the Principal Distribution
Amount less amounts of Principal Distribution Amount distributed pursuant
to all prior clauses, until the Certificate Balance of such Class is
reduced to zero;
(xl) FORTIETH, to the Class K Certificates, to the extent not
distributed pursuant to all prior clauses, for the unreimbursed amounts of
Realized Losses, if any, an amount equal to the aggregate of such
unreimbursed Realized Losses previously allocated to such Class;
(xli) FORTY-FIRST, to the Class L Certificates, in respect of
interest, up to an amount equal to the Interest Accrual Amount of such
Class;
(xlii) FORTY-SECOND, to the Class L Certificates, in respect of
interest, up to an amount equal to the aggregate unpaid Interest Shortfalls
previously allocated to such Class;
(xliii) FORTY-THIRD, to the Class L Certificates, in reduction of the
Certificate Balance thereof, an amount equal to the Principal Distribution
Amount less amounts of Principal Distribution Amount distributed pursuant
to all prior clauses, until the Certificate Balance of such Class is
reduced to zero;
(xliv) FORTY-FOURTH, to the Class L Certificates, to the extent not
distributed pursuant to all prior clauses, for the unreimbursed amounts of
Realized Losses, if any, an amount equal to the aggregate of such
unreimbursed Realized Losses previously allocated to such Class;
(xlv) FORTY-FIFTH, to the Class M Certificates, in respect of
interest, up to an amount equal to the Interest Accrual Amount of such
Class;
(xlvi) FORTY-SIXTH, to the Class M Certificates, in respect of
interest, up to an amount equal to the aggregate unpaid Interest Shortfalls
previously allocated to such Class;
(xlvii) FORTY-SEVENTH, to the Class M Certificates, in reduction of
the Certificate Balance thereof, an amount equal to the Principal
Distribution Amount less amounts of Principal Distribution Amount
distributed pursuant to all prior clauses, until the Certificate Balance of
such Class is reduced to zero;
(xlviii) FORTY-EIGHTH, to the Class M Certificates, to the extent not
distributed pursuant to all prior clauses, for the unreimbursed amounts of
Realized Losses, if any, an amount equal to the aggregate of such
unreimbursed Realized Losses previously allocated to such Class;
(xlix) FORTY-NINTH, to the Class N Certificates, in respect of
interest, up to an amount equal to the Interest Accrual Amount of such
Class;
(l) FIFTIETH, to the Class N Certificates, in respect of interest, up
to an amount equal to the aggregate unpaid Interest Shortfalls previously
allocated to such Class;
(li) FIFTY-FIRST, to the Class N Certificates, in reduction of the
Certificate Balance thereof, an amount equal to the Principal Distribution
Amount less amounts of Principal Distribution Amount
S-94
distributed pursuant to all prior clauses until the Certificate Balance of
such Class is reduced to zero;
(lii) FIFTY-SECOND, to the Class N Certificates, to the extent not
distributed pursuant to all prior clauses, for the unreimbursed amounts of
Realized Losses, if any, an amount equal to the aggregate of such
unreimbursed Realized Losses previously allocated to such Class;
(liii) FIFTY-THIRD, to the Class O Certificates, in respect of
interest, up to an amount equal to the Interest Accrual Amount of such
Class;
(liv) FIFTY-FOURTH, to the Class O Certificates, in respect of
interest, up to an amount equal to the aggregate unpaid Interest Shortfalls
previously allocated to such Class;
(lv) FIFTY-FIFTH, to the Class O Certificates, in reduction of the
Certificate Balance thereof, an amount equal to the Principal Distribution
Amount less amounts of Principal Distribution Amount distributed pursuant
to all prior clauses, until the Certificate Balance of such Class is
reduced to zero;
(lvi) FIFTY-SIXTH, to the Class O Certificates, to the extent not
distributed pursuant to all prior clauses, for the unreimbursed amounts of
Realized Losses, if any, an amount equal to the aggregate of such
unreimbursed Realized Losses previously allocated to such Class; and
(lvii) FIFTY-SEVENTH, to the Class P Certificates, in respect of
interest, up to an amount equal to the Interest Accrual Amount of such
Class;
(lviii) FIFTY-EIGHTH, to the Class P Certificates, in respect of
interest, up to an amount equal to the aggregate unpaid Interest Shortfalls
previously allocated to such Class;
(lix) FIFTY-NINTH, to the Class P Certificates, in reduction of the
Certificate Balance thereof, an amount equal to the Principal Distribution
Amount less amounts of Principal Distribution Amount distributed pursuant
to all prior clauses until the Certificate Balance of such Class is reduced
to zero;
(lx) SIXTIETH, to the Class P Certificates, to the extent not
distributed pursuant to all prior clauses, for the unreimbursed amounts of
Realized Losses, if any, an amount equal to the aggregate of such
unreimbursed Realized Losses previously allocated to such Class; and
(lxi) SIXTY-FIRST, to the Class R and Class LR Certificates as
specified in the Pooling and Servicing Agreement.
All references to "PRO RATA" in the preceding clauses unless otherwise
specified mean PRO RATA based upon the amount distributable pursuant to such
clause.
Notwithstanding the foregoing, on each Distribution Date occurring on or
after the Crossover Date, the Principal Distribution Amount will be distributed
to the Class A-1, Class A-2, Class A-3 and Class A-4 Certificates, PRO RATA,
based on their respective Certificate Balances, in reduction of their respective
Certificate Balances, until the Certificate Balance of each such Class is
reduced to zero, and any unreimbursed amounts of Realized Losses previously
allocated to such Classes, if available, will be distributed PRO RATA based on
the amount of unreimbursed Realized Losses previously allocated to such Classes.
The "Crossover Date" is the Distribution Date on which the Certificate Balance
of each Class of Principal Balance Certificates, other than the Class A-1, Class
A-2, Class A-3 and Class A-4 Certificates, have been reduced to zero. The Class
X-1 and Class X-2 Certificates will not be entitled to any distribution of
principal.
PREPAYMENT PREMIUMS; YIELD MAINTENANCE CHARGES. Any Prepayment Premium or
Yield Maintenance Charge actually collected on a Mortgage Loan during any
Collection Period will be distributed on the related Distribution Date to the
holders of the Class A-1, Class A-2, Class A-3, Class A-4, Class B, Class C,
Class D, Class E, Class F, Class G and Class H Certificates as additional
interest and not in reduction of their Certificate Balances or in an amount up
to, in the case of each Class, the product of
S-95
the Prepayment Discount Rate Principal Allocation
Premium or Yield x Fraction for that x Fraction of that
Maintenance Charge Class Class
The "Discount Rate Fraction" for any Class of Certificates equal to:
Pass-Through Rate for
that Class of Certificates--relevant Discount Rate
--------------------------------------------------
Mortgage Rate of the
related Mortgage Loan--relevant Discount Rate
The Discount Rate Fraction may not be greater than 1.0 or less than 0.0 and
both the numerator and denominator must be greater than zero.
The "Principal Allocation Fraction" for any Class with respect to any
Prepayment Premiums or Yield Maintenance Charges collected from for any
Distribution Date is:
the portion, if any, of the Principal Distribution
Amount allocated to that Class of Certificates for
that Distribution Date
--------------------------------------------------
entire Principal Distribution Amount for that
Distribution Date
The portion of the Prepayment Premium or Yield Maintenance Charge remaining
after the payment of the amount calculated as described above will be
distributed to the holders of the Class X-1 Certificates.
The "Discount Rate" means the yield (compounded monthly, in the case of the
AFR/Bank of America Portfolio Loan) for "This Week" as reported by the Federal
Reserve Board in Federal Reserve Statistical Release H.15(519) for the constant
maturity treasury having a maturity coterminous with the maturity date of such
Mortgage Loan as of the Determination Date. If there is no Discount Rate for
instruments having a maturity coterminous with the remaining term to maturity of
the relevant Mortgage Loan, then the Discount Rate will be equal to the linear
interpolation of the yields of the constant maturity treasuries with maturities
next longer and shorter than such remaining term to maturity.
In the case of the AFR/Bank of America Portfolio Whole Loan, Yield
Maintenance Charges actually collected in respect of such Whole Loan will be
allocated ratably in proportion to the outstanding principal balances of the
AFR/Bank of America Portfolio Loan, the AFR/Bank of America Pari Passu Loans and
the AFR/Bank of America Portfolio B Loan.
Prepayment Premiums or Yield Maintenance Charges, if any, collected on the
Mortgage Loans during any Collection Period may not be sufficient to fully
compensate Certificateholders of any Class for any loss in yield attributable to
the related Principal Prepayments.
REALIZED LOSSES
The Certificate Balance of the Certificates will be reduced without
distribution on any Distribution Date to the extent of any Realized Loss
allocated to the applicable Class of Certificates on such Distribution Date. As
referred to herein, the "Realized Loss" with respect to any Distribution Date
shall mean the amount, if any, by which the aggregate Certificate Balance of the
Regular Certificates (other than the Class X-1 and Class X-2 Certificates) after
giving effect to distributions made on such Distribution Date exceeds the
aggregate Stated Principal Balance of the Mortgage Loans immediately following
the Determination Date preceding such Distribution Date. Any such Realized
Losses will be applied to the Classes of Certificates in the following order,
until the Certificate Balance of each is reduced to zero: FIRST, to the Class P
Certificates, SECOND, to the Class O Certificates, THIRD, to the Class N
Certificates, FOURTH, to the Class M Certificates, FIFTH, to the Class L
Certificates, SIXTH to the Class K Certificates, SEVENTH, to the Class J
Certificates, EIGHTH, to the Class H Certificates, NINTH, to the Class G
Certificates, TENTH, to the Class F Certificates, ELEVENTH, to the Class E
Certificates, TWELFTH, to the
S-96
Class D Certificates, THIRTEENTH, to the Class C Certificates, FOURTEENTH, to
the Class B Certificates, and FINALLY, PRO RATA, to the Class A-1, Class A-2,
Class A-3 and Class A-4 Certificates based on their respective Certificate
Balances. Any amounts recovered in respect of any such amounts previously
allocated as Realized Losses will be distributed to the Classes of Principal
Balance Certificates in reverse order of allocation of such Realized Losses
thereto. Shortfalls in Available Funds resulting from interest on Advances (to
the extent not covered by Default Interest and late payment fees), additional
servicing compensation (including the special servicing fee), extraordinary
expenses of the Trust and other additional expenses of the Trust, a reduction of
the interest rate of a Mortgage Loan by a bankruptcy court pursuant to a plan of
reorganization or pursuant to any of its equitable powers, a reduction in
interest rate or a forgiveness of principal of a Mortgage Loan as described
under "The Pooling and Servicing Agreement--Modifications," in this prospectus
supplement or otherwise, will be allocated in the same manner as Realized
Losses. Excess Prepayment Interest Shortfalls, as described under "--Prepayment
Interest Shortfalls" in this prospectus supplement, will be allocated to, and be
deemed distributed to, each Class of Certificates, PRO RATA, based upon amounts
distributable in respect of interest to each such Class (without giving effect
to any such allocation of Excess Prepayment Interest Shortfall). The Notional
Balances of the Class X-1 and Class X-2 Certificates will be reduced to reflect
reductions in the Certificate Balances of the Classes of Principal Balance
Certificates that are included in the calculation of such Notional Balances, as
set forth above, as a result of write-offs in respect of final recovery
determinations in respect of liquidation of defaulted Mortgage Loans.
The "Stated Principal Balance" of each Mortgage Loan will generally equal
the Cut-off Date Balance thereof (or in the case of a Replacement Mortgage Loan,
the outstanding principal balance as of the related date of substitution),
reduced (to not less than zero) on each Distribution Date by (i) all payments or
other collections (or Advances in lieu thereof) of principal of such Mortgage
Loan that have been distributed on the Certificates on such Distribution Date or
applied to any other payments required under the Pooling and Servicing Agreement
and (ii) any principal forgiven by the Special Servicer and other principal
losses realized in respect of such Mortgage Loan during the related Collection
Period.
With respect to each Non-Serviced Mortgage Loan, any additional trust
expenses under the GMACCM 2003-C3 Pooling and Servicing Agreement or the
Wachovia 2003-C9 Pooling and Servicing Agreement, as applicable, that are
similar to those expenses resulting in Realized Losses and that relate to a
Non-Serviced Mortgage Loan are to be paid out of collections on, and other
proceeds of, the related Non-Serviced Mortgage Loan and the related companion
loans, thereby potentially resulting in a loss to the Trust.
PREPAYMENT INTEREST SHORTFALLS
For any Distribution Date, a "Prepayment Interest Shortfall" will arise
with respect to any Mortgage Loan if a mortgagor makes a full Principal
Prepayment or a Balloon Payment during the related Collection Period, and the
date such payment was made (or, in the case of a Balloon Payment, the date
through which interest thereon accrues) occurred prior to the Due Date for such
Mortgage Loan in the related Collection Period. Such a shortfall arises because
the amount of interest which accrues on the amount of such Principal Prepayment
or the principal portion of a Balloon Payment, as the case may be, will be less
than the corresponding amount of interest accruing on the Certificates and fees
payable to the Trustee, the Bond Administrator and the Servicer. In such case,
the Prepayment Interest Shortfall will generally equal the excess of (a) the
aggregate amount of interest which would have accrued on the Stated Principal
Balance of such Mortgage Loan for the one month period ending on such Due Date
if such Principal Prepayment or Balloon Payment had not been made over (b) the
aggregate interest that did so accrue through the date such payment was made.
In any case in which a Principal Prepayment in full or in part or a Balloon
Payment is made during any Collection Period after the Due Date for a Mortgage
Loan in the related Collection Period, "Prepayment Interest Excess" will arise
since the amount of interest which accrues on the amount of such Principal
Prepayment or the principal portion of a Balloon Payment will exceed the
corresponding amount of interest accruing on the Certificates and fees payable
to the Trustee and the Servicer.
S-97
To the extent that the aggregate of such Prepayment Interest Shortfalls for
all Mortgage Loans that are not specially serviced exceed such Prepayment
Interest Excess for such Mortgage Loans as of any Distribution Date ("Net
Prepayment Interest Shortfall"), such amount will reduce the aggregate Master
Servicing Fee (but not the fees payable to the Special Servicer in the case of
Specially Serviced Mortgage Loans and not the Trustee Fee) in an amount
necessary to offset such Net Prepayment Interest Shortfalls. See "The Pooling
and Servicing Agreement--Servicing Compensation and Payment of Expenses" in this
prospectus supplement. The aggregate Prepayment Interest Shortfalls in excess of
the sum of (i) the aggregate Prepayment Interest Excess and (ii) the aggregate
Master Servicing Fee ("Excess Prepayment Interest Shortfall") will generally be
allocated to each Class of Certificates, pro rata, based on interest amounts
distributable (without giving effect to any such allocation of Excess Prepayment
Interest Shortfall) to each such Class.
To the extent that such Prepayment Interest Excess for all Mortgage Loans
exceeds such Prepayment Interest Shortfalls for all Mortgage Loans as of any
Distribution Date, such excess amount (the "Net Prepayment Interest Excess")
will be payable to the Servicer as additional compensation.
SUBORDINATION
As a means of providing a certain amount of protection to the holders of
the Class A-1, Class A-2, Class A-3, Class A-4, Class X-1 and Class X-2
Certificates (except as set forth below) against losses associated with
delinquent and defaulted Mortgage Loans, the rights of the holders of the Class
B, Class C, Class D, Class E, Class F, Class G, Class H, Class J, Class K, Class
L, Class M, Class N, Class O and Class P Certificates (collectively, the
"Subordinate Certificates") to receive distributions of interest and principal
(if applicable) with respect to the Mortgage Loans, as applicable, will be
subordinated to such rights of the holders of the Class A-1, Class A-2, Class
A-3, Class A-4, Class X-1 and Class X-2 Certificates. The Class B Certificates
will be likewise protected by the subordination of the Class C, Class D, Class
E, Class F, Class G, Class H, Class J, Class K, Class L, Class M, Class N, Class
O and Class P Certificates. The Class C Certificates will be likewise protected
by the subordination of the Class D, Class E, Class F, Class G, Class H, Class
J, Class K, Class L, Class M, Class N, Class O and Class P Certificates. The
Class D Certificates will be likewise protected by the subordination of the
Class E, Class F, Class G, Class H, Class J, Class K, Class L, Class M, Class N,
Class O and Class P Certificates. The Class E Certificates will be likewise
protected by the subordination of the Class F, Class G, Class H, Class J, Class
K, Class L, Class M, Class N, Class O and Class P Certificates. This
subordination will be effected in two ways: (i) by the preferential right of the
holders of a Class of Regular Certificates to receive on any Distribution Date
the amounts of interest and principal distributable in respect of such Regular
Certificates on such date prior to any distribution being made on such
Distribution Date in respect of any Classes of Regular Certificates subordinate
thereto, and (ii) by the allocation of Realized Losses (as defined in this
prospectus supplement), FIRST, to the Class P Certificates, SECOND, to the Class
O Certificates, THIRD, to the Class N Certificates, FOURTH, to the Class M
Certificates, FIFTH to the Class L Certificates, SIXTH, to the Class K
Certificates, SEVENTH, to the Class J Certificates, EIGHTH, to the Class H
Certificates, NINTH, to the Class G Certificates, TENTH, to the Class F
Certificates, ELEVENTH, to the Class E Certificates, TWELFTH, to the Class D
Certificates, THIRTEENTH, to the Class C Certificates, FOURTEENTH, to the Class
B Certificates, and FINALLY, PRO RATA, to the Class A-1, Class A-2, Class A-3
and Class A-4 Certificates based on their respective Certificate Balances for
Realized Losses. No other form of credit enhancement will be available for the
benefit of the holders of the Offered Certificates.
Allocation of principal distributions to the Class A-1, Class A-2, Class
A-3 and Class A-4 Certificates (collectively, the "Class A Certificates") will
have the effect of reducing the aggregate Certificate Balance of the Class A
Certificates at a proportionately faster rate than the rate at which the
aggregate Stated Principal Balance of the Mortgage Pool will reduce. Thus, as
principal is distributed to the holders of the Class A Certificates, the
percentage interest in the Trust Fund evidenced by the Class A Certificates will
be decreased (with a corresponding increase in the percentage interest in the
Trust Fund evidenced by the Subordinate Certificates), thereby increasing,
relative to their respective Certificate Balances, the subordination afforded
the Class A Certificates by the Subordinate Certificates.
S-98
APPRAISAL REDUCTIONS
With respect to any Mortgage Loan other than the Non-Serviced Mortgage
Loans, on the first Distribution Date following the earliest of (i) the date on
which such Mortgage Loan becomes a Modified Mortgage Loan (as defined below),
(ii) the 90th day following the occurrence of any uncured delinquency in Monthly
Payments with respect to such Mortgage Loan, (iii) receipt of notice that the
related borrower has filed a bankruptcy petition or the date on which a receiver
is appointed and continues in such capacity or the 60th day after the related
borrower becomes the subject of involuntary bankruptcy proceedings and such
proceedings are not dismissed in respect of the Mortgaged Property securing such
Mortgage Loan, (iv) the date on which the Mortgaged Property securing such
Mortgage Loan becomes an REO Property, (v) 60 days after the third anniversary
of any extension of a Mortgage Loan and (vi) the 30th day (as may be extended by
the Special Servicer, with the consent of the Directing Certificateholder or
with respect to Serviced Whole Loans, with the consent of certain other persons,
to the 60th day) following the occurrence of any uncured delinquency with
respect to a Balloon Payment on a Balloon Loan, unless (a) within 30 days after
such delinquency, the related borrower delivers a statement to the effect that
it is diligently pursuing refinancing and (b) within 90 days (as may be extended
by the Special Servicer, with the consent of the Directing Certificateholder or
with respect to Serviced Whole Loans, with the consent of certain other persons,
to the 120 days) after such delinquency, the related borrower delivers a binding
financing commitment reasonably acceptable to the Special Servicer and the
Directing Certificateholder (any of clauses (i), (ii), (iii), (iv), (v) and
(vi), an "Appraisal Reduction Event"), an Appraisal Reduction Amount will be
calculated. The "Appraisal Reduction Amount" for any Distribution Date and for
any Mortgage Loan (other than a Non-Serviced Mortgage Loan) or Serviced Whole
Loan as to which any Appraisal Reduction Event has occurred will be an amount
equal to the excess of (a) the outstanding Stated Principal Balance of such
Mortgage Loan or Serviced Whole Loan over (b) the excess of (i) 90% of the sum
of the appraised values (net of any prior liens but including all escrows and
reserves (other than escrows and reserves for taxes and insurance)) of the
related Mortgaged Properties as determined by independent MAI appraisals (the
costs of which shall be paid by the Servicer or the Special Servicer as an
Advance) or, in the case of Mortgage Loans having a principal balance under
$2,000,000, 90% of the sum of the estimated values of the related Mortgaged
Properties, as described below over (ii) the sum of (A) to the extent not
previously advanced by the Servicer or the Trustee, all unpaid interest on such
Mortgage Loan or Serviced Whole Loan at a per annum rate equal to the Mortgage
Rate (or with respect to a Serviced Whole Loan, the weighted average of its
Mortgage Rates), (B) all unreimbursed Property Advances, the principal portion
of all unreimbursed P&I Advances and all unpaid interest on Advances at the
Advance Rate in respect of such Mortgage Loan or Serviced Whole Loan, (C) any
other unpaid additional Trust expenses in respect of such Mortgage Loan or
Serviced Whole Loan and (D) all currently due and unpaid real estate taxes,
ground rents and assessments and insurance premiums and all other amounts due
and unpaid under the Mortgage Loan or Serviced Whole Loan (which taxes, premiums
(net of any escrows or reserves therefor) and other amounts have not been the
subject of an Advance by the Servicer, the Special Servicer or the Trustee);
PROVIDED, HOWEVER, that in the event that the Special Servicer has not received
the independent MAI appraisal or Small Loan Appraisal Estimate within the time
frame described below, the Appraisal Reduction Amount will be deemed to be an
amount equal to 25% of the current Stated Principal Balance of the related
Mortgage Loan or Serviced Whole Loan until the independent MAI Appraisal or
Small Loan Appraisal Estimate is received. Notwithstanding the foregoing, within
60 days after the Appraisal Reduction Event (or in the case of an Appraisal
Reduction Event occurring by reason of clause (ii) of the definition thereof, 30
days) (i) with respect to Mortgage Loans having a principal balance of
$2,000,000 or higher, the Special Servicer will be required to obtain an
independent MAI appraisal, and (ii) for Mortgage Loans having a principal
balance under $2,000,000, the Special Servicer will be required, at its option,
(A) to provide its good faith estimate (a "Small Loan Appraisal Estimate") of
the value of the Mortgaged Properties within the same time period as an
appraisal would otherwise be required and such Small Loan Appraisal Estimate
will be used in lieu of an independent MAI Appraisal to calculate an Appraisal
Reduction Amount for such Mortgage Loans, or (B) to obtain, with the consent of
the Directing Certificateholder or with respect to Serviced Whole Loans, with
the consent of certain other persons, an Updated Appraisal. On the first
Distribution Date occurring on or after the delivery of such independent MAI
appraisal, the
S-99
Special Servicer will be required to adjust the Appraisal Reduction Amount to
take into account such appraisal (regardless of whether the independent MAI
appraisal is higher or lower than the Small Loan Appraisal Estimate). To the
extent required in the Pooling and Servicing Agreement, Appraisal Reduction
Amounts will be recalculated on each Distribution Date and an Updated Appraisal
will be obtained annually.
At any time that an Appraisal Reduction Amount exists with respect to any
Mortgage Loan or with respect to Serviced Whole Loans, with the consent of
certain other persons, the Directing Certificateholder may, at its own expense,
obtain and deliver to the Servicer, the Special Servicer and the Trustee an
appraisal that satisfies the requirements of an "Updated Appraisal," and upon
the written request of the Directing Certificateholder, the Special Servicer
shall recalculate the Appraisal Reduction Amount in respect of such Updated
Appraisal Loan based on the appraisal delivered by the Directing
Certificateholder and shall notify the Trustee, the Servicer and the Directing
Certificateholder of such recalculated Appraisal Reduction Amount.
Contemporaneously with the earliest of (i) the effective date of any
modification of the stated maturity, Mortgage Rate, principal balance or
amortization terms of any Mortgage Loan, any extension of the maturity date of a
Mortgage Loan or consent to the release of any Mortgaged Property or REO
Property from the lien of the related Mortgage other than pursuant to the terms
of the Mortgage Loan, (ii) the occurrence of an Appraisal Reduction Event, (iii)
a default in the payment of a Balloon Payment for which an extension has not
been granted or (iv) the date on which the Special Servicer, consistent with the
Servicing Standard, requests an Updated Appraisal, the Special Servicer will be
required to obtain an appraisal (or a letter update for an existing appraisal
which is less than two years old) of the Mortgaged Property, or REO Property, as
the case may be, from an independent appraiser who is a member of the Appraiser
Institute (an "Updated Appraisal") or a Small Loan Appraisal Estimate, as
applicable, PROVIDED, that, the Special Servicer will not be required to obtain
an Updated Appraisal or Small Loan Appraisal Estimate of any Mortgaged Property
with respect to which there exists an appraisal or Small Loan Appraisal Estimate
which is less than 12 months old. The Special Servicer will be required to
update, on an annual basis, each Small Loan Appraisal Estimate or Updated
Appraisal for so long as the related Mortgage Loan remains specially serviced.
Each Serviced Whole Loan will be treated as a single mortgage loan for
purposes of calculating an Appraisal Reduction Amount with respect to the
mortgage loans that comprise such Whole Loan. Any Appraisal Reduction calculated
with respect to such Whole Loan will be applied first to the related B note, if
any. Any Appraisal Reduction Amount in respect of a Serviced Whole Loan that
exceeds the aggregate balance of the related B note, if any, will be allocated
to the related Mortgage Loan and the related Pari Passu Companion Loans on a PRO
RATA basis (based on such loan's outstanding principal balance).
In the event that an Appraisal Reduction Event occurs with respect to a
Mortgage Loan, the amount advanced by the Servicer with respect to delinquent
payments of interest for such Mortgage Loan will be reduced as described under
"The Pooling and Servicing Agreement--Advances" in this prospectus supplement.
The AFR/Bank of America Portfolio Loan and the Meadows Mall Loan are
subject to provisions in the GMACCM 2003-C3 Pooling and Servicing Agreement and
the Wachovia 2003-C9 Pooling and Servicing Agreement, respectively, relating to
appraisal reductions that are substantially similar to the provisions set forth
above. The existence of an appraisal reduction under (i) the GMACCM 2003-C3
Pooling and Servicing Agreement in respect of the AFR/Bank of America Portfolio
Loan and (ii) the Wachovia 2003-C9 Pooling and Servicing Agreement in respect of
the Meadows Mall Loan, will proportionately reduce the Servicer's or the
Trustee's, as the case may be, obligation to make P&I Advances on the AFR/Bank
of America Portfolio Loan and the Meadows Mall Loan and will generally have the
effect of reducing the amount otherwise available for current distributions to
the holders of the most subordinate Class or Classes of Certificates. Any such
appraisal reduction on the AFR/Bank of America Portfolio Whole Loan will
generally be allocated, first, to the holder of the AFR/Bank of America
Portfolio B Loan and, then, to the holders of the AFR/Bank of America Portfolio
Senior Loans (which include the Trust as the holder of the AFR/Bank of America
Portfolio Loan), PRO RATA, based on each
S-100
AFR/Bank of America Portfolio Senior Loan's outstanding principal balance. Any
such appraisal reduction on the Meadows Mall Whole Loan will generally be
allocated, PRO RATA, to the Meadows Mall Loan and the Meadows Mall Pari Passu
Loan based on each loan's outstanding principal balance.
A "Modified Mortgage Loan" is any Specially Serviced Mortgage Loan which
has been modified by the Special Servicer in a manner that: (a) affects the
amount or timing of any payment of principal or interest due thereon (other
than, or in addition to, bringing current Monthly Payments with respect to such
Mortgage Loan); (b) except as expressly contemplated by the related Mortgage,
results in a release of the lien of the Mortgage on any material portion of the
related Mortgaged Property without a corresponding Principal Prepayment in an
amount not less than the fair market value (as is) of the property to be
released; or (c) in the reasonable good faith judgment of the Special Servicer,
otherwise materially impairs the security for such Mortgage Loan or reduces the
likelihood of timely payment of amounts due thereon.
DELIVERY, FORM AND DENOMINATION
The Offered Certificates will be issuable in registered form, in minimum
denominations of Certificate Balance of (i) $10,000 with respect to the Class
A-1, Class A-2, Class A-3 and Class A-4 Certificates and multiples of $1 in
excess thereof; and (ii) $25,000 with respect to Classes B, C, D and E
Certificates and multiples of $1 in excess thereof.
The Offered Certificates will initially be represented by one or more
global Certificates for each such Class registered in the name of the nominee of
DTC. The Depositor has been informed by DTC that DTC's nominee will be Cede &
Co. No holder of an Offered Certificate will be entitled to receive a
certificate issued in fully registered, certificated form (each, a "Definitive
Certificate") representing its interest in such Class, except under the limited
circumstances described in the prospectus under "Description of the
Certificates--Book Entry Registration and Definitive Certificates." Unless and
until Definitive Certificates are issued, all references to actions by holders
of the Offered Certificates will refer to actions taken by DTC upon instructions
received from holders of Offered Certificates through its participating
organizations (together with Clearstream Banking, societe anonyme
("Clearstream") and Euroclear participating organizations, the "Participants"),
and all references herein to payments, notices, reports, statements and other
information to holders of Offered Certificates will refer to payments, notices,
reports and statements to DTC or Cede & Co., as the registered holder of the
Offered Certificates, for distribution to holders of Offered Certificates
through its Participants in accordance with DTC procedures; PROVIDED, HOWEVER,
that to the extent that the party responsible for distributing any report,
statement or other information has been provided with the name of the beneficial
owner of a Certificate (or the prospective transferee of such beneficial owner),
such report, statement or other information will be provided to such beneficial
owner (or prospective transferee).
Until Definitive Certificates are issued in respect of the Offered
Certificates, interests in the Offered Certificates will be transferred on the
book-entry records of DTC and its Participants. The Bond Administrator will
initially serve as certificate registrar (in such capacity, the "Certificate
Registrar") for purposes of recording and otherwise providing for the
registration of the Offered Certificates.
A "Certificateholder" under the Pooling and Servicing Agreement will be the
person in whose name a Certificate is registered in the certificate register
maintained pursuant to the Pooling and Servicing Agreement, except that solely
for the purpose of giving any consent or taking any action pursuant to the
Pooling and Servicing Agreement, any Certificate registered in the name of the
Depositor, the Servicer, the Special Servicer, the Trustee (in its individual
capacity), the Bond Administrator, a manager of a Mortgaged Property, a
mortgagor or any person affiliated with the Depositor, the Servicer, the Special
Servicer, the Trustee, the Bond Administrator, such manager or a mortgagor will
be deemed not to be outstanding and the Voting Rights to which it is entitled
will not be taken into account in determining whether the requisite percentage
of Voting Rights necessary to effect any such consent or take any such action
has been obtained; PROVIDED, HOWEVER, that for purposes of obtaining the consent
of Certificateholders to an amendment to the Pooling and Servicing Agreement,
any Certificates beneficially owned by the Servicer or Special Servicer or an
affiliate will be deemed to be outstanding, provided that such amendment does
not relate to compensation of the Servicer or
S-101
Special Servicer or otherwise benefit the Servicer or the Special Servicer in
any material respect; PROVIDED, FURTHER, that for purposes of obtaining the
consent of Certificateholders to any action proposed to be taken by the Special
Servicer with respect to a Specially Serviced Mortgage Loan, any Certificates
beneficially owned by the Special Servicer or an affiliate will be deemed not to
be outstanding, PROVIDED FURTHER, HOWEVER, that such restrictions will not apply
to the exercise of the Special Servicer's rights, if any, as a member of the
Controlling Class. Notwithstanding the foregoing, solely for purposes of
providing or distributing any reports, statements or other information pursuant
to the Pooling and Servicing Agreement, a Certificateholder will include any
beneficial owner (or prospective transferee of a beneficial owner) to the extent
that the party required or permitted to provide or distribute such report,
statement or other information has been provided with the name of such
beneficial owner (or prospective transferee). The Percentage Interest of any
Class of Offered Certificate will be equal to the percentage obtained by
dividing the denomination of such Certificate by the aggregate initial
Certificate Balance of such Class of Certificates. See "Description of the
Certificates--Book-Entry Registration and Definitive Certificates" in the
prospectus.
BOOK-ENTRY REGISTRATION
Holders of Offered Certificates may hold their Certificates through DTC (in
the United States) or Clearstream or Euroclear (in Europe) if they are
Participants of such system, or indirectly through organizations that are
participants in such systems. Clearstream and Euroclear will hold omnibus
positions on behalf of the Clearstream Participants and the Euroclear
Participants, respectively, through customers' securities accounts in
Clearstream's and Euroclear's names on the books of their respective
depositaries (collectively, the "Depositaries") which in turn will hold such
positions in customers' securities accounts in the Depositaries' names on the
books of DTC. DTC is a limited purpose trust company organized under the New
York Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code and a "clearing
agency" registered pursuant to Section 17A of the Securities Exchange Act of
1934, as amended. DTC was created to hold securities for its Participants and to
facilitate the clearance and settlement of securities transactions between
Participants through electronic computerized book-entries, thereby eliminating
the need for physical movement of certificates. Participants include securities
brokers and dealers, banks, trust companies and clearing corporations. Indirect
access to the DTC system also is available to others such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly ("Indirect
Participants").
Transfers between DTC Participants will occur in accordance with DTC rules.
Transfers between Clearstream Participants and Euroclear Participants will occur
in accordance with their applicable rules and operating procedures. For
additional information regarding clearance and settlement procedures for the
Offered Certificates and for information with respect to tax documentation
procedures relating to the Offered Certificates, see Annex C hereto.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly through Clearstream Participants or
Euroclear Participants, on the other, will be effected in DTC in accordance with
DTC rules on behalf of the relevant European international clearing system by
its Depositary; however, such cross-market transactions will require delivery of
instructions to the relevant European international clearing system by the
counterparty in such system in accordance with its rules and procedures. If the
transaction complies with all relevant requirements, Euroclear or Clearstream,
as the case may be, will then deliver instructions to the Depository to take
action to effect final settlement on its behalf.
Because of time-zone differences, credits of securities in Clearstream or
Euroclear as a result of a transaction with a DTC Participant will be made
during the subsequent securities settlement processing, dated the business day
following the DTC settlement date, and such credits or any transactions in such
securities settled during such processing will be reported to the relevant
Clearstream Participant or Euroclear Participant on such business day. Cash
received in Clearstream or Euroclear as a result of sales of securities by or
through a Clearstream Participant or a Euroclear Participant to a DTC
Participant will be received with value on the DTC settlement date but will be
S-102
available in the relevant Clearstream or Euroclear cash account only as of the
business day following settlement in DTC.
The holders of Offered Certificates that are not Participants or Indirect
Participants but desire to purchase, sell or otherwise transfer ownership of, or
other interests in, Offered Certificates may do so only through Participants and
Indirect Participants. In addition, holders of Offered Certificates will receive
all distributions of principal and interest from the Bond Administrator through
the Participants who in turn will receive them from DTC. Under a book-entry
format, holders of Offered Certificates may experience some delay in their
receipt of payments, reports and notices, since such payments, reports and
notices will be forwarded by the Bond Administrator to Cede & Co., as nominee
for DTC. DTC will forward such payments, reports and notices to its
Participants, which thereafter will forward them to Indirect Participants,
Clearstream, Euroclear or holders of Offered Certificates.
Under the rules, regulations and procedures creating and affecting DTC and
its operations (the "Rules"), DTC is required to make book-entry transfers of
Offered Certificates among Participants on whose behalf it acts with respect to
the Offered Certificates and to receive and transmit distributions of principal
of, and interest on, the Offered Certificates. Participants and Indirect
Participants with which the holders of Offered Certificates have accounts with
respect to the Offered Certificates similarly are required to make book-entry
transfers and receive and transmit such payments on behalf of their respective
holders of Offered Certificates. Accordingly, although the holders of Offered
Certificates will not possess the Offered Certificates, the Rules provide a
mechanism by which Participants will receive payments on Offered Certificates
and will be able to transfer their interest.
Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a holder of
Offered Certificates to pledge such Certificates to persons or entities that do
not participate in the DTC system, or to otherwise act with respect to such
Certificates, may be limited due to the lack of a physical certificate for such
Certificates.
DTC has advised the Depositor that it will take any action permitted to be
taken by a holder of an Offered Certificate under the Pooling and Servicing
Agreement only at the direction of one or more Participants to whose accounts
with DTC the Offered Certificates are credited. DTC may take conflicting actions
with respect to other undivided interests to the extent that such actions are
taken on behalf of Participants whose holdings include such undivided interests.
Clearstream is incorporated under the laws of Luxembourg as a professional
depository. Clearstream holds securities for its participating organizations
("Clearstream Participants") and facilitates the clearance and settlement of
securities transactions between Clearstream Participants through electronic
book-entry changes in accounts of Clearstream Participants, thereby eliminating
the need for physical movement of certificates.
Euroclear was created in 1968 to hold securities for participants of the
Euroclear system ("Euroclear Participants") and to clear and settle transactions
between Euroclear Participants through simultaneous electronic book-entry
delivery against payment.
Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System and applicable Belgian law
(collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within the Euroclear system, withdrawal of
securities and cash from the Euroclear system, and receipts of payments with
respect to securities in the Euroclear system.
Although DTC, Euroclear and Clearstream have implemented the foregoing
procedures in order to facilitate transfers of interests in Global Certificates
among Participants of DTC, Euroclear and Clearstream, they are under no
obligation to perform or to continue to comply with such procedures, and such
procedures may be discontinued at any time. None of the Depositor, the Trustee,
the Bond Administrator, the Servicer, the Special Servicer or the Underwriters
will have any responsibility for the performance by DTC, Euroclear or
Clearstream or their respective direct or indirect Participants of their
respective obligations under the rules and procedures governing their
operations.
S-103
The information herein concerning DTC, Clearstream and Euroclear and their
book-entry systems has been obtained from sources believed to be reliable, but
the Depositor takes no responsibility for the accuracy or completeness thereof.
DEFINITIVE CERTIFICATES
Definitive Certificates will be delivered to beneficial owners of the
Offered Certificates ("Certificate Owners") (or their nominees) only if (i) DTC
is no longer willing or able properly to discharge its responsibilities as
depository with respect to the book-entry certificates, and the Depositor is
unable to locate a qualified successor, (ii) the Depositor, at its sole option,
elects to terminate the book-entry system through DTC with respect to some or
all of any Class or Classes of Certificates, or (iii) after the occurrence of an
Event of Default under the Pooling and Servicing Agreement, Certificate Owners
representing a majority in principal amount of the book-entry certificates then
outstanding advise the Bond Administrator and DTC through DTC Participants in
writing that the continuation of a book-entry system through DTC (or a successor
thereto) is no longer in the best interest of Certificate Owners.
Upon the occurrence of any of the events described in clauses (i) through
(iii) in the immediately preceding paragraph, the Bond Administrator is required
to notify all affected Certificateholders (through DTC and related DTC
Participants) of the availability through DTC of Definitive Certificates. Upon
delivery of Definitive Certificates, the Trustee, the Bond Administrator, the
Certificate Registrar and the Servicer will recognize the holders of such
Definitive Certificates as holders under the Pooling and Servicing Agreement
("Holders"). Distributions of principal and interest on the Definitive
Certificates will be made by the Bond Administrator directly to Holders of
Definitive Certificates in accordance with the procedures set forth in the
Prospectus and the Pooling and Servicing Agreement.
Upon the occurrence of any of the events described in clauses (i) through
(iii) of the second preceding paragraph, requests for transfer of Definitive
Certificates will be required to be submitted directly to the Certificate
Registrar in a form acceptable to the Certificate Registrar (such as the forms
which will appear on the back of the certificate representing a Definitive
Certificate), signed by the Holder or such Holder's legal representative and
accompanied by the Definitive Certificate or Certificates for which transfer is
being requested. The Bond Administrator will be appointed as the initial
Certificate Registrar.
S-104
YIELD AND MATURITY CONSIDERATIONS
YIELD CONSIDERATIONS
GENERAL. The yield on any Offered Certificate will depend on: (i) the
Pass-Through Rate in effect from time to time for such Certificate; (ii) the
price paid for such Certificate and the rate and timing of payments of principal
on such Certificate; and (iii) the aggregate amount of distributions on such
Certificate.
PASS-THROUGH RATE. The Pass-Through Rate for the Class A-1, Class A-2,
Class A-3 and Class A-4 Certificates will be fixed. The Pass-Through Rates
applicable to the Class B, Class C, Class D and Class E Certificates for any
Distribution Date will equal one of the following: (i) a fixed rate, (ii) a rate
equal to the lesser of the initial Pass-Through Rate for such Class and the
Weighted Average Net Mortgage Pass-Through Rate for such Distribution Date,
(iii) a rate equal to the Weighted Average Net Mortgage Pass-Through Rate less a
specified percentage or (iv) a rate equal to the Weighted Average Net Mortgage
Pass-Through Rate. Accordingly, the yield on the Offered Certificates (other
than the Class A-1, Class A-2, Class A-3 and Class A-4 Certificates) will be
sensitive to changes in the relative composition of the Mortgage Loans as a
result of scheduled amortization, voluntary prepayments, liquidations of
Mortgage Loans following default and repurchases of Mortgage Loans. Losses or
payments of principal on the Mortgage Loans with higher Net Mortgage
Pass-Through Rates could result in a reduction in the Weighted Average Net
Mortgage Pass-Through Rate, thereby, to the extent that the Weighted Average Net
Mortgage Pass-Through Rate is reduced below the specified fixed rate with
respect to the Class B, Class C, Class D and Class E Certificates, reducing the
Pass-Through Rates on such Classes of Offered Certificates.
See "Yield and Maturity Considerations" in the prospectus, "Description of
the Offered Certificates" and "Description of the Mortgage Pool" in this
prospectus supplement and "--Rate and Timing of Principal Payments" below.
RATE AND TIMING OF PRINCIPAL PAYMENTS. The yield to holders of the Offered
Certificates will be affected by the rate and timing of principal payments on
the Mortgage Loans (including Principal Prepayments on the Mortgage Loans
resulting from both voluntary prepayments by the mortgagors and involuntary
liquidations). The rate and timing of principal payments on the Mortgage Loans
will in turn be affected by, among other things, the amortization schedules
thereof, the dates on which Balloon Payments or payments with respect to the ARD
Loan are due and the rate and timing of Principal Prepayments and other
unscheduled collections thereon (including for this purpose, collections made in
connection with liquidations of Mortgage Loans due to defaults, casualties or
condemnations affecting the Mortgaged Properties, or purchases of Mortgage Loans
out of the Trust). Prepayments and, assuming the Anticipated Repayment Date or
respective stated maturity dates, as applicable, have not occurred, liquidations
and purchases of the Mortgage Loans, will result in distributions on the
Principal Balance Certificates of amounts that otherwise would have been
distributed over the remaining terms of the Mortgage Loans. Defaults on the
Mortgage Loans, particularly at or near their stated maturity dates, may result
in significant delays in payments of principal on the Mortgage Loans (and,
accordingly, on the Principal Balance Certificates) while work-outs are
negotiated or foreclosures are completed. See "The Pooling and Servicing
Agreement--Amendment" and "--Modifications" in this prospectus supplement and
"Description of the Pooling Agreements--Realization Upon Defaulted Mortgage
Loans" and "Certain Legal Aspects of the Mortgage Loans--Foreclosure" in the
prospectus. Because the rate of principal payments on the Mortgage Loans will
depend on future events and a variety of factors (as described below), no
assurance can be given as to such rate or the rate of Principal Prepayments in
particular. The Depositor is not aware of any relevant publicly available or
authoritative statistics with respect to the historical prepayment experience of
a large group of mortgage loans comparable to the Mortgage Loans.
In addition, although the borrower under the ARD Loan may have certain
incentives to prepay the ARD Loan on its Anticipated Repayment Date, the
Depositor makes no assurance that the borrower will be able to prepay the ARD
Loan on its Anticipated Repayment Date. The failure of a borrower to prepay the
ARD Loan on its Anticipated Repayment Date will not be an event of default under
the terms of the
S-105
ARD Loan. Pursuant to the terms of the Pooling and Servicing Agreement, neither
the Servicer nor the Special Servicer will be permitted to take any enforcement
action with respect to the related borrower's failure to pay Excess Interest,
other than requests for collection, until the scheduled maturity of the ARD
Loan; PROVIDED that the Servicer or the Special Servicer, as the case may be,
may take action to enforce the Trust Fund's right to apply excess cash flow to
principal in accordance with the terms of the related Mortgage Loan Documents.
See "Risk Factors--Borrower May Be Unable to Repay the Remaining Principal
Balance on the Maturity Date or Anticipated Repayment Date" in this prospectus
supplement.
The extent to which the yield to maturity of an Offered Certificate may
vary from the anticipated yield will depend upon the degree to which such
Certificate is purchased at a discount or premium and when, and to what degree,
payments of principal on the Mortgage Loans are in turn distributed on or
otherwise result in the reduction of the Certificate Balance of such
Certificate. An investor should consider, in the case of an Offered Certificate
purchased at a discount, the risk that a slower than anticipated rate of
principal payments on such Certificate could result in an actual yield to such
investor that is lower than the anticipated yield and, in the case of an Offered
Certificate purchased at a premium, the risk that a faster than anticipated rate
of principal payments on such Certificate could result in an actual yield to
such investor that is lower than the anticipated yield. In general, the earlier
a payment of principal is made on an Offered Certificate purchased at a discount
or premium, the greater will be the effect on an investor's yield to maturity.
As a result, the effect on an investor's yield of principal payments on such
investor's Offered Certificates occurring at a rate higher (or lower) than the
rate anticipated by the investor during any particular period would not be fully
offset by a subsequent like reduction (or increase) in the rate of principal
payments.
LOSSES AND SHORTFALLS. The yield to holders of the Offered Certificates
will also depend on the extent to which such holders are required to bear the
effects of any losses or shortfalls on the Mortgage Loans. Losses and other
shortfalls on the Mortgage Loans will generally be borne: first, by the holders
of the respective Classes of Subordinate Certificates, in reverse alphabetical
order of Class designation, to the extent of amounts otherwise distributable in
respect of their Certificates; and then, by the holders of the Offered
Certificates. Further, any Net Prepayment Interest Shortfall for each
Distribution Date will be allocated on such Distribution Date among each Class
of Certificates, pro rata, in accordance with the respective Interest Accrual
Amounts for each such Class of Certificates for such Distribution Date.
CERTAIN RELEVANT FACTORS. The rate and timing of principal payments and
defaults and the severity of losses on the Mortgage Loans may be affected by a
number of factors, including, without limitation, prevailing interest rates, the
terms of the Mortgage Loans (for example, Prepayment Premiums, prepayment
lock-out periods and amortization terms that require Balloon Payments), the
demographics and relative economic vitality of the areas in which the Mortgaged
Properties are located and the general supply and demand for comparable
residential and/or commercial space in such areas, the quality of management of
the Mortgaged Properties, the servicing of the Mortgage Loans, possible changes
in tax laws and other opportunities for investment. See "Risk Factors" and
"Description of the Mortgage Pool" in this prospectus supplement and "Risk
Factors" and "Yield and Maturity Considerations--Yield and Prepayment
Considerations" in the prospectus.
The rate of prepayment on the Mortgage Loan is likely to be affected by
prevailing market interest rates for mortgage loans of a comparable type, term
and risk level. When the prevailing market interest rate is below a mortgage
coupon, a borrower may have an increased incentive to refinance its mortgage
loan. If a Mortgage Loan is not in a lock-out period, the Prepayment Premium, if
any, in respect of such Mortgage Loan may not be sufficient economic
disincentive to prevent the related borrower from voluntarily prepaying the loan
as part of a refinancing thereof. See "Description of the Mortgage Pool--Certain
Terms and Conditions of the Mortgage Loans" in this prospectus supplement.
DELAY IN PAYMENT OF DISTRIBUTIONS. Because monthly distributions will not
be made to Certificateholders until a date that is scheduled to be at least 10
days following the end of the related Interest Accrual Period, the effective
yield to the holders of the Offered Certificates will be lower than
S-106
the yield that would otherwise be produced by the applicable Pass-Through Rates
and purchase prices (assuming such prices did not account for such delay).
UNPAID INTEREST. As described under "Description of the Offered
Certificates--Distributions" in this prospectus supplement, if the portion of
the Available Funds to be distributed in respect of interest on any Class of
Offered Certificates on any Distribution Date is less than the respective
Interest Accrual Amount for such Class, the shortfall will be distributable to
holders of such Class of Certificates on subsequent Distribution Dates, to the
extent of available funds. Any such shortfall will not bear interest, however,
and will therefore negatively affect the yield to maturity of such Class of
Certificates for so long as it is outstanding.
WEIGHTED AVERAGE LIFE
The weighted average life of a Principal Balance Certificate refers to the
average amount of time that will elapse from the date of its issuance until each
dollar allocable to principal of such Certificate is distributed to the
investor. For purposes of this prospectus supplement, the weighted average life
of a Principal Balance Certificate is determined by (i) multiplying the amount
of each principal distribution thereon by the number of years from the Closing
Date to the related Distribution Date, (ii) summing the results and (iii)
dividing the sum by the aggregate amount of the reductions in the Certificate
Balance of such Certificate. Accordingly, the weighted average life of any such
Certificate will be influenced by, among other things, the rate at which
principal of the Mortgage Loans is paid or otherwise collected or advanced and
the extent to which such payments, collections or advances of principal are in
turn applied in reduction of the Certificate Balance of the Class of
Certificates to which such Certificate belongs. If the Balloon Payment on a
Balloon Loan having a Due Date after the Determination Date in any month is
received on the stated maturity date thereof, the excess of such payment over
the related Assumed Monthly Payment will not be included in the Available Funds
until the Distribution Date in the following month. Therefore, the weighted
average life of the Principal Balance Certificates may be extended.
Prepayments on mortgage loans may be measured by a prepayment standard or
model. The model used in this prospectus supplement is the Constant Prepayment
Rate ("CPR") model. The CPR Model assumes that a group of mortgage loans
experiences prepayments each month at a specified constant annual rate. As used
in each of the following sets of tables with respect to any particular Class,
the column headed "0%" assumes that none of the Mortgage Loans is prepaid before
maturity or, with respect to the ARD Loan, the Anticipated Repayment Date. The
columns headed "25%," "50%," "75%," and "100%" assume that no prepayments are
made on any Mortgage Loan during such Mortgage Loan's Lock-Out Period, if any,
or during such Mortgage Loan's Yield Maintenance Period, if any, and are
otherwise made on each of the Mortgage Loans at the indicated CPR percentages.
There is no assurance, however, that prepayments of the Mortgage Loans (whether
or not in a Lock-Out Period or a Yield Maintenance Period) will conform to any
particular CPR percentages, and no representation is made that the Mortgage
Loans will prepay in accordance with the assumptions at any of the CPR
percentages shown or at any other particular prepayment rate, that all the
Mortgage Loans will prepay in accordance with the assumptions at the same rate
or that Mortgage Loans that are in a Lock-Out Period or a Yield Maintenance
Period will not prepay as a result of involuntary liquidations upon default or
otherwise.
The following tables indicate the percentage of the initial Certificate
Balance of each Class of Offered Certificates that would be outstanding after
each of the dates shown at the indicated CPR percentages and the corresponding
weighted average life of each such Class of Certificates. The tables have been
prepared on the basis of the information set forth herein under "Description of
the Mortgage Pool--Additional Loan Information" and on Annex A to this
prospectus supplement and the following assumptions (collectively, the "Modeling
Assumptions"):
(i) the initial Certificate Balance and the Pass-Through Rate for each
Class of Certificates are as set forth herein;
S-107
(ii) the scheduled Monthly Payments for each Mortgage Loan are based
on such Mortgage Loan's Cut-off Date Balance, stated monthly principal and
interest payments, and the Mortgage Rate in effect as of the Cut-off Date
for such Mortgage Loan;
(iii) all scheduled Monthly Payments (including Balloon Payments) are
assumed to be timely received on the first day of each month commencing in
March 2004;
(iv) there are no delinquencies or losses in respect of the Mortgage
Loans, there are no extensions of maturity in respect of the Mortgage
Loans, there are no Appraisal Reduction Amounts applied to the Mortgage
Loans and there are no casualties or condemnations affecting the Mortgaged
Properties;
(v) prepayments are made on each of the Mortgage Loans at the
indicated CPR percentages set forth in the table (without regard to any
limitations in such Mortgage Loans on partial voluntary principal
prepayments) (except to the extent modified below by the assumption
numbered (xii));
(vi) all Mortgage Loans accrue interest under the method as specified
in Annex A;
(vii) no party exercises its right of optional termination described
herein;
(viii) no Mortgage Loan will be repurchased by the related Mortgage
Loan Seller for a breach of a representation or warranty or a document
defect in the mortgage file, no holder of the related subordinate debt with
respect to the AFR/Bank of America Portfolio Loan or the
Walgreens-Riverside Loan will exercise its option to purchase such mortgage
loan; and no party that is entitled to under the Pooling and Servicing
Agreement will exercise its option to purchase all of the Mortgage Loans
and thereby cause an early termination of the Trust Fund;
(ix) no Prepayment Interest Shortfalls are incurred and no Prepayment
Premiums are collected;
(x) there are no additional Trust expenses;
(xi) distributions on the Certificates are made on the 10th day of
each month, commencing in April 2004;
(xii) no prepayments are received as to any Mortgage Loan during such
Mortgage Loan's Lock-Out Period, if any, or Yield Maintenance Period, if
any;
(xiii) the Closing Date is March 17, 2004;
(xiv) the ARD Loan is paid in full on its Anticipated Repayment Date;
(xv) with respect to each Mortgage Loan, the Master Servicing Fee, the
Trustee Fee and the Bond Administrator Fee accrue on the same basis as
interest accrues on such Mortgage Loan. In addition, with respect to the
AFR/Bank of America Portfolio Loan, (a) a separate servicing fee as set
forth in the GMACCM 2003-C3 Pooling and Servicing Agreement calculated at
an actual/360 basis and (b) a separate master servicing fee as set forth in
the pooling and servicing agreement relating to the GE Commercial Mortgage
Corporation, Commercial Mortgage Pass-Through Certificates, Series 2004-C1
securitization calculated on the basis of 12 months of 30 days each. With
respect to the Meadows Mall Loan, a separate servicing fee as set forth in
the Wachovia 2003-C9 Pooling and Servicing Agreement calculated on a basis
of 12 months of 30 days each, and the Master Servicing Fee, Trustee Fee and
the Bond Administrator Fee accrue on the basis of 12 months of 30 days
each; and
(xvi) the AFR/Bank of America Portfolio Loan was modeled based on the
principal balance of the AFR/Bank of America Portfolio Whole Loan but only
the portions of such cash flow due with respect to the Cut-Off Date Balance
of the AFR/Bank of America Portfolio Loan was included in the tables
presented herein. In addition, the Walgreens-Riverside Loan was modeled
based on the principal balance of the Walgreens-Riverside Loan but
excluding the Walgreens-Riverside B Loan.
To the extent that the Mortgage Loans have characteristics or experience
performance that differs from those assumed in preparing the tables set forth
below, the Class A-1, Class A-2, Class A-3, Class A-4, Class B, Class C, Class D
and Class E Certificates may mature earlier or later than indicated by the
S-108
tables. It is highly unlikely that the Mortgage Loans will prepay or perform in
accordance with the Modeling Assumptions at any constant rate until maturity or
that all the Mortgage Loans will prepay in accordance with the Modeling
Assumptions or at the same rate. In particular, certain of the Mortgage Loans
may not permit voluntary partial Principal Prepayments. In addition, variations
in the actual prepayment experience and the balance of the specific Mortgage
Loans that prepay may increase or decrease the percentages of initial
Certificate Balances (and weighted average lives) shown in the following tables.
Such variations may occur even if the average prepayment experience of the
Mortgage Loans were to equal any of the specified CPR percentages. In addition,
there can be no assurance that the actual pre-tax yields on, or any other
payment characteristics of, any Class of Offered Certificates will correspond to
any of the information shown in the yield tables herein, or that the aggregate
purchase prices of the Offered Certificates will be as assumed. Accordingly,
investors must make their own decisions as to the appropriate assumptions
(including prepayment assumptions) to be used in deciding whether to purchase
the Offered Certificates.
Investors are urged to conduct their own analyses of the rates at which the
Mortgage Loans may be expected to prepay.
Based on the Modeling Assumptions, the following tables indicate the
resulting weighted average lives of the Class A-1, Class A-2, Class A-3, Class
A-4, Class B, Class C, Class D and Class E Certificates and set forth the
percentage of the initial Certificate Balance of each such Class of Certificates
that would be outstanding after the Closing Date and each of the Distribution
Dates shown under the applicable assumptions at the indicated CPR percentages.
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE
OF THE CLASS A-1 CERTIFICATES AT THE SPECIFIED CPRS
0% CPR DURING LOCK-OUT, DEFEASANCE AND YIELD MAINTENANCE--OTHERWISE AT INDICATED CPR
DATE 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ----------------------------------------- ----------- ----------- ----------- ----------- -----------
Initial ................................. 100% 100% 100% 100% 100%
March 2005 .............................. 95 95 95 95 95
March 2006 .............................. 88 88 88 88 88
March 2007 .............................. 79 79 79 79 79
March 2008 .............................. 68 68 68 68 68
March 2009 .............................. 0 0 0 0 0
Weighted Average Life (in years) ........ 3.90 3.89 3.88 3.86 3.75
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE
OF THE CLASS A-2 CERTIFICATES AT THE SPECIFIED CPRS
0% CPR DURING LOCK-OUT, DEFEASANCE AND YIELD MAINTENANCE--OTHERWISE AT INDICATED CPR
DATE 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ----------------------------------------- ----------- ----------- ----------- ----------- -----------
Initial ................................. 100% 100% 100% 100% 100%
March 2005 .............................. 100 100 100 100 100
March 2006 .............................. 100 100 100 100 100
March 2007 .............................. 100 100 100 100 100
March 2008 .............................. 100 100 100 100 100
March 2009 .............................. 45 45 45 45 45
March 2010 .............................. 36 36 36 36 36
March 2011 .............................. 0 0 0 0 0
Weighted Average Life (in years) ........ 5.50 5.49 5.49 5.47 5.32
S-109
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE
OF THE CLASS A-3 CERTIFICATES AT THE SPECIFIED CPRS
0% CPR DURING LOCK-OUT, DEFEASANCE AND YIELD MAINTENANCE--OTHERWISE AT INDICATED CPR
DATE 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ----------------------------------------- ----------- ----------- ----------- ----------- -----------
Initial ................................. 100% 100% 100% 100% 100%
March 2005 .............................. 100 100 100 100 100
March 2006 .............................. 100 100 100 100 100
March 2007 .............................. 100 100 100 100 100
March 2008 .............................. 100 100 100 100 100
March 2009 .............................. 100 100 100 100 100
March 2010 .............................. 100 100 100 100 100
March 2011 .............................. 39 39 39 39 39
March 2012 .............................. 27 27 27 27 27
March 2013 .............................. 15 15 15 15 15
March 2014 .............................. 0 0 0 0 0
Weighted Average Life (in years) ........ 7.50 7.49 7.47 7.45 7.34
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE
OF THE CLASS A-4 CERTIFICATES AT THE SPECIFIED CPRS
0% CPR DURING LOCK-OUT, DEFEASANCE AND YIELD MAINTENANCE--OTHERWISE AT INDICATED CPR
DATE 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ----------------------------------------- ----------- ----------- ----------- ----------- -----------
Initial ................................. 100% 100% 100% 100% 100%
March 2005 .............................. 100 100 100 100 100
March 2006 .............................. 100 100 100 100 100
March 2007 .............................. 100 100 100 100 100
March 2008 .............................. 100 100 100 100 100
March 2009 .............................. 100 100 100 100 100
March 2010 .............................. 100 100 100 100 100
March 2011 .............................. 100 100 100 100 100
March 2012 .............................. 100 100 100 100 100
March 2013 .............................. 100 100 100 100 100
March 2014 .............................. 0 0 0 0 0
Weighted Average Life (in years) ........ 9.80 9.78 9.75 9.71 9.49
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE
OF THE CLASS B CERTIFICATES AT THE SPECIFIED CPRS
0% CPR DURING LOCK-OUT, DEFEASANCE AND YIELD MAINTENANCE--OTHERWISE AT INDICATED CPR
DATE 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ----------------------------------------- ----------- ----------- ----------- ----------- -----------
Initial ................................. 100% 100% 100% 100% 100%
March 2005 .............................. 100 100 100 100 100
March 2006 .............................. 100 100 100 100 100
March 2007 .............................. 100 100 100 100 100
March 2008 .............................. 100 100 100 100 100
March 2009 .............................. 100 100 100 100 100
March 2010 .............................. 100 100 100 100 100
March 2011 .............................. 100 100 100 100 100
March 2012 .............................. 100 100 100 100 100
March 2013 .............................. 100 100 100 100 100
March 2014 .............................. 0 0 0 0 0
Weighted Average Life (in years) ........ 9.98 9.98 9.98 9.98 9.73
S-110
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE
OF THE CLASS C CERTIFICATES AT THE SPECIFIED CPRS
0% CPR DURING LOCK-OUT, DEFEASANCE AND YIELD MAINTENANCE--OTHERWISE AT INDICATED CPR
DATE 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ----------------------------------------- ----------- ----------- ----------- ----------- -----------
Initial ................................. 100% 100% 100% 100% 100%
March 2005 .............................. 100 100 100 100 100
March 2006 .............................. 100 100 100 100 100
March 2007 .............................. 100 100 100 100 100
March 2008 .............................. 100 100 100 100 100
March 2009 .............................. 100 100 100 100 100
March 2010 .............................. 100 100 100 100 100
March 2011 .............................. 100 100 100 100 100
March 2012 .............................. 100 100 100 100 100
March 2013 .............................. 100 100 100 100 100
March 2014 .............................. 0 0 0 0 0
Weighted Average Life (in years) ........ 9.98 9.98 9.98 9.98 9.73
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE
OF THE CLASS D CERTIFICATES AT THE SPECIFIED CPRS
0% CPR DURING LOCK-OUT, DEFEASANCE AND YIELD MAINTENANCE--OTHERWISE AT INDICATED CPR
DATE 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ----------------------------------------- ----------- ----------- ----------- ----------- -----------
Initial ................................. 100% 100% 100% 100% 100%
March 2005 .............................. 100 100 100 100 100
March 2006 .............................. 100 100 100 100 100
March 2007 .............................. 100 100 100 100 100
March 2008 .............................. 100 100 100 100 100
March 2009 .............................. 100 100 100 100 100
March 2010 .............................. 100 100 100 100 100
March 2011 .............................. 100 100 100 100 100
March 2012 .............................. 100 100 100 100 100
March 2013 .............................. 100 100 100 100 100
March 2014 .............................. 13 13 13 13 13
March 2015 .............................. 4 4 4 4 4
March 2016 .............................. 0 0 0 0 0
Weighted Average Life (in years) ........ 10.09 10.09 10.09 10.09 9.89
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE
OF THE CLASS E CERTIFICATES AT THE SPECIFIED CPRS
0% CPR DURING LOCK-OUT, DEFEASANCE AND YIELD MAINTENANCE--OTHERWISE AT INDICATED CPR
DATE 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ----------------------------------------- ----------- ----------- ----------- ----------- -----------
Initial ................................. 100% 100% 100% 100% 100%
March 2005 .............................. 100 100 100 100 100
March 2006 .............................. 100 100 100 100 100
March 2007 .............................. 100 100 100 100 100
March 2008 .............................. 100 100 100 100 100
March 2009 .............................. 100 100 100 100 100
March 2010 .............................. 100 100 100 100 100
March 2011 .............................. 100 100 100 100 100
March 2012 .............................. 100 100 100 100 100
March 2013 .............................. 100 100 100 100 100
March 2014 .............................. 100 100 100 100 100
March 2015 .............................. 100 100 100 100 100
March 2016 .............................. 89 89 89 89 89
March 2017 .............................. 67 67 67 67 67
March 2018 .............................. 44 44 44 44 44
March 2019 .............................. 0 0 0 0 0
Weighted Average Life (in years) ........ 13.59 13.53 13.52 13.52 13.52
S-111
CERTAIN PRICE/YIELD TABLES
The tables set forth below show the corporate bond equivalent ("CBE") yield
and weighted average life in years with respect to each Class of Offered
Certificates under the Modeling Assumptions.
The yields set forth in the following tables were calculated by determining
the monthly discount rates which, when applied to the assumed stream of cash
flows to be paid on each Class of Offered Certificates, would cause the
discounted present value of such assumed stream of cash flows as of _____, 2004
to equal the assumed purchase prices, plus accrued interest at the applicable
Pass-Through Rate as stated on the cover of this prospectus supplement from and
including _____, 2004 to but excluding the Closing Date, and converting such
monthly rates to semi-annual corporate bond equivalent rates. Such calculation
does not take into account variations that may occur in the interest rates at
which investors may be able to reinvest funds received by them as reductions of
the Certificate Balances of such Classes of Offered Certificates and
consequently does not purport to reflect the return on any investment in such
Classes of Offered Certificates when such reinvestment rates are considered.
Purchase prices are interpreted as a percentage of the initial Certificate
Balance of the specified Class and are exclusive of accrued interest.
PRE-TAX YIELD TO MATURITY (CBE), WEIGHTED AVERAGE LIFE, FIRST PRINCIPAL PAYMENT
DATE AND LAST PRINCIPAL PAYMENT DATE FOR THE CLASS A-1 CERTIFICATES
AT THE SPECIFIED CPRS 0% CPR DURING LOCK-OUT, DEFEASANCE AND YIELD
MAINTENANCE--OTHERWISE AT INDICATED CPR
ASSUMED PRICE (IN $) 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ----------------------------------------- ----------- ----------- ----------- ----------- -----------
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
Weighted Average Life (yrs) .........
First Principal Payment Date ........
Last Principal Payment Date .........
PRE-TAX YIELD TO MATURITY (CBE), WEIGHTED AVERAGE LIFE, FIRST PRINCIPAL PAYMENT
DATE AND LAST PRINCIPAL PAYMENT DATE FOR THE CLASS A-2 CERTIFICATES
AT THE SPECIFIED CPRS 0% CPR DURING LOCK-OUT, DEFEASANCE AND YIELD
MAINTENANCE--OTHERWISE AT INDICATED CPR
ASSUMED PRICE (IN $) 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ----------------------------------------- ----------- ----------- ----------- ----------- -----------
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
Weighted Average Life (yrs) .........
First Principal Payment Date ........
Last Principal Payment Date .........
S-112
PRE-TAX YIELD TO MATURITY (CBE), WEIGHTED AVERAGE LIFE, FIRST PRINCIPAL PAYMENT
DATE AND LAST PRINCIPAL PAYMENT DATE FOR THE CLASS A-3 CERTIFICATES AT THE
SPECIFIED CPRS 0% CPR DURING LOCK-OUT, DEFEASANCE AND YIELD
MAINTENANCE--OTHERWISE AT INDICATED CPR
ASSUMED PRICE (IN $) 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ----------------------------------------- ----------- ----------- ----------- ----------- -----------
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
Weighted Average Life (yrs) .........
First Principal Payment Date ........
Last Principal Payment Date .........
PRE-TAX YIELD TO MATURITY (CBE), WEIGHTED AVERAGE LIFE, FIRST PRINCIPAL PAYMENT
DATE AND LAST PRINCIPAL PAYMENT DATE FOR THE CLASS A-4 CERTIFICATES AT THE
SPECIFIED CPRS 0% CPR DURING LOCK-OUT, DEFEASANCE AND YIELD
MAINTENANCE--OTHERWISE AT INDICATED CPR
ASSUMED PRICE (IN $) 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ----------------------------------------- ----------- ----------- ----------- ----------- -----------
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
Weighted Average Life (yrs) .........
First Principal Payment Date ........
Last Principal Payment Date .........
PRE-TAX YIELD TO MATURITY (CBE), WEIGHTED AVERAGE LIFE, FIRST PRINCIPAL PAYMENT
DATE AND LAST PRINCIPAL PAYMENT DATE FOR THE CLASS B CERTIFICATES AT THE
SPECIFIED CPRS 0% CPR DURING LOCK-OUT, DEFEASANCE AND YIELD
MAINTENANCE--OTHERWISE AT INDICATED CPR
ASSUMED PRICE (IN $) 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ----------------------------------------- ----------- ----------- ----------- ----------- -----------
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
Weighted Average Life (yrs) .........
First Principal Payment Date ........
Last Principal Payment Date .........
S-113
PRE-TAX YIELD TO MATURITY (CBE), WEIGHTED AVERAGE LIFE, FIRST PRINCIPAL PAYMENT
DATE AND LAST PRINCIPAL PAYMENT DATE FOR THE CLASS C CERTIFICATES AT THE
SPECIFIED CPRS 0% CPR DURING LOCK-OUT, DEFEASANCE AND YIELD
MAINTENANCE--OTHERWISE AT INDICATED CPR
ASSUMED PRICE (IN $) 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ----------------------------------------- ----------- ----------- ----------- ----------- -----------
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
Weighted Average Life (yrs) .........
First Principal Payment Date ........
Last Principal Payment Date .........
PRE-TAX YIELD TO MATURITY (CBE), WEIGHTED AVERAGE LIFE, FIRST PRINCIPAL PAYMENT
DATE AND LAST PRINCIPAL PAYMENT DATE FOR THE CLASS D CERTIFICATES AT THE
SPECIFIED CPRS 0% CPR DURING LOCK-OUT, DEFEASANCE AND YIELD
MAINTENANCE--OTHERWISE AT INDICATED CPR
ASSUMED PRICE (IN $) 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ----------------------------------------- ----------- ----------- ----------- ----------- -----------
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
Weighted Average Life (yrs) .........
First Principal Payment Date ........
Last Principal Payment Date .........
PRE-TAX YIELD TO MATURITY (CBE), WEIGHTED AVERAGE LIFE, FIRST PRINCIPAL PAYMENT
DATE AND LAST PRINCIPAL PAYMENT DATE FOR THE CLASS E CERTIFICATES AT THE
SPECIFIED CPRS 0% CPR DURING LOCK-OUT, DEFEASANCE AND YIELD
MAINTENANCE--OTHERWISE AT INDICATED CPR
ASSUMED PRICE (IN $) 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ----------------------------------------- ----------- ----------- ----------- ----------- -----------
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
...........................
Weighted Average Life (yrs) .........
First Principal Payment Date ........
Last Principal Payment Date .........
S-114
THE POOLING AND SERVICING AGREEMENT
GENERAL
The Certificates will be issued pursuant to a Pooling and Servicing
Agreement, to be dated as of March 1, 2004 (the "Pooling and Servicing
Agreement"), with, among others, the Depositor, the Servicer, the Special
Servicer, the Trustee and the Bond Administrator.
Reference is made to the prospectus for important information in addition
to that set forth in this prospectus supplement regarding the terms of the
Pooling and Servicing Agreement and the terms and conditions of the Offered
Certificates. The Bond Administrator has informed the Depositor that it will
provide to a prospective or actual holder of an Offered Certificate at the
expense of the requesting party, upon written request, a copy (without exhibits)
of the Pooling and Servicing Agreement. Requests should be addressed to LaSalle
Bank National Association, 135 South LaSalle Street, Chicago, Illinois 60603,
Attention: Asset Backed Securities Trust Services Group--COMM 2004-LNB2.
ASSIGNMENT OF THE MORTGAGE LOANS
The Depositor will purchase the Mortgage Loans to be included in the
Mortgage Pool on or before the Closing Date from GACC, LaSalle and ABN AMRO Bank
pursuant to three separate Mortgage Loan Purchase Agreements (the "Mortgage Loan
Purchase Agreements"). See "Description of the Mortgage Pool--The Mortgage Loan
Sellers" in this prospectus supplement.
On the Closing Date, the Depositor will sell, transfer or otherwise convey,
assign or cause the assignment of the Mortgage Loans, without recourse, together
with the Depositor's rights and remedies against the Mortgage Loan Sellers in
respect of breaches of representations and warranties regarding the Mortgage
Loans, to the Trustee for the benefit of the holders of the Certificates. On or
prior to the Closing Date, the Depositor will deliver to the custodian
designated by the Trustee (the "Custodian"), with respect to each Mortgage Loan
the Note and certain other documents and instruments (the "Mortgage Loan
Documents"). The Custodian will hold such documents in trust for the benefit of
the holders of the Certificates. The Custodian is obligated to review certain
documents for each Mortgage Loan within 60 days after the later of the Closing
Date or actual receipt (but not later than 120 days after the Closing Date) and
report any missing documents or certain types of defects therein to the
Depositor, the Servicer, the Special Servicer, the Directing Certificateholder
and the related Mortgage Loan Seller. Each of the Mortgage Loan Sellers will
retain a third party vendor (which may be the Trustee or the Custodian) to
complete the assignment and recording of the related Mortgage Loan Documents to
the Custodian. The Mortgage Loan Sellers will be required to effect (at the
expense of the related Mortgage Loan Seller) the assignment and recordation of
the Mortgage Loan Documents until the assignment and recordation of all Mortgage
Loan Documents has been completed.
REPRESENTATIONS AND WARRANTIES; REPURCHASE; SUBSTITUTION
In the Pooling and Servicing Agreement, the Depositor will assign to the
Trustee for the benefit of Certificateholders the representations and warranties
made by the Mortgage Loan Sellers to the Depositor in the Mortgage Loan Purchase
Agreements.
In their respective Mortgage Loan Purchase Agreements, each of the Mortgage
Loan Sellers will represent and warrant with respect to its respective Mortgage
Loans, subject to certain exceptions set forth in the Mortgage Loan Purchase
Agreements, as of the Closing Date, or as of such other date specifically
provided in the representation and warranty, among other things, generally to
the effect that:
(1) the information pertaining to each Mortgage Loan set forth in the
schedule of Mortgage Loans attached to the applicable Mortgage Loan
Purchase Agreement was true and correct in all material respects as of the
Cut-off Date;
(2) immediately prior to the sale, transfer and assignment to the
Depositor, the Mortgage Loan Seller had good title to, and was the sole
owner of, each Mortgage Loan, and the Mortgage Loan
S-115
Seller is transferring such Mortgage Loan free and clear of any and all
liens, pledges, charges or security interests of any nature encumbering
such Mortgage Loan;
(3) the proceeds of each Mortgage Loan have been fully disbursed and
there is no obligation for future advances with respect thereto;
(4) each Mortgage Note, Mortgage and the assignment of leases (if it
is a document separate from the Mortgage) executed in connection with such
Mortgage Loan are legal, valid and binding obligations of the related
borrower (subject to any nonrecourse provisions therein and any state
anti-deficiency legislation or market value limit deficiency legislation),
enforceable in accordance with their terms, except (i) that certain
provisions contained in such Mortgage Loan Documents are or may be
unenforceable in whole or in part under applicable state or federal laws,
but neither the application of any such laws to any such provision nor the
inclusion of any such provisions renders any of the Mortgage Loan Documents
invalid as a whole and such Mortgage Loan Documents taken as a whole are
enforceable to the extent necessary and customary for the practical
realization of the rights and benefits afforded thereby and (ii) as such
enforcement may be limited by bankruptcy, insolvency, receivership,
reorganization, moratorium, redemption, liquidation or other laws affecting
the enforcement of creditors' rights generally, or by general principles of
equity (regardless of whether such enforcement is considered in a
proceeding in equity or at law);
(5) each assignment of leases creates a valid, collateral or first
priority assignment of, or a valid perfected first priority security
interest in the related borrower's right to receive payments due under the
leases or other agreements pursuant to which any person is entitled to
occupy, use or possess any portion of the Mortgaged Property, subject to
any license granted to the related borrower to exercise certain rights and
to perform certain obligations of the lessor under such leases;
(6) there is no valid offset, defense, counterclaim or right of
rescission with respect to any of the related Note, Mortgage(s) or other
agreements executed in connection therewith, subject to the limitations set
forth in (4) above;
(7) each related assignment of Mortgage and assignment of assignment
of leases constitutes the legal, valid, binding and enforceable assignment
from the Mortgage Loan Seller, subject to the limitations set forth in (4)
above;
(8) each related Mortgage is a legal, valid and enforceable first lien
on the related Mortgaged Property subject only to title exceptions;
(9) all real estate taxes and governmental assessments, fees,
environmental charges or water or sewer bills that prior to the Cut-off
Date have become delinquent in respect of each related Mortgaged Property
have been paid, or if in dispute, an escrow of funds in an amount
sufficient to cover such payments has been established;
(10) after conducting due diligence consistent with the practice of
institutional lenders generally for properties of the same type as the
related Mortgaged Property, to the Mortgage Loan Seller's knowledge as of
the Cut-off Date, each Mortgaged Property is free and clear of any material
damage that would materially and adversely affect its value as security for
such Mortgage Loan;
(11) the Mortgaged Property is covered by a title insurance policy (or
a "pro forma" title policy or a commitment "mark up") insuring that the
related Mortgage is a valid first lien subject only to title exceptions. No
claims have been made under such title insurance policy. Such title
insurance policy is in full force and effect;
(12) as of the date of the origination of each Mortgage Loan, the
related Mortgaged Property was insured by all insurance coverage required
under the related Mortgage or loan agreement and such insurance was in full
force and effect as of the Cut-off Date;
(13) other than payments due but not yet 30 days or more delinquent,
to the Mortgage Loan Seller's actual knowledge, based on due diligence
customarily performed in connection with the servicing of comparable
mortgage loans, there exists no material default, breach, violation or
event
S-116
of acceleration under the related Mortgage Note or each related Mortgage,
PROVIDED, HOWEVER, that this representation and warranty does not address
or otherwise cover any default, breach, violation or event of acceleration
that specifically pertains to any matter otherwise covered by any
representation and warranty made by the Mortgage Loan Seller elsewhere in
this prospectus supplement or in the related purchase agreement;
(14) each Mortgage Loan is not, and in the prior 12 months (or since
the date of origination if such Mortgage Loan has been originated within
the past 12 months) has not been, 30 days or more past due in respect of
any periodic payment without giving effect to any applicable grace or cure
period;
(15) to the actual knowledge of the Mortgage Loan Seller, as of the
Cut-off Date, no Mortgaged Property, nor any material portion thereof, is
the subject of and no borrower is a debtor in any state or federal
bankruptcy or insolvency or similar proceeding;
(16) the Mortgage Loan Documents provide for the acceleration of the
related Mortgage Loan if, without complying with the requirements of the
related Mortgage Loan Documents, the related Mortgaged Property or a
controlling interest in the borrower is directly transferred or sold (other
than by reason of family and estate planning transfers or by reason of a
permitted substitution or release of collateral) or if the Mortgaged
Property is encumbered by a subordinate lien; and
(17) since origination, no material portion of the related Mortgaged
Property has been released from the lien of the related Mortgage, in any
manner which materially and adversely affects the value, use or operation
of the Mortgage Loan or materially interferes with the security intended to
be provided by such Mortgage.
The Pooling and Servicing Agreement requires that the Custodian, the
Servicer, the Special Servicer, the Trustee or the Bond Administrator notify the
Depositor, the Bond Administrator, the affected Mortgage Loan Seller, the
Directing Certificateholder, the Custodian, the Servicer, the Special Servicer
and the Trustee, as applicable, upon its becoming aware of any failure to
deliver Mortgage Loan Documents in a timely manner, any defect in the Mortgage
Loan Documents (as described in the Pooling and Servicing Agreement) or any
breach of any representation or warranty contained in the preceding paragraph
that materially and adversely affects the value of such Mortgage Loan, the
related Mortgaged Property or the interests of, the Trustee or any holders of
the Certificates. Each of the Mortgage Loan Purchase Agreements provides that,
with respect to any such Mortgage Loan, within 90 days following the earlier of
its receipt of notice from the Servicer, the Special Servicer, the Trustee, the
Custodian or the Bond Administrator or its discovery of such breach, the
affected Mortgage Loan Seller must either (a) repurchase such Mortgage Loan as
well as, if such affected Mortgage Loan is a cross-collateralized Mortgage Loan
and not otherwise un-crossed as set forth below, the other Mortgage Loan in such
cross-collateralized group (and such other Mortgage Loan so repurchased will be
deemed to be in breach of the representations and warranties by reason of its
cross-collateralization with the affected Mortgage Loan) at an amount equal to
the sum of (1) the outstanding principal balance of the Mortgage Loan or
Mortgage Loans as of the date of purchase, (2) all accrued and unpaid interest
on the Mortgage Loan or Mortgage Loans at the related Mortgage Rates in effect
from time to time, to but not including the Due Date in the month of purchase,
(3) all related unreimbursed Property Advances plus accrued and unpaid interest
on related Advances at the Advance Rate and unpaid Special Servicing Fees and
Workout Fees allocable to the Mortgage Loan or Mortgage Loans, (4) any payable
Liquidation Fee, as specified below in "-- Special Servicing -- Special
Servicing Compensation" and (5) all reasonable out-of-pocket expenses reasonably
incurred or to be incurred by the Servicer, the Special Servicer, the Depositor
and the Trustee in respect of the defect or breach giving rise to the repurchase
obligation, including any expenses arising out of the enforcement of the
repurchase obligation (such price, the "Repurchase Price") or (b) substitute,
within two years of the Closing Date, a Qualified Substitute Mortgage Loan (a
"Replacement Mortgage Loan") for the affected Mortgage Loan (the "Removed
Mortgage Loan") and pay any shortfall amount equal to the excess of the
Repurchase Price of the affected Mortgage Loan calculated as of the date of
substitution over the stated principal balance of the Qualified Substitute
Mortgage Loan as of the date of substitution; PROVIDED, that the applicable
Mortgage Loan Seller generally has an additional period (as set forth in the
Pooling and Servicing
S-117
Agreement) to cure the material defect or material breach if such material
defect or material breach is not capable of being cured within the initial
90-day period, the Mortgage Loan Seller is diligently proceeding with that cure,
and such material defect or material breach is not related to the Mortgage Loan
not being a "qualified mortgage" within the meaning of Section 860G(a)(3) of the
Code. In addition, the applicable Mortgage Loan Seller will have an additional
90 days to cure the material breach or material defect if the Mortgage Loan
Seller has commenced and is diligently proceeding with the cure of such material
breach or material defect and the failure to cure such material breach or
material defect is solely the result of a delay in the return of documents from
the local filing or recording authorities. See "The Pooling and Servicing
Agreement--Servicing Compensation and Payment of Expenses" in this prospectus
supplement.
If one of a group of cross-collateralized Mortgage Loans is to be
repurchased by the related Mortgage Loan Seller as contemplated above, then,
prior to such repurchase, the related Mortgage Loan Seller or its designee is
required to use its reasonable efforts to prepare and have executed all
documentation necessary to terminate the cross-collateralization between such
Mortgage Loans; PROVIDED, that such Mortgage Loan Seller cannot effect such
termination unless the Directing Certificateholder has consented in its sole
discretion and the Trustee has received from the related Mortgage Loan Seller
(i) an opinion of counsel to the effect that such termination would neither
endanger the status of the Loan REMIC, the Lower-Tier REMIC or the Upper-Tier
REMIC as a REMIC nor result in the imposition of any tax on the Loan REMIC, the
Lower-Tier REMIC or the Upper-Tier REMIC or the Trust Fund and (ii) written
confirmation from each Rating Agency that such termination would not cause the
then-current ratings of the Certificates to be qualified, withdrawn or
downgraded; and PROVIDED, FURTHER, that such Mortgage Loan Seller may, at its
option and within 30 days, purchase all such cross-collateralized Mortgage Loans
in lieu of effecting a termination of the cross-collateralization. All costs and
expenses incurred by the Trustee in connection with such termination are
required to be included in the calculation of the Repurchase Price for the
Mortgage Loan to be repurchased. If the cross-collateralization cannot be
terminated as set forth above, then, for purposes of (i) determining the
materiality of any breach or defect, as the case may be, and (ii) the
application of remedies, both such Mortgage Loans are required to be treated as
a single Mortgage Loan.
A "Qualifying Substitute Mortgage Loan" is a Mortgage Loan that, among
other things: (i) has a Stated Principal Balance of not more than the Stated
Principal Balance of the related Removed Mortgage Loan, (ii) accrues interest at
a rate of interest at least equal to that of the related Removed Mortgage Loan,
(iii) has a remaining term to stated maturity of not greater than, and not more
than two years less than, the related Removed Mortgage Loan and (iv) is approved
by the Directing Certificateholder.
The obligations of the Mortgage Loan Sellers to repurchase, substitute or
cure described in the second and third preceding paragraphs constitute the sole
remedies available to holders of Certificates or the Trustee for a breach of a
representation or warranty by a Mortgage Loan Seller with respect to an affected
Mortgage Loan. None of the Servicer, the Special Servicer, the Trustee or the
Bond Administrator will be obligated to purchase or substitute a Mortgage Loan
if a Mortgage Loan Seller defaults on its obligation to repurchase, substitute
or cure, and no assurance can be given that a Mortgage Loan Seller will fulfill
such obligations. If such obligation is not met as to a Mortgage Loan that is
not a "qualified mortgage" within the meaning of Section 860G(a)(3) of the Code,
the Upper-Tier REMIC, the Lower-Tier REMIC and the Loan REMIC, if applicable,
may fail to qualify to be treated as REMICs for federal income tax purposes.
SERVICING OF THE MORTGAGE LOANS; COLLECTION OF PAYMENTS
For so long as the Servicer is GMACCM, the Pooling and Servicing Agreement
requires the Servicer to service and administer the Mortgage Loans (other than
the AFR/Bank of America Portfolio Loan and the Meadows Mall Loan, which will be
serviced pursuant to the GMACCM 2003-C3 Pooling and Servicing Agreement and the
Wachovia 2003-C9 Pooling and Servicing Agreement, respectively) and the
Companion Loans related to the Tysons Corner Center Loan and the
Walgreens-Riverside Loan (collectively, the "Serviced Companion Loans") on
behalf of the Trust solely in the best interests of and for the benefit of all
of the Certificateholders and with respect to any Serviced Whole Loan, for the
S-118
benefit of the Certificateholders and the holder(s) of the related Serviced
Companion Loan (as a collective whole, as determined by the Servicer, as the
case may be, in the exercise of its reasonable judgment taking into account that
the Walgreens-Riverside B Loan is subordinate to the Walgreens-Riverside Loan).
In accordance with applicable law, the terms of the Pooling and Servicing
Agreement, the terms of the related intercreditor agreement, if applicable, and
the Mortgage Loans and to the extent not inconsistent with the foregoing,
further as follows:
o with the same care, skill and diligence as is normal and usual in its
general mortgage servicing on behalf of third parties or on behalf of
itself, whichever is higher, with respect to mortgage loans that are
comparable to those for which it is responsible under the Pooling and
Servicing Agreement;
o with a view to the timely collection of all scheduled payments of
principal and interest under the Mortgage Loans; and
o without regard to--
(A) any relationship that the Servicer or any affiliate thereof may
have with the related borrower;
(B) the ownership of any Certificate by the Servicer or by any
affiliate thereof;
(C) the Servicer's obligation to make Advances; and
(D) the right of the Servicer (or any affiliate thereof), to receive
reimbursement of costs, or the sufficiency of any compensation
payable to it, hereunder or with respect to any particular
transaction (the foregoing, collectively referred to as the
"GMACCM Servicing Standard").
In addition, the Pooling and Servicing Agreement requires the Special
Servicer and, for so long as the Servicer is not GMACCM, the Servicer to
diligently service and administer the Mortgage Loans (other than the
Non-Serviced Mortgage Loans) for which each is responsible in the best interests
of and for the benefit of the Certificateholders and with respect to the
Serviced Whole Loans (as a collective whole, as determined by the Servicer, as
the case may be, in the exercise of its reasonable judgment taking into account
that each of the applicable B Loans is subordinate to the related Mortgage Loan)
in accordance with applicable law, the terms of the Pooling and Servicing
Agreement, the terms of the related intercreditor agreement, if applicable, and
the terms of the Mortgage Loans and, to the extent consistent with the
foregoing, in accordance with the higher of the following standards of care:
o the same manner in which, and with the same care, skill, prudence and
diligence with which the Servicer or the Special Servicer, as the case
may be, services and administers similar mortgage loans for other
third-party portfolios, giving due consideration to the customary and
usual standards of practice of prudent institutional commercial and
multifamily mortgage lenders servicing their own mortgage loans with a
view to the maximization of timely recovery of principal and interest
on a net present value basis on the Mortgage Loans or Specially
Serviced Mortgage Loans, as applicable, and the best interests of the
Trust, the Certificateholders and with respect to the Serviced Whole
Loans, the Certificateholders and the holders of the related Serviced
Companion Loans (as a collective whole, as determined by the Servicer
or the Special Servicer, as the case may be, in its reasonable
judgment, taking into account that each of the applicable B Loans is
subordinate to the related Mortgage Loan); and
o the same care, skill, prudence and diligence with which the Servicer
or the Special Servicer, as the case may be, services and administers
commercial and multifamily mortgage loans owned by the Servicer or the
Special Servicer, as the case may be, with a view to the maximization
of timely recovery of principal and interest on a net present value
basis on the Mortgage Loans or Specially Serviced Mortgage Loans, as
applicable, and the best interests of the Trust, the
Certificateholders and with respect to the Serviced Whole Loans, the
Certificateholders and the holders of the related Serviced Companion
Loans (as a collective whole, as determined by the Servicer or the
Special Servicer, as the case may be, in its reasonable judgment,
taking into account that each of the applicable B Loans is subordinate
to the related Mortgage Loan) but without regard to:
S-119
(A) any relationship that the Servicer or the Special Servicer, as the
case may be, or any affiliate of either, may have with the related
borrower, any Mortgage Loan Seller, any other party to the Pooling
and Servicing Agreement or any affiliate of any of the foregoing;
(B) the ownership of any Certificate by the Servicer or the Special
Servicer, as the case may be, or any affiliate of either;
(C) the Servicer's obligation to make Advances;
(D) the Servicer's or the Special Servicer's, as the case may be,
right to receive compensation for its services under the Pooling
and Servicing Agreement or with respect to any particular
transaction;
(E) the ownership, servicing or management for others of any other
mortgage loans or mortgaged properties by the Servicer or Special
Servicer or any affiliate of the Servicer or Special Servicer, as
applicable; and
(F) any debt that the Servicer or Special Servicer or any of the
Servicer or Special Servicer, as applicable, has extended to any
borrower (including, without limitation, any mezzanine financing)
(the foregoing, collectively referred to as the "General Servicing
Standard").
As used in this prospectus supplement, the term "Servicing Standard" means
(a) with respect to GMACCM, the GMACCM Servicing Standard and (b) with respect
to all other servicers, the General Servicing Standard.
For a description of the servicing of the AFR/Bank of America Portfolio
Loan and the Meadows Mall Loan see "--Servicing of the Non-Serviced Mortgage
Loans" below.
The Servicer and the Special Servicer are permitted, at their own expense,
to employ subservicers, agents or attorneys in performing any of their
respective obligations under the Pooling and Servicing Agreement, but will not
thereby be relieved of any such obligation, and will be responsible for the acts
and omissions of any such subservicers, agents or attorneys. The Pooling and
Servicing Agreement provides, however, that neither the Servicer, the Special
Servicer nor any of their respective directors, officers, employees members,
managers or agents will have any liability to the Trust or the
Certificateholders for taking any action or refraining from taking an action in
good faith, or for errors in judgment. The foregoing provision would not protect
the Servicer or the Special Servicer for the breach of its representations or
warranties in the Pooling and Servicing Agreement, the breach of certain
specified covenants therein or any liability by reason of willful misconduct,
bad faith, fraud or negligence in the performance of its duties or by reason of
its reckless disregard of obligations or duties under the Pooling and Servicing
Agreement.
The Pooling and Servicing Agreement requires the Servicer or the Special
Servicer, as applicable, to make reasonable efforts to collect all payments
called for under the terms and provisions of the Mortgage Loans (other than the
Non-Serviced Mortgage Loans) and Serviced Companion Loans, to the extent such
procedures are consistent with the Servicing Standard. Consistent with the
above, the Servicer or Special Servicer may, in its discretion, waive any late
payment fee in connection with any delinquent Monthly Payment or Balloon Payment
with respect to any Mortgage Loan.
ADVANCES
The Servicer will be obligated to advance, on the business day immediately
preceding a Distribution Date (the "Servicer Remittance Date") an amount (each
such amount, a "P&I Advance") equal to the amount not received in respect of the
Monthly Payment or Assumed Monthly Payment on a Mortgage Loan (with interest at
the Net Mortgage Pass-Through Rate plus the Trustee Fee Rate) that was
delinquent as of the close of business on the immediately preceding Due Date and
which delinquent payment has not been received as of the Servicer Remittance
Date, or, in the event of a default in the payment of amounts due on the
maturity date of a Mortgage Loan, the amount equal to the Monthly Payment or
portion thereof or the Assumed Monthly Payment not received that was due prior
to the maturity date; PROVIDED, HOWEVER, the Servicer will not be required to
make an Advance to the extent it determines that such Advance would not be
ultimately recoverable from collections or the related
S-120
Mortgage Loan as described below. P&I Advances made in respect of Mortgage Loans
which have a grace period that expires after the Determination Date will not
begin to accrue interest until the day succeeding the expiration date of any
applicable grace period; PROVIDED that if such P&I Advance is not reimbursed
from collections received by the related borrower by the end of the applicable
grace period, interest on such Advance will accrue from the date such Advance is
made.
P&I Advances are intended to maintain a regular flow of scheduled interest
and principal payments to holders of the Certificates entitled thereto, rather
than to guarantee or insure against losses. Neither the Servicer nor the Trustee
will be required or permitted to make a P&I Advance for Default Interest or
Balloon Payments. The Special Servicer will not be required or permitted to make
any P&I Advance. The amount required to be advanced in respect of delinquent
Monthly Payments or Assumed Scheduled Payments on a Mortgage Loan that has been
subject to an Appraisal Reduction Event will equal the product of (a) the amount
that would be required to be advanced by the Servicer without giving effect to
such Appraisal Reduction Event and (b) a fraction, the numerator of which is the
Stated Principal Balance of the Mortgage Loan (as of the last day of the related
Collection Period) less any Appraisal Reduction Amounts thereof and the
denominator of which is the Stated Principal Balance (as of the last day of the
related Collection Period).
With respect to the Tysons Corner Center Loan and the AFR/Bank of America
Portfolio Loan, the Servicer will be required to make its determination that it
has made a nonrecoverable P&I Advance on such Mortgage Loan or that any proposed
P&I Advance, if made, would constitute a nonrecoverable P&I Advance with respect
to such Mortgage Loan independently of any determination made by the servicer
with respect to a commercial mortgage securitization holding one of the
Companion Loans related to the Tysons Corner Center Loan or the AFR/Bank of
America Portfolio Loan, as applicable, that is PARI PASSU in right of payment
with the related Mortgage Loan (each, a "Pari Passu Companion Loan"). If the
Servicer determines that a proposed P&I Advance with respect to the Tysons
Corner Center Loan or the AFR/Bank of America Portfolio Loan, if made, or any
outstanding P&I Advance with respect to the Tysons Corner Center Loan or the
AFR/Bank of America Portfolio Loan previously made, would be, or is, as
applicable, a nonrecoverable advance, the Servicer will be required to provide
the servicer of each securitization that holds a related Pari Passu Companion
Loan written notice of such determination within one business day of the date of
such determination. If the Servicer receives written notice from any such
servicer that it has determined, with respect to the related Pari Passu
Companion Loan, that any proposed advance of principal and/or interest would be,
or any outstanding advance of principal and/or interest is, a nonrecoverable
advance, then such determination will be binding on the Certificateholders and
neither the Servicer nor the Trustee will be permitted to make any additional
P&I Advances with respect to the related Mortgage Loan unless the Servicer has
consulted with the other servicers of the related securitizations and they agree
that circumstances with respect to the Tysons Corner Center Whole Loan or the
AFR/Bank of America Portfolio Whole Loan, as applicable, have changed such that
a proposed P&I Advance in respect of the related Mortgage Loan would not be a
nonrecoverable P&I Advance. Notwithstanding the foregoing, if the servicer of a
Pari Passu Companion Loan determines that any advance of principal and/or
interest with respect to the related Pari Passu Companion Loan would be
recoverable, then the Servicer will continue to have the discretion to determine
that any proposed P&I Advance or outstanding P&I Advance would be, or is, as
applicable, a nonrecoverable P&I Advance. Once such a nonrecoverability
determination is made by the Servicer or the Servicer receives written notice of
such nonrecoverability determination by any of the other servicers, neither the
Servicer nor the Trustee will be permitted to make any additional P&I Advances
with respect to related Mortgage Loan except as set forth in this paragraph.
With respect to the Meadows Mall Loan, the Servicer will make its own
independent recoverability determination in accordance with the Servicing
Standard with respect to a P&I Advance on the Meadows Mall Loan. The Servicer
will make such determination no later than the Servicer Remittance Date. If the
Servicer makes a nonrecoverability determination with respect to a P&I Advance
on the Meadows Mall Loan, it will advise the Wachovia 2003-C9 Servicer within
two business days of such nonrecoverability determination, and the Wachovia
2003-C9 Servicer will not make any related principal and/or interest advance
S-121
on the Meadows Mall Pari Passu Loan. Similarly, if the Wachovia 2003-C9 Servicer
makes a nonrecoverability determination with respect to such principal and/or
interest advance on the Meadows Mall Pari Passu Loan, it will advise the
Servicer within two business days of such nonrecoverability determination, and
the Servicer will not make any related P&I Advance on the Meadows Mall Loan. The
Servicer and the Wachovia 2003-C9 Servicer will advise one another, as
applicable, of the amount of the principal and/or interest advance it made
within two business days of making such principal and/or interest advance. If
the Wachovia 2003-C9 Servicer subsequently determines that either a principal
and/or interest advance or a property advance would be nonrecoverable, it will
advise the Servicer within two business days of making such determination. The
Wachovia 2003-C9 Servicer will only be entitled to reimbursement for a principal
and/or interest advance that becomes nonrecoverable first from the proceeds of
the Meadows Mall Pari Passu Loan, and then from general collections of the
Wachovia 2003-C9 Trust Fund. Similarly, the Servicer will only be entitled to
reimbursement for a P&I Advance that becomes nonrecoverable first from the
proceeds of the Meadows Mall Loan, and then from general collections of the
Trust.
Neither the Servicer nor the Trustee will be required to make P&I Advances
with respect to any Companion Loan.
In addition to P&I Advances, the Servicer will also be obligated (subject
to the limitations described herein and except with respect to the Non-Serviced
Mortgage Loans) to make advances ("Property Advances," and together with P&I
Advances, "Advances") to pay delinquent real estate taxes, assessments and
hazard insurance premiums and to cover other similar costs and expenses
necessary to preserve the priority of the related Mortgage, enforce the terms of
any Mortgage Loan or to protect, manage and maintain each related Mortgaged
Property (other than with respect to the Mortgaged Properties securing the
Non-Serviced Mortgage Loans). In addition if the Special Servicer requests that
the Servicer make a Property Advance and the Servicer fails to make such advance
within two business days, then the Special Servicer may make such Property
Advance on an emergency basis with respect to the Specially Serviced Mortgage
Loans. The Servicer will also be obligated to make Property Advances with
respect to the Tysons Corner Center Whole Loan.
The GMACCM 2003-C3 Servicer and the Wachovia 2003-C9 Servicer will be
obligated to make Property Advances with respect to the AFR/Bank of America
Portfolio Whole Loan and the Meadows Mall Whole Loan, respectively.
With respect to a nonrecoverable Property Advance on the AFR/Bank of
America Portfolio Whole Loan, the GMACCM 2003-C3 Servicer will be entitled to
reimbursement FIRST from collections on, and proceeds of, the AFR/Bank of
America Portfolio B Loan, second from the AFR/Bank of America Portfolio Loan and
the AFR/Bank of America Portfolio Pari Passu Loans, on a PRO RATA basis, and
then from general collections of each trust into which an AFR/Bank of America
Portfolio Pari Passu Loan has been deposited and the Trust, on a PRO RATA basis
(based on such loan's outstanding principal balance).
With respect to a nonrecoverable Property Advance on the Meadows Mall Whole
Loan, the Wachovia 2003-C9 Servicer will be entitled to reimbursement FIRST from
collections on, and proceeds of, the Meadows Mall Loan and the Meadows Mall Pari
Passu Loan, on a PRO RATA basis, and then from general collections of the trust
created under the Wachovia 2003-C9 Pooling and Servicing Agreement and the
Trust, on a PRO RATA basis (based on such loan's outstanding principal balance).
To the extent the Servicer fails to make an Advance it is required to make
under the Pooling and Servicing Agreement, the Trustee, subject to a
recoverability determination, will make such required Advance pursuant to the
terms of the Pooling and Servicing Agreement. The Trustee will be entitled to
rely conclusively on any nonrecoverability determination of the Servicer. The
Trustee, as back-up advancer, will be required to have a combined capital and
surplus of at least $50,000,000 and have debt ratings that satisfy certain
criteria set forth in the Pooling and Servicing Agreement.
The Servicer, the Special Servicer or the Trustee, as applicable, will be
entitled to reimbursement for any Advance made by it in an amount equal to the
amount of such Advance (i) from late payments on the related Mortgage Loan by
the borrower, (ii) from insurance proceeds, condemnation proceeds, liquidation
proceeds from the sale of the related Specially Serviced Mortgage Loan or the
related Mortgaged Property or other collections relating to the Mortgage Loan or
(iii) upon determining in good
S-122
faith that such Advance is not recoverable in the manner described in the
preceding two clauses, from any other amounts from time to time on deposit
in the Collection Account.
The Servicer, the Special Servicer and the Trustee will each be entitled to
receive interest on Advances at a per annum rate equal to the Prime Rate (the
"Advance Rate") (i) from the amount of Default Interest on the related Mortgage
Loan paid by the borrower, (ii) from late payment fees on the related Mortgage
Loan paid by the borrower, and (iii) upon determining in good faith that such
interest is not recoverable in the manner described in the preceding two
clauses, from any other amounts from time to time on deposit in the Collection
Account. The Servicer will be authorized to pay itself, the Special Servicer or
the Trustee, as applicable, such interest monthly prior to any payment to
holders of Certificates, PROVIDED that no interest shall accrue and be payable
on any P&I Advances until the grace period for a late payment by the underlying
borrower has expired. To the extent that the payment of such interest at the
Advance Rate results in a shortfall in amounts otherwise payable on one or more
Classes of Certificates on the next Distribution Date, the Servicer or the
Trustee, as applicable, will be obligated to make a cash Advance to cover such
shortfall, but only to the extent the Servicer or the Trustee, as applicable,
concludes that, with respect to each such Advance, such Advance can be recovered
from amounts payable on or in respect of the Mortgage Loan to which the Advance
is related. If the interest on such Advance is not recovered from Default
Interest and late payment fees on such Mortgage Loan, a shortfall will result
which will have the same effect as a Realized Loss. The "Prime Rate" is the
rate, for any day, set forth as such in the "Money Rates" section of The Wall
Street Journal, Eastern Edition.
The obligation of the Servicer or the Trustee, as applicable, to make
Advances with respect to any Mortgage Loan pursuant to the Pooling and Servicing
Agreement continues through the foreclosure of such Mortgage Loan and until the
liquidation of the Mortgage Loan or disposition of the related REO Properties.
Neither the Servicer nor the Trustee will be required to make any Advance that
it determines in its good faith business judgment that it will not be able to
recover out of related late payments (including late payment fees), insurance
proceeds, liquidation proceeds and other collections with respect to the
Mortgage Loan as to which such Advances are to be made. In addition, if the
Servicer or the Trustee, as applicable, determines in its good faith business
judgment that any Advance previously made will not be recoverable from the
foregoing sources, then the Servicer or the Trustee, as applicable, will be
entitled to reimburse itself for such Advance, plus interest thereon at the
Advance Rate, out of amounts payable on or in respect of all of the Mortgage
Loans prior to distributions on the Certificates. Any such judgment or
determination with respect to the recoverability of Advances must be evidenced
by an officers' certificate delivered to the Depositor, the Bond Administrator
and the Trustee in the case of the Servicer, and delivered to the Depositor, the
Servicer and the Bond Administrator in the case of the Trustee, setting forth
such judgment or nonrecoverability determination and the considerations of the
Servicer or the Trustee, as applicable, forming the basis of such determination
(including but not limited to information selected by the person making such
determination in its good faith discretion such as related income and expense
statements, rent rolls, occupancy status, property inspections, inquiries by the
Servicer or the Trustee, as applicable, and an independent appraisal performed
in accordance with Appraiser Institute standards conducted within the past 12
months on the applicable Mortgaged Property).
With respect to the payment of insurance premiums and delinquent tax
assessments, in the event that the Servicer determines that a Property Advance
of such amounts would not be recoverable, the Servicer will be required to
notify the Special Servicer of such determination. Upon receipt of such notice,
the Special Servicer will be required to determine (with the reasonable
assistance of the Servicer) whether or not payment of such amount would
nonetheless be in the best interests of the Certificateholders. If the Special
Servicer determines that such payment would be in the best interests of the
Certificateholders, the Special Servicer will be required to direct the Servicer
to make such payment, who will then be required to make such payment from the
Collection Account to the extent of available funds.
Each of the Servicer and the Trustee will be entitled to recover any
Advance made by it that it subsequently determines to be a nonrecoverable
Advance out of general funds on deposit in the Collection Account (first from
principal collections and then from interest collections). If the funds in the
S-123
Collection Account allocable to principal are insufficient to fully reimburse
the party entitled to reimbursement, then such party may elect, on a monthly
basis, in its sole discretion, to defer reimbursement of the portion that
exceeds such amount allocable to principal (in which case interest will continue
to accrue on the unreimbursed portion of the Advance) for such time as is
required to reimburse such excess portion from principal up to 12 months and any
such deferral or decision to seek immediate reimbursement will be deemed to be
in accordance with the servicing standard with respect to the Servicer and not
to violate any fiduciary duty or contractual obligation with respect to the
Trustee.
ACCOUNTS
COLLECTION ACCOUNT. The Servicer will establish and maintain one or more
segregated accounts (the "Collection Account") pursuant to the Pooling and
Servicing Agreement, and will be required to deposit into the Collection Account
(or with respect to each Serviced Whole Loan, a separate custodial account) all
payments in respect of the Mortgage Loans, other than amounts permitted to be
withheld by the Servicer or amounts to be deposited into any Reserve Account.
Payments and collections received in respect of a Serviced Whole Loan will not
be deposited into the Collection Account, but will be deposited into a separate
custodial account. Payments and collections on each related Mortgage Loan will
be transferred from such custodial account to the Collection Account no later
than the business day preceding the related Distribution Date.
DISTRIBUTION ACCOUNTS. The Bond Administrator will establish and maintain
one or more segregated accounts (the "Distribution Account") in the name of the
Trustee for the benefit of the holders of the Certificates. With respect to each
Distribution Date, the Servicer will remit on or before each Servicer Remittance
Date to the Bond Administrator, and the Bond Administrator will deposit into the
Distribution Account, to the extent of funds on deposit in the Collection
Account, on the Servicer Remittance Date an aggregate amount of immediately
available funds equal to the sum of (i) the Available Funds (including all P&I
Advances) and (ii) the Trustee Fee (which includes the Bond Administrator Fee).
To the extent the Servicer fails to do so, the Trustee will deposit all P&I
Advances into the Distribution Account as described herein. See "Description of
the Offered Certificates--Distributions" in this prospectus supplement.
INTEREST RESERVE ACCOUNT. The Bond Administrator will establish and
maintain an "Interest Reserve Account" in the name of the Trustee for the
benefit of the holders of the Certificates. With respect to each Distribution
Date occurring in February and each Distribution Date occurring in any January
which occurs in a year that is not a leap year, unless such Distribution Date is
the final Distribution Date there shall be deposited, in respect of each
Mortgage Loan that does not accrue interest on the basis of a 360-day year of 12
months of 30 days each, an amount equal to one day's interest at the related
Mortgage Rate (net of any Servicing Fee payable therefrom) on the respective
Stated Principal Balance as of the immediately preceding Due Date, to the extent
a Monthly Payment or P&I Advance is made in respect thereof (all amounts so
deposited in any consecutive January (if applicable) and February, "Withheld
Amounts"). With respect to each Distribution Date occurring in March, an amount
is required to be withdrawn from the Interest Reserve Account in respect of each
such Mortgage Loan equal to the related Withheld Amounts from the preceding
January (if applicable) and February, if any, and deposited into the
Distribution Account.
EXCESS INTEREST DISTRIBUTION ACCOUNT. The Bond Administrator is required to
establish and maintain an "Excess Interest Distribution Account" in the name of
the Trustee for the benefit of the Class Q Certificateholders. Prior to the
applicable Distribution Date, the Servicer is required to remit to the Trustee
for deposit into the Excess Interest Distribution Account an amount equal to the
Excess Interest received during the related Collection Period. The Excess
Interest Distribution Account may be a subaccount of the Distribution Account.
On each Distribution Date, the Bond Administrator is required to distribute from
the Excess Interest Distribution Account any Excess Interest received with
respect to Mortgage Loans during the related Collection Period to the holders of
the Class Q Certificates.
"Excess Interest" with respect to the ARD Loan is the interest accrued at
an increased interest rate in respect of the ARD Loan in excess of the interest
accrued at the initial interest rate, plus any related interest, to the extent
permitted by applicable law.
S-124
The Bond Administrator will also establish and maintain one or more
segregated accounts or sub-accounts for the "Lower-Tier Distribution Account,"
the "Upper-Tier Distribution Account," and the "Excess Liquidation Proceeds
Account," each in the name of the Trustee for the benefit of the holders of the
Certificates.
The Collection Account, each separate custodial account for a Serviced
Whole Loan, the Lower-Tier Distribution Account, the Upper-Tier Distribution
Account and the Excess Liquidation Proceeds Account will be held in the name of
the Trustee (or the Servicer or Bond Administrator on behalf of the Trustee) on
behalf of the holders of Certificates, and, in the case of a Serviced Whole
Loan, the holders of the related Serviced Companion Loans. Each of the
Collection Account, each separate custodial account for a Serviced Whole Loan,
any REO Account, the Lower-Tier Distribution Account, the Upper-Tier
Distribution Account and the Excess Liquidation Proceeds Account will be (or
will be a sub-account of) either (i) (A) an account or accounts maintained with
a depository institution or trust company the short-term unsecured debt
obligations or commercial paper of which are rated at least "A-1" by S&P, "F1"
by Fitch, "P1" by Moody's Investors Service, Inc. ("Moody's") and "R-1" by DBRS
or, if not rated by DBRS, an equivalent rating by two nationally-recognized
statistical rating organizations, in the case of accounts in which deposits have
a maturity of 30 days or less or, in the case of accounts in which deposits have
a maturity of more than 30 days, the long term unsecured debt obligations of
which are rated at least "AA-" by S&P, "AA-" by Fitch, "Aa3" by Moody's and AA
(low) by DBRS or, if not rated by DBRS, an equivalent rating by two
nationally-recognized statistical rating organizations or (B) as to which the
Bond Administrator has received written confirmation from each of the Rating
Agencies that holding funds in such account would not cause any Rating Agency to
qualify, withdraw or downgrade any of its then-current ratings on the
Certificates or (ii) a segregated trust account or accounts maintained with a
federal or state chartered depository institution or trust company acting in its
fiduciary capacity which, in the case of a state chartered depository
institution, is subject to regulations substantially similar to 12 C.F.R.
Section 9.10(b), having in either case a combined capital surplus of at least
$50,000,000 and subject to supervision or examination by federal and state
authority, or (iii) any other account that, as evidenced by a written
confirmation from each Rating Agency that such account would not, in and of
itself, cause a downgrade, qualification or withdrawal of the then-current
ratings assigned to the Certificates, which may be an account maintained with
the Trustee, the Bond Administrator or the Servicer.
Amounts on deposit in the Collection Account, each separate custodial
account for a Serviced Whole Loan and any REO Account may be invested in certain
United States government securities and other high-quality investments specified
in the Pooling and Servicing Agreement ("Permitted Investments"). Interest or
other income earned on funds in the Collection Account and each separate
custodial account for a Serviced Whole Loan, will be paid to the Servicer
(except to the extent required to be paid to the related borrower) as additional
servicing compensation and interest or other income earned on funds in any REO
Account will be payable to the Special Servicer. The Servicer or the Special
Servicer, as applicable, will be required to bear any losses resulting from the
investment of such funds in accounts maintained by the Servicer, other than
losses which result from the insolvency of any financial institution which was
an eligible institution under the terms of the Pooling and Servicing Agreement
in the month in which the loss occurred and at the time the investment was made.
Amounts on deposit in the Distribution Account and the Excess Liquidation
Proceeds Account will remain uninvested.
The Servicer may make withdrawals from the Collection Account (and the
separate custodial account for each Serviced Whole Loan), to the extent
permitted and in the priorities provided in the Pooling and Servicing Agreement.
ENFORCEMENT OF "DUE-ON-SALE" AND "DUE-ON-ENCUMBRANCE" CLAUSES
In general, the Mortgage Loans contain provisions in the nature of
"due-on-sale" clauses, which by their terms (a) provide that the Mortgage Loans
will (or may at the mortgagee's option) become due and payable upon the sale or
other transfer of an interest in the related Mortgaged Property or (b) provide
that the Mortgage Loans may not be assumed without the consent of the related
mortgagee in
S-125
connection with any such sale or other transfer. The Servicer or the Special
Servicer, as applicable, will not be required to enforce any such due-on-sale
clauses and in connection therewith will not be required to (i) accelerate
payments thereon or (ii) withhold its consent to such an assumption if (x) such
provision is not exercisable under applicable law or such provision is
reasonably likely to result in meritorious legal action by the borrower or (y)
the Servicer or the Special Servicer, as applicable, determines, in accordance
with the Servicing Standard, that granting such consent would be likely to
result in a greater recovery, on a present value basis (discounting at the
related Mortgage Rate), than would enforcement of such clause. If the Servicer
or the Special Servicer, as applicable, determines that (i) granting such
consent would be likely to result in a greater recovery, or (ii) such provisions
are not legally enforceable, the Servicer or the Special Servicer, as
applicable, is authorized to take or enter into an assumption agreement from or
with the proposed transferee as obligor thereon PROVIDED that (a) the credit
status of the prospective transferee is in compliance with the Servicer's or
Special Servicer's, as applicable, regular commercial mortgage origination or
servicing standards and criteria and the terms of the related Mortgage and (b)
the Servicer or the Special Servicer, as applicable, has received written
confirmation that such assumption or substitution would not, in and of itself,
cause a downgrade, qualification or withdrawal of the then-current ratings
assigned to the Certificates from (i) S&P with respect to Mortgage Loans that
(A) represent more than 5% of the then-current aggregate Stated Principal
Balance of the Mortgage Loans (taking into account for the purposes of this
calculation, in the case of any such Mortgage Loan with respect to which the
related borrower or its affiliate is a borrower with respect to one or more
other Mortgage Loans, such other Mortgage Loans), (B) have a Stated Principal
Balance that is more than $35,000,000 or (C) are among the ten largest Mortgage
Loans in the Trust (based on unpaid principal balance), or (ii) Fitch and DBRS
with respect to any Mortgage Loan which (together with any Mortgage Loans
cross-collateralized with such Mortgage Loan) represent one of the ten largest
Mortgage Loans in the Trust (based on its then unpaid principal balance). The
Servicer or Special Servicer may not approve an assumption or substitution
without requiring the related borrower to pay any fees owed to the Rating
Agencies associated with the approval of such assumption or substitution unless
the related Mortgage Loan Documents expressly prohibit the Servicer or Special
Servicer from requiring such payment, in which case such fees will be a Trust
Fund expense. No assumption agreement may contain any terms that are different
from any term of any Mortgage or related Note, except pursuant to the provisions
described under "--Realization Upon Defaulted Mortgage Loans" and
"--Modifications" in this prospectus supplement. The Special Servicer will have
the right to consent to any assumption of a Mortgage Loan that is not a
Specially Serviced Mortgage Loan; and the Special Servicer will also be required
to obtain the consent of the Directing Certificateholder to any such assumption,
in each case, to the extent described in this prospectus supplement under
"--Special Servicing." In addition, the Special Servicer will also be required
to obtain the consent of the Directing Certificateholder with respect to any
assumption with respect to a Special Serviced Mortgage Loan, to the extent
described in this prospectus supplement under "--Special Servicing."
In general, the Mortgage Loans contain provisions in the nature of a
"due-on-encumbrance" clause which by their terms (a) provide that the Mortgage
Loans will (or may at the mortgagee's option) become due and payable upon the
creation of any lien or other encumbrance on the related Mortgaged Property, or
(b) require the consent of the related mortgagee to the creation of any such
lien or other encumbrance on the related Mortgaged Property. The Servicer or the
Special Servicer, as applicable, will not be required to enforce such
due-on-encumbrance clauses and in connection therewith will not be required to
(i) accelerate payments thereon or (ii) withhold its consent to such lien or
encumbrance if the Servicer or the Special Servicer, as applicable, (A)
determines, in accordance with the Servicing Standard, that such enforcement
would not be in the best interests of the Trust and (B) receives prior written
confirmation from S&P, Fitch and DBRS that granting such consent would not, in
and of itself, cause a downgrade, qualification or withdrawal of any of the
then-current ratings assigned to the Certificates; provided, that in the case of
S&P, such confirmation will only be required with respect to any Mortgage Loan
that (1) represents 2% or more of the Stated Principal Balance of all of the
Mortgage Loans held by the Trust Fund, (2) has a Stated Principal Balance
greater than $20,000,000, (3) is one of the ten largest mortgage loans based on
Stated Principal Balance, (4) has a loan-to-value ratio (which includes
additional debt of the related borrower, if any) that is greater than or equal
to 85% or (5)
S-126
has a Debt Service Coverage Ratio (which includes additional debt of the related
borrower, if any) that is less than 1.20x or, in the case of Fitch and DBRS,
such confirmation will only be required with respect to any Mortgage Loan which
(together with any Mortgage Loans cross-collateralized with such Mortgage Loans)
represent one of the ten largest Mortgage Loans in the Trust (based on its then
unpaid principal balance). The Special Servicer will have the right to consent
to the waiver of any due-on-encumbrance clauses with regard to any Mortgage Loan
that is not a Specially Serviced Mortgage Loan, and the Special Servicer will
also be required to obtain the consent of the Directing Certificateholder to any
such waiver of a due-on-encumbrance clause, to the extent described in this
prospectus supplement under "--Special Servicing." In addition, the Special
Servicer will also be required to obtain the consent of the Directing
Certificateholder with respect to any waiver of a due-on encumbrance clause with
respect to a Special Serviced Mortgage Loan, to the extent described in this
prospectus supplement under "--Special Servicing." See "Certain Legal Aspects of
Mortgage Loans--Due-on-Sale and Due-on-Encumbrance Provisions" in the
prospectus.
The provisions described under this heading are not applicable to the
Non-Serviced Mortgage Loans.
INSPECTIONS
The Servicer (or with respect to any Specially Serviced Mortgage Loan and
REO Property, the Special Servicer) is required to inspect or cause to be
inspected each Mortgaged Property (other than the Mortgaged Properties securing
the Non-Serviced Mortgage Loans) at such times and in such manner as are
consistent with the Servicing Standard, but in any event is required to inspect
each Mortgaged Property securing a Note, with a Stated Principal Balance (or in
the case of a Note secured by more than one Mortgaged Property, having an
allocated loan amount) of (a) $2,000,000 or more at least once every 12 months
and (b) less than $2,000,000 at least once every 24 months, in each case
commencing in 2005; PROVIDED, HOWEVER, that if any Mortgage Loan becomes a
Specially Serviced Mortgage Loan, the Special Servicer is required to inspect or
cause to be inspected the related Mortgaged Property as soon as practicable but
in no event more than 60 days after the Mortgage Loan becomes a Specially
Serviced Mortgage Loan and annually thereafter for so long as the Mortgage Loan
remains a Specially Serviced Mortgage Loan. The reasonable cost of each such
inspection performed by the Special Servicer will be paid by the Servicer as a
Property Advance or if such Property Advance would not be recoverable, as a
Trust expense. The Servicer or the Special Servicer, as applicable, will be
required to prepare a written report of the inspection describing, among other
things, the condition of and any damage to the Mortgaged Property and specifying
the existence of any material vacancies in the Mortgaged Property, any sale,
transfer or abandonment of the Mortgaged Property of which it has actual
knowledge, any material adverse change in the condition of the Mortgaged
Property, or any visible material waste committed on the Mortgaged Property.
Inspection of the Mortgaged Properties securing the AFR/Bank of America
Portfolio Loan and the Meadows Mall Loan will be in accordance with the terms of
the GMACCM 2003-C3 Pooling and Servicing Agreement and the Wachovia 2003-C9
Pooling and Servicing Agreement, respectively.
INSURANCE POLICIES
In the case of each Mortgage Loan (but excluding any Specially Serviced
Mortgage Loan, any Mortgage Loan as to which the related Mortgaged Property has
become an REO Property and the Non-Serviced Mortgage Loans), the Servicer will
be required to use reasonable efforts consistent with the Servicing Standard to
cause the related borrower to maintain (including identifying the extent to
which such borrower is maintaining insurance coverage and, if such borrower does
not so maintain, the Servicer will be required to itself cause to be maintained)
for the related Mortgaged Property:
(i) except where the Mortgage Loan Documents permit a borrower to rely
on self-insurance provided by a tenant, a fire and casualty extended
coverage insurance policy which does not provide for reduction due to
depreciation, in an amount that is at least equal to the lesser of the full
replacement cost of the improvements securing the Mortgage Loan or the
outstanding principal
S-127
balance of the Mortgage Loan or Whole Loan, as applicable, but, in any
event, in an amount sufficient to avoid the application of any co-insurance
clause, and
(ii) all other insurance coverage as is required (including, but not
limited to, coverage for acts of terrorism), subject to applicable law,
under the related Mortgage Loan Documents,
PROVIDED, HOWEVER, that:
(i) the Servicer will not be required to maintain any earthquake or
environmental insurance policy on any Mortgaged Property unless such
insurance policy was in effect at the time of the origination of such
Mortgage Loan and is available at commercially reasonable rates (and if the
Servicer does not cause the borrower to maintain or itself maintain such
earthquake or environmental insurance policy on any Mortgaged Property, the
Special Servicer will have the right, but not the duty, to obtain (in
accordance with the Servicing Standard), at the Trust's expense, earthquake
or environmental insurance on any Mortgaged Property securing an REO
Property so long as such insurance is available at commercially reasonable
rates);
(ii) if and to the extent that any Mortgage Loan grants the lender
thereunder any discretion (by way of consent, approval or otherwise) as to
the insurance provider from whom the related borrower is to obtain the
requisite insurance coverage, the Servicer must (to the extent consistent
with the Servicing Standard) require the related borrower to obtain the
requisite insurance coverage;
(iii) the Servicer will have no obligation beyond using its reasonable
efforts consistent with the Servicing Standard to enforce those insurance
requirements against any borrower; PROVIDED, HOWEVER, that this will not
limit the Servicer's obligation to obtain and maintain a force-placed
insurance policy as set forth in the Pooling and Servicing Agreement;
(iv) except as provided below, in no event will the Servicer be
required to cause the borrower to maintain, or itself obtain, insurance
coverage that the Servicer has determined is either (A) not available at
any rate or (B) not available at commercially reasonable rates and the
related hazards are not at the time commonly insured against for properties
similar to the related Mortgaged Property and located in or around the
region in which the related Mortgaged Property is located (in each case, as
determined by the Servicer in accordance with the Servicing Standard, not
less frequently than annually, and such Servicer will be entitled to rely
on insurance consultants, retained at its own expense, in making such
determination);
(v) the reasonable efforts of the Servicer to cause a borrower to
maintain insurance must be conducted in a manner that takes into account
the insurance that would then be available to the Servicer on a
force-placed basis;
(vi) to the extent the Servicer itself is required to maintain
insurance that the borrower does not maintain, the Servicer will not be
required to maintain insurance other than what is available on a
force-placed basis (and this limitation is not to be construed to modify
the other limits set forth in clause (iv) above); and
(vii) any explicit terrorism insurance requirements contained in the
related Mortgage Loan Documents are required to be enforced by the Servicer
in accordance with the Servicing Standard (unless the Special Servicer has
consented to a waiver (including a waiver to permit the Servicer to accept
insurance that does not comply with specific requirements contained in the
Mortgage Loan Documents) in writing of that provision in accordance with
the Servicing Standard).
Notwithstanding the provision described in clause (iv) above, with respect
to insurance that provides coverage for acts of terrorism, the Servicer must,
prior to availing itself of any limitation described in that clause with respect
to any Mortgage Loan, obtain the approval or disapproval of the Special Servicer
(and, in connection therewith, the Special Servicer will be required to comply
with any applicable provisions of the Pooling and Servicing Agreement described
herein under "--Modifications" and "--Special Servicing"). The Servicer will be
entitled to conclusively rely on the determination of the Special Servicer.
S-128
In addition, you should assume that the Pooling and Servicing Agreement
will prohibit the Servicer from making various determinations that it is
otherwise authorized to make in connection with its efforts to maintain
insurance or cause insurance to be maintained unless it obtains the consent of
the Special Servicer and that the Special Servicer will not be permitted to
consent to those determinations unless the Special Servicer has complied with
any applicable provisions of the Pooling and Servicing Agreement described
herein under "--Modifications" and "--Special Servicing." The Pooling and
Servicing Agreement may also provide for the Special Servicer to fulfill the
duties otherwise imposed on the Servicer as described above with respect to a
particular Mortgage Loan if the Special Servicer has a consent right described
above and disapproves the proposed determination, or if certain other
circumstances occur in connection with an insurance-related determination by the
Servicer, with respect to that Mortgage Loan.
With respect to each Specially Serviced Mortgage Loan and REO Property, the
Special Servicer will generally be required to use reasonable efforts,
consistent with the Servicing Standard, to maintain (and, in the case of
Specially Serviced Mortgage Loans, the Special Servicer will be required to
itself maintain) (subject to the right of the Special Servicer to (i) direct the
Servicer to make a Property Advance for the costs associated with coverage that
the Special Servicer determines to maintain, in which case the Servicer will be
required to make that Property Advance (subject to the recoverability
determination and Property Advance procedures described above under "--Advances"
in this prospectus supplement) or (ii) direct the Servicer to cause that
coverage to be maintained under the Servicer's force-placed insurance policy, in
which case that Servicer will be required to so cause that coverage to be
maintained to the extent that the identified coverage is available under the
Servicer's existing force-placed policy) (a) a fire and casualty extended
coverage insurance policy, which does not provide for reduction due to
depreciation, in an amount that is at least equal to the lesser of the full
replacement value of the Mortgaged Property or the Stated Principal Balance of
the Mortgage Loan or Whole Loan, as applicable, (or such greater amount of
coverage required by the related Mortgage Loan Documents (unless such amount is
not available)), but, in any event, in an amount sufficient to avoid the
application of any co-insurance clause, (b) a comprehensive general liability
insurance policy with coverage comparable to that which would be required under
prudent lending requirements and in an amount not less than $1,000,000 per
occurrence and (c) to the extent consistent with the Servicing Standard, a
business interruption or rental loss insurance covering revenues or rents for a
period of at least 12 months. However, the Special Servicer will not be required
in any event to maintain or obtain (or direct the Servicer to maintain or
obtain) insurance coverage described in this paragraph beyond what is reasonably
available at a cost customarily acceptable and consistent with the Servicing
Standard.
If either (x) the Servicer or the Special Servicer obtains and maintains,
or causes to be obtained and maintained, a blanket policy or master force-placed
policy insuring against hazard losses on all of the Mortgage Loans or REO
Properties, as applicable, as to which it is the Servicer or the Special
Servicer, as the case may be, then, to the extent such policy (i) is obtained
from an insurer meeting certain criteria set forth in the Pooling and Servicing
Agreement, and (ii) provides protection equivalent to the individual policies
otherwise required or (y) the Servicer or Special Servicer has long-term
unsecured debt obligations that are rated not lower than "A" by S&P and Fitch
and the Servicer or Special Servicer self-insures for its obligation to maintain
the individual policies otherwise required, then the Servicer or Special
Servicer, as the case may be, will conclusively be deemed to have satisfied its
obligation to cause hazard insurance to be maintained on the related Mortgaged
Properties or REO Properties, as applicable. Such a blanket or master
force-placed policy may contain a deductible clause (not in excess of a
customary amount), in which case the Servicer or the Special Servicer, as the
case may be, that maintains such policy shall, if there shall not have been
maintained on any Mortgaged Property or REO Property thereunder a hazard
insurance policy complying with the requirements described above, and there
shall have been one or more losses that would have been covered by such an
individual policy, promptly deposit into the Collection Account, from its own
funds, the amount not otherwise payable under the blanket or master force-placed
policy in connection with such loss or losses because of such deductible clause
to the extent that any such deductible exceeds the deductible limitation that
pertained to the related Mortgage Loan (or, in the absence of any such
deductible limitation, the deductible limitation for an individual policy which
is consistent with the Servicing Standard).
S-129
The costs of the insurance premiums may be recovered by the Servicer or the
Special Servicer, as applicable, from reimbursements received from the related
borrower or, if the borrower does not pay those amounts, as a Property Advance
(to the extent that such Property Advances are recoverable advances) as set
forth in the Pooling and Servicing Agreement. However, even if such Property
Advance would be a nonrecoverable advance, the Servicer or the Special Servicer,
as applicable, may make such payments using funds held in the Collection Account
(or with respect to a Serviced Whole Loan, the related separate custodial
account) or may be permitted or required to make such Property Advance, subject
to certain conditions set forth in the Pooling and Servicing Agreement.
No pool insurance policy, special hazard insurance policy, bankruptcy bond,
repurchase bond or certificate guarantee insurance will be maintained with
respect to the Mortgage Loans, nor will any Mortgage Loan be subject to FHA
insurance.
CERTAIN MATTERS REGARDING THE DEPOSITOR, THE SERVICER AND THE SPECIAL SERVICER
Each of the Servicer and Special Servicer may assign its rights and
delegate its duties and obligations under the Pooling and Servicing Agreement in
connection with the sale or transfer of a substantial portion of its mortgage
servicing or asset management portfolio, PROVIDED that certain conditions are
satisfied including obtaining written confirmation of each Rating Agency that
such assignment or delegation will not cause a qualification, withdrawal or
downgrading of the then-current ratings assigned to the Certificates. The
Pooling and Servicing Agreement provides that the Servicer or Special Servicer
may not otherwise resign from its obligations and duties as Servicer or Special
Servicer thereunder, except upon either (a) the determination that performance
of its duties is no longer permissible under applicable law and provided that
such determination is evidenced by an opinion of counsel delivered to the
Trustee and the Bond Administrator or (b) the appointment of, and the acceptance
of the appointment by, a successor and receipt by the Trustee of written
confirmation from each Rating Agency that the resignation and appointment will,
in and of itself, not cause a downgrade, withdrawal or qualification of the
then-current rating assigned by such Rating Agency to any Class of Certificates.
No such resignation may become effective until the Trustee or a successor
Servicer or Special Servicer has assumed the obligations of the Servicer or
Special Servicer under the Pooling and Servicing Agreement. The Trustee or any
other successor Servicer or Special Servicer assuming the obligations of the
Servicer or Special Servicer under the Pooling and Servicing Agreement will be
entitled to the compensation to which the Servicer or Special Servicer would
have been entitled. If no successor Servicer or Special Servicer can be obtained
to perform such obligations for such compensation, additional amounts payable to
such successor Servicer or Special Servicer will be treated as Realized Losses.
In addition, the Pooling and Servicing Agreement provides that the Trustee is
permitted to remove the Servicer or the Special Servicer upon receipt of notice
from any Rating Agency that if such Servicer or Special Servicer is not removed
there is the risk of a downgrade, qualification or withdrawal of the then
current rating of any Class of Certificates.
The Pooling and Servicing Agreement also provides that none of the
Depositor, the Servicer or the Special Servicer, or any director, officer,
employee, member, manager or agent (including subservicers) of the Depositor,
the Servicer or the Special Servicer will be under any liability to the Trust,
or the holders of Certificates for any action taken or for refraining from the
taking of any action in good faith pursuant to the Pooling and Servicing
Agreement (including actions taken at the direction of the Controlling Class),
or for errors in judgment; PROVIDED, HOWEVER, that none of the Depositor, the
Servicer or the Special Servicer or any director, officer, employee, member,
manager or agent (including subservicers) of the Depositor, the Servicer and the
Special Servicer will be protected against any breach of its representations and
warranties made in the Pooling and Servicing Agreement or any liability which
would otherwise be imposed by reason of willful misconduct, bad faith, fraud or
negligence (or in the case of the Servicer, by reason of any specific liability
imposed for a breach of the Servicing Standard) in the performance of duties
thereunder or by reason of negligent disregard of obligations and duties
thereunder. The Pooling and Servicing Agreement further provides that the
Depositor, the Servicer and the Special Servicer and any director, officer,
employee, member, manager or agent (including subservicers) of the Depositor,
the Servicer and the Special Servicer will be entitled to indemnification by the
Trust for any loss, liability or expense incurred in connection with any claim
or
S-130
legal action relating to the Pooling and Servicing Agreement or the
Certificates, other than any loss, liability or expense (i) incurred by reason
of willful misconduct, bad faith, fraud or negligence (or in the case of the
Servicer, by reason of any specific liability imposed for a breach of the
Servicing Standard) in the performance of duties thereunder or by reason of
negligent disregard of obligations and duties thereunder, (ii) imposed by any
taxing authority if such loss, liability or expense is not specifically
reimbursable pursuant to the terms of the Pooling and Servicing Agreement or
(iii) in the case of the Depositor and any of its directors, officers, members,
managers, employees and agents, any violation by any of them of any state or
federal securities law.
The Pooling and Servicing Agreement will also provide that the servicer,
special servicer and trustee of the Non-Serviced Mortgage Loans, and any
director, officer, employee or agent of any of them will be entitled to
indemnification by the Trust Fund and held harmless against the Trust's pro rata
share of any liability or expense incurred in connection with any legal action
or claim that relates to the applicable Whole Loan under the related pooling and
servicing agreement or the Pooling and Servicing Agreement; PROVIDED, HOWEVER,
that such indemnification will not extend to any loss, liability or expense
incurred by reason of willful misfeasance, bad faith or negligence on the part
of such party in the performance of its obligations or duties or by reason of
negligent disregard of its obligations or duties under the applicable pooling
and servicing agreement.
In addition, the Pooling and Servicing Agreement provides that none of the
Depositor, the Servicer or the Special Servicer will be under any obligation to
appear in, prosecute or defend any legal action unless such action is related to
its duties under the Pooling and Servicing Agreement and which in its opinion
does not expose it to any expense or liability. The Depositor, the Servicer or
the Special Servicer may, however, in its discretion undertake any such action
which it may deem necessary or desirable with respect to the Pooling and
Servicing Agreement and the rights and duties of the parties thereto and the
interests of the holders of Certificates thereunder. In such event, the legal
expenses and costs of such action and any liability resulting therefrom will be
expenses, costs and liabilities of the Trust, and the Depositor, the Servicer
and the Special Servicer will be entitled to be reimbursed therefor and to
charge the Collection Account.
The Depositor is not obligated to monitor or supervise the performance of
the Servicer, the Special Servicer, the Trustee or the Bond Administrator under
the Pooling and Servicing Agreement. The Depositor may, but is not obligated to,
enforce the obligations of the Servicer or the Special Servicer under the
Pooling and Servicing Agreement and may, but is not obligated to, perform or
cause a designee to perform any defaulted obligation of the Servicer or the
Special Servicer or exercise any right of the Servicer or the Special Servicer
under the Pooling and Servicing Agreement. In the event the Depositor undertakes
any such action, it will be reimbursed by the Trust from the Collection Account
to the extent not recoverable from the Servicer or Special Servicer, as
applicable. Any such action by the Depositor will not relieve the Servicer or
the Special Servicer of its obligations under the Pooling and Servicing
Agreement.
Any person into which the Servicer, the Special Servicer or the Depositor
may be merged or consolidated, or any person resulting from any merger or
consolidation to which the Servicer, the Special Servicer or the Depositor is a
party, or any person succeeding to the business of the Servicer, the Special
Servicer or the Depositor, will be the successor of the Servicer, the Special
Servicer or the Depositor under the Pooling and Servicing Agreement, and shall
be deemed to have assumed all of the liabilities and obligations of the
Servicer, the Special Servicer or the Depositor under the Pooling and Servicing
Agreement if each of the Rating Agencies has confirmed in writing that such
merger or consolidation or transfer of assets or succession, in and of itself,
will not cause a downgrade, qualification or withdrawal of the then-current
ratings assigned by such Rating Agency for any Class of Certificates.
EVENTS OF DEFAULT
"Events of Default" under the Pooling and Servicing Agreement with respect
to the Servicer or the Special Servicer, as the case may be, will include,
without limitation:
S-131
(a) (i) any failure by the Servicer to make a required deposit to the
Collection Account on the day such deposit was first required to be made,
which failure is not remedied within one business day, or (ii) any failure
by the Servicer to deposit into, or remit to the Bond Administrator for
deposit into, the Distribution Account any amount required to be so
deposited or remitted (including any required P&I Advance, unless the
Servicer determines that such P&I Advance would not be recoverable), which
failure is not remedied (with interest) by 11:00 a.m. (New York City time)
on the relevant Distribution Date or any failure by the Servicer to remit
to any holder of a Serviced Companion Loan, in a timely manner as required
by the Pooling and Servicing Agreement or any related intercreditor
agreement, any amount required to be so remitted;
(b) any failure by the Special Servicer to deposit into the REO
Account on the day such deposit is required to be made, or to remit to the
Servicer for deposit in the Collection Account any such remittance required
to be made, under the Pooling and Servicing Agreement; PROVIDED, HOWEVER,
that the failure of the Special Servicer to remit such remittance to the
Servicer will not be an Event of Default if such failure is remedied within
one business day and if the Special Servicer has compensated the Servicer
for any loss of income on such amount suffered by the Servicer due to and
caused by the late remittance of the Special Servicer and reimbursed the
Trust for any resulting advance interest due to the Servicer;
(c) any failure by the Servicer or the Special Servicer duly to
observe or perform in any material respect any of its other covenants or
obligations under the Pooling and Servicing Agreement, which failure
continues unremedied for 30 days (45 days in the case of failure to pay the
premium for any insurance policy required to be force-placed by the
Servicer pursuant to the Pooling and Servicing Agreement) after written
notice of the failure has been given to the Servicer or the Special
Servicer, as the case may be, by any other party to the Pooling and
Servicing Agreement, or to the Servicer or the Special Servicer, as the
case may be, with a copy to each other party to the Pooling and Servicing
Agreement, by the Certificateholders of any Class, evidencing, as to that
Class, Percentage Interests aggregating not less than 25% or by a holder of
a Serviced Companion Loan, if affected; PROVIDED, HOWEVER, if that failure
is capable of being cured and the Servicer or Special Servicer, as
applicable, is diligently pursuing that cure, that 45-day period will be
extended an additional 30 days;
(d) any breach on the part of the Servicer or the Special Servicer of
any representation or warranty in the Pooling and Servicing Agreement which
materially and adversely affects the interests of any Class of
Certificateholders and which continues unremedied for a period of 30 days
after the date on which notice of that breach, requiring the same to be
remedied, will have been given to the Servicer or the Special Servicer, as
the case may be, by the Depositor or the Trustee, or to the Servicer, the
Special Servicer, the Depositor and the Trustee by the holders of
Certificates of any Class evidencing, as to that Class, Percentage
Interests aggregating not less than 25% or by a holder of a Serviced
Companion Loan, if affected; PROVIDED, HOWEVER, if that breach is capable
of being cured and the Servicer or Special Servicer, as applicable, is
diligently pursuing that cure, that 30-day period will be extended an
additional 30 days;
(e) certain events of insolvency, readjustment of debt, marshalling of
assets and liabilities or similar proceedings in respect of or relating to
the Servicer or the Special Servicer, and certain actions by or on behalf
of the Servicer or the Special Servicer indicating its insolvency or
inability to pay its obligations;
(f) the Trustee has received notice from either Fitch or DBRS to the
effect that the continuation of the Servicer or Special Servicer, as
applicable, in such capacity would result in the downgrade, qualification
or withdrawal of any rating then assigned by Fitch or DBRS to any Class of
Certificates;
(g) the Trust has received written notice from S&P to the effect that
the Servicer or the Special Servicer is removed from S&P's approved master
servicer list or special servicer list, as the case may be, and any of the
ratings assigned to the Certificates or any securities backed by a Serviced
Companion Loan are qualified, downgraded or withdrawn in connection with
such removal; and
S-132
(h) Moody's places the rating of any securities backed by a Serviced
Companion Loan on "watchlist" status for possible ratings downgrade or
withdrawal (or Moody's has downgraded or withdrawn its rating for any
securities backed by a Serviced Companion Loan) citing servicing concerns
with respect to the servicing of such Serviced Companion Loan by the
Servicer or Special Servicer, as the case may be, as the sole cause or a
material factor in such rating action, and, in the case of watch status,
such watch is not withdrawn by Moody's within 60 days.
RIGHTS UPON EVENT OF DEFAULT
If an Event of Default with respect to the Servicer or the Special
Servicer, as applicable, occurs, then the Trustee may, and at the direction of
the holders of Certificates evidencing at least 51% of the aggregate Voting
Rights of all Certificateholders, the Trustee will be required to, terminate all
of the rights and obligations of the Servicer as servicer or the Special
Servicer as special servicer under the Pooling and Servicing Agreement and in
and to the Trust. Notwithstanding the foregoing, upon any termination of the
Servicer or the Special Servicer, as applicable, under the Pooling and Servicing
Agreement, the Servicer or the Special Servicer, as applicable, will continue to
be entitled to receive all accrued and unpaid servicing compensation through the
date of termination plus reimbursement for all Advances and interest thereon as
provided in the Pooling and Servicing Agreement. In the event that the Servicer
is also the Special Servicer and the Servicer is terminated, the Servicer will
also be terminated as Special Servicer. A Certificateholder may not terminate
the Servicer or Special Servicer if an Event of Default with respect to the
Servicer or Special Servicer only affects a holder of a Serviced Companion Loan
but does not affect a Certificateholder. If an Event of Default affects a holder
of a Companion Loan, the Trustee, at the direction of such holder of a Serviced
Companion Loan, may terminate the Servicer or Special Servicer with respect to
the related Serviced Whole Loan.
On and after the date of termination following an Event of Default by the
Servicer or the Special Servicer, the Trustee will succeed to all authority and
power of the Servicer (and the Special Servicer if the Special Servicer is also
the Servicer) under the Pooling and Servicing Agreement (and any sub-servicing
agreements) and will be entitled to the compensation arrangements to which the
Servicer (and the Special Servicer if the Servicer is also the Special Servicer)
would have been entitled. If the Trustee is unwilling or unable so to act, or if
the holders of Certificates evidencing at least 25% of the aggregate Voting
Rights of all Certificateholders so request, or if the Trustee shall not be an
"approved" servicer by any of the Rating Agencies for mortgage pools similar to
the Trust, the Trustee must appoint, or petition a court of competent
jurisdiction for the appointment of, a mortgage loan servicing institution the
appointment of which will not result in the downgrading, qualification or
withdrawal of the rating or ratings then assigned to any Class of Certificates
as evidenced in writing by each Rating Agency to act as successor to the
Servicer or the Special Servicer, as applicable, under the Pooling and Servicing
Agreement. Pending such appointment, the Trustee is obligated to act in such
capacity. The Trustee and any such successor may agree upon the servicing
compensation to be paid.
If the Special Servicer is not the Servicer and an Event of Default with
respect to the Special Servicer occurs, upon the termination of the Special
Servicer the Servicer will succeed to all the power and authority of the Special
Servicer under the Pooling and Servicing Agreement (PROVIDED that such
succession would not result in the downgrading, qualification or withdrawal of
the ratings then assigned to any Class of Certificates as evidenced in writing
by each Rating Agency) and will be entitled to the compensation to which the
Special Servicer would have been entitled.
No Certificateholder will have any right under the Pooling and Servicing
Agreement to institute any proceeding with respect to the Pooling and Servicing
Agreement or the Mortgage Loans, unless, with respect to the Pooling and
Servicing Agreement, such holder previously shall have given to the Trustee a
written notice of a default under the Pooling and Servicing Agreement, and of
the continuance thereof, and unless also the holders of Certificates of any
Class affected thereby evidencing Percentage Interests of at least 25% of such
Class shall have made written request of the Trustee to institute such
proceeding in its capacity as Trustee under the Pooling and Servicing Agreement
and shall have offered to the Trustee such reasonable security or indemnity as
it may require against the costs, expenses and liabilities to be incurred
therein or thereby, and the Trustee, for 60 days after its receipt of such
notice, request and offer of indemnity, shall have neglected or refused to
institute such proceeding.
S-133
Notwithstanding the foregoing in this "--Rights Upon Event of Default"
section, if an event of default on the part of the Servicer affects a Serviced
Companion Loan (other than the Walgreens-Riverside B Loan) and the Servicer is
not otherwise terminated, the Trustee, at the direction of the holder of a
Serviced Companion Loan, will be required to appoint a servicer that will be
responsible for servicing the related Whole Loan.
The Trustee will have no obligation to make any investigation of matters
arising under the Pooling and Servicing Agreement or to institute, conduct or
defend any litigation thereunder or in relation thereto at the request, order or
direction of any of the holders of Certificates, unless such holders of
Certificates shall have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which may be incurred therein or
thereby.
AMENDMENT
The Pooling and Servicing Agreement may be amended at any time by the
Depositor, the Servicer, the Special Servicer, the Trustee and the Bond
Administrator without the consent of any of the holders of Certificates or
holders of any Companion Loans (i) to cure any ambiguity or to correct any
error; (ii) to cause the provisions therein to conform or be consistent with or
in furtherance of the statements herein made with respect to the Certificates,
the Trust or the Pooling and Servicing Agreement or to correct or supplement any
provisions therein which may be defective or inconsistent with any other
provisions therein; (iii) to amend any provision thereof to the extent necessary
or desirable to maintain the rating or ratings then assigned to each Class of
Certificates or any security backed by a Companion Loan, if applicable
(PROVIDED, that such amendment does not adversely affect in any material respect
the interests of any Certificateholder or holder of a Companion Loan not
consenting thereto); and (iv) to amend or supplement a provision, or to
supplement any provisions therein to the extent not inconsistent with the
provisions of the Pooling and Servicing Agreement, or any other change which
will not adversely affect in any material respect the interests of any
Certificateholder or holder of a Companion Loan not consenting thereto, as
evidenced in writing by an opinion of counsel or, if solely affecting any
Certificateholder or holder of a Companion Loan, confirmation in writing from
each Rating Agency that such amendment will not result in a qualification,
withdrawal or downgrading of the then-current ratings assigned to the
Certificates or any security backed by a Companion Loan, if applicable. The
Pooling and Servicing Agreement requires that no such amendment shall cause the
Upper-Tier REMIC or the Lower-Tier REMIC to fail to qualify as a REMIC.
The Pooling and Servicing Agreement may also be amended from time to time
by the Depositor, the Servicer, the Special Servicer, the Trustee and the Bond
Administrator with the consent of the holders of Certificates evidencing at
least 662/3% of the Percentage Interests of each Class of Certificates affected
thereby for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of the Pooling and Servicing Agreement or
modifying in any manner the rights of the holders of Certificates; PROVIDED,
HOWEVER, that no such amendment may (i) reduce in any manner the amount of, or
delay the timing of, payments received on the Mortgage Loans which are required
to be distributed on any Certificate, without the consent of the holder of such
Certificate, or which are required to be distributed to the holder of any
Companion Loan, without the consent of the holder of such Companion Loan; (ii)
alter the obligations of the Servicer or the Trustee to make a P&I Advance or a
Property Advance or alter the Servicing Standard set forth in the Pooling and
Servicing Agreement; (iii) change the percentages of Voting Rights of holders of
Certificates which are required to consent to any action or inaction under the
Pooling and Servicing Agreement; or (iv) amend the section in the Pooling and
Servicing Agreement relating to the amendment of the Pooling and Servicing
Agreement, in each case, without the consent of the holders of all Certificates
representing all the Percentage Interests of the Class or Classes affected
thereby and the consent of the holders of the affected Companion Loan.
VOTING RIGHTS
At all times during the term of the Pooling and Servicing Agreement, 98% of
the voting rights for the Certificates (the "Voting Rights") shall be allocated
among the holders of the respective Classes of
S-134
Regular Certificates (other than the Class X-1 and Class X-2 Certificates) in
proportion to the Certificate Balances of their Certificates, and 2% of the
Voting Rights shall be allocated among the holders of the Class X-1 and Class
X-2 Certificates. Voting Rights allocated to a Class of Certificateholders shall
be allocated among such Certificateholders in proportion to the Percentage
Interests in such Class evidenced by their respective Certificates.
SALE OF DEFAULTED MORTGAGE LOANS
The Pooling and Servicing Agreement contains provisions requiring, within
60 days after a Mortgage Loan (other than a Non-Serviced Mortgage Loan) becomes
a Defaulted Mortgage Loan, the Special Servicer to determine the fair value of
such Mortgage Loan in accordance with the Servicing Standard. A "Defaulted
Mortgage Loan" is a Mortgage Loan which is delinquent at least 60 days in
respect of its Monthly Payments or more than 30 days delinquent in respect of
its Balloon Payment, if any, in either case such delinquency to be determined
without giving effect to any grace period permitted by the related Mortgage Loan
Documents and without regard to any acceleration of payments under the Mortgage
Loan. The Special Servicer will be required to recalculate, if necessary, from
time to time, but not less often than every 90 days, its determination of the
fair value of a Defaulted Mortgage Loan based upon changed circumstances, new
information or otherwise, in accordance with the Servicing Standard. The Special
Servicer will be permitted to retain, at the expense of the Trust Fund, an
independent third party to assist the Special Servicer in determining such fair
value and will be permitted to conclusively rely, to the extent it is reasonable
to do so in accordance with the Servicing Standard, on the opinion of such third
party in making such determination.
In the event a Mortgage Loan (other than a Non-Serviced Mortgage Loan)
becomes a Defaulted Mortgage Loan, the Directing Certificateholder and the
Special Servicer, in that order (only if the Directing Certificateholder, or the
Special Servicer, as applicable, is not an affiliate of the related Mortgage
Loan Seller), will each have an assignable option to purchase the Defaulted
Mortgage Loan from the Trust Fund (a "Purchase Option") at a price (the "Option
Price") equal to (i) the outstanding principal balance of the Defaulted Mortgage
Loan as of the date of purchase, plus all accrued and unpaid interest on such
balance plus all related unreimbursed Property Advances and accrued and unpaid
interest on such Advances, plus all related fees and expenses, if the Special
Servicer has not yet determined the fair value of the Defaulted Mortgage Loan,
or (ii) the fair value of the Defaulted Mortgage Loan as determined by the
Special Servicer, if the Special Servicer has made such fair value
determination. For a description of the purchase option relating to the AFR/Bank
of America Portfolio Loan, see "--Servicing of the Non-Serviced Mortgage
Loans--Rights of the Holder of the AFR/Bank of America Portfolio B
Loan--Purchase Option" and "--Sale of Defaulted Mortgage Loan" in this
prospectus supplement and for a description of the purchase option relating the
Meadows Mall Loan see "--Servicing of the Non-Serviced Mortgage--The Meadows
Mall Whole Loan--Sale of Defaulted Mortgage Loan" in this prospectus supplement.
With respect to the Tysons Corner Center Whole Loan, the party that
exercises the foregoing Purchase Option will only be entitled to purchase the
related Mortgage Loan and not any related Companion Loans.
There can be no assurance that the Special Servicer's fair market value
determination for any Defaulted Mortgage Loan will equal the amount that could
have actually been realized in an open bid or will equal or be greater than the
amount that could have been realized through foreclosure or a workout of the
subject Defaulted Mortgage Loan.
Except as described under "--Servicing of the Non-Serviced Mortgage
Loans--The AFR/ Bank of America Portfolio Whole Loan--Rights of the Holder of
the AFR/Bank of America Portfolio B Loan--Purchase Option," "--The Meadows Mall
Whole Loan--Sale of Defaulted Loan," and "--Certain Rights of the Holder of the
Walgreens-Riverside B Loan--Option to Purchase the Walgreens-Riverside Loan,"
unless and until the Purchase Option with respect to a Defaulted Mortgage Loan
is exercised, the Special Servicer will be required to pursue such other
resolution strategies available under the Pooling and Servicing Agreement,
including workout and foreclosure, as are consistent with the Servicing
S-135
Standard, but the Special Servicer will not be permitted to sell the Defaulted
Mortgage Loan other than pursuant to the exercise of the Purchase Option.
If not exercised sooner, the Purchase Option with respect to any Defaulted
Mortgage Loan will automatically terminate upon (i) the related borrower's cure
of all defaults on the Defaulted Mortgage Loan, (ii) the acquisition by, or on
behalf of, the Trust Fund of title to the related Mortgaged Property through
foreclosure or deed in lieu of foreclosure, (iii) the modification or pay-off
(full or discounted) of the Defaulted Mortgage Loan in connection with a
workout, (iv) a repurchase of a Defaulted Mortgage Loan by the applicable
Mortgage Loan Seller due to the Mortgage Loan Seller's breach of a
representation with respect to such Defaulted Mortgage Loan, (v) with respect to
the AFR/Bank of America Portfolio Loan, a purchase of such Defaulted Mortgage
Loan by the holder of the AFR/Bank of America Portfolio B Loan, (vi) with
respect to the Walgreens-Riverside Loan, a purchase of such Defaulted Mortgage
Loan by the holder of the Walgreens-Riverside B Loan. With respect to clauses
(v) or (vi), see "--Servicing of the Non-Serviced Mortgage Loans--The AFR/ Bank
of America Portfolio Whole Loan--Rights of the Holder of the AFR/Bank of America
Portfolio B Loan--Purchase Option," and "--Certain Rights of the Holder of the
Walgreens-Riverside B Loan--Option to Purchase the Walgreens-Riverside Loan" in
this prospectus supplement. In addition, the Purchase Option with respect to a
Defaulted Mortgage Loan held by any person will terminate upon the exercise of
the Purchase Option by any other holder of a Purchase Option.
If (a) a Purchase Option is exercised with respect to a Defaulted Mortgage
Loan and the person expected to acquire the Defaulted Mortgage Loan pursuant to
such exercise is the Special Servicer or, if the Directing Certificateholder is
affiliated with the Special Servicer, the Directing Certificateholder, or any
affiliate of any of them (in other words, the Purchase Option has not been
assigned to another unaffiliated person) and (b) the Option Price is based on
the Special Servicer's determination of the fair value of the Defaulted Mortgage
Loan, the Servicer will be required to determine, in accordance with the
Servicing Standard, whether the Option Price represents a fair price. The
Servicer will be required to retain, at the expense of the Trust Fund, an
independent third party who is an MAI qualified appraiser or an independent
third party that is of recognized standing having experience in evaluating the
value of Defaulted Mortgage Loans in accordance with the Pooling and Servicing
Agreement, to assist the Servicer to determine if the Option Price represents a
fair price for the Defaulted Mortgage Loan. In making such determination and
absent manifest error, the Servicer will be entitled to conclusively rely on the
opinion of such person in accordance with the terms of the Pooling and Servicing
Agreement.
REALIZATION UPON DEFAULTED MORTGAGE LOANS
If a default on a Mortgage Loan (other than a Non-Serviced Mortgage Loan)
has occurred or, in the Special Servicer's judgment, a payment default is
imminent, then, pursuant to the Pooling and Servicing Agreement, the Special
Servicer, on behalf of the Trustee, may, to the extent consistent with the
related Asset Status Report (as defined in this prospectus supplement), at any
time institute foreclosure proceedings, exercise any power of sale contained in
the related Mortgage, obtain a deed in lieu of foreclosure, or otherwise acquire
title to the related Mortgaged Property, by operation of law or otherwise. The
Special Servicer is not permitted, however, to acquire title to any Mortgaged
Property, have a receiver of rents appointed with respect to any Mortgaged
Property or take any other action with respect to any Mortgaged Property that
would cause the Trustee, for the benefit of the Certificateholders, or any other
specified person to be considered to hold title to, to be a "mortgagee-in-
possession" of, or to be an "owner" or an "operator" of such Mortgaged Property
within the meaning of certain federal environmental laws, unless the Special
Servicer has previously received a report prepared by a person who regularly
conducts environmental audits (which report will be an expense of the Trust) and
either:
(i) such report indicates that (a) the Mortgaged Property is in
compliance with applicable environmental laws and regulations and (b) there
are no circumstances or conditions present at the Mortgaged Property
relating to the use, management or disposal of any hazardous materials for
which investigation, testing, monitoring, containment, clean-up or
remediation could be required under any applicable environmental laws and
regulations; or
S-136
(ii) the Special Servicer, based solely (as to environmental matters
and related costs) on the information set forth in such report, determines
that taking such actions as are necessary to bring the Mortgaged Property
into compliance with applicable environmental laws and regulations and/or
taking the actions contemplated by clause (i) above, would be in the best
economic interest of the Trust.
Such requirement precludes enforcement of the security for the related
Mortgage Loan until a satisfactory environmental site assessment is obtained (or
until any required remedial action is taken), but will decrease the likelihood
that the Trust will become liable for a material adverse environmental condition
at the Mortgaged Property. However, there can be no assurance that the
requirements of the Pooling and Servicing Agreement will effectively insulate
the Trust from potential liability for a materially adverse environmental
condition at any Mortgaged Property.
If title to any Mortgaged Property is acquired by the Trust, the Special
Servicer, on behalf of the Trust, will be required to sell the Mortgaged
Property prior to the close of the third calendar year following the year in
which the Trust acquires such Mortgaged Property, unless (i) the Internal
Revenue Service grants an extension of time to sell such property or (ii) the
Trustee receives an opinion of independent counsel to the effect that the
holding of the property by the Trust beyond such period will not result in the
imposition of a tax on the Trust or cause the Trust (or any designated portion
thereof) to fail to qualify as a REMIC under the Code at any time that any
Certificate is outstanding. Subject to the foregoing and any other tax-related
limitations, the Special Servicer will generally be required to attempt to sell
any Mortgaged Property so acquired on the same terms and conditions it would if
it were the owner. If title to any Mortgaged Property is acquired by the Special
Servicer on behalf of the Trust, the Special Servicer will also be required to
ensure that the Mortgaged Property is administered so that it constitutes
"foreclosure property" within the meaning of Code Section 860G(a)(8) at all
times that the sale of such property does not result in the receipt by the Trust
of any income from non-permitted assets as described in Code Section
860F(a)(2)(B) with respect to such property. If the Trust acquires title to any
Mortgaged Property, the Special Servicer, on behalf of the Trust, generally will
be required to retain an independent contractor to manage and operate such
property. The retention of an independent contractor, however, will not relieve
the Special Servicer of its obligation to manage such Mortgaged Property as
required under the Pooling and Servicing Agreement.
In general, the Special Servicer will be obligated to cause any Mortgaged
Property acquired as REO Property to be operated and managed in a manner that
would, in its good faith and reasonable judgment and to the extent commercially
feasible, maximize the Trust's net after-tax proceeds from such property. After
the Special Servicer reviews the operation of such property and consults with
the Bond Administrator to determine the Trust's federal income tax reporting
position with respect to income it is anticipated that the Trust would derive
from such property, the Special Servicer could determine, pursuant to the
Pooling and Servicing Agreement, that it would not be commercially feasible to
manage and operate such property in a manner that would avoid the imposition of
a tax on "net income from foreclosure property" within the meaning of the REMIC
Regulations (such tax referred to herein as the "REO Tax"). To the extent that
income the Trust receives from an REO Property is subject to a tax on "net
income from foreclosure property," such income would be subject to federal tax
at the highest marginal corporate tax rate (currently 35%). The determination as
to whether income from an REO Property would be subject to an REO Tax will
depend on the specific facts and circumstances relating to the management and
operation of each REO Property. Any REO Tax imposed on the Trust's income from
an REO Property would reduce the amount available for distribution to
Certificateholders. Certificateholders are advised to consult their own tax
advisors regarding the possible imposition of the REO Tax in connection with the
operation of commercial REO Properties by REMICs. The Special Servicer will be
required to sell any REO Property acquired on behalf of the Trust within the
time period and in the manner described above.
Under the Pooling and Servicing Agreement, the Special Servicer is required
to establish and maintain one or more REO Accounts, to be held on behalf of the
Trustee in trust for the benefit of the Certificateholders, for the retention of
revenues, Liquidation Proceeds (net of related liquidation expenses) other than
Excess Liquidation Proceeds and insurance proceeds derived from each REO
Property. The Special Servicer is required to use the funds in the REO Account
to pay for the proper
S-137
operation, management, maintenance, disposition and liquidation of any REO
Property, but only to the extent of amounts on deposit in the REO Account relate
to such REO Property. To the extent that amounts in the REO Account in respect
of any REO Property are insufficient to make such payments, the Servicer is
required to make a Property Advance, unless it determines such Property Advance
would be nonrecoverable. Within one business day following the end of each
Collection Period, the Special Servicer is required to deposit all amounts
received in respect of each REO Property during such Collection Period, net of
any amounts withdrawn to make any permitted disbursements, to the Collection
Account (or with respect to a Whole Loan, the related separate custodial
account), PROVIDED that the Special Servicer may retain in the REO Account
permitted reserves.
Under the Pooling and Servicing Agreement, the Bond Administrator is
required to establish and maintain an Excess Liquidation Proceeds Account, to be
held on behalf of the Trustee for the benefit of the Certificateholders and
holders of the Serviced Companion Loans. Upon the disposition of any REO
Property as described above, to the extent that Liquidation Proceeds (net of
related liquidation expenses of such Mortgage Loan or Serviced Whole Loan or
related REO Property) exceed the amount that would have been received if a
principal payment and all other amounts due with respect to such Mortgage Loan
and any related Serviced Companion Loans have been paid in full on the Due Date
immediately following the date on which proceeds were received (such excess
being "Excess Liquidation Proceeds"), such amount will be deposited in the
Excess Liquidation Proceeds Account for distribution as provided in the Pooling
and Servicing Agreement.
MODIFICATIONS
The Special Servicer (except as provided in the Pooling and Servicing
Agreement) may agree to extend the maturity date of a Mortgage Loan (other than
a Non-Serviced Mortgage Loan) that is neither (a) a Specially Serviced Mortgage
Loan nor (b) a Mortgage Loan that either is in default or as to which default is
reasonably foreseeable; except that any extension entered into by the Special
Servicer will not be permitted to extend the maturity date beyond the earlier of
(1) two years prior to the Rated Final Distribution Date and (2) in the case of
a Mortgage Loan secured by a leasehold estate and not the related fee interest,
the date 20 years prior to the expiration of the leasehold estate (or ten years
provided that that the Special Servicer gives due consideration to the remaining
term of the ground lease and such extension is in the best interest of
Certificateholders (and, in the case of the Serviced Whole Loans, a holder of
the related Serviced Companion Loan)); provided that, if the extension would
extend the maturity date of a Mortgage Loan or a Serviced Whole Loan for more
than 12 months (or such longer period not to exceed five years if the Special
Servicer has determined that such longer period will result in a greater
recovery on a net present value basis for the Trust Fund and if a Serviced Whole
Loan is involved, the holders of the related Serviced Companion Loans (as a
collective whole)) from the original maturity date of the Mortgage Loan, the
Special Servicer must obtain an opinion of counsel that such extension will not
constitute a "significant modification" of the Mortgage Loan within the meaning
of Treasury Regulations Section 1.860G-2(b).
Notwithstanding the foregoing, the Special Servicer will not be permitted
to extend any Mortgage Loan unless (a) it has sent notice of such proposed
extension, together with its recommendation, and (b) the Directing
Certificateholder has also approved such extension; PROVIDED, HOWEVER, that if
the Directing Certificateholder does not respond to or approve such
recommendation within ten business days of its receipt of the Special Servicer's
recommendation, then the extension will be deemed approved. If the Directing
Certificateholder objects to such extension, the Special Servicer, subject to
the Servicing Standards, will not be permitted to extend such maturity date and
will not be liable for any loss caused by the failure to extend such maturity.
Except as otherwise described in this section (and other than with respect
to the Non-Serviced Mortgage Loans), neither the Servicer nor the Special
Servicer may waive, modify or amend (or consent to waive, modify or amend) any
provision of a Mortgage Loan which is not in default or as to which default is
not reasonably foreseeable except for (1) the waiver of any due-on-sale clause
or due-on-encumbrance clause to the extent permitted in the Pooling and
Servicing Agreement, and (2) any waiver, modification or amendment that would
not be a "significant modification."
S-138
If the Special Servicer determines that a modification, waiver or amendment
(including the forgiveness or deferral of interest or principal or the
substitution or release of collateral or the pledge of additional collateral) of
the terms of a Specially Serviced Mortgage Loan with respect to which a payment
default or other material default has occurred or a payment default or other
material default is, in the Special Servicer's judgment, reasonably foreseeable,
is estimated to produce a greater recovery on a net present value basis (the
relevant discounting to be performed at the related Mortgage Rate) than
liquidation of the Specially Serviced Mortgage Loan pursuant to the terms
described under "--Realization Upon Defaulted Mortgage Loans" above, then the
Special Servicer will agree to such modification, waiver or amendment of the
Specially Serviced Mortgage Loan, subject to the restrictions and limitations
described below.
The Special Servicer will be required to use reasonable efforts to the
extent possible to fully amortize each Specially Serviced Mortgage Loan prior to
the Rated Final Distribution Date and will not be permitted to agree to a
modification, waiver or amendment of any term of any Specially Serviced Mortgage
Loan if that modification, waiver or amendment would:
(1) extend the maturity date of the Specially Serviced Mortgage Loan
to a date occurring later than the earlier of (A) (1) two years prior to
the Rated Final Distribution Date and (B) if the Specially Serviced
Mortgage Loan is secured by a leasehold estate and not the related fee
interest, the date twenty years prior to the expiration of the leasehold
(or ten years provided that that the Special Servicer gives due
consideration to the remaining term of the ground lease and such extension
is in the best interest of Certificateholders and if a Serviced Whole Loans
is involved, the holders of the related Serviced Companion Loans (as a
collective whole)); or
(2) provide for the deferral of interest unless (A) interest accrues
on the Mortgage Loan, generally, at the related Mortgage Rate and (B) the
aggregate amount of deferred interest does not exceed 10% of the unpaid
principal balance of the Specially Serviced Mortgage Loan.
Any modification, extension, waiver or amendment of the payment terms of
the Serviced Whole Loans will be required to be structured so as to be
consistent with the allocation and payment priorities in the related Mortgage
Loan Documents and the related intercreditor agreement, such that neither the
Trust as holder of the Mortgage Loan nor a holder of the Serviced Companion Loan
gains a priority over the other such holder that is not reflected in the related
Mortgage Loan Documents and intercreditor agreement.
Further, to the extent consistent with the Servicing Standard and the
related intercreditor agreement, taking into account the subordinate position of
any related B Loan, no waiver, reduction or deferral of any amounts due on the
related Mortgage Loan will be permitted to be effected prior to the waiver,
reduction or deferral of the entire corresponding item in respect of the related
B Loan.
In the event of a modification that creates a deferral of interest, the
Pooling and Servicing Agreement will provide that the amount of deferred
interest will be allocated to reduce the Interest Accrual Amount and any
Interest Shortfall of the Class or Classes (other than the Class X-1 or Class
X-2 Certificates) with the latest alphabetical designation then outstanding, and
to the extent so allocated, will be added to the Certificate Balance of the
Class or Classes.
The Special Servicer or the Servicer, as the case may be, will be required
to notify each other, the Mortgage Loan Sellers, the Rating Agencies, the
applicable holders of the related Serviced Companion Loans and the Trustee of
any modification, waiver or amendment of any term of any Mortgage Loan or Whole
Loan and will be required to deliver to the Trustee for deposit in the related
mortgage file, an original counterpart of the agreement related to the
modification, waiver or amendment, promptly following the execution. Copies of
each agreement whereby the modification, waiver or amendment of any term of any
Mortgage Loan or Whole Loan is effected are required to be available for review
during normal business hours at the offices of the Trustee.
The Special Servicer will also be required to obtain the consent of the
Directing Certificateholder to any modification, to the extent described in this
prospectus supplement under "--Special Servicing." The Special Servicer is also
required to obtain the consent of the Directing Certificateholder to any
S-139
modification with regard to any Specially Serviced Mortgage Loan to the extent
described under "--Special Servicing--The Special Servicer" below.
In the event the Special Servicer determines that a refusal to consent by
the Directing Certificateholder or any advice from the Directing
Certificateholder would cause the Special Servicer to violate the terms of any
Mortgage Loan Documents or the Pooling and Servicing Agreement (including,
without limitation, the Servicing Standard), the Special Servicer will be
required to disregard such refusal to consent or advice and notify the Directing
Certificateholder, the Trustee and the Rating Agencies.
In addition, with respect to the Walgreens-Riverside Whole Loan, the
Special Servicer is required to obtain the consent of the holder of the related
B Loan, in connection with a modification, waiver or amendment of the terms of
the related Mortgage Loan Documents that affects the rights of such holder of
the related B Loan, in certain circumstances pursuant to the terms of the
related intercreditor agreement. See "--Certain Rights of the Holder of the
Walgreens-Riverside B Loan" in this prospectus supplement.
With respect to the Tysons Corner Center Whole Loan, any decision to be
made with respect to the Tysons Corner Center Whole Loan that requires the
approval of the Directing Certificateholder or otherwise requires approval under
the related intercreditor agreement will require the approval of noteholders
then holding a majority of the outstanding principal balance of the Tysons
Corner Center Whole Loan. If noteholders then holding a majority of the
outstanding principal balance of the Tysons Corner Center Whole Loan are not
able to agree on a course of action that satisfies the Servicing Standard within
30 days after receipt of a request for consent to any action by the Servicer or
the Special Servicer, as applicable, the Directing Certificateholder will be
entitled to direct the Servicer or the Special Servicer, as applicable, on a
course of action to follow that satisfies the requirements set forth in the
Pooling and Servicing Agreement.
See also "--Special Servicing--The Special Servicer" below for a
description of the Directing Certificateholder's rights with respect to
reviewing and approving the Asset Status Report.
OPTIONAL TERMINATION
Any holder of Certificates representing greater than 50% of the Percentage
Interest of the then Controlling Class, and, if such holder does not exercise
its option, the Servicer, and if the Servicer does not exercise its option, the
Special Servicer, will have the option to purchase all of the Mortgage Loans and
all property acquired in respect of any Mortgage Loan remaining in the Trust,
and thereby effect termination of the Trust and early retirement of the then
outstanding Certificates, on any Distribution Date on which the aggregate Stated
Principal Balance of the Mortgage Loans remaining in the Trust is less than 1%
of the aggregate principal balance of such Mortgage Loans as of the Cut-off
Date. The purchase price payable upon the exercise of such option on such a
Distribution Date will be an amount equal to the greater of (i) the sum of (A)
100% of the outstanding principal balance of each Mortgage Loan included in the
Trust as of the last day of the month preceding such Distribution Date (less any
P&I Advances previously made on account of principal); (B) the fair market value
of all other property included in the Trust as of the last day of the month
preceding such Distribution Date, as determined by an independent appraiser as
of a date not more than 30 days prior to the last day of the month preceding
such Distribution Date; (C) all unpaid interest accrued on such principal
balance of each such Mortgage Loan (including any Mortgage Loans as to which
title to the related Mortgaged Property has been acquired) at the Mortgage Rate
(plus the Excess Rate, to the extent applicable) to the last day of the month
preceding such Distribution Date (less any P&I Advances previously made on
account of interest); and (D) unreimbursed Advances (with interest thereon),
unpaid Servicing Fees and Trustee Fees and unpaid Trust expenses, and (ii) the
aggregate fair market value of the Mortgage Loans and all other property
acquired in respect of any Mortgage Loan in the Trust, on the last day of the
month preceding such Distribution Date, as determined by an independent
appraiser acceptable to the Servicer, together with one month's interest thereon
at the Mortgage Rate. The Trust may also be terminated in connection with an
exchange by a sole remaining Certificateholder of all the then outstanding
Certificates (excluding the Class Q, Class R and Class LR Certificates)
(PROVIDED, HOWEVER,
S-140
that the Class A through Class E certificates are no longer outstanding), for
the Mortgage Loans remaining in the Trust.
THE TRUSTEE AND THE BOND ADMINISTRATOR
Wells Fargo Bank, N.A. ("Wells Fargo Bank") will act as Trustee pursuant to
the Pooling Agreement. Wells Fargo Bank maintains an office at Wells Fargo
Center, Sixth and Marquette Avenue, Minneapolis, Minnesota 55479-0113. Wells
Fargo Bank also conducts trustee administration services at its offices in
Columbia, Maryland. Its address there is 9062 Old Annapolis Road, Columbia,
Maryland 21045-1951. In addition, Wells Fargo Bank maintains a customer service
help desk at (301) 815-6600.
LaSalle Bank National Association will serve as Bond Administrator. In
addition, LaSalle Bank National Association will serve as paying agent and
registrar for the Certificates. The Bond Administrator Fee will equal a portion
of the fee calculated at the Trustee Fee Rate as described in the Pooling and
Servicing Agreement. The office of LaSalle Bank National Association responsible
for performing its duties under the Pooling and Servicing Agreement is located
at 135 South LaSalle Street, Suite 1625, Chicago, Illinois 60603, Attention:
Asset-Backed Securities Trust Services Group, COMM 2004-LNB2. LaSalle Bank
National Association is a Mortgage Loan Seller and an affiliate of ABN AMRO
Incorporated, one of the Underwriters, and ABN AMRO Bank, one of the Mortgage
Loan Sellers.
The Trustee and the Bond Administrator may resign at any time by giving
written notice to the Depositor, the Bond Administrator (in the case of the
Trustee), the Servicer, the Special Servicer, the Trustee (in the case of the
Bond Administrator) and the Rating Agencies, PROVIDED that no such resignation
shall be effective until a successor has been appointed. Upon such notice, the
Servicer will appoint a successor trustee and the Trustee will appoint a
successor Bond Administrator (which may be the Trustee). If no successor trustee
or successor Bond Administrator is appointed within 30 days after the giving of
such notice of resignation, the resigning Trustee or Bond Administrator may
petition the court for appointment of a successor trustee or successor Bond
Administrator.
The Servicer or the Depositor may remove the Trustee or the Bond
Administrator if, among other things, the Trustee or the Bond Administrator
ceases to be eligible to continue as such under the Pooling and Servicing
Agreement or if at any time the Trustee or the Bond Administrator becomes
incapable of acting, or is adjudged bankrupt or insolvent, or a receiver of the
Trustee or the Bond Administrator or of either of their property is appointed or
any public officer takes charge or control of the Trustee or the Bond
Administrator or of either of their property. The holders of Certificates
evidencing aggregate Voting Rights of at least 50% of all Certificateholders may
remove the Trustee or the Bond Administrator upon written notice to the
Depositor, the Servicer, the Trustee and the Bond Administrator. Any resignation
or removal of the Trustee or the Bond Administrator and appointment of a
successor trustee or successor bond administrator will not become effective
until acceptance of the appointment by the successor trustee or successor bond
administrator. Notwithstanding the foregoing, upon any termination of the
Trustee or the Bond Administrator under the Pooling and Servicing Agreement, the
Trustee or Bond Administrator, as applicable, will continue to be entitled to
receive from the Trust all accrued and unpaid compensation and expenses through
the date of termination plus, in the case of the Trustee, the reimbursement of
all Advances made by the Trustee and interest thereon as provided in the Pooling
and Servicing Agreement. In addition, if the Trustee or the Bond Administrator
is terminated without cause, the terminating party is required to pay all of the
expenses of the Trustee or the Bond Administrator necessary to effect the
transfer of its responsibilities to the successor trustee or successor bond
administrator, as applicable. Any successor trustee or bond administrator must
have a combined capital and surplus of at least $50,000,000 and have debt
ratings that satisfy certain criteria set forth in the Pooling and Servicing
Agreement.
Pursuant to the Pooling and Servicing Agreement, the Trustee will be paid
from the Distribution Account a monthly fee equal to a portion of the fee
calculated at the "Trustee Fee Rate" as described in the Pooling and Servicing
Agreement (the "Trustee Fee"), which constitutes a portion of the Servicing Fee.
Pursuant to the Pooling and Servicing Agreement, the Bond Administrator will be
paid from the Distribution Account a monthly fee equal to a portion of the fee
calculated at the "Bond Administrator
S-141
Fee Rate" as described in the Pooling and Servicing Agreement (the "Bond
Administrator Fee"), which constitutes a portion of the Trustee Fee.
The Trust will indemnify the Trustee and the Bond Administrator against any
and all losses, liabilities, damages, claims or unanticipated expenses
(including reasonable attorneys' fees) arising in respect of the Pooling and
Servicing Agreement or the Certificates other than those resulting from the
fraud, negligence, bad faith or willful misconduct of the Trustee or the Bond
Administrator, as applicable, or to the extent such party is indemnified
pursuant to the second succeeding sentence. Neither the Trustee nor the Bond
Administrator will be required to expend or risk its own funds or otherwise
incur financial liability in the performance of any of its duties under the
Pooling and Servicing Agreement, or in the exercise of any of its rights or
powers, if in the Trustee's or Bond Administrator's opinion, as applicable, the
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it. Each of the Servicer, the Special Servicer, the
Depositor, the Paying Agent, the Certificate Registrar and the Custodian will
indemnify the Trustee, the Bond Administrator and certain related parties for
similar losses incurred related to the willful misconduct, bad faith, fraud
and/or negligence in the performance of each such party's respective duties
under the Pooling and Servicing Agreement or by reason of reckless disregard of
its obligations and duties under the Pooling and Servicing Agreement.
At any time, for the purpose of meeting any legal requirements of any
jurisdiction in which any part of the Trust or property securing the same is
located, the Trustee will have the power to appoint one or more persons or
entities approved by the Trustee to act (at the expense of the Trustee) as
co-trustee or co-trustees, jointly with the Trustee, or separate trustee or
separate trustees, of all or any part of the Trust, and to vest in such
co-trustee or separate trustee such powers, duties, obligations, rights and
trusts as the Trustee may consider necessary or desirable. Except as required by
applicable law, the appointment of a co-trustee or separate trustee will not
relieve the Trustee of its responsibilities, obligations and liabilities under
the Pooling and Servicing Agreement to the extent set forth therein.
The Bond Administrator will be the REMIC Administrator, as described in the
prospectus. See "Description of the Pooling Agreements--Certain Matters
Regarding the Servicer, the Special Servicer, the REMIC Administrator and the
Depositor" in the prospectus.
DUTIES OF THE TRUSTEE
The Trustee (except for the information under the first paragraph of "--The
Trustee and the Bond Administrator" above) will make no representation as to the
validity or sufficiency of the Pooling and Servicing Agreement, the Certificates
or the Mortgage Loans, this prospectus supplement or related documents. The
Trustee will not be accountable for the use or application by the Depositor, the
Servicer or the Special Servicer of any Certificates issued to it or of the
proceeds of such Certificates, or for the use of or application of any funds
paid to the Depositor, the Servicer or the Special Servicer in respect of the
assignment of the Mortgage Loans to the Trust, or any funds deposited in or
withdrawn from the Lock Box Accounts, Reserve Accounts, Collection Account,
Distribution Account, Interest Reserve Account or any other account maintained
by or on behalf of the Servicer, the Special Servicer or the Bond Administrator,
nor will the Trustee be required to perform, or be responsible for the manner of
performance of, any of the obligations of the Servicer or the Special Servicer
under the Pooling and Servicing Agreement (unless the Trustee has assumed the
duties of the Servicer or the Special Servicer as described above under
"--Rights Upon Event of Default").
If no Event of Default has occurred, and after the curing of all Events of
Default which may have occurred, the Trustee is required to perform only those
duties specifically required under the Pooling and Servicing Agreement. Upon
receipt of the various certificates, reports or other instruments required to be
furnished to it, the Trustee is required to examine such documents and to
determine whether they conform on their face to the requirements of the Pooling
and Servicing Agreement to the extent set forth therein.
S-142
THE SERVICER
GMAC Commercial Mortgage Corporation ("GMACCM") will be responsible for
servicing the Mortgage Loans (other than the Non-Serviced Mortgage Loans)
pursuant to the Pooling and Servicing Agreement (the "Servicer"). The AFR/Bank
of America Portfolio Loan will be serviced by the GMACCM 2003-C3 Servicer, which
will initially be GMAC Commercial Mortgage Corporation, pursuant to a separate
pooling and servicing agreement. The Meadows Mall Loan will be serviced by the
Wachovia 2003-C9 Servicer, which will initially be Wachovia Bank, National
Association, pursuant to a separate pooling and servicing agreement.
As of December 31, 2003, GMACCM and its affiliates were responsible for
master or primary servicing loans, totaling approximately $209.9 billion in
aggregate outstanding principal amount, including loans securitized in
mortgage-backed securitization transactions.
The information set forth herein concerning GMACCM, as Servicer, has been
provided by it. Accordingly, neither the Depositor nor the Underwriters make any
representation or warranty as to the accuracy or completeness of such
information.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
Pursuant to the Pooling and Servicing Agreement, the Servicer will be
entitled to withdraw the Master Servicing Fee from the Collection Account. The
"Master Servicing Fee" will be payable monthly and will accrue at a rate per
annum of (i) 0.03%, with respect to each Mortgage Loan other than the
Non-Serviced Mortgage Loans and the Mortgage Loan known as "Wenatchee Valley
Mall loan" (the "Wenatchee Valley Mall Loan"), (ii) 0.01%, with respect to the
AFR/Bank of America Portfolio Loan, (iii) 0.01%, with respect to the Meadows
Mall Loan and (iv) 0.06%, with respect to the Wenatchee Valley Mall Loan (the
"Master Servicing Fee Rate"). A separate master servicing fee at a rate per
annum of 0.02% calculated based at an actual/360 basis will be charged by the
GMACCM 2003-C3 Servicer with respect to AFR/Bank of America Portfolio Loan and a
separate master servicing fee at a rate per annum of 0.02% with respect to the
Meadows Mall Loan will be charged by the Wachovia 2003-C9 Servicer in addition
to the Master Servicing Fee. The "Servicing Fee" will be payable monthly on a
loan-by-loan basis and will accrue at a percentage rate per annum (the
"Servicing Fee Rate") set forth on Annex A to this prospectus supplement for
each Mortgage Loan and will include the Master Servicing Fee, the Trustee Fee,
the Bond Administrator Fee, and any fee for primary servicing functions (which
varies loan by loan). The Master Servicing Fee will be retained by the Servicer
from payments and collections (including insurance proceeds, condemnation
proceeds and liquidation proceeds) in respect of such Mortgage Loan. The
Servicer will also be entitled to retain as additional servicing compensation
(together with the Master Servicing Fee, "Servicing Compensation") (i) all
investment income earned on amounts on deposit in the Collection Account (and
with respect to a Whole Loan, each separate custodial account), the Interest
Reserve Account, the Excess Liquidation Proceeds Account and certain Reserve
Accounts (to the extent consistent with the related Mortgage Loan), (ii) to the
extent permitted by applicable law and the related Mortgage Loans, 50% of any
loan modification, extension and assumption fees (for as long as the Mortgage
Loan is not a Specially Serviced Mortgage Loan at which point the Special
Servicer will receive 100% of such fees), 100% of loan service transaction fees,
beneficiary statement charges, or similar items (but not including Prepayment
Premiums), (iii) Net Prepayment Interest Excess, if any, and (iv) Net Default
Interest and any late payment fees collected by the Servicer during a Collection
Period on any non-Specially Serviced Mortgage Loan remaining after application
thereof to reimburse interest on Advances and to reimburse the Trust for certain
expenses of the Trust. The Servicer will not be entitled to the amounts
specified in clause (ii), (iii) and (iv) with respect to the Non-Serviced
Mortgage Loans. If a Mortgage Loan is a Specially Serviced Mortgage Loan, the
Special Servicer will be entitled to the full amount of any modification,
extension or assumption fees, as described below under "--Special Servicing."
The Master Servicing Fee, the Trustee Fee and the Bond Administrator Fee will
accrue on the same basis as the Mortgage Loans and with respect to the AFR/Bank
of America Portfolio Loan, the servicing fee of the GMACCM 2003-C3 Servicer will
be calculated on an actual/360 basis.
S-143
In connection with any Net Prepayment Interest Shortfall, the Servicer will
be obligated to reduce its Servicing Compensation as provided in this prospectus
supplement under "Description of the Offered
Certificates--Distributions--Prepayment Interest Shortfall."
The Servicer will pay all expenses incurred in connection with its
responsibilities under the Pooling and Servicing Agreement (subject to
reimbursement as described in the Pooling and Servicing Agreement). The Bond
Administrator will withdraw monthly from the Distribution Account the portion of
the Servicing Fee payable to the Trustee and the Bond Administrator.
SPECIAL SERVICING
THE SPECIAL SERVICER. Lennar Partners, Inc., a Florida corporation
("Lennar") and a subsidiary of LNR Property Corporation ("LNR"), will initially
be appointed under the Pooling and Servicing Agreement as special servicer of
all of the Mortgage Loans other than the Non-Serviced Mortgage Loans (the
"Special Servicer"). The AFR/Bank of America Portfolio Loan will be specially
serviced by the GMACCM 2003-C3 Special Servicer, which initially will be Midland
Loan Services, Inc., pursuant to a separate pooling and servicing agreement. The
Meadows Mall Loan will be specially serviced by the Wachovia 2003-C9 Special
Servicer, which will initially be Lennar Partners, Inc., pursuant to a separate
pooling and servicing agreement.
The principal executive offices of Lennar are located at 1601 Washington
Avenue, Miami Beach, Florida 33139, and its telephone number is (305) 695-5600.
LNR, its subsidiaries and affiliates are involved in the real estate investment,
finance and management business and engage principally in (i) purchasing,
enhancing, repositioning and/or developing commercial real estate properties,
(ii) purchasing and originating high yielding loans backed by commercial real
estate properties, and (iii) investing in, and managing as special servicer,
unrated and non-investment grade rated commercial mortgage-backed securities.
Lennar and its affiliates have regional offices located across the country
in Florida, Georgia, Oregon and California and in Europe in London, England and
Paris, France.
As of August 31, 2003, Lennar and its affiliates were managing a portfolio
which included an original count of 15,100 assets in most states across the
country and in Europe (France and the United Kingdom) with an original face
value of over $99 billion, most of which are commercial real estate assets.
Included in this managed portfolio are $97 billion of commercial real estate
assets representing 111 securitization transactions, for which Lennar is master
servicer or special servicer.
The Special Servicer may elect to subservice some or all of its special
servicing duties with respect to each of the Mortgage Loans.
The Pooling and Servicing Agreement will provide that more than one Special
Servicer may be appointed, but only one Special Servicer may specially service
any Mortgage Loan.
THE DIRECTING CERTIFICATEHOLDER. The Directing Certificateholder may at any
time with or without cause terminate substantially all of the rights and duties
of the Special Servicer (other than with respect to the Non-Serviced Mortgage
Loans) and appoint a replacement to perform such duties under substantially the
same terms and conditions as applicable to the Special Servicer. Such holder(s)
shall designate a replacement to so serve by the delivery to the Trustee of a
written notice stating such designation. The Trustee shall, promptly after
receiving any such notice, so notify the Rating Agencies. If the designated
replacement is acceptable to the Trustee, which approval may not be unreasonably
withheld, the designated replacement shall become the replacement Special
Servicer as of the date the Trustee shall have received: (i) written
confirmation from each Rating Agency stating that if the designated replacement
were to serve as Special Servicer under the Pooling and Servicing Agreement,
none of the then-current ratings of any of the outstanding Classes of the
Certificates would be qualified, downgraded or withdrawn as a result thereof;
(ii) a written acceptance of all obligations of such replacement Special
Servicer, executed by the designated replacement; and (iii) an opinion of
counsel to the effect that the designation of such replacement to serve as
Special Servicer is in compliance with the Pooling and Servicing Agreement, that
the designated replacement will be bound by the terms of the Pooling and
Servicing Agreement and that the Pooling and Servicing Agreement will be
enforceable
S-144
against such designated replacement in accordance with its terms. The prior
Special Servicer will be deemed to have resigned from its duties under the
Pooling and Servicing Agreement in respect of Specially Serviced Mortgage Loans
and REO Properties simultaneously with such designated replacement's becoming
the Special Servicer under the Pooling and Servicing Agreement. Any replacement
Special Servicer may be similarly so replaced by the Directing
Certificateholder.
With respect to the AFR/Bank of America Portfolio Loan, the GMACCM 2003-C3
Special Servicer may be terminated and replaced (initially by the holder of the
AFR/Bank of America Portfolio B Loan) as provided by the GMACCM 2003-C3 Pooling
and Servicing Agreement. See "--Servicing of the Non-Serviced Mortgage
Loans--The AFR/Bank of America Portfolio Whole Loan--Termination of GMACCM
2003-C3 Special Servicer" in this prospectus supplement.
With respect to the Meadows Mall Loan, the Wachovia 2003-C9 Special
Servicer may be terminated and replaced with the consent of the Directing
Certificateholder and the majority subordinate certificateholder of the
controlling class under Wachovia 2003-C9 Pooling and Servicing Agreement, in
accordance with the terms of the Wachovia 2003-C9 Pooling and Servicing
Agreement and the related intercreditor agreement. See "--Servicing of the
Non-Serviced Mortgage Loans--The Meadows Mall Whole Loan--Termination of
Wachovia 2003-C9 Special Servicer" in this prospectus supplement.
The Directing Certificateholder will have no liability whatsoever to the
Trust Fund or any Certificateholders other than the Controlling Class
Certificateholders and shall have no liability to any Controlling Class
Certificateholder for any action taken, or for refraining from the taking of any
action, in good faith pursuant to the Pooling and Servicing Agreement, or for
errors in judgment; PROVIDED, HOWEVER, that with respect to Controlling Class
Certificateholders the Directing Certificateholder will not be protected against
any liability which would otherwise be imposed by reason of willful misfeasance,
bad faith or negligence in the performance of duties or by reason of reckless
disregard of obligations or duties. Each Certificateholder acknowledges and
agrees, by its acceptance of its Certificates, that the Directing
Certificateholder may have special relationships and interests that conflict
with those of holders of one or more Classes of Certificates, that the Directing
Certificateholder may act solely in the interests of the holders of the
Controlling Class, that the Directing Certificateholder does not have any duties
to the holders of any Class of Certificates other than the Controlling Class,
that the Directing Certificateholder may take actions that favor the interests
of the holders of the Controlling Class over the interests of the holders of one
or more other Classes of Certificates, that the Directing Certificateholder will
have no liability whatsoever for having acted solely in the interest of the
Controlling Class and that no Certificateholder may take any action whatsoever
against the Directing Certificateholder or any director, officer, employee,
agent or principal of the Directing Certificateholder for having so acted.
The "Controlling Class" will be, as of any date of determination, the Class
of Principal Balance Certificates with the latest alphabetical Class designation
that has a then aggregate Certificate Balance at least equal to 25% of the
initial aggregate Certificate Balance of such Class of Principal Balance
Certificates as of the Closing Date. As of the Closing Date, the Controlling
Class will be the Class P Certificates. For purposes of determining the
Controlling Class, the Class A-1, Class A-2, Class A-3 and Class A-4
Certificates collectively will be treated as one Class.
The "Directing Certificateholder" will be the Controlling Class
Certificateholder selected by more than 50% of the Controlling Class
Certificateholders, by Certificate Balance, as certified by the Bond
Administrator from time to time; PROVIDED, HOWEVER, that (i) absent such
selection, or (ii) until a Directing Certificateholder is so selected or (iii)
upon receipt of a notice from a majority of the Controlling Class
Certificateholders, by Certificate Balance, that a Directing Certificateholder
is no longer designated, the Controlling Class Certificateholder that owns the
largest aggregate Certificate Balance of the Controlling Class will be the
Directing Certificateholder.
A "Controlling Class Certificateholder" is each holder (or Certificate
Owner, if applicable) of a Certificate of the Controlling Class as certified to
the Bond Administrator from time to time by such holder (or Certificate Owner).
S-145
SERVICING TRANSFER EVENT. The duties of the Special Servicer relate to
Specially Serviced Mortgage Loans and to any REO Property. The Pooling and
Servicing Agreement will define a "Specially Serviced Mortgage Loan" to include
any Mortgage Loan (other than the Non-Serviced Mortgage Loans) and any Serviced
Companion Loan with respect to which (each, a "Servicing Transfer Event"): (i)
either (x) with respect to any Mortgage Loan or Serviced Companion Loan other
than a Balloon Loan, a payment default shall have occurred on such Mortgage Loan
or Serviced Companion Loan at its maturity date or, if the maturity date of such
Mortgage has been extended in accordance with the Pooling and Servicing
Agreement, a payment default occurs on such Mortgage Loan or Serviced Companion
Loan at its extended maturity date or (y) with respect to a Balloon Loan, the
date that the related Balloon Payment is due, unless, in either case the
borrower has delivered to the Servicer prior to the maturity date a written
refinancing commitment reasonably satisfactory in form and substance to the
Servicer which provides that such refinancing will occur within 60 days,
provided that if such refinancing does not occur, at such time the related
Mortgage Loan or Serviced Companion Loan will become a Specially Serviced
Mortgage Loan; (ii) the date on which any Monthly Payment (other than a Balloon
Payment) is 60 days or more delinquent; (iii) the date upon which the Servicer
or Special Servicer determines that a payment default or any other default under
the applicable Mortgage Loan Documents that (with respect to such other default)
would materially impair the value of the Mortgaged Property as security for the
Mortgage Loan and, if applicable, Serviced Companion Loan or otherwise would
materially adversely affect the interests of Certificateholders and, if
applicable, the holders of the related Serviced Companion Loans and would
continue unremedied beyond the applicable grace period under the terms of the
Mortgage Loan (or, if no grace period is specified for 60 days and PROVIDED that
a default that would give rise to an acceleration right without any grace period
shall be deemed to have a grace period equal to zero) is imminent and is not
likely to be cured by the related borrower within 60 days or, except as provided
in clause (i) (y) above in, the case of a Balloon Payment, for at least 30 days,
(iv) the date upon which the related borrower has become the subject of a decree
or order of a court or agency or supervisory authority having jurisdiction in
the premises in an involuntary case under any present or future federal or state
bankruptcy, insolvency or similar law, or the appointment of a conservator,
receiver or liquidator in any insolvency, readjustment of debt, marshaling of
assets and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, provided that if such decree or order has been
dismissed, discharged or stayed within 60 days thereafter, the Mortgage Loan or
Serviced Companion Loan will no longer be a Specially Serviced Mortgage Loan and
no Special Servicing Fees shall be payable with respect thereto; (v) the date on
which the related borrower consents to the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt, marshaling of
assets and liabilities or similar proceedings of or relating to such borrower of
or relating to all or substantially all of its property; (vi) the date on which
related borrower admits in writing its inability to pay its debts generally as
they become due, files a petition to take advantage of any applicable insolvency
or reorganization statute, makes an assignment for the benefit of its creditors,
or voluntarily suspends payment of its obligations; (vii) a default of which the
Servicer or the Special Servicer has notice (other than a failure by such
related borrower to pay principal or interest) and which in the opinion of the
Servicer or the Special Servicer materially and adversely affects the interests
of the Certificateholders or any holder of a Serviced Companion Loan occurs and
remains unremedied for the applicable grace period specified in the Mortgage
Loan Documents for such Mortgage Loan or Serviced Companion Loan (or if no grace
period is specified for those defaults which are capable of cure, 60 days); or
(viii) the date on which the Servicer or Special Servicer receives notice of the
foreclosure or proposed foreclosure of any lien on the related Mortgaged
Property; PROVIDED, HOWEVER, that a Mortgage Loan or Serviced Companion Loan
will cease to be a Specially Serviced Mortgage Loan (each, a "Corrected Mortgage
Loan") (A) with respect to the circumstances described in clauses (i) and (ii),
above, when the borrower thereunder has brought the Mortgage Loan or Serviced
Companion Loan current and thereafter made three consecutive full and timely
monthly payments, including pursuant to any workout of the Mortgage Loan or
Serviced Companion Loan, (B) with respect to the circumstances described in
clause (iii), (iv), (v), (vi) and (viii) above, when such circumstances cease to
exist in the good faith judgment of the Special Servicer or (C) with respect to
the circumstances described in clause (vii) above, when such default is cured;
PROVIDED, in each case, that at that time no circumstance exists (as described
above) that would cause the Mortgage Loan or Serviced Companion Loan to continue
to be characterized as a Specially Serviced Mortgage Loan.
S-146
If a Servicing Transfer Event exists with respect to any Mortgage Loan
included in a Serviced Whole Loan, then it will also be deemed to exist with
respect to the related Companion Loans. If a servicing transfer event under
GMACCM 2003-C3 Pooling and Servicing Agreement or the Wachovia 2003-C9 Pooling
and Servicing Agreement, as applicable, exists with respect to a Companion Loan
related to a Non-Serviced Mortgage Loan, then it will also be deemed to exist
with respect to the related Non-Serviced Mortgage Loan. The Whole Loans are
intended to always be serviced or specially serviced, as the case may be,
together.
A servicing transfer event under the GMACCM 2003-C3 Pooling and Servicing
Agreement for the AFR/Bank of America Portfolio Whole Loan will generally be
delayed if the holder of the AFR/Bank of America Portfolio B Loan is making all
cure payments required by the related intercreditor agreement and subject to
limitations upon the number of cure payments that may be made in any twelve
calendar month period. In addition, so long as the holder of the AFR/Bank of
America Portfolio B Loan is exercising its right to cure certain events of
default under the AFR/Bank of America Portfolio Whole Loan pursuant to the
related intercreditor agreement, neither the GMACCM 2003-C3 Servicer nor the
GMACCM 2003-C3 Special Servicer may treat such event of default as such for
purposes of accelerating the AFR/Bank of America Portfolio Whole Loan or
commencing foreclosure proceedings.
ASSET STATUS REPORT. The Special Servicer will prepare a report (an "Asset
Status Report") for each Mortgage Loan (other than the Non-Serviced Mortgage
Loans) and any Serviced Companion Loan which becomes a Specially Serviced
Mortgage Loan not later than 30 days after the servicing of such Mortgage Loan
or Serviced Companion Loan is transferred to the Special Servicer. Each Asset
Status Report will be delivered to the Servicer, the Directing Certificateholder
and the Rating Agencies. If the Directing Certificateholder does not disapprove
an Asset Status Report within 10 business days, the Special Servicer will
implement the recommended action as outlined in such Asset Status Report;
PROVIDED, HOWEVER, that the Special Servicer may not take any actions that are
contrary to applicable law or the terms of the applicable Mortgage Loan
Documents. The Directing Certificateholder may object to any Asset Status Report
within 10 business days of receipt; PROVIDED, HOWEVER, that the Special Servicer
will be required to implement the recommended action as outlined in the Asset
Status Report if it makes a determination in accordance with the Servicing
Standard that the objection is not in the best interests of all the
Certificateholders (and with respect to a Whole Loan, the holders of the related
Serviced Companion Loans). If the Directing Certificateholder disapproves such
Asset Status Report and the Special Servicer has not made the affirmative
determination described above, the Special Servicer will revise such Asset
Status Report as soon as practicable thereafter, but in no event later than 30
business days after such disapproval. In any event, if the Directing
Certificateholder does not approve an Asset Status Report within 60 business
days from the first submission of an Asset Status Report, the Special Servicer
may act upon the most recently submitted form of Asset Status Report and in
compliance with the Servicing Standard. The Special Servicer will revise such
Asset Status Report until the Directing Certificateholder fails to disapprove
such revised Asset Status Report as described above or until the Special
Servicer makes a determination, consistent with the Servicing Standard, that
such objection is not in the best interests of all the Certificateholders and
the holders of the related Serviced Companion Loan, if applicable.
CERTAIN RIGHTS OF THE DIRECTING CERTIFICATEHOLDER. In addition to its
rights and obligations with respect to Specially Serviced Mortgage Loans, the
Special Servicer has the right to approve any modification, whether or not the
applicable Mortgage Loan is a Specially Serviced Mortgage Loan, to the extent
described above under "--Modifications" and to approve any waivers of
due-on-sale or due-on-encumbrance clauses as described above under
"--Enforcement of "Due-on-Sale" and "Due-on Encumbrance" Clauses," whether or
not the applicable Mortgage Loan is a Specially Serviced Mortgage Loan. With
respect to non-Specially Serviced Mortgage Loans, the Servicer must notify the
Special Servicer of any request for approval (a "Request for Approval") received
relating to the Special Servicer's above-referenced approval rights and forward
to the Special Servicer any other information or documents reasonably requested
by the Special Servicer (to the extent such information or documents are in the
Servicer's possession). The Special Servicer is required to notify the Directing
Certificateholder of such Request for Approval and its recommendation with
respect thereto. Following such notice, the Directing Certificateholder will
have five business days to approve any
S-147
recommendation of the Special Servicer relating to any Request for Approval. In
any event, if the Directing Certificateholder does not respond to a Request for
Approval within the required five business days, the Special Servicer may deem
its recommendation approved by the Directing Certificateholder. With respect to
a Specially Serviced Mortgage Loan, the Special Servicer must notify the
Directing Certificateholder of any Request for Approval received relating to the
Directing Certificateholder's above-referenced approval rights and its
recommendation with respect thereto. The Directing Certificateholder will have
10 business days to approve any recommendation of the Special Servicer relating
to any such Request for Approval. In any event, if the Directing
Certificateholder does not respond to any such Request for Approval within the
required 10 business days, the Special Servicer may deem its recommendation
approved by the Directing Certificateholder.
The Controlling Class may have conflicts of interest with other Classes of
Certificates or with the Trust. The Directing Certificateholder has no duty to
act in the interests of any Class other than the Controlling Class.
The Special Servicer will not be required to take or refrain from taking
any action pursuant to instructions from the Directing Certificateholder that
would cause it to violate applicable law, the Pooling and Servicing Agreement,
including the Servicing Standard, or the REMIC Regulations.
SPECIAL SERVICING COMPENSATION. Pursuant to the Pooling and Servicing
Agreement, the Special Servicer will be entitled to certain fees including a
special servicing fee, payable with respect to each Collection Period, equal to
0.25% per annum of the Stated Principal Balance of each related Specially
Serviced Mortgage Loan (the "Special Servicing Fee") other than the Non-Serviced
Mortgage Loans. The GMACCM 2003-C3 Special Servicer and the Wachovia 2003-C9
Special Servicer will accrue a comparable special servicing fee with respect to
the AFR/Bank of America Portfolio Whole Loan under the GMACCM 2003-C3 Pooling
and Servicing Agreement and the Meadows Mall Whole Loan under the Wachovia
2003-C9 Pooling and Servicing Agreement, respectively. The Special Servicer will
not be entitled to retain any portion of the Excess Interest paid on the ARD
Loan.
A "Workout Fee" will in general be payable to the Special Servicer with
respect to each Mortgage Loan (other than the Non-Serviced Mortgage Loans) that
ceases to be a Specially Serviced Mortgage Loan pursuant to the definition
thereof. As to each such Mortgage Loan (other than the Non-Serviced Mortgage
Loans), the Workout Fee will be payable out of, and will be calculated by
application of a "Workout Fee Rate" of 1.0% to, each collection of interest and
principal (including scheduled payments, prepayments, Balloon Payments and
payments at maturity) received on such Mortgage Loan for so long as it remains a
Corrected Mortgage Loan. The Workout Fee with respect to any such Mortgage Loan
will cease to be payable if such loan again becomes a Specially Serviced
Mortgage Loan or if the related Mortgaged Property becomes an REO Property;
provided that a new Workout Fee will become payable if and when such Mortgage
Loan again ceases to be a Specially Serviced Mortgage Loan. If the Special
Servicer is terminated (other than for cause) or resigns with respect to any or
all of its servicing duties, it shall retain the right to receive any and all
Workout Fees payable with respect to Mortgage Loans that cease to be Specially
Serviced Mortgage Loans during the period that it had responsibility for
servicing Specially Serviced Mortgage Loans and that had ceased being Specially
Serviced Mortgage Loans (or for any Specially Serviced Mortgage Loan that had
not yet become a Corrected Mortgage Loan because as of the time that the Special
Servicer is terminated the borrower has not made three consecutive monthly debt
service payments and subsequently the Specially Serviced Mortgage Loan becomes a
Corrected Mortgage Loan) at the time of such termination or resignation (and the
successor Special Servicer will not be entitled to any portion of such Workout
Fees), in each case until the Workout Fee for any such loan ceases to be payable
in accordance with the preceding sentence. The GMACCM 2003-C3 Special Servicer
and the Wachovia 2003-C9 Special Servicer will accrue a comparable workout fee
with respect to the AFR/Bank of America Portfolio Whole Loan under the GMACCM
2003-C3 Pooling and Servicing Agreement and the Meadows Mall Whole Loan under
the Wachovia 2003-C9 Pooling and Servicing Agreement, respectively.
A "Liquidation Fee" will be payable to the Special Servicer with respect to
each Specially Serviced Mortgage Loan (other than the Non-Serviced Mortgage
Loans) as to which the Servicer obtains a full, partial or discounted payoff
from the related borrower and, except as otherwise described below, with
S-148
respect to any Specially Serviced Mortgage Loan or REO Property as to which the
Special Servicer recovered any proceeds ("Liquidation Proceeds"). As to each
such Specially Serviced Mortgage Loan and REO Property, the Liquidation Fee will
be payable from, and will be calculated by application of a "Liquidation Fee
Rate" of 1.0% to, the related payment or proceeds. The GMACCM 2003-C3 Special
Servicer and the Wachovia 2003-C9 Special Servicer will accrue a comparable
liquidation fee with respect to the AFR/Bank of America Portfolio Whole Loan
under the GMACCM 2003-C3 Pooling and Servicing Agreement and the Meadows Mall
Whole Loan under the Wachovia 2003-C9 Pooling and Servicing Agreement,
respectively. Notwithstanding anything to the contrary described above, no
Liquidation Fee will be payable based on, or out of, Liquidation Proceeds
received in connection with
o the purchase of any Specially Serviced Mortgage Loan or REO Property
by the Servicer, the Special Servicer or the Directing
Certificateholder,
o the purchase of all of the Mortgage Loans and REO Properties by the
Servicer, the Special Servicer or the Directing Certificateholder in
connection with the termination of the Trust,
o a repurchase of a Mortgage Loan by a Mortgage Loan Seller due to a
breach of a representation or warranty or a document defect in the
mortgage file prior to the expiration of certain time periods set
forth in the Pooling and Servicing Agreement,
o the purchase of a Mortgage Loan included in a Whole Loan by the holder
of the related B Loan, unless in the case of the AFR/Bank of America
Portfolio Loan, such Mortgage Loan is purchased more than 90 days
after the default giving rise to the right of the holder of the
related B Loan to purchase such Mortgage Loan,
o the purchase of a Mortgage Loan by the holder of any related mezzanine
debt. If, however, Liquidation Proceeds are received with respect to
any Specially Serviced Mortgage Loan as to which the Special Servicer
is properly entitled to a Workout Fee, such Workout Fee will be
payable based on and out of the portion of such Liquidation Proceeds
that constitute principal and/or interest.
In addition, the Special Servicer will be entitled to receive
o any loan modification, extension and assumption fees related to the
Specially Serviced Mortgage Loans (which will not include the
Non-Serviced Mortgage Loans),
o any income earned on deposits in the REO Accounts,
o 50% of any extension fees, modification and assumption fees of
non-Specially Serviced Mortgage Loans (other than the Non-Serviced
Mortgage Loans), and
o any late payment fees collected by the Servicer during a Collection
Period on any Specially Serviced Mortgage Loan (other than with
respect to the Non-Serviced Mortgage Loans) remaining after
application thereof during such Collection Period to reimburse
interest on Advances and to reimburse the Trust for certain expenses
of the Trust; PROVIDED, HOWEVER, that with respect to any Mortgage
Loan that has a related Serviced Companion Loan, late payment fees
will be allocated as provided in the related intercreditor agreement
and the Pooling and Servicing Agreement.
The GMACCM 2003-C3 Special Servicer and the Wachovia 2003-C9 Special
Servicer will be entitled to comparable fees with respect to the AFR/Bank of
America Portfolio Loan under the GMACCM 2003-C3 Pooling and Servicing Agreement
and the Meadows Mall Loan under the Wachovia 2003-C9 Pooling and Servicing
Agreement, respectively.
CERTAIN RIGHTS OF THE HOLDER OF THE WALGREENS-RIVERSIDE B LOAN
The holder of the Walgreens-Riverside Loan has entered into an
intercreditor agreement with the holder of the Walgreens-Riverside B Loan. The
holder of the Walgreens-Riverside B Loan has certain rights under such
intercreditor agreement, including, among others, the following:
S-149
OPTION TO PURCHASE THE WALGREENS-RIVERSIDE LOAN. In the event that (i) any
payment of principal or interest on the Walgreens-Riverside Whole Loan becomes
90 or more days delinquent, (ii) the respective principal balances of the
Walgreens-Riverside Loan and the Walgreens-Riverside B Loan have been
accelerated, (iii) the respective principal balances of the Walgreens-Riverside
Loan and the Walgreens-Riverside B Loan are not paid at maturity or (iv) the
related borrower under the Walgreens-Riverside Whole Loan files a petition for
bankruptcy, the holder of the Walgreens-Riverside Loan will have the option to
purchase the Walgreens-Riverside B Loan and, if such purchase option is not
exercised, the holder of the Walgreens-Riverside B Loan will have the option to
purchase the Walgreens-Riverside Loan from the Trust for a period of 90 days
after the delivery of a repurchase notice by the Trust to the
Walgreens-Riverside B Loan, subject to certain conditions under the related
intercreditor agreement. The purchase price of the Walgreens-Riverside Loan or
the Walgreens-Riverside B Loan, as the case may be, will generally equal the
outstanding principal balance thereof, together with all accrued interest and
certain other amounts due under the related Mortgage Loan Documents (including
without limitation any unreimbursed Property Advances and any interest thereon,
but excluding any prepayment premiums and default interest).
CERTAIN OBLIGATIONS OF THE SERVICER AND SPECIAL SERVICER CONCERNING THE
CREDIT TENANT LEASE. In certain circumstances described in the related
intercreditor agreement, the Servicer or Special Servicer is required to take
actions to prevent and cure any default by the landlord under the related credit
tenant lease and prevent a termination of such lease by using commercially
reasonable efforts to cause the related borrower to perform the landlord's
obligations under such lease as described in the related intercreditor
agreement.
CERTAIN CONSENT RIGHTS OF THE HOLDER OF THE WALGREENS-RIVERSIDE B LOAN
CONCERNING FORECLOSURE ON THE WALGREENS-RIVERSIDE WHOLE LOAN COLLATERAL.
Pursuant to the related intercreditor agreement, the holder of the
Walgreens-Riverside Loan is not permitted to commence a foreclosure action upon
a default under the related Mortgage Loan Documents without the consent of the
holder of the Walgreens-Riverside B Loan, except (i) upon the occurrence of
certain events of defaults as described in the intercreditor agreement,
including failure to pay scheduled interest or principal on the
Walgreens-Riverside Loan, (ii) if a nonrecoverability determination is made for
any Advance or (iii) if the event of default described in clause (i) above is a
failure to cure a lease termination condition or other landlord default under
the related credit tenant lease and the cure would require a Property Advance
which would be determined to be nonrecoverable; PROVIDED, HOWEVER, the holder of
the Walgreens-Riverside Loan is not permitted to commence a foreclosure action
if the holder of the Walgreens-Riverside B Loan has undertaken actions to cure
the default which constitutes a lease termination condition as described in the
intercreditor agreement.
CERTAIN ADDITIONAL RIGHTS OF THE HOLDER OF THE WALGREENS-RIVERSIDE B LOAN.
The holder of the Walgreens-Riverside B Loan has the right (i) to direct
defaulted lease claims of the related borrower against a defaulting or bankrupt
tenant prior to foreclosure of the Walgreens-Riverside Whole Loan, (ii) to take
certain other actions to prevent a default on the part of the landlord under the
Walgreens-Riverside lease, (iii) to approve modifications to the terms of the
related Mortgage Loan Documents that affect the rights of the holder of the
Walgreens-Riverside B Loan or of the borrower under the related credit tenant
lease, (vi) to require foreclosure of the related Mortgage upon certain defaults
under the Mortgage Loan Documents, (v) to take action to cure a lease
termination condition under certain circumstances described in the related
intercreditor agreement and (vi) to direct the holder of the Walgreens-Riverside
Loan in certain other respects as described in the intercreditor agreement.
SERVICING OF THE NON-SERVICED MORTGAGE LOANS
THE AFR/BANK OF AMERICA PORTFOLIO WHOLE LOAN
GENERAL
Pursuant to the terms of the related intercreditor agreements, all five
mortgage loans included in the AFR/Bank of America Portfolio Whole Loan are
being serviced under the provisions of the GMACCM 2003-C3 Pooling and Servicing
Agreement, which are similar to, but not necessarily identical with, the
provisions of the Pooling and Servicing Agreement. In that regard,
S-150
o LaSalle Bank National Association, which is the trustee under the
GMACCM 2003-C3 Pooling and Servicing Agreement (the "GMACCM 2003-C3
Trustee"), is, in that capacity, the mortgagee of record with respect
to the mortgaged properties securing the AFR/Bank of America Portfolio
Whole Loan;
o GMAC Commercial Mortgage Corporation, which is the master servicer
under the GMACCM 2003-C3 Pooling and Servicing Agreement (the "GMACCM
2003-C3 Servicer"), is, in that capacity, the master servicer for the
AFR/Bank of America Portfolio Whole Loan under the GMACCM 2003-C3
Pooling and Servicing Agreement. However, P&I Advances with respect to
the AFR/Bank of America Portfolio Loan will be made by the Servicer or
the Trustee, as applicable, as described in "Description of the
Certificates--Advances" in the prospectus supplement; and
o Midland Loan Services, Inc., which is the special servicer of the
AFR/Bank of America Portfolio Whole Loan under the GMACCM 2003-C3
Pooling and Servicing Agreement (the "GMACCM 2003-C3 Special
Servicer"), is, in that capacity, the special servicer with respect to
the AFR/Bank of America Portfolio Whole Loan under the GMACCM 2003-C3
Pooling and Servicing Agreement.
The Directing Certificateholder will not have any rights with respect to
the servicing and administration of the AFR/Bank of America Portfolio Loan under
the GMACCM 2003-C3 Pooling and Servicing Agreement except as set forth below.
RIGHTS OF THE HOLDER OF THE AFR/BANK OF AMERICA PORTFOLIO B LOAN
CONSULTATION AND CONSENT. Unless an AFR/Bank of America Portfolio Change of
Control Event has occurred and is continuing, then (i) the GMACCM 2003-C3
Special Servicer will be required to consult with the holder of the AFR/Bank of
America Portfolio B Loan upon the occurrence of any event of default for the
AFR/Bank of America Portfolio Loan under the related loan documents, to consider
alternative actions recommended by the holder of the AFR/Bank of America
Portfolio B Loan and to consult with the holder of the AFR/Bank of America
Portfolio B Loan with respect to certain determinations made by the GMACCM
2003-C3 Special Servicer pursuant to the GMACCM 2003-C3 Pooling and Servicing
Agreement, (ii) at any time (whether or not an event of default for such
mortgage loan under the related loan documents has occurred) the GMACCM 2003-C3
Servicer and the GMACCM 2003-C3 Special Servicer will be required to consult
with the holder of the AFR/Bank of America Portfolio B Loan (1) with respect to
proposals to take any significant action with respect to the AFR/Bank of America
Portfolio Whole Loan and the related Mortgaged Property and to consider
alternative actions recommended by the holder of the AFR/Bank of America
Portfolio B Loan and (2) to the extent that the related loan documents grant the
lender the right to approve budgets for the related Mortgaged Property, prior to
approving any such budget and (iii) prior to taking any of the following actions
with respect to the AFR/Bank of America Portfolio Whole Loan, the GMACCM 2003-C3
Servicer and the GMACCM 2003-C3 Special Servicer will be required to notify in
writing to the holder of the AFR/Bank of America Portfolio B Loan of any
proposal to take any of such actions (and to provide the holder of the AFR/Bank
of America Portfolio B Loan with such information reasonably requested as may be
necessary in the reasonable judgment of the holder of the AFR/Bank of America
Portfolio B Loan in order to make a judgment, the expense of providing such
information not to be an expense of the requesting party) and to receive the
written approval of the holder of the AFR/Bank of America Portfolio B Loan
(which approval may be withheld in its sole discretion) with respect to:
o any modification or waiver of any term of the related loan documents
that would result in the extension of the applicable maturity date, a
reduction of the applicable Mortgage Rate or monthly payment, that
relates to any exit fee, prepayment premium or Yield Maintenance
Charge, or a deferral or forgiveness of interest on or principal of
the AFR/Bank of America Portfolio Whole Loan, a modification or waiver
of any other monetary term of the AFR/Bank of America Portfolio Whole
Loan relating to the timing or amount of any payment of principal and
interest (other than default interest) or a modification or waiver
of any provision which restricts the related borrower from incurring
additional indebtedness or from transferring any AFR/Bank of America
Portfolio Mortgaged Property;
S-151
o the waiver of any "due-on-sale" clause and/or "due-on-encumbrance"
clause (unless such clause is not exercisable under the applicable law
or such exercise is reasonably likely to result in successful legal
action by the related borrower);
o any proposed or actual foreclosure upon or comparable conversion
(which may include acquisitions of an REO Property) of any related
Mortgaged Property if the AFR/Bank of America Portfolio Whole Loan
should become a specially serviced loan and continue in default or any
acquisition of such related Mortgaged Property by deed in lieu of
foreclosure;
o any proposed or actual sale of the related REO Property or the
AFR/Bank of America Portfolio Whole Loan (other than in connection
with exercise of the fair value purchase option and the termination of
the trust fund pursuant to the GMACCM 2003-C3 Pooling and Servicing
Agreement);
o any release of the related borrower, any guarantor or other obligor
from liability;
o any modification or amendment of, or waiver of any term of the
AFR/Bank of America Portfolio Whole Loan that would result in a
discounted pay-off;
o any determination to bring any related Mortgaged Property, which has
become an REO Property, into compliance with applicable environmental
laws or to otherwise address hazardous materials located at such
property;
o any substitution or release of collateral or acceptance of additional
collateral for the AFR/Bank of America Portfolio Whole Loan (other
than any release made in connection with the grant of a non-material
easement or right-of-way or other non-material release such as a
"curb-cut") unless required by the related loan documents;
o any adoption or approval of a plan in a bankruptcy of the borrower;
o any termination or consent to termination of the related property
manager of the AFR/Bank of America Portfolio Whole Loan or a change in
any franchise arrangement related to the AFR/Bank of America Portfolio
Whole Loan;
o any consent to the execution, termination or renewal of any major
lease at any related Mortgaged Property; or
o any renewal or replacement of the then-existing insurance policies (to
the extent the lender's approval is required under the related loan
documents) or any waiver, modification or amendment of any insurance
requirements under the related loan documents.
The rights of the holder of the AFR/Bank of America Portfolio B Loan set
forth in this section will initially be exercised by a designated class of
commercial mortgage pass-through certificates issued under the GMACCM 2003-C3
Pooling and Servicing Agreement.
Such rights will terminate and will be exercised by the holders of the
AFR/Bank of America Portfolio Loan and the AFR/Bank of America Portfolio Pari
Passu Loans (as described below) at any time that an "AFR/Bank of America
Portfolio Change of Control Event" has occurred and is continuing. An AFR/Bank
of America Portfolio Change of Control Event will be deemed to have occurred and
be continuing if the initial principal balance of the AFR/Bank of America
Portfolio B Loan, as reduced by any payments of principal (whether as scheduled
amortization, principal prepayments or otherwise) allocated to the AFR/Bank of
America Portfolio B Loan, appraisal reduction amounts and any realized losses
allocated to the AFR/Bank of America Portfolio B Loan, is less than 25% of the
initial principal balance of the AFR/Bank of America Portfolio B Loan, as
reduced by any payments of principal (whether as scheduled amortization,
principal prepayments or otherwise allocated to the AFR/Bank of America
Portfolio B Loan).
Notwithstanding any direction to, or approval or disapproval of, or right
to give direction to or to approve or disapprove, an action of, the GMACCM
2003-C3 Special Servicer or the GMACCM 2003-C3 Servicer by the holder of the
AFR/Bank of America Portfolio B Loan, in no event will the GMACCM 2003-C3
Special Servicer or the GMACCM 2003-C3 Servicer be required to take any action
or refrain
S-152
from taking any action which would violate any law of any applicable
jurisdiction, be inconsistent with the servicing standard under the GMACCM
2003-C3 Pooling and Servicing Agreement, violate the REMIC provisions or violate
any other provisions of the GMACCM 2003-C3 Pooling and Servicing Agreement or
the related loan documents.
Notwithstanding anything herein to the contrary, the majority
certificateholder of the controlling class under the GMACCM 2003-C3 Pooling and
Servicing Agreement, the Directing Certificateholder and the holders of the
other AFR/Bank of America Portfolio Pari Passu Loans (or their designees) will
always retain the right to consult with the AFR/Bank of America Portfolio
Servicer and the GMACCM 2003-C3 Special Servicer regarding the AFR/Bank of
America Portfolio Whole Loan.
Upon the occurrence and continuance of an AFR/Bank of America Portfolio
Change of Control Event, any decision to be made with respect to the AFR/Bank of
America Portfolio Whole Loan which requires the approval of the majority of
holders of the then controlling class of a securitization or otherwise requires
approval under the related intercreditor agreement will require the approval of
the holders of the AFR/Bank of America Portfolio Loan and the AFR/Bank of
America Portfolio Pari Passu Loans (or their designees) then holding a majority
of the outstanding principal balance of the AFR/Bank of America Portfolio Loan
and the AFR/Bank of America Portfolio Pari Passu Loans. If the holders of the
AFR/Bank of America Portfolio Loan and the AFR/Bank of America Portfolio Pari
Passu Loans then holding a majority of the outstanding principal balance of the
AFR/Bank of America Portfolio Loan and the AFR/Bank of America Portfolio Pari
Passu Loans are not able to agree on a course of action that satisfies the
servicing standard under the GMACCM 2003-C3 Pooling and Servicing Agreement
within sixty days after receipt of a request for consent to any action by the
GMACCM 2003-C3 Servicer or the GMACCM 2003-C3 Special Servicer, as applicable,
the majority certificateholder of the controlling class under the GMACCM 2003-C3
Pooling and Servicing Agreement will be entitled to direct the GMACCM 2003-C3
Servicer or the GMACCM 2003-C3 Special Servicer, as applicable, on a course of
action to follow that satisfies the requirements set forth in the GMACCM 2003-C3
Pooling and Servicing Agreement (provided that such action does not violate the
servicing standard or another provision of the GMACCM 2003-C3 Pooling and
Servicing Agreement, the AFR/Bank of America Portfolio Whole Loan or any
applicable REMIC provisions), and the GMACCM 2003-C3 Servicer or the GMACCM
2003-C3 Special Servicer, as applicable, will be required to implement the
course of action in accordance with the servicing standard set forth in the
GMACCM 2003-C3 Pooling and Servicing Agreement. For purposes of the foregoing,
the Directing Certificateholder will be entitled to exercise the rights
described in this paragraph with respect to the AFR/Bank of America Portfolio
Loan.
CURE RIGHTS. In the event that the borrower fails to make any payment of
principal or interest on the AFR/Bank of America Portfolio Whole Loan, resulting
in a monetary event of default, or a material non-monetary event of default
exists that is capable of being cured within thirty days, the holder of the
AFR/Bank of America Portfolio B Loan will have the right to cure such event of
default (each such cure, a "AFR/Bank of America Portfolio Cure Event") subject
to certain limitations set forth in the related intercreditor agreement;
PROVIDED that the right of the holder of the AFR/Bank of America Portfolio B
Loan to effect an AFR/Bank of America Portfolio Cure Event or cause a delay in
the transfer of the AFR/Bank of America Whole Loan to special servicing is
subject to the limitation that there be no more than three consecutive AFR/Bank
of America Portfolio Cure Events or special servicing delays, in any combination
and no more than an aggregate of six AFR/Bank of America Portfolio Cure Events
or special servicing delays in any twelve calendar month period. So long as the
holder of the AFR/Bank of America Portfolio B Loan is exercising its cure right,
neither the GMACCM 2003-C3 Servicer nor the GMACCM 2003-C3 Special Servicer will
be permitted to (i) accelerate the AFR/Bank of America Portfolio Whole Loan,
(ii) treat such event of default as such for purposes of transferring the
AFR/Bank of America Portfolio Whole Loan to special servicing, or (iii) commence
foreclosure proceedings. The holder of the AFR/Bank of America Portfolio B Loan
will not be permitted to exercise any cure rights if it is an affiliate of the
related borrower.
PURCHASE OPTION. So long as no AFR/Bank of America Portfolio Change of
Control Event exists, the holder of the AFR/Bank of America Portfolio B Loan has
the option of purchasing the AFR/Bank of America Portfolio Loan from the Trust,
together with the AFR/Bank of America Portfolio Pari Passu Loans, at any time
after the AFR/Bank of America Portfolio Whole Loan becomes a specially serviced
S-153
mortgage loan under the GMACCM 2003-C3 Pooling and Servicing Agreement as a
result of an event that constitutes an event of default under the AFR/Bank of
America Portfolio Whole Loan, PROVIDED that no foreclosure sale, sale by power
of sale or delivery of a deed in lieu of foreclosure with respect to any related
Mortgaged Property has occurred.
The purchase price required to be paid by the holder of the AFR/Bank of
America Portfolio B Loan will generally equal the aggregate outstanding
principal balance of the AFR/Bank of America Portfolio Loan and the AFR/Bank of
America Portfolio Pari Passu Loans, together with accrued and unpaid interest
thereon (excluding default interest), any unreimbursed advances, together with
unreimbursed interest thereon, relating to the AFR/Bank of America Portfolio
Whole Loan, and, if such purchase price is being paid more than 90 days after
the event giving rise to the holder of the AFR/Bank of America Portfolio B
Loan's purchase, a 1% liquidation fee (which will be paid to the GMACCM 2003-C3
Special Servicer).
SALE OF DEFAULTED MORTGAGE LOAN. Under the GMACCM 2003-C3 Pooling and
Servicing Agreement, if the AFR/Bank of America Portfolio Pari Passu Loan that
was deposited into the GMAC Commercial Mortgage Securities, Inc., Series 2003-C3
Mortgage Pass-Through Certificates securitization is subject to a fair value
purchase option, the option holder will also be required to purchase the other
AFR/Bank of America Portfolio Pari Passu Loans and the AFR/Bank of America
Portfolio Loan. Such option may be exercised by the majority certificateholder
of the related securitization's controlling class and German American Capital
Corporation, as mortgage loan seller under that securitization, in that order.
If such option is exercised by the majority certificateholder of the related
securitization's controlling class, then that holder will be required to
purchase the AFR/Bank of America Portfolio Loan from the Trust in connection
with the exercise of that option, unless one of the option holders specified in
"--Realization Upon Defaulted Mortgage Loans" in this prospectus supplement
elects to purchase the AFR/Bank of America Portfolio Loan from the Trust.
TERMINATION OF THE GMACCM 2003-C3 SERVICER. If an event of default has
occurred with respect to the GMACCM 2003-C3 Servicer under the GMACCM 2003-C3
Pooling and Servicing Agreement, which event of default relates to the AFR/Bank
of America Portfolio Whole Loan or, if the certificates issued under the Pooling
and Servicing Agreement or under any other pooling and servicing agreement as to
which an AFR/Bank of America Portfolio Pari Passu Loan is subject, have been
qualified, withdrawn or downgraded because of the actions of the GMACCM 2003-C3
Servicer with respect to the AFR/Bank of America Portfolio Whole Loan, then the
Directing Certificateholder or such holder of an AFR/Bank of America Portfolio
Pari Passu Loan (or its designee), as applicable, will be entitled to direct the
GMACCM 2003-C3 Trustee to terminate the GMACCM 2003-C3 Servicer solely with
respect to the AFR/Bank of America Portfolio Whole Loan and, at the direction of
the Directing Certificateholder or holder of such AFR/Bank of America Portfolio
Pari Passu Loan (or its designee), as applicable, a successor master servicer
will be appointed to service the AFR/Bank of America Portfolio Whole Loan that
assumes the obligations of the GMACCM 2003-C3 Servicer and that meets the
eligibility requirements of the GMACCM 2003-C3 Pooling and Servicing Agreement
and the related pooling and servicing agreement.
TERMINATION OF GMACCM 2003-C3 SPECIAL SERVICER. So long as no AFR/Bank of
America Portfolio Change of Control Event has occurred and is continuing, the
holder of the AFR/Bank of America Portfolio B Loan is permitted to terminate, at
its expense, the GMACCM 2003-C3 Special Servicer for the AFR/Bank of America
Portfolio Whole Loan at any time with or without cause, and to appoint a
replacement special servicer, subject to satisfaction of the conditions
contained in the GMACCM 2003-C3 Pooling and Servicing Agreement. If an AFR/Bank
of America Portfolio Change of Control Event exists, the holders of the AFR/Bank
of America Portfolio Loan and the AFR/Bank of America Portfolio Pari Passu Loans
(or their designees) then holding a majority of the outstanding principal
balance of the AFR/Bank of America Portfolio Loan and the AFR/Bank of America
Portfolio Pari Passu Loans will be entitled to exercise this right.
EXERCISE OF RIGHTS OF HOLDERS OF AFR/BANK OF AMERICA PORTFOLIO B LOAN. The
AFR/Bank of America Portfolio B Loan has been deposited into the commercial
mortgage securitization trust created under the GMACCM 2003-C3 Pooling and
Servicing Agreement. All rights of the holder of the AFR/Bank of
S-154
America Portfolio B Loan will initially be exercised by the controlling class of
the separate series of commercial mortgage pass-through certificates backed by
the AFR/Bank of America Portfolio B Loan.
THE MEADOWS MALL WHOLE LOAN
Pursuant to the terms of the related intercreditor agreement, both of the
two mortgage loans included in the Meadows Mall Whole Loan are to be serviced
under the provisions of the Wachovia 2003-C9 Pooling and Servicing Agreement,
which are similar to, but not necessarily identical with, the provisions of the
Pooling and Servicing Agreement. In that regard,
o Wells Fargo Bank, N.A., the trustee under the Wachovia Pooling and
Servicing Agreement (the "Wachovia 2003-C9 Trustee"), is, in that
capacity, the mortgagee of record with respect to the Mortgaged
Property securing the Meadows Mall Whole Loan;
o Wachovia Bank, National Association, the initial master servicer under
the Wachovia 2003-C9 Pooling and Servicing Agreement (the "Wachovia
2003-C9 Servicer"), is, in that capacity, the master servicer for the
Meadows Mall Whole Loan under the Wachovia 2003-C9 Pooling and
Servicing Agreement. However, P&I Advances with respect to the Meadows
Mall Loan will be made by the Servicer or the Trustee, as applicable,
as described in "Description of the Certificates--Advances" in the
prospectus supplement; and
o Lennar Partners, Inc., the initial special servicer of the Meadows
Mall Whole Loan under the Wachovia 2003-C9 Pooling and Servicing
Agreement (the "Wachovia 2003-C9 Special Servicer"), is, in that
capacity, the special servicer with respect to the Meadows Mall Whole
Loan under the Wachovia 2003-C9 Pooling and Servicing Agreement.
The Directing Certificateholder will not have any rights with respect to
the servicing and administration of the Meadows Mall Loan under the Wachovia
2003-C9 Pooling and Servicing Agreement except as set forth below.
CONSULTATION AND CONSENT. Both the majority certificateholder of the
controlling class of the Wachovia 2003-C9 Securitization (the "Wachovia 2003-C9
Majority Subordinate Certificateholder") and the Directing Certificateholder
will be required to approve any of the following:
o any proposed or actual foreclosure upon or comparable conversion
(which may include acquisition of REO property) of the ownership of
the Mortgaged Property securing the Meadows Mall Whole Loan if it
comes into and continues in default;
o any modification, amendment or waiver of a monetary term (including a
change in the timing of payments but excluding the waiver of default
charges) or any material non-monetary term (excluding the waiver of
any "due-on-sale" or "due-on-encumbrance" clause, as noted below) of
the Meadows Mall Whole Loan;
o any acceptance of a discounted payoff with respect to the Meadows Mall
Whole Loan;
o any determination to bring REO property into compliance with
applicable environmental laws or to otherwise address hazardous
materials located at the REO property;
o any release of real property collateral for the Meadows Mall Whole
Loan (other than any release made in connection with the grant of a
non-material easement or right-of-way);
o any acceptance of substitute or additional collateral for the Meadows
Mall Whole Loan (other than defeasance collateral as required by the
terms of the Meadows Mall Whole Loan);
o any releases of earn-out reserve funds or related letters of credit
with respect to the related Mortgaged Property;
o any waiver of a "due-on-sale" or "due-on-encumbrance" clause in the
Meadows Mall Whole Loan;
o any determination by the Wachovia 2003-C9 Servicer or Wachovia 2003-C9
Special Servicer not to maintain or cause the related borrower to
maintain for the Mortgaged Property or REO property all-risk casualty
or other insurance that provides coverage for acts of terrorism,
despite
S-155
the fact that such insurance may be required under the terms of the
Meadows Mall Whole Loan; and
o any change in the property manager for the related Mortgaged Property
or REO property which is required to be approved by the lender under
the Meadows Mall Whole Loan.
If the Wachovia 2003-C9 Majority Subordinate Certificateholder and the
Directing Certificateholder give conflicting consents or directions to the
Wachovia 2003-C9 Servicer or the Wachovia 2003-C9 Special Servicer, as
applicable, and disagree on the proper course of action regarding any of the
above-referenced items (and notify the Wachovia 2003-C9 Servicer or the Wachovia
2003-C9 Special Servicer, as applicable, of its disagreement in writing), then
the Meadows Mall Operating Advisor (as defined below) will decide which one of
the two proposed courses of action to follow, and will instruct the Wachovia
2003-C9 Servicer or the Wachovia 2003-C9 Special Servicer, as applicable, to
implement such course of action in accordance with the servicing standard set
forth in the Wachovia 2003-C9 Pooling and Servicing Agreement. The Wachovia
2003-C9 Special Servicer shall be required to consult with the holders of each
of the Meadows Mall Loan and the Meadows Mall Pari Passu Loan.
Notwithstanding any direction to, or approval or disapproval of, or right
to give direction to or to approve or disapprove, an action of, the Wachovia
2003-C3 Special Servicer or the Wachovia 2003-C3 Servicer by the Wachovia
2003-C9 Majority Subordinate Certificateholder or the Directing
Certificateholder, in no event will the Wachovia 2003-C3 Special Servicer or the
Wachovia 2003-C3 Servicer be required to take any action or refrain from taking
any action which would violate any law of any applicable jurisdiction, be
inconsistent with the servicing standard under the Wachovia 2003-C3 Pooling and
Servicing Agreement, violate the REMIC provisions or violate any other
provisions of the Wachovia 2003-C3 Pooling and Servicing Agreement or the
related loan documents.
The operating advisor for the Meadows Mall Whole Loan will be the entity
named as such in the related intercreditor agreement, or such other third party
operating advisor mutually acceptable to such holders (the "Meadows Mall
Operating Advisor"), that, as set forth in the related intercreditor agreement,
has a required special servicer rating (the "Wachovia 2003-C9 Required Special
Servicer Rating") of "CSS2" or higher from Fitch, is on the S&P list of approved
special servicers in the case of S&P and is, in the case of Moody's, acting as
special servicer in a commercial mortgage loan securitization that was rated by
Moody's within the 12 month period prior to the Determination Date and has not
been downgraded by Moody's or has had Moody's withdraw the then-current rating
on any class of commercial mortgage securities or placed any class of commercial
mortgage securities on watch citing the continuation of such special servicer of
such commercial mortgage securities as the cause for such downgrade, withdrawal
or watch. The Meadows Mall Operating Advisor will consult with the holders of
the Meadows Mall Loan and the Meadows Mall Pari Passu Loan.
In the event that the provisions of the Wachovia 2003-C9 Pooling and
Servicing Agreement conflict with the provisions of the related intercreditor
agreement for the Meadows Mall Whole Loan, the provisions of such intercreditor
agreement will be controlling. Notwithstanding the foregoing, in no event will
the Wachovia 2003-C9 Servicer or the Wachovia 2003-C9 Special Servicer be
required to take any action or refrain from taking any action in accordance with
the terms of such intercreditor agreement that would cause the Wachovia 2003-C9
Servicer or the Wachovia 2003-C9 Special Servicer to violate the servicing
standard under or the REMIC provisions of the Wachovia 2003-C9 Pooling and
Servicing Agreement.
SALE OF DEFAULTED MORTGAGE LOAN. Under the Wachovia 2003-C9 Pooling and
Servicing Agreement, the Meadows Mall Pari Passu Loan that was deposited into
the Wachovia Commercial Mortgage Securities, Inc., Commercial Mortgage
Pass-Through Certificates, Series 2003-C9 securitization (the "Wachovia 2003-C9
Securitization") may be subject to a fair value purchase option if the Meadows
Mall Pari Passu Loan becomes a defaulted mortgage loan (in accordance with the
terms of the Wachovia 2003-C9 Pooling and Servicing Agreement). Such option may
be exercised by the Wachovia 2003-C9 Majority Subordinate Certificateholder
prior to the exercise of such option by any other holder of such option. If the
Wachovia 2003-C9 Majority Subordinate Certificateholder or its assignee does not
exercise such option within thirty days of the Meadows Mall Pari Passu Loan
becoming a defaulted mortgage loan, then the Directing Certificateholder will
have thirty days thereafter
S-156
to exercise such option. If the fair value purchase option on the Meadows Mall
Loan is not exercised by the Wachovia 2003-C9 Majority Subordinate
Certificateholder or the Directing Certificateholder or their respective
assignee within 60 days of the Meadows Mall Pari Passu Loan becoming a defaulted
mortgage loan, then the Wachovia 2003-C9 Special Servicer or its assignee has 15
days to exercise such option. After the expiration of this 75 day period
following the time when the Meadows Mall Pari Passu Loan became a defaulted
mortgage loan, the Wachovia 2003-C9 Majority Subordinate Certificateholder will
again have the right to exercise its fair value purchase option prior to any
exercise of such option by the Wachovia 2003-C9 Special Servicer.
If the Wachovia 2003-C9 Majority Subordinate Certificateholder (or its
assignee), the Directing Certificateholder or the Wachovia 2003-C9 Special
Servicer (or its assignee) exercises the fair value purchase option with respect
to the Meadows Mall Pari Passu Loan, such person will be required to also
purchase the Meadows Mall Loan at the option price, as such price is defined in
the Wachovia 2003-C9 Pooling and Servicing Agreement.
While the Wachovia 2003-C9 Trustee and the trust fund created under the
Wachovia 2003-C9 Pooling and Servicing Agreement (the "Wachovia 2003-C9 Trust
Fund") are prohibited from acquiring the Meadows Mall Loan, the Wachovia 2003-C9
Servicer or one of its affiliates may own or acquire the Meadows Mall Loan.
If the Wachovia 2003-C9 Special Servicer has not yet calculated, in
accordance with the Servicing Standard as set forth in the Wachovia 2003-C9
Pooling and Servicing Agreement, the fair value of the Meadows Mall Loan within
the 60-day period after such mortgage loan has defaulted, the option price
required to be paid for the Meadows Mall Loan will generally equal the
outstanding principal balance of such mortgage loan, calculated as of the date
of purchase, together with all accrued and unpaid interest thereon at the
related Mortgage Rate, up to but not including the Due Date in the collection
period of purchase, plus any accrued interest on P&I Advances made with respect
to such mortgage loan, any related reasonable costs and expenses, any previously
unreimbursed trust fund expenses and any other trust fund expenses relating to
such Mortgage Loan under the Wachovia 2003-C9 Pooling and Servicing Agreement.
TERMINATION OF WACHOVIA 2003-C9 SPECIAL SERVICER. The Wachovia 2003-C9
Special Servicer may be removed as special servicer with respect to only the
Meadows Mall Whole Loan at any time upon the consent of the Wachovia 2003-C9
Majority Subordinate Certificateholder and the Directing Certificateholder.
SERVICER AND SPECIAL SERVICER PERMITTED TO BUY CERTIFICATES
GMACCM, the initial Servicer, and LNR, the initial Special Servicer, are
permitted to purchase any Class of Certificates. Such a purchase by the Servicer
or Special Servicer could cause a conflict relating to the Servicer's or Special
Servicer's duties pursuant to the Pooling and Servicing Agreement and the
Servicer's or Special Servicer's interest as a holder of Certificates,
especially to the extent that certain actions or events have a disproportionate
effect on one or more Classes of Certificates. The Pooling and Servicing
Agreement provides that the Servicer or Special Servicer will administer the
Mortgage Loans in accordance with the Servicing Standard, without regard to
ownership of any Certificate by the Servicer or Special Servicer or any
affiliate thereof.
REPORTS TO CERTIFICATEHOLDERS; AVAILABLE INFORMATION
BOND ADMINISTRATOR REPORTS
Based on information provided in monthly reports prepared by the Servicer
and the Special Servicer and delivered to the Bond Administrator, the Bond
Administrator will prepare and make available on each Distribution Date to each
Certificateholder, the Depositor, the Servicer, the Special Servicer, the
Trustee, each Underwriter, each Rating Agency and, if requested, any potential
investors in the Certificates (i) a statement (a "Distribution Date Statement")
and (ii) a report containing information regarding the Mortgage Loans as of the
end of the related Collection Period, which report shall contain substantially
the categories of information regarding the Mortgage Loans set forth in this
prospectus
S-157
supplement in the tables under the caption "Description of the Mortgage
Pool--Certain Terms and Conditions of the Mortgage Loans."
Certain information regarding the Mortgage Loans will be made accessible at
the website maintained by LaSalle Bank National Association at www.etrustee.net
or such other mechanism as the Bond Administrator may have in place from time to
time.
After all of the Certificates have been sold by the Underwriters, certain
information will be made accessible on the website maintained by the Servicer as
the Servicer may have in place from time to time.
SERVICER REPORTS
The Servicer is required to deliver to the Bond Administrator prior to each
Distribution Date, and the Bond Administrator is to make available to each
Certificateholder, each holder of a Companion Loan, the Depositor, each
Underwriter, each Rating Agency, the Special Servicer, the Directing
Certificateholder and, if requested, any potential investor in the Certificates,
on each Distribution Date, the following six CMSA reports:
(a) A "Comparative Financial Status Report" setting forth, to the
extent such information is provided by the related borrowers, among other
things, the occupancy, revenue, underwritten net operating income or net
cash flow and DSCR for each Mortgaged Property as of the current
Determination Date for each of the following three periods: (i) the most
current trailing 12 months or year to date, (ii) the previous two full
fiscal years (if made available to the Servicer), and (iii) the "base year"
(representing the original underwriting information used as of the Cut-off
Date).
(b) A "Delinquent Loan Status Report" setting forth, among other
things, those Mortgage Loans which, as of the close of business on the
Determination Date immediately preceding the respective Distribution Date,
were delinquent 30 days to 59 days, 60 days to 89 days, 90 days or more,
current but specially serviced, or in foreclosure but not REO Property.
(c) An "Historical Loan Modification Report" setting forth, among
other things, those Mortgage Loans which, as of the close of business on
the Determination Date immediately preceding the respective Distribution
Date, have been modified pursuant to the Pooling and Servicing Agreement
(i) during the related Collection Period and (ii) since the Cut-off Date,
showing the original and the revised terms thereof.
(d) An "Historical Liquidation Report" setting forth, among other
things, as of the close of business on the Determination Date immediately
preceding the respective Distribution Date, (i) the aggregate amount of net
liquidation proceeds, both for the current period and historically, and
(ii) the amount of Realized Losses occurring during the related Collection
Period, set forth on a Mortgage Loan-by-Mortgage Loan basis.
(e) An "REO Status Report" setting forth, among other things, with
respect to each REO Property that was included in the Trust as of the close
of business on the Determination Date immediately preceding the respective
Distribution Date, (i) the acquisition date of such REO Property, and (ii)
the value of the REO Property based on the most recent appraisal or other
valuation thereof available to the Special Servicer as of such date of
determination (including any prepared internally by the Special Servicer).
(f) A "Watch List" as of the close of business on the Determination
Date immediately preceding the respective Distribution Date setting forth,
among other things, any Mortgage Loan that is in jeopardy of becoming a
Specially Serviced Mortgage Loan.
Subject to the receipt of necessary information from any subservicer, such
loan-by-loan listing will be made available electronically in the form of the
standard CMSA Reports; PROVIDED, HOWEVER, the Bond Administrator will provide
Certificateholders with a written copy of such report upon request. The
information that pertains to Specially Serviced Mortgage Loans and REO
Properties reflected in such reports shall be based solely upon the reports
delivered by the Special Servicer to the Servicer no later than four business
day prior to the related Servicer Remittance Date. Absent manifest error, none
of the
S-158
Servicer, the Special Servicer, the Bond Administrator or the Trustee shall be
responsible for the accuracy or completeness of any information supplied to it
by a borrower or third party that is included in any reports, statements,
materials or information prepared or provided by the Servicer, the Special
Servicer, the Bond Administrator or the Trustee, as applicable.
The Trustee, the Bond Administrator, the Servicer and the Special Servicer
will be indemnified by the Trust against any loss, liability or expense incurred
in connection with any claim or legal action relating to any statement or
omission based upon information supplied by a borrower or third party under a
Mortgage Loan and reasonably relied upon by such party.
The Servicer is also required to deliver to the Bond Administrator and the
Rating Agencies the following materials:
(a) Annually, on or before June 30 of each year, commencing with June
30, 2004, with respect to each Mortgaged Property and REO Property, an
"Operating Statement Analysis Report" together with copies of the related
operating statements and rent rolls (but only if the related borrower is
required by the Mortgage to deliver, or has otherwise agreed to provide
such information) for such Mortgaged Property or REO Property for the
preceding calendar year-end, if available. The Servicer (or the Special
Servicer in the case of Specially Serviced Mortgage Loans and REO
Properties) is required to use its best reasonable efforts to obtain annual
and other periodic operating statements and related rent rolls and promptly
update the Operating Statement Analysis Report.
(b) Within 60 days of receipt by the Servicer (or within 45 days of
receipt by the Special Servicer with respect to any Specially Serviced
Mortgage Loan or REO Property) of annual year-end operating statements, if
any, with respect to any Mortgaged Property or REO Property, an "NOI
Adjustment Worksheet" for such Mortgaged Property (with the annual
operating statements attached thereto as an exhibit), presenting the
computations made in accordance with the methodology described in the
Pooling and Servicing Agreement to "normalize" the full year-end net
operating income or net cash flow and debt service coverage numbers used by
the Servicer or Special Servicer in the other reports referenced above.
The Bond Administrator is to make available a copy of each Operating
Statement Analysis Report and NOI Adjustment Worksheet that it receives from the
Servicer upon request to the Depositor, each Underwriter, the Directing
Certificateholder, each Rating Agency, the Certificateholders and the Special
Servicer promptly after its receipt thereof. Any potential investor in the
Certificates may obtain a copy of any NOI Adjustment Worksheet for a Mortgaged
Property or REO Property in the possession of the Bond Administrator upon
request.
In addition, within a reasonable period of time after the end of each
calendar year, the Bond Administrator is required to send to each person who at
any time during the calendar year was a Certificateholder of record, a report
summarizing on an annual basis (if appropriate) certain items provided to
Certificateholders in the monthly Distribution Date Statements and such other
information as may be reasonably required to enable such Certificateholders to
prepare their federal income tax returns. The Bond Administrator will also make
available information regarding the amount of original issue discount accrued on
each Class of Certificate held by persons other than holders exempted from the
reporting requirements and information regarding the expenses of the Trust.
OTHER INFORMATION
The Pooling and Servicing Agreement requires that the Bond Administrator
make available at its offices, during normal business hours, for review by any
Certificateholder, any holder of a Serviced Companion Loan (with respect to
items (iv)-(vii), only to the extent such information relates to the related
Serviced Companion Loan), the Depositor, the Servicer, the Special Servicer, any
Rating Agency or any potential investor in the Certificates, originals or copies
of, among other things, the following items (except to the extent not permitted
by applicable law or under any of the Mortgage Loan Documents): (i) the Pooling
and Servicing Agreement and any amendments thereto, (ii) all Distribution Date
Statements made available to holders of the relevant Class of Offered
Certificates since the Closing Date and any holder of a Companion Loan, (iii)
all annual officers' certificates and accountants' reports delivered by the
Servicer and the Special Servicer to the Bond Administrator since the
S-159
Closing Date regarding compliance with the relevant agreements, (iv) the most
recent property inspection report prepared by or on behalf of the Servicer or
the Special Servicer with respect to each Mortgaged Property and delivered to
the Bond Administrator, (v) the most recent annual (or more frequent, if
available) operating statements, rent rolls (to the extent such rent rolls have
been made available by the related borrower) and/or lease summaries and retail
"sales information," if any, collected by or on behalf of the Servicer or the
Special Servicer with respect to each Mortgaged Property and delivered to the
Bond Administrator, (vi) any and all modifications, waivers and amendments of
the terms of a Mortgage Loan entered into by the Servicer and/or the Special
Servicer and delivered to the Bond Administrator, and (vii) any and all
officers' certificates and other evidence delivered to or by the Bond
Administrator to support the Servicer's, the Special Servicer's or the
Trustee's, as the case may be, determination that any Advance, if made, would
not be recoverable. Copies of any and all of the foregoing items will be
available upon request at the expense of the requesting party from the Bond
Administrator to the extent such documents are in the Bond Administrator's
possession.
USE OF PROCEEDS
The net proceeds from the sale of Offered Certificates will be used by the
Depositor to pay part of the purchase price of the Mortgage Loans.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following summary and the discussion in the prospectus under the
heading "Certain Federal Income Tax Consequences--Federal Income Tax
Consequences for REMIC Certificates" are a general discussion of the anticipated
material federal income tax consequences of the purchase, ownership and
disposition of the Offered Certificates and constitute the opinion of
Cadwalader, Wickersham & Taft LLP as to the accuracy of matters discussed herein
and therein. The summary below and such discussion in the Prospectus do not
purport to address all federal income tax consequences that may be applicable to
particular categories of investors, some of which may be subject to special
rules. In addition, such summary and such discussion do not address state, local
or foreign tax issues with respect to the acquisition, ownership or disposition
of the Offered Certificates. The authorities on which such summary and such
discussion are based are subject to change or differing interpretations, and any
such change or interpretation could apply retroactively. Such summary and such
discussion are based on the applicable provisions of the Code, as well as
regulations (the "REMIC Regulations") promulgated by the U.S. Department of the
Treasury as of the date hereof. Investors should consult their own tax advisors
in determining the federal, state, local, foreign or any other tax consequences
to them of the purchase, ownership and disposition of Certificates.
Elections will be made to treat designated portions of the Trust (exclusive
of Excess Interest and the Excess Interest Distribution Account), and proceeds
thereof (such nonexcluded portion of the Trust, the "Trust REMICs"), as two
separate REMICs within the meaning of Code Section 860D. In addition, the
AFR/Bank of America Portfolio Loan and any related REO property and proceeds
thereof will constitute the assets of a separate REMIC (the "Loan REMIC"). The
Loan REMIC has issued a class of "regular interests" (the "Loan REMIC Regular
Interest") and a class of "residual interests." The Lower-Tier REMIC will hold
the Mortgage Loans (exclusive of the AFR/Bank of America Portfolio Loan, which
is held in the Loan REMIC) and the "regular interest" issued by the Loan REMIC,
proceeds thereof held in the Collection Account, the Interest Reserve Account,
the Lower-Tier Distribution Account, the Excess Liquidation Proceeds Account and
any related REO Property, and will issue several uncertificated classes of
regular interests (the "Lower-Tier Regular Interests") to the Upper-Tier REMIC
and the Class LR Certificates, which will represent the sole class of residual
interests in the Lower-Tier REMIC and the Loan REMIC. The Upper-Tier REMIC will
hold the Lower-Tier Regular Interests and the Upper-Tier Distribution Account in
which distributions on the Lower-Tier Regular Interests will be deposited, and
will issue the Class X-1, Class X-2, Class A-1, Class A-2, Class A-3, Class A-4,
Class B, Class C, Class D, Class E, Class F, Class G, Class H, Class J, Class K,
Class L, Class M, Class N, Class O and Class P Certificates (the "Regular
Certificates") as classes of regular interests and the Class R Certificates as
the sole class of residual interests in the Upper-Tier REMIC. Qualification as a
REMIC
S-160
requires ongoing compliance with certain conditions. Assuming (i) the making of
appropriate elections, (ii) compliance with the Pooling and Servicing Agreement,
(iii) compliance with the GMACCM 2003-C3 Pooling and Servicing Agreement and the
Wachovia 2003-C9 Pooling and Servicing Agreement and the continuing
qualification of the REMICs formed thereunder and (iv) compliance with any
changes in the law, including any amendments to the Code or applicable temporary
or final regulations of the United States Department of the Treasury ("Treasury
Regulations") thereunder, in the opinion of Cadwalader, Wickersham & Taft LLP,
the Lower-Tier REMIC, the Upper-Tier REMIC and the Loan REMIC will each qualify
as a REMIC. References in this discussion to the "REMIC" will, unless the
context dictates otherwise, refer to each of the Upper-Tier REMIC, the
Lower-Tier REMIC and the Loan REMIC. In addition, in the opinion of Cadwalader,
Wickersham & Taft LLP, the portion of the Trust Fund consisting of the Excess
Interest and the Excess Interest Distribution Account will be treated as a
grantor trust for federal income tax purposes under subpart E, Part I of
subchapter J of the Code and the Class Q Certificates will represent undivided
beneficial interests therein.
The Offered Certificates will be treated as "loans . . . secured by an
interest in real property which is . . . residential real property" within the
meaning of Section 7701(a)(19)(C) of the Code, for domestic building and loan
associations (but only to the extent of the allocable portion of the Mortgage
Loans secured by multifamily properties and mobile home park properties). As of
the Cut-off Date, Mortgage Loans secured by multifamily properties and mobile
home park properties represent approximately 31.42% of the Mortgage Loans by
Initial Outstanding Pool Balance.
The Offered Certificates will be treated as "real estate assets," within
the meaning of Section 856(c)(5)(B) of the Code, for real estate investment
trusts and interest thereon will be treated as "interest on mortgages on real
property," within the meaning of Section 856(c)(3)(B) of the Code, to the extent
described in the prospectus under the heading "Certain Federal Income Tax
Consequences--Federal Income Tax Consequences for REMIC Certificates--Status of
REMIC Certificates." Mortgage Loans which have been defeased with U.S. Treasury
obligations will not qualify for the foregoing treatments.
The Offered Certificates will be treated as "regular interests" in the
Upper-Tier REMIC and therefore generally will be treated as newly originated
debt instruments for federal income tax purposes. Beneficial owners of the
Offered Certificates will be required to report income on such regular interests
in accordance with the accrual method of accounting.
The IRS has issued Treasury Regulations under Sections 1271 to 1275 of the
Code generally addressing the treatment of debt instruments issued with original
issue discount (the "OID Regulations"). Purchasers of the Offered Certificates
should be aware that the OID Regulations and Section 1272(a)(6) of the Code do
not adequately address certain issues relevant to, or are not applicable to,
prepayable securities such as the Offered Certificates. The OID Regulations in
some circumstances permit the holder of a debt instrument to recognize original
issue discount under a method that differs from that of the issuer. Accordingly,
it is possible that holders of Certificates may be able to select a method for
recognizing any original issue discount that differs from that used by the Bond
Administrator in preparing reports to Certificateholders and the IRS.
Prospective purchasers of Certificates are advised to consult their tax advisors
concerning the treatment of any original issue discount with respect to
purchased Certificates. See "Certain Federal Income Tax Consequences--Federal
Income Tax Consequences for REMIC Certificates--Taxation of Regular
Certificates--Original Issue Discount" in the prospectus.
Whether any holder of any such Class of Certificates will be treated as
holding a Certificate with amortizable bond premium will depend on such
Certificateholder's purchase price and the distributions remaining to be made on
such Certificate at the time of its acquisition by such Certificateholder. It is
anticipated that the Offered Certificates will be issued [at a premium] for
federal income tax purposes. Holders of each such Class of Certificates should
consult their tax advisors regarding the possibility of making an election to
amortize such premium. See "Certain Federal Income Tax Consequences--Federal
Income Tax Consequences for REMIC Certificates--Taxation of Regular
Certificates--Premium" in the prospectus.
S-161
For purposes of accruing original issue discount, if any, determining
whether such original issue discount is DE MINIMIS and amortizing any premium,
the Prepayment Assumption will be 0% CPR. See "Yield and Maturity
Considerations" in this prospectus supplement. No representation is made as to
the rate, if any, at which the Mortgage Loans will prepay.
Prepayment Premiums and Yield Maintenance Charges actually collected on the
Mortgage Loans will be distributed to the holders of each Class of Certificates
entitled thereto as described herein. It is not entirely clear under the Code
when the amount of a Prepayment Premium or a Yield Maintenance Charge should be
taxed to the holder of a Class of Certificates entitled to a Prepayment Premium
or a Yield Maintenance Charge. For federal income tax reporting purposes,
Prepayment Premiums and Yield Maintenance Charges will be treated as income to
the holders of a Class of Certificates entitled to Prepayment Premiums and Yield
Maintenance Charges only after the Servicer's actual receipt of a Prepayment
Premium or a Yield Maintenance Charge as to which such Class of Certificates is
entitled under the terms of the Pooling and Servicing Agreement. It appears that
Prepayment Premiums and Yield Maintenance Charges are to be treated as ordinary
income rather than capital gain. However, the correct characterization of such
income is not entirely clear and Certificateholders should consult their tax
advisors concerning the treatment of Prepayment Premiums and Yield Maintenance
Charges.
For a discussion of the tax consequences of the acquisition ownership and
disposition of Offered Certificates by any person who is not a citizen or
resident of the United States, a corporation or partnership or other entity
created or organized in or under the laws of the United States, any state
thereof or the District of Columbia or is a foreign estate or trust, see
"Certain Federal Income Tax Consequences--Federal Income Tax Consequences for
REMIC Certificates--Taxation of Certain Foreign Investors--Regular Certificates"
in the prospectus.
ERISA CONSIDERATIONS
The purchase by or transfer to an employee benefit plan or other retirement
arrangement, including an individual retirement account or a Keogh plan, which
is subject to Title I of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") or Section 4975 of the Code, or a governmental plan (as
defined in Section 3(32) of ERISA) that is subject to any federal, state or
local law ("Similar Law") which is, to a material extent, similar to the
foregoing provisions of ERISA or the Code (each, a "Plan"), or a collective
investment fund in which such Plans are invested, an insurance company using the
assets of separate accounts or general accounts which include assets of Plans
(or which are deemed pursuant to ERISA or any Similar Law to include assets of
Plans) or other Persons acting on behalf of any such Plan or using the assets of
any such Plan to acquire the Offered Certificates may constitute or give rise to
a prohibited transaction under ERISA or the Code or Similar Law. There are
certain exemptions issued by the United States Department of Labor (the
"Department") that may be applicable to an investment by a Plan in the Offered
Certificates. The Department has granted to each of the co-lead managers an
administrative exemption (Deutsche Bank Securities Inc. as Department Final
Authorization Number 97-03E, as amended by Prohibited Transaction Exemption
("PTE") 2002-41 (the "DBS Exemption"), and ABN AMRO Incorporated as Department
Final Authorization Number 98-08E, as amended by PTE 2002-41 (the "ABN
Exemption" and collectively with the DBS Exemption, the "Exemption")), for
certain mortgage-backed and asset-backed certificates underwritten in whole or
in part by the co-lead managers. The Exemption might be applicable to the
initial purchase, the holding, and the subsequent resale by a Plan of certain
certificates, such as the Offered Certificates, underwritten by the co-lead
managers, representing interests in pass-through trusts that consist of certain
receivables, loans and other obligations, provided that the conditions and
requirements of the Exemption are satisfied. The loans described in the
Exemption include mortgage loans such as the Mortgage Loans. However, it should
be noted that in issuing the Exemption, the Department may not have considered
interests in pools of the exact nature as some of the Offered Certificates.
Among the conditions that must be satisfied for the Exemption to apply to
the acquisition, holding and resale of the Offered Certificates are the
following:
(1) The acquisition of Offered Certificates by a Plan is on terms
(including the price for the Certificates) that are at least as favorable
to the Plan as they would be in an arm's length transaction with an
unrelated party;
S-162
(2) The Offered Certificates acquired by the Plan have received a
rating at the time of such acquisition that is one of the four highest
generic rating categories from any of S&P, Moody's or Fitch;
(3) The Trustee must not be an affiliate of any other member of the
Restricted Group (as defined below) other than an Underwriter;
(4) The sum of all payments made to and retained by the co-lead
managers in connection with the distribution of Offered Certificates
represents not more than reasonable compensation for underwriting the
Certificates. The sum of all payments made to and retained by the Depositor
pursuant to the assignment of the Mortgage Loans to the Trust represents
not more than the fair market value of such Mortgage Loans. The sum of all
payments made to and retained by the Servicer and any other servicer
represents not more than reasonable compensation for such person's services
under the Pooling and Servicing Agreement and reimbursement of such
person's reasonable expenses in connection therewith; and
(5) The Plan investing in the Certificates is an "accredited investor"
as defined in Rule 501(a)(1) of Regulation D of the Securities and Exchange
Commission under the Securities Act of 1933.
The Trust must also meet the following requirements:
(a) the corpus of the Trust must consist solely of assets of the type
that have been included in other investment pools;
(b) certificates in such other investment pools must have been rated
in one of the four highest rating categories of S&P, Moody's or Fitch for
at least one year prior to the Plan's acquisition of the Offered
Certificates pursuant to the Exemption; and
(c) certificates evidencing interests in such other investment pools
must have been purchased by investors other than Plans for at least one
year prior to any Plan's acquisition of the Offered Certificates pursuant
to the Exemption.
If all of the conditions of the Exemption are met, then whether or not a
Plan's assets would be deemed to include an ownership interest in the Mortgage
Loans in the Mortgage Pool, the acquisition, holding and resale by Plans of the
Offered Certificates with respect to which the conditions were met would be
exempt from the prohibited transaction provisions of ERISA and the Code to the
extent indicated in the Exemption.
Moreover, the Exemption can provide relief from certain
self-dealing/conflict of interest prohibited transactions that may occur if a
Plan fiduciary causes a Plan to acquire certificates in a trust holding
receivables, loans or obligations on which the fiduciary (or its affiliate) is
an obligor, PROVIDED that, among other requirements, (a) in the case of an
acquisition in connection with the initial issuance of certificates, at least
fifty percent of each class of certificates in which Plans have invested is
acquired by persons independent of the Restricted Group (as defined below) and
at least fifty percent of the aggregate interest in the Trust is acquired by
persons independent of the Restricted Group (as defined below); (b) such
fiduciary (or its affiliate) is an obligor with respect to five percent or less
of the fair market value of the obligations contained in the Trust; (c) the
Plan's investment in certificates of any class does not exceed twenty-five
percent of all of the certificates of that class outstanding at the time of the
acquisitions; and (d) immediately after the acquisition no more than twenty-five
percent of the assets of the Plan with respect to which such person is a
fiduciary are invested in certificates representing an interest in one or more
trusts containing assets sold or serviced by the same entity.
The Exemption does not apply to the purchasing or holding of Offered
Certificates by Plans sponsored by the Depositor, the Underwriters, the Trustee,
the Servicer, any obligor with respect to Mortgage Loans included in the Trust
constituting more than five percent of the aggregate unamortized principal
balance of the assets in the Trust, any party considered a "sponsor" within the
meaning of the Exemption, or any affiliate of such parties (the "Restricted
Group").
The co-lead managers believe that the conditions to the applicability of
their respective Exemption will generally be met with respect to the Offered
Certificates, other than possibly those conditions
S-163
which are dependent on facts unknown to the co-lead managers or which it cannot
control, such as those relating to the circumstances of the Plan purchaser or
the Plan fiduciary making the decision to purchase any such Certificates.
However, before purchasing an Offered Certificate, a fiduciary of a Plan should
make its own determination as to the availability of the exemptive relief
provided by the Exemption or the availability of any other prohibited
transaction exemptions or similar exemption under Similar Law, and whether the
conditions of any such exemption will be applicable to such purchase. As noted
above, the Department, in granting the Exemption, may not have considered
interests in pools of the exact nature as some of the Offered Certificates. A
fiduciary of a Plan that is a governmental plan should make its own
determination as to the need for and the availability of any exemptive relief
under any Similar Law.
Any fiduciary of a Plan considering whether to purchase an Offered
Certificate should also carefully review with its own legal advisors the
applicability of the fiduciary duty and prohibited transaction provisions of
ERISA and the Code to such investment. See "Certain ERISA Considerations" in the
prospectus.
The sale of Offered Certificates to a Plan is in no respect a
representation by the Depositor or the Underwriters that this investment meets
all relevant legal requirements with respect to investments by Plans generally
or any particular Plan, or that this investment is appropriate for Plans
generally or any particular Plan.
LEGAL INVESTMENT
The Certificates will not constitute "mortgage related securities" for
purposes of the Secondary Mortgage Market Enhancement Act of 1984, as amended.
No representation is made as to the proper characterization of the Offered
Certificates for legal investment purposes, financial institution regulatory
purposes, or other purposes, or as to the ability of particular investors to
purchase the Offered Certificates under applicable legal investment or other
restrictions. These uncertainties may adversely affect the liquidity of the
Offered Certificates. Accordingly, all institutions whose investment activities
are subject to legal investment laws and regulations, regulatory capital
requirements or review by regulatory authorities should consult with their own
legal advisors in determining whether and to what extent the Offered
Certificates constitute a legal investment or are subject to investment, capital
or other restrictions.
See "Legal Investment" in the prospectus.
METHOD OF DISTRIBUTION
Subject to the terms and conditions set forth in an Underwriting Agreement,
dated February___, 2004 (the "Underwriting Agreement"), Deutsche Bank Securities
Inc. ("DBS"), ABN AMRO Incorporated ("ABN"), Banc of America Securities LLC
("BOA"), Citigroup Global Markets Inc. ("Citigroup") and Merrill Lynch, Pierce,
Fenner & Smith Incorporated ("ML"), (collectively, the "Underwriters") have
agreed to purchase and the Depositor has agreed to sell to the Underwriters the
Offered Certificates. It is expected that delivery of the Offered Certificates
will be made only in book-entry form through the Same Day Funds Settlement
System of DTC on or about March __, 2004, against payment therefor in
immediately available funds. DBS and ABN will act as co-lead managers of the
offering of the Offered Certificates and BOA, Citigroup and ML are acting as
co-managers and underwriters of the offering of Offered Certificates. DBS is
acting as sole bookrunner of the offering.
S-164
In the Underwriting Agreement, the Underwriters have agreed, subject to the
terms and conditions set forth therein, to purchase the approximate percentage
of the Certificate Balance of the Offered Certificates set forth below:
MERRILL LYNCH, PIERCE,
DEUTSCHE BANK ABN AMRO BANC OF AMERICA CITIGROUP GLOBAL FENNER & SMITH,
CLASS SECURITIES INC. INCORPORATED SECURITIES LLC MARKETS INC. INCORPORATED
- ---- --------------- ------------ --------------- --------------- ---------------------
Class A-1 ........... $_____ $_____ $_____ $_____ $_____
Class A-2 ........... _____ _____ _____ _____ _____
Class A-3 ........... _____ _____ _____ _____ _____
Class A-4 ........... _____ _____ _____ _____ _____
Class B ............. _____ _____ _____ _____ _____
Class C ............. _____ _____ _____ _____ _____
Class D ............. _____ _____ _____ _____ _____
Class E ............. _____ _____ _____ _____ _____
The Underwriting Agreement provides that the obligation of each Underwriter
to pay for and accept delivery of its Offered Certificates is subject to, among
other things, the receipt of certain legal opinions and to the conditions, among
others, that no stop order suspending the effectiveness of the Depositor's
Registration Statement shall be in effect, and that no proceedings for such
purpose shall be pending before or threatened by the Securities and Exchange
Commission.
The distribution of the Offered Certificates by the Underwriters may be
effected from time to time in one or more negotiated transactions, or otherwise,
at varying prices to be determined at the time of sale. Proceeds to the
Depositor from the sale of the Offered Certificates, before deducting expenses
payable by the Depositor, will be approximately ___% of the aggregate
Certificate Balance of the Offered Certificates, plus accrued interest. Each
Underwriter may effect such transactions by selling its Offered Certificates to
or through dealers, and such dealers may receive compensation in the form of
underwriting discounts, concessions or commissions from the Underwriter for whom
they act as agent. In connection with the sale of the Offered Certificates, each
Underwriter may be deemed to have received compensation from the Depositor in
the form of underwriting compensation. Each Underwriter and any dealers that
participate with such Underwriter in the distribution of the Offered
Certificates may be deemed to be underwriters and any profit on the resale of
the Offered Certificates positioned by them may be deemed to be underwriting
discounts and commissions under the Securities Act of 1933, as amended.
DBS is an affiliate of GACC and ABN is an affiliate of LaSalle and ABN AMRO
Bank.
The Underwriting Agreement or a separate indemnification agreement provides
that the Depositor and the Mortgage Loan Sellers will indemnify the Underwriters
against certain civil liabilities under the Securities Act of 1933, as amended,
or contribute to payments to be made in respect thereof.
There can be no assurance that a secondary market for the Offered
Certificates will develop or, if it does develop, that it will continue. The
primary source of ongoing information available to investors concerning the
Offered Certificates will be the reports distributed by the Bond Administrator
discussed in this prospectus supplement under "The Pooling and Servicing
Agreement--Reports to Certificateholders; Available Information." Except as
described in this prospectus supplement under "The Pooling and Servicing
Agreement--Reports to Certificateholders; Available Information," there can be
no assurance that any additional information regarding the Offered Certificates
will be available through any other source. In addition, the Depositor is not
aware of any source through which price information about the Offered
Certificates will be generally available on an ongoing basis. The limited nature
of such information regarding the Offered Certificates may adversely affect the
liquidity of the Offered Certificates, even if a secondary market for the
Offered Certificates becomes available.
S-165
LEGAL MATTERS
The validity of the Offered Certificates and the material federal income
tax consequences of investing in the Offered Certificates will be passed upon
for the Depositor by Cadwalader, Wickersham & Taft LLP, New York, New York.
Certain legal matters with respect to the Offered Certificates will be passed
upon for the Underwriters by Cadwalader, Wickersham & Taft LLP, New York, New
York.
RATINGS
It is a condition to the issuance of the Offered Certificates that (i) the
Class A-1, Class A-2, Class A-3 and Class A-4 Certificates be rated "AAA" by
Standard & Poor's Rating Services, a division of The McGraw-Hill Companies, Inc.
("S&P"), "AAA" by Fitch, Inc. ("Fitch") and "AAA" by Dominion Bond Rating
Service Limited ("DBRS" and together with Fitch and S&P, the "Rating Agencies"),
(ii) the Class B Certificates be rated at least "AA" by S&P, "AA" by Fitch and
"AA" by DBRS, (iii) the Class C Certificates be rated at least "AA-" by S&P,
"AA-" by Fitch and "AA (low)"by DBRS, (iv) the Class D Certificates be rated at
least "A" by S&P, "A" by Fitch and "A" by DBRS, and (v) the Class E Certificates
be rated at least "A-" by S&P, "A-" by Fitch and "A (low)" by DBRS. The "Rated
Final Distribution Date" of each Class of Certificates is the Distribution Date
in March 2039.
The Rating Agencies' ratings on mortgage pass-through certificates address
the likelihood of the timely payment of interest and the ultimate repayment of
principal by the Rated Final Distribution Date. The Rating Agencies' ratings
take into consideration the credit quality of the Mortgage Pool, structural and
legal aspects associated with the Certificates, and the extent to which the
payment stream in the Mortgage Pool is adequate to make payments required under
the Certificates. Ratings on mortgage pass-through certificates do not, however,
represent an assessment of the likelihood, timing or frequency of principal
prepayments (both voluntary and involuntary) by mortgagors, or the degree to
which such prepayments might differ from those originally anticipated. The
security ratings do not address the possibility that Certificateholders might
suffer a lower than anticipated yield. In addition, ratings on mortgage
pass-through certificates do not address the likelihood of receipt of Prepayment
Premiums, Default Interest or the timing or frequency of the receipt thereof. In
general, the ratings thus address credit risk and not prepayment risk. Also, a
security rating does not represent any assessment of the yield to maturity that
investors may experience. The ratings do not address the fact that the
Pass-Through Rates of the Offered Certificates to the extent that they are based
on the Weighted Average Net Mortgage Pass-Through Rate may be affected by
changes thereon.
There can be no assurance as to whether any rating agency not requested to
rate the Offered Certificates will nonetheless issue a rating and, if so, what
such rating would be. A rating assigned to the Offered Certificates by a rating
agency that has not been requested by the Depositor to do so may be lower than
the rating assigned by the Rating Agencies pursuant to the Depositor's request.
The rating of the Offered Certificates should be evaluated independently
from similar ratings on other types of securities. A security rating is not a
recommendation to buy, sell or hold securities and may be subject to revision or
withdrawal at any time by the assigning rating agency.
S-166
INDEX OF PRINCIPAL TERMS
ABN ........................................................... S-164
ABN AMRO Bank ................................................. S-55
ABN Exemption ................................................. S-25, S-162
ACMs .......................................................... S-37
ADA ........................................................... S-47
Advance ....................................................... S-21
Advance Rate .................................................. S-123
Advances ...................................................... S-122
AFR/Bank of America
Portfolio B Loan ........................................... S-16, S-65
AFR/Bank of America Portfolio
Change of Control Event .................................... S-152
AFR/Bank of America Portfolio
Companion Loans ............................................ S-65
AFR/Bank of America Portfolio
Cure Event ................................................. S-153
AFR/Bank of America Portfolio Loan ............................ S-16, S-65
AFR/Bank of America Portfolio
Pari Passu Loan ............................................ A-1, S-65
AFR/Bank of America Portfolio
Pari Passu Loans ........................................... S-16, S-65
AFR/Bank of America
Portfolio Senior Loans ..................................... S-16, S-65
AFR/Bank of America Portfolio
Whole Loan ................................................. S-16, S-65
Annual Debt Service ........................................... S-69
Anticipated Repayment Date .................................... S-68
Appraisal Reduction Amount .................................... S-23, S-89, S-99
Appraisal Reduction Event ..................................... S-99
Appraisal Reduction Events .................................... S-22
Appraised Value ............................................... S-70
ARD Loan ...................................................... S-38, S-68
Asset Status Report ........................................... S-147
Assumed Final Distribution Date ............................... S-3
Assumed Scheduled Payment ..................................... S-91
Available Funds ............................................... S-87
Balloon Balance ............................................... S-70
Balloon Loans ................................................. S-38
Balloon Payments .............................................. S-38
B Loan ........................................................ S-18
BOA ........................................................... S-164
Bond Administrator ............................................ S-8
Bond Administrator Fee ........................................ S-142
Bond Administrator Fee Rate ................................... S-141
BUILD Loan .................................................... S-83
CBE ........................................................... S-112
Certificate Balance ........................................... S-86
Certificate Owners ............................................ S-104
Certificate Registrar ......................................... S-101
Certificateholder ............................................. S-101
Certificates .................................................. S-86
Citigroup ..................................................... S-164
Class ......................................................... S-86
Class A Certificates .......................................... S-98
Clearstream ................................................... S-26, S-101
Clearstream Participants ...................................... S-103
Closing Date .................................................. S-9
Code .......................................................... S-25
Collection Account ............................................ S-124
Collection Period ............................................. S-89
Companion Loan ................................................ S-18
Companion Loans ............................................... S-18
Comparable Treasury Rate ...................................... S-79
Comparative Financial Status Report ........................... S-158
Controlling Class ............................................. S-145
Controlling Class Certificateholder ........................... S-145
Corrected Mortgage Loan ....................................... S-146
CPR ........................................................... S-107
Crossover Date ................................................ S-95
Current LTV ................................................... S-70
Custodian ..................................................... S-115
Cut-off Date .................................................. S-55
Cut-off Date Balance .......................................... S-55
Cut-off Date Loan-to-Value Ratio .............................. S-70
Cut-off Date LTV .............................................. S-70
Cut-off Date LTV Ratio ........................................ S-70
DBRS .......................................................... S-166
DBS ........................................................... S-164
DBS Exemption ................................................. S-25, S-162
Debt Service Coverage Ratio ................................... S-69
Default Interest .............................................. S-89
Default Rate .................................................. S-89
Defaulted Mortgage Loan ....................................... S-135
Defeasance .................................................... S-80
Defeasance Collateral ......................................... S-80
Defeasance Lock-Out Period .................................... S-80
Defeasance Option ............................................. S-80
Definitive Certificate ........................................ S-101
Delinquency ................................................... S-89
Delinquent Loan Status Report ................................. S-158
Department .................................................... S-162
Depositaries .................................................. S-102
Depositor ..................................................... S-55
Determination Date ............................................ S-89
Directing Certificateholder ................................... S-145
Discount Rate ................................................. S-96
Discount Rate Fraction ........................................ S-96
Distribution Account .......................................... S-124
Distribution Date ............................................. S-87
Distribution Date Statement ................................... S-157
DSCR .......................................................... S-69
DTC ........................................................... S-26
Due Date ...................................................... S-90
ERISA ......................................................... S-162
ESA ........................................................... S-61
Euroclear ..................................................... S-26
S-167
Euroclear Participants ........................................ S-103
Events of Default ............................................. S-131
Excess Liquidation Proceeds ................................... S-138
Excess Prepayment Interest Shortfall .......................... S-98
Exemption ..................................................... S-25, S-162
FIRREA ........................................................ S-61
Fitch ......................................................... S-166
Form 8-K ...................................................... S-85
FPO Persons ................................................... S-4
FSMA .......................................................... S-4
GAAP .......................................................... S-68
GACC .......................................................... S-55
General Servicing Standard .................................... S-120
GLA ........................................................... S-71
GMACCM ........................................................ S-143
GMACCM 2003-C3 Pooling
and Servicing Agreement .................................... S-17, S-65
GMACCM 2003-C3 Servicer ....................................... S-17, S-151
GMACCM 2003-C3 Special Servicer ............................... S-17, S-151
GMACCM 2003-C3 Trustee ........................................ S-151
GMACCM Servicing Standard ..................................... S-119
Historical Liquidation Report ................................. S-158
Historical Loan Modification Report ........................... S-158
Holders ....................................................... S-104
Indirect Participants ......................................... S-102
Initial Outstanding Pool Balance .............................. S-55
Initial Rate .................................................. S-68
Interest Accrual Amount ....................................... S-89
Interest Accrual Period ....................................... S-90
Interest Rate ................................................. S-70
Interest Reserve Account ...................................... S-124
Interest Shortfall ............................................ S-90
LaSalle ....................................................... S-55
Lennar ........................................................ S-144
Liquidation Fee ............................................... S-148
Liquidation Fee Rate .......................................... S-149
Liquidation Proceeds .......................................... S-149
LNR ........................................................... S-144
Loan REMIC .................................................... S-24, S-160
Loan REMIC Regular Interest ................................... S-160
Loan-to-Value Ratio ........................................... S-70
Lock-Out Period ............................................... S-78
Lower-Tier Regular Interests .................................. S-160
Lower-Tier REMIC .............................................. S-24
LTV ........................................................... S-70
LTV Ratio at Maturity ......................................... S-70
MAI ........................................................... S-58
Master Servicing Fee .......................................... S-143
Master Servicing Fee Rate ..................................... S-143
Meadows Mall Loan ............................................. S-66
Meadows Mall Operating Advisor ................................ S-156
Meadows Mall Pari Passu Loan .................................. S-17, S-66
Meadows Mall Whole Loan ....................................... S-17, S-66
ML ............................................................ S-164
Modeling Assumptions .......................................... S-107
Modified Mortgage Loan ........................................ S-101
Monthly Payment ............................................... S-88
Moody's ....................................................... S-125
Mortgage ...................................................... S-55
Mortgage Loan ................................................. S-55
Mortgage Loan Documents ....................................... S-115
Mortgage Loan Purchase Agreement .............................. S-56
Mortgage Loan Purchase Agreements ............................. S-115
Mortgage Loan Sellers ......................................... S-55
Mortgage Loans ................................................ S-55
Mortgage Pool ................................................. S-55
Mortgage Rate ................................................. S-70, S-90
Mortgaged Properties .......................................... S-55
Mortgaged Property ............................................ S-55
Net Default Interest .......................................... S-89
Net Mortgage Pass-Through Rate ................................ S-90
Net Prepayment Interest Excess ................................ S-98
Net Prepayment Interest Shortfall ............................. S-98
Net REO Proceeds .............................................. S-89
NOI Adjustment Worksheet ...................................... S-159
Non-Serviced Mortgage Loans ................................... S-8
Note .......................................................... S-55
Notional Balance .............................................. S-87
NRA ........................................................... S-71
Occupancy Rate ................................................ S-70
Offered Certificates .......................................... S-10, S-86
OID REGULATIONS ............................................... S-161
Operating Statement Analysis Report ........................... S-159
Option Price .................................................. S-135
P&I Advance ................................................... S-21, S-120
Pads .......................................................... S-70
PAR ........................................................... S-61, S-62
Pari Passu Companion Loan ..................................... S-121
Participants .................................................. S-101
Pass-Through Rate ............................................. S-10, S-90
PCBs .......................................................... S-37
PCIS Persons .................................................. S-4
Percentage Interest ........................................... S-87
Permitted Investments ......................................... S-125
Plan .......................................................... S-162
Pooling and Servicing Agreement ............................... S-115
Prepayment Interest Excess .................................... S-97
Prepayment Interest Shortfall ................................. S-97
Prime Rate .................................................... S-123
Principal Allocation Fraction ................................. S-96
Principal Balance Certificate ................................. S-86
Principal Balance Certificates ................................ S-86
Principal Distribution Amount ................................. S-91
Principal Prepayments ......................................... S-89
Private Certificates .......................................... S-10, S-86
Property Advance .............................................. S-21
Property Advances ............................................. S-122
PTE ........................................................... S-25, S-162
Purchase Option ............................................... S-135
Qualifying Substitute Mortgage Loan ........................... S-118
S-168
Rated Final Distribution Date ................................. S-166
Rating Agencies ............................................... S-25, S-166
Rating Agency ................................................. S-25
Realized Loss ................................................. S-96
Record Date ................................................... S-87
Regular Certificates .......................................... S-160
Related Borrower Loan Groups .................................. S-84
Release Date .................................................. S-80
Relevant Persons .............................................. S-4
REMIC ......................................................... S-161
REMIC Regulations ............................................. S-160
Removed Mortgage Loan ......................................... S-117
REO Account ................................................... S-86
REO Loan ...................................................... S-91
REO Property .................................................. S-86
REO Status Report ............................................. S-158
REO Tax ....................................................... S-137
Replacement Mortgage Loan ..................................... S-117
Repurchase Price .............................................. S-117
Request for Approval .......................................... S-147
Reserve Accounts .............................................. S-56
Restricted Group .............................................. S-163
Rooms ......................................................... S-70
Rules ......................................................... S-103
S&P ........................................................... S-166
Serviced Companion Loans ...................................... S-18, S-118
Serviced Whole Loan ........................................... S-18
Servicer ...................................................... S-143
Servicer Remittance Date ...................................... S-120
Servicing Compensation ........................................ S-143
Servicing Fee ................................................. S-143
Servicing Fee Rate ............................................ S-71, S-143
Servicing Standard ............................................ S-120
Servicing Transfer Event ...................................... S-146
Similar Law ................................................... S-162
Single-Tenant Mortgage Loan ................................... S-84
Small Loan Appraisal Estimate ................................. S-99
Special Servicer .............................................. S-144
Special Servicing Fee ......................................... S-148
Specially Serviced Mortgage Loan .............................. S-146
Sq. Ft ........................................................ S-70
Square Feet ................................................... S-70
Stated Principal Balance ...................................... S-97
Subordinate Certificates ...................................... S-98
Term to Maturity .............................................. S-71
Terms and Conditions .......................................... S-103
Terrorism Risk Insurance Act .................................. S-43
Treasury Rate ................................................. S-79
Treasury Regulations .......................................... S-161
Trust ......................................................... S-10, S-55
Trust Fund .................................................... S-4
Trust REMICs .................................................. S-160
Trustee ....................................................... S-8
Trustee Fee ................................................... S-141
Trustee Fee Rate .............................................. S-141
Tysons Corner Center Loan ..................................... S-16, S-63
Tysons Corner Center Pari Passu Loans ......................... S-16, S-63
Tysons Corner Center Whole Loan ............................... S-16, S-63
U/W Revenue ................................................... S-71
Underwriters .................................................. S-164
Underwriting Agreement ........................................ S-164
Underwritten NCF .............................................. S-68
Underwritten NCF DSCR ......................................... S-69
Underwritten Net Cash Flow .................................... S-68
Units ......................................................... S-70
Unscheduled Payments .......................................... S-89
Updated Appraisal ............................................. S-100
Upper-Tier REMIC .............................................. S-24
UW NCF ........................................................ S-68
UW NCF DSCR ................................................... S-69
Voting Rights ................................................. S-134
Wachovia 2003-C9 Majority
Subordinate Certificateholder .............................. S-155
Wachovia 2003-C9 Pooling
and Servicing Agreement .................................... S-17, S-66
Wachovia 2003-C9 Required
Special Servicer Rating .................................... S-156
Wachovia 2003-C9 Securitization ............................... S-17, S-156
Wachovia 2003-C9 Servicer ..................................... S-17, S-155
Wachovia 2003-C9 Special Servicer ............................. S-155
Wachovia 2003-C9 Trust Fund ................................... S-157
Wachovia 2003-C9 Trustee ...................................... S-155
Walgreens-Riverside B Loan .................................... S-18, S-67
Walgreens-Riverside Loan ...................................... S-18
Walgreens-Riverside Whole Loan ................................ S-18, S-67
Watch List .................................................... S-158
Weighted Average Net Mortgage
Pass-Through Rate .......................................... S-90
Wells Fargo Bank .............................................. S-141
Wenatchee Valley Mall Loan .................................... S-143
Whole Loan .................................................... S-18
Withheld Amounts .............................................. S-124
Workout Fee ................................................... S-148
Workout Fee Rate .............................................. S-148
Yield Maintenance Charge ...................................... S-78
Yield Maintenance Period ...................................... S-78
S-169
[THIS PAGE INTENTIONALLY LEFT BLANK]
COMM 2004-LNB2
ANNEX A-1 - CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS AND MORTGAGED
PROPERTIES
% OF MORTGAGE
INITIAL POOL # OF LOAN ORIGINAL
ID PROPERTY NAME BALANCE PROPERTIES SELLER (1) BALANCE
- ---------------------------------------------------------------------------------------------------------------------------
1 Tysons Corner Center 15.23% 1 GACC 147,500,000
2 AFR/Bank of America Portfolio (10) 8.78% 152 GACC 85,000,000
2.1 Harrison Main 0.01% GACC 90,155
2.2 Camelback-Bank of America CTR 0.06% GACC 595,301
- ---------------------------------------------------------------------------------------------------------------------------
2.3 Camelback Uptown 0.00% GACC -
2.4 Catalina-Bank of America Ctr 0.17% GACC 1,684,205
2.5 Maricopa-Bank of America Ctr 0.06% GACC 600,261
2.6 McDowell-Bank of America Ctr 0.06% GACC 595,301
2.7 Mesa Main 0.02% GACC 223,238
- ---------------------------------------------------------------------------------------------------------------------------
2.8 South Mountain-Bank of America 0.17% GACC 1,602,971
2.9 Auburn 0.02% GACC 223,238
2.10 Bixby-Atlantic 0.01% GACC 136,423
2.11 Calwa 0.01% GACC 141,384
2.12 Cedar & Shields 0.02% GACC 168,669
- ---------------------------------------------------------------------------------------------------------------------------
2.13 Coronado Branch 0.05% GACC 483,682
2.14 East Bakersfield Office 0.02% GACC 173,629
2.15 East Compton Branch 0.01% GACC 99,217
2.16 Ellinwood Center #300 0.07% GACC 704,439
2.17 Ellinwood Center #400 0.07% GACC 699,478
- ---------------------------------------------------------------------------------------------------------------------------
2.18 Ellinwood Center #500 0.06% GACC 537,132
2.19 El Segundo 0.02% GACC 194,713
2.20 Escondido Main Office 0.03% GACC 272,846
2.21 Fresno Proof/Vault 0.03% GACC 255,483
2.22 Gardena Main 0.04% GACC 342,298
- ---------------------------------------------------------------------------------------------------------------------------
2.23 Glendale Main 0.08% GACC 744,126
2.24 Inglewood Main Office 0.03% GACC 329,896
2.25 Inland Empire Cash Vault 0.06% GACC 570,496
2.26 Irvine Industrial 0.04% GACC 347,259
2.27 La Jolla Main 0.05% GACC 465,009
- ---------------------------------------------------------------------------------------------------------------------------
2.28 Lake & Colorado Br 0.06% GACC 545,692
2.29 Lincoln Heights Branch 0.01% GACC 136,423
2.30 Long Beach Financial 0.07% GACC 644,909
2.31 Lynwood Branch 0.01% GACC 125,261
2.32 North Hollywood 0.03% GACC 290,209
- ---------------------------------------------------------------------------------------------------------------------------
2.33 North Sacramento Branch 0.02% GACC 173,629
2.34 Oak Park Branch 0.01% GACC 136,423
2.35 Palmdale Branch 0.01% GACC 124,021
2.36 Pico-Vermont Branch 0.01% GACC 85,574
2.37 Pomona Main 0.06% GACC 545,692
- ---------------------------------------------------------------------------------------------------------------------------
2.38 Red Bluff Branch 0.00% GACC -
2.39 Redding Main Branch 0.04% GACC 434,073
2.40 Riverside Main 0.05% GACC 483,682
2.41 Salinas Main Branch 0.03% GACC 260,444
2.42 San Bernadino Main 0.03% GACC 272,846
- ---------------------------------------------------------------------------------------------------------------------------
2.43 Santa Barbara 0.04% GACC 403,068
2.44 Santa Maria Branch 0.03% GACC 264,165
2.45 Sepulveda-Devonshire BR 0.02% GACC 168,669
2.46 Stockdale 0.02% GACC 161,227
2.47 Stockton Main Office 0.06% GACC 582,899
- ---------------------------------------------------------------------------------------------------------------------------
2.48 Sunnyvale Main Branch 0.05% GACC 496,084
2.49 Torrance Sartori 0.03% GACC 280,287
2.50 Van Ness & Market 0.70% GACC 6,737,880
2.51 Ventura Main Office 0.02% GACC 174,870
2.52 Whittier Office 0.05% GACC 458,878
- ---------------------------------------------------------------------------------------------------------------------------
2.53 Willow-Daisy Branch 0.01% GACC 111,619
2.54 Yuba City Branch 0.02% GACC 238,740
2.55 Century Park 0.10% GACC 992,168
2.56 Clermont 0.00% GACC 43,407
2.57 Cordova 0.03% GACC 253,003
- ---------------------------------------------------------------------------------------------------------------------------
2.58 Downtown Palmetto 0.01% GACC 89,915
2.59 Gulf to Bay 0.02% GACC 210,836
2.60 Hallandale Beach 0.05% GACC 446,475
2.61 Hollywood/Tyler 0.00% GACC -
2.62 Jacksonville Ops CTR/#100 0.31% GACC 2,988,905
- ---------------------------------------------------------------------------------------------------------------------------
2.63 Jacksonville Ops CTR/#200 0.17% GACC 1,637,077
2.64 Jacksonville Ops CTR/#300 0.16% GACC 1,550,262
2.65 Jacksonville Ops CTR/#400 0.25% GACC 2,418,409
2.66 Jacksonville Ops CTR/#500 0.17% GACC 1,599,871
2.67 Jacksonville Ops CTR/#600 0.42% GACC 4,043,084
- ---------------------------------------------------------------------------------------------------------------------------
CUT-OFF GENERAL DETAILED
DATE PROPERTY PROPERTY INTEREST ADMINISTRATIVE
ID BALANCE TYPE TYPE RATE (9) FEE RATE
- ---------------------------------------------------------------------------------------------------------------------------
1 147,500,000 Retail Anchored 5.2240% 0.03210%
2 85,000,000 Office Office, Operation Centers, and Retail Bank Branches 5.4891% 0.03210%
2.1 90,155 Office Office Space
2.2 595,301 Office Operations Center
- ---------------------------------------------------------------------------------------------------------------------------
2.3 - Mixed Use Office / Retail
2.4 1,684,205 Office Operations Center
2.5 600,261 Office Operations Center
2.6 595,301 Office Operations Center
2.7 223,238 Office Office Space
- ---------------------------------------------------------------------------------------------------------------------------
2.8 1,602,971 Office Operations Center
2.9 223,238 Office Office Space
2.10 136,423 Mixed Use Office / Retail
2.11 141,384 Mixed Use Office / Retail
2.12 168,669 Mixed Use Office / Retail
- ---------------------------------------------------------------------------------------------------------------------------
2.13 483,682 Office Office Space
2.14 173,629 Office Office Space
2.15 99,217 Mixed Use Office / Retail
2.16 704,439 Office Office Space
2.17 699,478 Office Office Space
- ---------------------------------------------------------------------------------------------------------------------------
2.18 537,132 Office Office Space
2.19 194,713 Mixed Use Office / Retail
2.20 272,846 Office Office Space
2.21 255,483 Office Operations Center
2.22 342,298 Office Office Space
- ---------------------------------------------------------------------------------------------------------------------------
2.23 744,126 Office Office Space
2.24 329,896 Office Office Space
2.25 570,496 Office Operations Center
2.26 347,259 Office Office Space
2.27 465,009 Office Office Space
- ---------------------------------------------------------------------------------------------------------------------------
2.28 545,692 Office Office Space
2.29 136,423 Mixed Use Office / Retail
2.30 644,909 Office Office Space
2.31 125,261 Mixed Use Office / Retail
2.32 290,209 Office Office Space
- ---------------------------------------------------------------------------------------------------------------------------
2.33 173,629 Mixed Use Office / Retail
2.34 136,423 Mixed Use Office / Retail
2.35 124,021 Mixed Use Office / Retail
2.36 85,574 Mixed Use Office / Retail
2.37 545,692 Office Office Space
- ---------------------------------------------------------------------------------------------------------------------------
2.38 - Office Office Space
2.39 434,073 Office Office Space
2.40 483,682 Office Office Space
2.41 260,444 Office Office Space
2.42 272,846 Office Office Space
- ---------------------------------------------------------------------------------------------------------------------------
2.43 403,068 Office Office Space
2.44 264,165 Office Office Space
2.45 168,669 Mixed Use Office / Retail
2.46 161,227 Mixed Use Office / Retail
2.47 582,899 Office Office Space
- ---------------------------------------------------------------------------------------------------------------------------
2.48 496,084 Office Office Space
2.49 280,287 Office Office Space
2.50 6,737,880 Office Office Space
2.51 174,870 Office Office Space
2.52 458,878 Office Office Space
- ---------------------------------------------------------------------------------------------------------------------------
2.53 111,619 Mixed Use Office / Retail
2.54 238,740 Mixed Use Office / Retail
2.55 992,168 Office Office Space
2.56 43,407 Mixed Use Banking Center
2.57 253,003 Office Office Space
- ---------------------------------------------------------------------------------------------------------------------------
2.58 89,915 Office Office Space
2.59 210,836 Office Office Space
2.60 446,475 Office Office Space
2.61 - Office Office Space
2.62 2,988,905 Office Office Space
- ---------------------------------------------------------------------------------------------------------------------------
2.63 1,637,077 Office Office Space
2.64 1,550,262 Office Office Space
2.65 2,418,409 Office Office Space
2.66 1,599,871 Office Office Space
2.67 4,043,084 Office Operations Center
- ---------------------------------------------------------------------------------------------------------------------------
INTEREST ORIGINAL STATED REMAINING ORIGINAL REMAINING FIRST MATURITY
ACCRUAL TERM TO MATURITY TERM TO MATURITY AMORTIZATION AMORTIZATION PAYMENT DATE
ID BASIS OR APD (MOS.) OR APD (MOS.) TERM (MOS.) TERM (MOS.) DATE OR ARD
- --------------------------------------------------------------------------------------------------------------------
1 30/360 120 120 360 360 04/1/2004 03/1/2014
2 Actual/360 120 117 330 330 01/1/2004 12/1/2013
2.1
2.2
- --------------------------------------------------------------------------------------------------------------------
2.3
2.4
2.5
2.6
2.7
- --------------------------------------------------------------------------------------------------------------------
2.8
2.9
2.10
2.11
2.12
- --------------------------------------------------------------------------------------------------------------------
2.13
2.14
2.15
2.16
2.17
- --------------------------------------------------------------------------------------------------------------------
2.18
2.19
2.20
2.21
2.22
- --------------------------------------------------------------------------------------------------------------------
2.23
2.24
2.25
2.26
2.27
- --------------------------------------------------------------------------------------------------------------------
2.28
2.29
2.30
2.31
2.32
- --------------------------------------------------------------------------------------------------------------------
2.33
2.34
2.35
2.36
2.37
- --------------------------------------------------------------------------------------------------------------------
2.38
2.39
2.40
2.41
2.42
- --------------------------------------------------------------------------------------------------------------------
2.43
2.44
2.45
2.46
2.47
- --------------------------------------------------------------------------------------------------------------------
2.48
2.49
2.50
2.51
2.52
- --------------------------------------------------------------------------------------------------------------------
2.53
2.54
2.55
2.56
2.57
- --------------------------------------------------------------------------------------------------------------------
2.58
2.59
2.60
2.61
2.62
- --------------------------------------------------------------------------------------------------------------------
2.63
2.64
2.65
2.66
2.67
- --------------------------------------------------------------------------------------------------------------------
ANNUAL MONTHLY REMAINING CROSSED
DEBT DEBT INTEREST ONLY ARD WITH DSCR
ID SERVICE (2) SERVICE (2) PERIOD (MOS.) LOCKBOX (3) (YES/NO) OTHER LOANS (12) (2)(4)(8)(14)
- -------------------------------------------------------------------------------------------------------------------------------
1 9,745,521 812,127 24 Hard No No 1.88
2 5,995,419 499,618 15 Hard No No 1.92
2.1
2.2
- -------------------------------------------------------------------------------------------------------------------------------
2.3
2.4
2.5
2.6
2.7
- -------------------------------------------------------------------------------------------------------------------------------
2.8
2.9
2.10
2.11
2.12
- -------------------------------------------------------------------------------------------------------------------------------
2.13
2.14
2.15
2.16
2.17
- -------------------------------------------------------------------------------------------------------------------------------
2.18
2.19
2.20
2.21
2.22
- -------------------------------------------------------------------------------------------------------------------------------
2.23
2.24
2.25
2.26
2.27
- -------------------------------------------------------------------------------------------------------------------------------
2.28
2.29
2.30
2.31
2.32
- -------------------------------------------------------------------------------------------------------------------------------
2.33
2.34
2.35
2.36
2.37
- -------------------------------------------------------------------------------------------------------------------------------
2.38
2.39
2.40
2.41
2.42
- -------------------------------------------------------------------------------------------------------------------------------
2.43
2.44
2.45
2.46
2.47
- -------------------------------------------------------------------------------------------------------------------------------
2.48
2.49
2.50
2.51
2.52
- -------------------------------------------------------------------------------------------------------------------------------
2.53
2.54
2.55
2.56
2.57
- -------------------------------------------------------------------------------------------------------------------------------
2.58
2.59
2.60
2.61
2.62
- -------------------------------------------------------------------------------------------------------------------------------
2.63
2.64
2.65
2.66
2.67
- -------------------------------------------------------------------------------------------------------------------------------
CUT-OFF
GRACE PAYMENT APPRAISED DATE LTV LTV RATIO AT
ID PERIOD DATE VALUE (5) RATIO (4)(8)(14) MATURITY/APD (4)(14)
- --------------------------------------------------------------------------------------
1 5 1 650,000,000 52.31% 45.14%
2 5 1 719,705,000 47.24% 39.64%
2.1 950,000
2.2 4,800,000
- --------------------------------------------------------------------------------------
2.3 600,000
2.4 13,580,000
2.5 4,840,000
2.6 4,800,000
2.7 1,800,000
- --------------------------------------------------------------------------------------
2.8 12,925,000
2.9 1,800,000
2.10 1,100,000
2.11 1,140,000
2.12 1,360,000
- --------------------------------------------------------------------------------------
2.13 3,900,000
2.14 1,400,000
2.15 800,000
2.16 5,680,000
2.17 5,640,000
- --------------------------------------------------------------------------------------
2.18 5,660,000
2.19 1,570,000
2.20 2,200,000
2.21 2,060,000
2.22 2,760,000
- --------------------------------------------------------------------------------------
2.23 6,000,000
2.24 2,660,000
2.25 4,600,000
2.26 2,800,000
2.27 4,900,000
- --------------------------------------------------------------------------------------
2.28 4,400,000
2.29 1,100,000
2.30 5,200,000
2.31 1,010,000
2.32 2,340,000
- --------------------------------------------------------------------------------------
2.33 1,400,000
2.34 1,100,000
2.35 1,000,000
2.36 690,000
2.37 4,400,000
- --------------------------------------------------------------------------------------
2.38 2,100,000
2.39 3,500,000
2.40 3,900,000
2.41 2,100,000
2.42 2,200,000
- --------------------------------------------------------------------------------------
2.43 3,250,000
2.44 2,130,000
2.45 1,360,000
2.46 1,300,000
2.47 4,700,000
- --------------------------------------------------------------------------------------
2.48 4,000,000
2.49 1,140,000
2.50 71,000,000
2.51 2,260,000
2.52 3,700,000
- --------------------------------------------------------------------------------------
2.53 900,000
2.54 1,925,000
2.55 8,000,000
2.56 350,000
2.57 2,040,000
- --------------------------------------------------------------------------------------
2.58 725,000
2.59 1,700,000
2.60 3,600,000
2.61 1,500,000
2.62 24,100,000
- --------------------------------------------------------------------------------------
2.63 13,200,000
2.64 12,500,000
2.65 19,500,000
2.66 12,900,000
2.67 32,600,000
- --------------------------------------------------------------------------------------
ID ADDRESS
- -------------------------------------------------------------------------------------------
1 1961 Chain Bridge Road
2 Various
2.1 204 East Rush
2.2 1825 East Buckeye Road
- -------------------------------------------------------------------------------------------
2.3 51 E Camelback Road
2.4 1825 East Buckeye Road
2.5 1825 East Buckeye Road
2.6 1825 East Buckeye Road
2.7 63 West Main Street
- -------------------------------------------------------------------------------------------
2.8 1825 East Buckeye Road
2.9 900 High Street
2.10 3804 Atlantic Avenue
2.11 2611 South Cedar Avenue
2.12 3435 N Cedar Ave
- -------------------------------------------------------------------------------------------
2.13 1199 Orange Ave
2.14 1201 Baker Street
2.15 518 So. Long Beach Boulevard
2.16 300 Ellinwood Way
2.17 400 Ellinwood Way
- -------------------------------------------------------------------------------------------
2.18 500 Ellinwood Way
2.19 835 North Sepulveda Boulevard
2.20 220 South Escondido Boulevard
2.21 2111 Tuolumne Street
2.22 1450 West Redondo Beach Boulevard
- -------------------------------------------------------------------------------------------
2.23 345 North Brand Boulevard
2.24 330 East Manchester Boulevard
2.25 1275 SO Dupont Avenue
2.26 4101 MacArthur Boulevard
2.27 7680 Girard Avenue
- -------------------------------------------------------------------------------------------
2.28 880 E Colorado Boulevard
2.29 2400 North Broadway
2.30 150 Long Beach Boulevard
2.31 3505 East Imperial Highway
2.32 5025 Lankershim Boulevard
- -------------------------------------------------------------------------------------------
2.33 1830 Del Paso Boulevard
2.34 3810 Broadway
2.35 839 East Palmdale Boulevard
2.36 1232 South Vermont Avenue
2.37 444 South Garey Avenue
- -------------------------------------------------------------------------------------------
2.38 955 Main Street
2.39 1661 East Street
2.40 3650 14th Street
2.41 405 Main Street
2.42 303 North D Street
- -------------------------------------------------------------------------------------------
2.43 834 State Street
2.44 300 Town Center East
2.45 10300-10306 Sepul Veda Boulevard
2.46 5021 California Avenue
2.47 110 East Weber Street
- -------------------------------------------------------------------------------------------
2.48 444 South Mathilda Avenue
2.49 1255 Sartori Avenue
2.50 One South Van Ness Boulevard
2.51 1130 South Victoria
2.52 7255 South Greenleaf Avenue
- -------------------------------------------------------------------------------------------
2.53 600 West Willow Street
2.54 1100 Butte House Road
2.55 1000 Century Park Road
2.56 690 East Highway 50
2.57 5061 Bayou Boulevard
- -------------------------------------------------------------------------------------------
2.58 700 8th Avenue West
2.59 1640 Gulf to Bay Boulevard
2.60 801 East Hallandale Boulevard
2.61 1900 Tyler Street
2.62 9000 Southside Boulevard
- -------------------------------------------------------------------------------------------
2.63 9000 Southside Boulevard
2.64 9000 Southside Boulevard
2.65 9000 Southside Boulevard
2.66 9000 Southside Boulevard
2.67 9000 Southside Boulevard
- -------------------------------------------------------------------------------------------
YEAR YEAR
ID CITY COUNTY STATE ZIP CODE BUILT RENOVATED
- ---------------------------------------------------------------------------------------------------
1 McLean Fairfax VA 22102 1968 1988
2 Various Various Various Various Various Various
2.1 Harrison Boone AR 72601 1964 1972/1980
2.2 Phoenix Maricopa AZ 85034 1989
- ---------------------------------------------------------------------------------------------------
2.3 Phoenix Maricopa AZ 85012 1970
2.4 Phoenix Maricopa AZ 85034 1989
2.5 Phoenix Maricopa AZ 85034 1989
2.6 Phoenix Maricopa AZ 85034 1989
2.7 Mesa Maricopa AZ 85201 1990
- ---------------------------------------------------------------------------------------------------
2.8 Phoenix Maricopa AZ 85034 1995
2.9 Auburn Placer CA 95603 1955
2.10 Long Beach Los Angeles CA 90807 1955
2.11 Fresno Fresno CA 93725 1981
2.12 Fresno Fresno CA 93726 1981
- ---------------------------------------------------------------------------------------------------
2.13 Coronado San Diego CA 92118 1983
2.14 Bakersfield Kern CA 93305 1972
2.15 Compton Los Angeles CA 90221 1962 1976
2.16 Pleasant Hill Contra Costa CA 94523 1981/1982
2.17 Pleasant Hill Contra Costa CA 94523 1982/1983
- ---------------------------------------------------------------------------------------------------
2.18 Pleasant Hill Contra Costa CA 94523 1983/1984
2.19 El Segundo Los Angeles CA 90245 1980
2.20 Escondido San Diego CA 92025 1978
2.21 Fresno Fresno CA 93721 1965
2.22 Gardena Los Angeles CA 90247 1979/1983
- ---------------------------------------------------------------------------------------------------
2.23 Glendale Los Angeles CA 91203 1968
2.24 Inglewood Los Angeles CA 90301 1948/1954
2.25 Ontario San Bernadino CA 91761 1988
2.26 Newport Beach Orange CA 92660 1981
2.27 La Jolla San Diego CA 92037 1975
- ---------------------------------------------------------------------------------------------------
2.28 Pasadena Los Angeles CA 91106 1952
2.29 Los Angeles Los Angeles CA 90031 1976
2.30 Long Beach Los Angeles CA 90802 1981
2.31 Lynwood Los Angeles CA 90262 1974
2.32 North Hollywood Los Angeles CA 91601 1971
- ---------------------------------------------------------------------------------------------------
2.33 Sacramento Sacramento CA 95815 1954/1975/1980
2.34 Sacramento Sacramento CA 95817 1960
2.35 Palmdale Los Angeles CA 93550 1980
2.36 Los Angeles Los Angeles CA 90006 1959
2.37 Pomona Los Angeles CA 91766 1979
- ---------------------------------------------------------------------------------------------------
2.38 Red Bluff Tehama CA 96080 1983 2001
2.39 Redding Shasta CA 96001 1978
2.40 Riverside Riverside CA 92501 1976
2.41 Salinas Monterey CA 93901 1968
2.42 San Bernardino San Bernadino CA 92418 1970
- ---------------------------------------------------------------------------------------------------
2.43 Santa Barbara Santa Barbara CA 93101 1926 1963
2.44 Santa Maria Santa Barbara CA 93454 1976
2.45 Mission Hills Los Angeles CA 91345 1955
2.46 Bakersfield Kern CA 93309 1981
2.47 Stockton San Joaquin CA 95202 1971-1973 1995
- ---------------------------------------------------------------------------------------------------
2.48 Sunnyvale Santa Clara CA 94086 1978
2.49 Torrance Los Angeles CA 90501 1936
2.50 San Francisco San Francisco CA 94103 1959 1989
2.51 Ventura Ventura CA 93003 1978
2.52 Whittier Los Angeles CA 90602 1980
- ---------------------------------------------------------------------------------------------------
2.53 Long Beach Los Angeles CA 90806 1962
2.54 Yuba City Sutter CA 95991 1981
2.55 Tampa Hillsborough FL 33607 1984
2.56 Clermont Lake FL 34711 1973
2.57 Pensacola Escambia FL 32503 1975 1993
- ---------------------------------------------------------------------------------------------------
2.58 Palmetto Manatee FL 34221 1950 2002
2.59 Clearwater Pinellas FL 33755 1971 2001
2.60 Hallandale Broward FL 33009 1960's 1996
2.61 Hollywood Broward FL 33020 1958
2.62 Jacksonville Duval FL 32256 1990
- ---------------------------------------------------------------------------------------------------
2.63 Jacksonville Duval FL 32256 1990
2.64 Jacksonville Duval FL 32256 1990
2.65 Jacksonville Duval FL 32256 1990
2.66 Jacksonville Duval FL 32256 1990
2.67 Jacksonville Duval FL 32256 1990
- ---------------------------------------------------------------------------------------------------
NET UNITS LOAN PER NET PREPAYMENT
RENTABLE OF RENTABLE AREA PROVISIONS
ID AREA SF/UNITS (6) MEASURE SF/UNITS (4)(6) (# OF PAYMENTS) (7)(13)
- -----------------------------------------------------------------------------------------------
1 1,554,116 Sq Ft 219 L(24);D(89);O(7)
2 7,774,995 Sq. Ft. 44 L(24);D(91);O(5)
2.1 23,521 Sq. Ft. 4
2.2 62,457 Sq. Ft. 10
- -----------------------------------------------------------------------------------------------
2.3 10,067 Sq. Ft. -
2.4 170,151 Sq. Ft. 10
2.5 62,482 Sq. Ft. 10
2.6 62,469 Sq. Ft. 10
2.7 20,847 Sq. Ft. 11
- -----------------------------------------------------------------------------------------------
2.8 150,000 Sq. Ft. 11
2.9 15,900 Sq. Ft. 14
2.10 11,937 Sq. Ft. 11
2.11 12,971 Sq. Ft. 11
2.12 14,539 Sq. Ft. 12
- -----------------------------------------------------------------------------------------------
2.13 21,356 Sq. Ft. 23
2.14 14,860 Sq. Ft. 12
2.15 10,990 Sq. Ft. 9
2.16 43,104 Sq. Ft. 16
2.17 42,766 Sq. Ft. 16
- -----------------------------------------------------------------------------------------------
2.18 42,971 Sq. Ft. 12
2.19 13,117 Sq. Ft. 15
2.20 22,400 Sq. Ft. 12
2.21 22,065 Sq. Ft. 12
2.22 27,906 Sq. Ft. 12
- -----------------------------------------------------------------------------------------------
2.23 46,338 Sq. Ft. 16
2.24 28,909 Sq. Ft. 11
2.25 62,659 Sq. Ft. 9
2.26 21,511 Sq. Ft. 16
2.27 31,482 Sq. Ft. 15
- -----------------------------------------------------------------------------------------------
2.28 33,033 Sq. Ft. 17
2.29 16,285 Sq. Ft. 8
2.30 42,941 Sq. Ft. 15
2.31 12,720 Sq. Ft. 10
2.32 22,780 Sq. Ft. 13
- -----------------------------------------------------------------------------------------------
2.33 14,437 Sq. Ft. 12
2.34 10,560 Sq. Ft. 13
2.35 13,278 Sq. Ft. 9
2.36 10,660 Sq. Ft. 8
2.37 33,513 Sq. Ft. 16
- -----------------------------------------------------------------------------------------------
2.38 20,320 Sq. Ft. -
2.39 32,200 Sq. Ft. 13
2.40 38,500 Sq. Ft. 13
2.41 20,967 Sq. Ft. 12
2.42 46,273 Sq. Ft. 6
- -----------------------------------------------------------------------------------------------
2.43 24,406 Sq. Ft. 17
2.44 20,956 Sq. Ft. 13
2.45 16,178 Sq. Ft. 10
2.46 16,000 Sq. Ft. 10
2.47 36,250 Sq. Ft. 16
- -----------------------------------------------------------------------------------------------
2.48 34,559 Sq. Ft. 14
2.49 16,200 Sq. Ft. 17
2.50 481,064 Sq. Ft. 14
2.51 21,576 Sq. Ft. 8
2.52 37,996 Sq. Ft. 12
- -----------------------------------------------------------------------------------------------
2.53 10,736 Sq. Ft. 10
2.54 18,900 Sq. Ft. 13
2.55 68,868 Sq. Ft. 14
2.56 13,572 Sq. Ft. 3
2.57 27,585 Sq. Ft. 9
- -----------------------------------------------------------------------------------------------
2.58 28,909 Sq. Ft. 3
2.59 17,191 Sq. Ft. 12
2.60 42,944 Sq. Ft. 10
2.61 27,712 Sq. Ft. -
2.62 233,311 Sq. Ft. 13
- -----------------------------------------------------------------------------------------------
2.63 122,666 Sq. Ft. 13
2.64 113,861 Sq. Ft. 14
2.65 172,511 Sq. Ft. 14
2.66 116,749 Sq. Ft. 14
2.67 295,895 Sq. Ft. 14
- -----------------------------------------------------------------------------------------------
Fourth Fourth Third Third Most
Most Recent Recent NOI Most Recent Recent NOI
ID Property Name NOI Date NOI Date
- ---------------------------------------------------------------------------------------------------------------------
1 Tysons Corner Center 40,021,560 06/30/2001
2 AFR/Bank of America Portfolio (10)
2.1 Harrison Main
2.2 Camelback-Bank of America CTR
- ---------------------------------------------------------------------------------------------------------------------
2.3 Camelback Uptown
2.4 Catalina-Bank of America Ctr
2.5 Maricopa-Bank of America Ctr
2.6 McDowell-Bank of America Ctr
2.7 Mesa Main
- ---------------------------------------------------------------------------------------------------------------------
2.8 South Mountain-Bank of America
2.9 Auburn
2.10 Bixby-Atlantic
2.11 Calwa
2.12 Cedar & Shields
- ---------------------------------------------------------------------------------------------------------------------
2.13 Coronado Branch
2.14 East Bakersfield Office
2.15 East Compton Branch
2.16 Ellinwood Center #300
2.17 Ellinwood Center #400
- ---------------------------------------------------------------------------------------------------------------------
2.18 Ellinwood Center #500
2.19 El Segundo
2.20 Escondido Main Office
2.21 Fresno Proof/Vault
2.22 Gardena Main
- ---------------------------------------------------------------------------------------------------------------------
2.23 Glendale Main
2.24 Inglewood Main Office
2.25 Inland Empire Cash Vault
2.26 Irvine Industrial
2.27 La Jolla Main
- ---------------------------------------------------------------------------------------------------------------------
2.28 Lake & Colorado Br
2.29 Lincoln Heights Branch
2.30 Long Beach Financial
2.31 Lynwood Branch
2.32 North Hollywood
- ---------------------------------------------------------------------------------------------------------------------
2.33 North Sacramento Branch
2.34 Oak Park Branch
2.35 Palmdale Branch
2.36 Pico-Vermont Branch
2.37 Pomona Main
- ---------------------------------------------------------------------------------------------------------------------
2.38 Red Bluff Branch
2.39 Redding Main Branch
2.40 Riverside Main
2.41 Salinas Main Branch
2.42 San Bernadino Main
- ---------------------------------------------------------------------------------------------------------------------
2.43 Santa Barbara
2.44 Santa Maria Branch
2.45 Sepulveda-Devonshire BR
2.46 Stockdale
2.47 Stockton Main Office
- ---------------------------------------------------------------------------------------------------------------------
2.48 Sunnyvale Main Branch
2.49 Torrance Sartori
2.50 Van Ness & Market
2.51 Ventura Main Office
2.52 Whittier Office
- ---------------------------------------------------------------------------------------------------------------------
2.53 Willow-Daisy Branch
2.54 Yuba City Branch
2.55 Century Park
2.56 Clermont
2.57 Cordova
- ---------------------------------------------------------------------------------------------------------------------
2.58 Downtown Palmetto
2.59 Gulf to Bay
2.60 Hallandale Beach
2.61 Hollywood/Tyler
2.62 Jacksonville Ops CTR/#100
- ---------------------------------------------------------------------------------------------------------------------
2.63 Jacksonville Ops CTR/#200
2.64 Jacksonville Ops CTR/#300
2.65 Jacksonville Ops CTR/#400
2.66 Jacksonville Ops CTR/#500
2.67 Jacksonville Ops CTR/#600
- ---------------------------------------------------------------------------------------------------------------------
SECOND SECOND MOST MOST RECENT
MOST RECENT RECENT NOI MOST RECENT NOI UNDERWRITTEN UNDERWRITTEN UNDERWRITTEN
ID NOI DATE NOI DATE NOI (4) REVENUE EGI
- -----------------------------------------------------------------------------------------------------------------------
1 38,192,742 06/30/2002 41,320,162 T-12 11/30/2003 43,158,704 35,837,555 63,222,014
2 47,703,725 106,929,051 99,291,236
2.1 (23,248) 250,384 65,997
2.2 545,224 738,030 738,030
- -----------------------------------------------------------------------------------------------------------------------
2.3 12,547 182,531 182,531
2.4 1,000,895 1,513,386 1,513,386
2.5 529,565 722,023 722,023
2.6 545,329 738,171 738,171
2.7 179,653 339,664 339,664
- -----------------------------------------------------------------------------------------------------------------------
2.8 558,166 1,001,288 1,001,288
2.9 93,761 202,453 159,997
2.10 103,473 170,304 170,304
2.11 112,547 180,678 180,678
2.12 126,111 204,163 204,163
- -----------------------------------------------------------------------------------------------------------------------
2.13 217,605 366,636 366,636
2.14 129,011 204,004 204,004
2.15 95,240 157,793 157,793
2.16 133,042 503,781 503,781
2.17 133,042 503,781 503,781
- -----------------------------------------------------------------------------------------------------------------------
2.18 133,042 503,781 503,781
2.19 113,639 189,695 189,695
2.20 193,937 328,948 328,948
2.21 161,083 387,171 278,252
2.22 166,670 368,520 323,547
- -----------------------------------------------------------------------------------------------------------------------
2.23 400,327 714,931 714,931
2.24 210,721 366,128 366,128
2.25 350,217 611,728 451,044
2.26 185,257 355,189 355,189
2.27 65,178 328,068 251,726
- -----------------------------------------------------------------------------------------------------------------------
2.28 278,805 491,889 491,889
2.29 111,791 223,118 196,518
2.30 364,370 631,843 610,943
2.31 110,258 181,589 181,589
2.32 153,081 321,872 283,872
- -----------------------------------------------------------------------------------------------------------------------
2.33 91,966 189,282 157,931
2.34 91,807 139,884 139,884
2.35 99,765 183,598 169,424
2.36 92,448 150,364 150,364
2.37 212,120 521,512 464,512
- -----------------------------------------------------------------------------------------------------------------------
2.38 122,029 256,065 202,714
2.39 87,548 395,033 233,533
2.40 344,328 561,009 561,009
2.41 166,888 257,534 257,534
2.42 243,552 458,745 458,745
- -----------------------------------------------------------------------------------------------------------------------
2.43 191,182 372,592 372,592
2.44 150,565 284,070 254,913
2.45 156,086 237,739 237,739
2.46 113,040 223,279 200,479
2.47 263,190 494,957 447,456
- -----------------------------------------------------------------------------------------------------------------------
2.48 299,773 484,837 484,837
2.49 123,935 223,787 208,397
2.50 3,252,726 8,768,839 8,220,935
2.51 187,175 301,941 301,941
2.52 211,006 421,496 396,796
- -----------------------------------------------------------------------------------------------------------------------
2.53 93,063 153,167 153,167
2.54 121,982 242,868 201,828
2.55 575,558 964,813 964,813
2.56 28,341 223,099 174,592
2.57 127,209 345,413 261,195
- -----------------------------------------------------------------------------------------------------------------------
2.58 35,015 250,174 154,795
2.59 125,254 207,905 192,705
2.60 156,311 535,321 347,202
2.61 (4,190) 194,246 165,746
2.62 2,097,231 3,472,126 3,472,126
- -----------------------------------------------------------------------------------------------------------------------
2.63 1,038,946 1,780,700 1,780,700
2.64 955,610 1,651,351 1,651,351
2.65 1,339,155 2,403,980 2,403,980
2.66 944,261 1,656,704 1,656,704
2.67 2,107,372 3,905,218 3,905,218
- -----------------------------------------------------------------------------------------------------------------------
UNDERWRITTEN UNDERWRITTEN UNDERWRITTEN UNDERWRITTEN NET
ID EXPENSES RESERVES TI/LC (11) CASH FLOW (4)(11) LARGEST TENANT SF
- ---------------------------------------------------------------------------------------------------------------------------------
1 20,063,310 300,000 633,849 42,224,855 Bloomingdale's 255,888
2 51,587,505 663,100 1,033,319 46,007,301
2.1 89,246 7,002 - (30,250) Bank of America N.A. 23,521
2.2 192,806 - - 545,224 Bank of America N.A. 62,457
- ---------------------------------------------------------------------------------------------------------------------------------
2.3 169,983 900 - 11,648 Bank of America N.A. 6,544
2.4 512,491 11,639 - 989,255 Bank of America N.A. 129,793
2.5 192,458 1,719 - 527,845 Bank of America N.A. 56,271
2.6 192,842 - - 545,329 Bank of America N.A. 62,469
2.7 160,011 - - 179,653 Bank of America N.A. 20,847
- ---------------------------------------------------------------------------------------------------------------------------------
2.8 443,122 13,146 - 545,020 Bank of America N.A. 72,086
2.9 66,236 1,849 - 91,912 Bank of America N.A. 15,900
2.10 66,830 - - 103,473 Bank of America N.A. 11,937
2.11 68,132 - - 112,547 Bank of America N.A. 12,971
2.12 78,052 - - 126,111 Bank of America N.A. 14,539
- ---------------------------------------------------------------------------------------------------------------------------------
2.13 149,031 8,314 - 209,290 Bank of America N.A. 12,434
2.14 74,992 - - 129,011 Bank of America N.A. 14,860
2.15 62,553 - - 95,240 Bank of America N.A. 10,990
2.16 370,739 2,108 - 130,934 Bank of America N.A. 43,104
2.17 370,739 2,108 - 130,934 Bank of America N.A. 42,766
- ---------------------------------------------------------------------------------------------------------------------------------
2.18 370,739 2,108 - 130,934
2.19 76,056 - - 113,639 Bank of America N.A. 13,117
2.20 135,012 - - 193,937 Bank of America N.A. 22,400
2.21 117,170 2,753 - 158,330 Bank of America N.A. 22,065
2.22 156,877 3,013 - 163,657 Bank of America N.A. 24,808
- ---------------------------------------------------------------------------------------------------------------------------------
2.23 314,604 - - 400,327 Bank of America N.A. 46,338
2.24 155,408 982 - 209,738 Bank of America N.A. 25,045
2.25 100,828 5,062 - 345,155 Bank of America N.A. 62,659
2.26 169,932 - - 185,257 Bank of America N.A. 21,511
2.27 186,548 18,573 - 46,605 Bank of America N.A. 16,036
- ---------------------------------------------------------------------------------------------------------------------------------
2.28 213,084 501 - 278,305 Bank of America N.A. 32,405
2.29 84,727 1,328 - 110,463 Bank of America N.A. 16,285
2.30 246,573 1,976 - 362,394 Bank of America N.A. 42,941
2.31 71,331 - - 110,258 Bank of America N.A. 12,720
2.32 130,791 2,807 - 150,274 Bank of America N.A. 22,780
- ---------------------------------------------------------------------------------------------------------------------------------
2.33 65,965 361 - 91,605 Bank of America N.A. 14,437
2.34 48,077 - - 91,807 Bank of America N.A. 10,560
2.35 69,659 148 - 99,617 Bank of America N.A. 13,278
2.36 57,916 - - 92,448 Bank of America N.A. 10,660
2.37 252,392 999 - 211,121 Bank of America N.A. 33,513
- ---------------------------------------------------------------------------------------------------------------------------------
2.38 80,685 521 - 121,508 Bank of America N.A. 20,320
2.39 145,985 4,538 - 83,010 Bank of America N.A. 32,200
2.40 216,681 - - 344,328 Bank of America N.A. 38,500
2.41 90,646 153 - 166,735 Bank of America N.A. 20,423
2.42 215,193 6,854 - 236,698 Bank of America N.A. 31,129
- ---------------------------------------------------------------------------------------------------------------------------------
2.43 181,410 92 - 191,090 Bank of America N.A. 22,804
2.44 104,348 601 - 149,964 Bank of America N.A. 20,956
2.45 81,653 1,438 - 154,649 Bank of America N.A. 12,438
2.46 87,439 333 - 112,707 Bank of America N.A. 16,000
2.47 184,266 1,898 - 261,292 Bank of America N.A. 36,250
- ---------------------------------------------------------------------------------------------------------------------------------
2.48 185,064 - - 299,773 Bank of America N.A. 34,559
2.49 84,462 1,188 - 122,747 Bank of America N.A. 16,200
2.50 4,968,209 53,844 - 3,198,882 Bank of America N.A. 277,524
2.51 114,767 - - 187,175 Bank of America N.A. 21,576
2.52 185,790 1,567 - 209,439 Bank of America N.A. 29,113
- ---------------------------------------------------------------------------------------------------------------------------------
2.53 60,104 - - 93,063 Bank of America N.A. 10,736
2.54 79,846 179 - 121,803 Bank of America N.A. 18,900
2.55 389,255 418 - 575,140 Bank of America N.A. 66,203
2.56 146,251 1,423 - 26,918 Bank of America N.A. 13,447
2.57 133,986 15,222 - 111,987 Bank of America N.A. 22,198
- ---------------------------------------------------------------------------------------------------------------------------------
2.58 119,780 8,017 - 26,998 Bank of America N.A. 18,538
2.59 67,451 168 - 125,086 Bank of America N.A. 17,191
2.60 190,891 6,198 - 150,113 Bank of America N.A. 42,944
2.61 169,936 1,582 - (5,772) Bank of America N.A. 12,203
2.62 1,374,895 49 - 2,097,182 Bank of America N.A. 232,441
- ---------------------------------------------------------------------------------------------------------------------------------
2.63 741,754 173 - 1,038,773 Bank of America N.A. 120,477
2.64 695,741 90 - 955,520 Bank of America N.A. 111,037
2.65 1,064,825 1,067 - 1,338,088 Bank of America N.A. 158,404
2.66 712,443 682 - 943,579 Bank of America N.A. 110,560
2.67 1,797,846 4,832 - 2,102,541 Bank of America N.A. 254,800
- ---------------------------------------------------------------------------------------------------------------------------------
LEASE LEASE
ID EXPIRATION 2ND LARGEST TENANT SF EXPIRATION 3RD LARGEST TENANT
- ------------------------------------------------------------------------------------------------------------------------------------
1 07/22/2008 Hecht's 237,076 07/24/2008 LL Bean
2
2.1 06/30/2023
2.2 06/30/2023
- ------------------------------------------------------------------------------------------------------------------------------------
2.3 06/30/2023
2.4 06/30/2023
2.5 06/30/2023
2.6 06/30/2023
2.7 06/30/2023
- ------------------------------------------------------------------------------------------------------------------------------------
2.8 06/30/2023
2.9 06/30/2023
2.10 06/30/2023
2.11 06/30/2023
2.12 06/30/2023
- ------------------------------------------------------------------------------------------------------------------------------------
2.13 06/30/2023 William Shuffet 2,774 01/31/2004 Charles Eaton
2.14 06/30/2023
2.15 06/30/2023
2.16 06/30/2023
2.17 06/30/2023
- ------------------------------------------------------------------------------------------------------------------------------------
2.18
2.19 06/30/2023
2.20 06/30/2023
2.21 06/30/2023
2.22 06/30/2023 Ctr for Educational Achievement 3,098 12/31/2004
- ------------------------------------------------------------------------------------------------------------------------------------
2.23 06/30/2023
2.24 06/30/2023
2.25 06/30/2023
2.26 06/30/2023
2.27 06/30/2023 United Studios Self Defense 1,496 10/31/2005
- ------------------------------------------------------------------------------------------------------------------------------------
2.28 06/30/2023
2.29 06/30/2023
2.30 06/30/2023
2.31 06/30/2023
2.32 06/30/2023
- ------------------------------------------------------------------------------------------------------------------------------------
2.33 06/30/2023
2.34 06/30/2023
2.35 06/30/2023
2.36 06/30/2023
2.37 06/30/2023
- ------------------------------------------------------------------------------------------------------------------------------------
2.38 06/30/2023
2.39 06/30/2023
2.40 06/30/2023
2.41 06/30/2023
2.42 06/30/2023
- ------------------------------------------------------------------------------------------------------------------------------------
2.43 06/30/2023
2.44 06/30/2023
2.45 06/30/2023 Sion Noble 3,740 07/31/2006
2.46 06/30/2023
2.47 06/30/2023
- ------------------------------------------------------------------------------------------------------------------------------------
2.48 06/30/2023
2.49 06/30/2023
2.50 06/30/2023 California Pacific Medical Center 77,276 01/31/2012 California State Compensation Fund
2.51 06/30/2023
2.52 06/30/2023
- ------------------------------------------------------------------------------------------------------------------------------------
2.53 06/30/2023
2.54 06/30/2023
2.55 06/30/2023
2.56 06/30/2023
2.57 06/30/2023 Moulton McEchrn 5,387 05/31/2004
- ------------------------------------------------------------------------------------------------------------------------------------
2.58 06/30/2023 City of Palmetto 2,501 01/31/2004 Blews and Ritchie Adv
2.59 06/30/2023
2.60 06/30/2023
2.61 06/30/2023
2.62 06/30/2023 AT&T 870 02/15/2009
- ------------------------------------------------------------------------------------------------------------------------------------
2.63 06/30/2023
2.64 06/30/2023
2.65 06/30/2023
2.66 06/30/2023
2.67 06/30/2023
- ------------------------------------------------------------------------------------------------------------------------------------
UPFRONT ONGOING
LEASE OCCUPANCY OCCUPANCY ACTUAL REPLACEMENT ACTUAL REPLACEMENT UPFRONT
ID SF EXPIRATION RATE AS-OF DATE RESERVES RESERVES TI/LC
- ---------------------------------------------------------------------------------------------------------------------------------
1 75,778 05/31/2020 98.11% 09/01/2003 - - -
2 86.39% 09/15/2003 - 54,468 205,965
2.1 100.00% 09/15/2003 - - -
2.2 100.00% 09/15/2003 - - -
- ---------------------------------------------------------------------------------------------------------------------------------
2.3 65.00% 09/15/2003 - - -
2.4 76.28% 09/15/2003 - - -
2.5 90.06% 09/15/2003 - - -
2.6 100.00% 09/15/2003 - - -
2.7 100.00% 09/15/2003 - - -
- ---------------------------------------------------------------------------------------------------------------------------------
2.8 48.06% 09/15/2003 - - -
2.9 100.00% 09/15/2003 - - -
2.10 100.00% 09/15/2003 - - -
2.11 100.00% 09/15/2003 - - -
2.12 100.00% 09/15/2003 - - -
- ---------------------------------------------------------------------------------------------------------------------------------
2.13 3,702 12/31/2003 86.52% 09/15/2003 - - -
2.14 100.00% 09/15/2003 - - -
2.15 100.00% 09/15/2003 - - -
2.16 100.00% 09/15/2003 - - -
2.17 100.00% 09/15/2003 - - -
- ---------------------------------------------------------------------------------------------------------------------------------
2.18 0.00% 09/15/2003 - - -
2.19 100.00% 09/15/2003 - - -
2.20 100.00% 09/15/2003 - - -
2.21 100.00% 09/15/2003 - - -
2.22 100.00% 09/15/2003 - - -
- ---------------------------------------------------------------------------------------------------------------------------------
2.23 100.00% 09/15/2003 - - -
2.24 86.63% 09/15/2003 - - -
2.25 100.00% 09/15/2003 - - -
2.26 100.00% 09/15/2003 - - -
2.27 55.69% 09/15/2003 - - -
- ---------------------------------------------------------------------------------------------------------------------------------
2.28 98.10% 09/15/2003 - - -
2.29 100.00% 09/15/2003 - - -
2.30 100.00% 09/15/2003 - - -
2.31 100.00% 09/15/2003 - - -
2.32 100.00% 09/15/2003 - - -
- ---------------------------------------------------------------------------------------------------------------------------------
2.33 100.00% 09/15/2003 - - -
2.34 100.00% 09/15/2003 - - -
2.35 100.00% 09/15/2003 - - -
2.36 100.00% 09/15/2003 - - -
2.37 100.00% 09/15/2003 - - -
- ---------------------------------------------------------------------------------------------------------------------------------
2.38 100.00% 09/15/2003 - - -
2.39 100.00% 09/15/2003 - - -
2.40 100.00% 09/15/2003 - - -
2.41 97.41% 09/15/2003 - - -
2.42 67.27% 09/15/2003 - - -
- ---------------------------------------------------------------------------------------------------------------------------------
2.43 93.44% 09/15/2003 - - -
2.44 100.00% 09/15/2003 - - -
2.45 100.00% 09/15/2003 - - -
2.46 100.00% 09/15/2003 - - -
2.47 100.00% 09/15/2003 - - -
- ---------------------------------------------------------------------------------------------------------------------------------
2.48 100.00% 09/15/2003 - - -
2.49 100.00% 09/15/2003 - - -
2.50 55,043 07/31/2007 85.30% 09/15/2003 - - -
2.51 100.00% 09/15/2003 - - -
2.52 76.62% 09/15/2003 - - -
- ---------------------------------------------------------------------------------------------------------------------------------
2.53 100.00% 09/15/2003 - - -
2.54 100.00% 09/15/2003 - - -
2.55 96.13% 09/15/2003 - - -
2.56 99.08% 09/15/2003 - - -
2.57 100.00% 09/15/2003 - - -
- ---------------------------------------------------------------------------------------------------------------------------------
2.58 1,625 01/31/2006 82.46% 09/15/2003 - - -
2.59 100.00% 09/15/2003 - - -
2.60 100.00% 09/15/2003 - - -
2.61 44.04% 09/15/2003 - - -
2.62 100.00% 09/15/2003 - - -
- ---------------------------------------------------------------------------------------------------------------------------------
2.63 98.22% 09/15/2003 - - -
2.64 97.52% 09/15/2003 - - -
2.65 91.82% 09/15/2003 - - -
2.66 94.70% 09/15/2003 - - -
2.67 86.11% 09/15/2003 - - -
- ---------------------------------------------------------------------------------------------------------------------------------
UPFRONT ENVIRONMENTAL
MONTHLY MONTHLY TAX MONTHLY INSURANCE ENGINEERING REPORT
ID TI/LC ESCROW ESCROW RESERVE DATE
- ------------------------------------------------------------------------------------------------------------------------
1 - - - 478,664 09/29/2003
2 86,110 318,078 plus a Monthly Non-BofA Tax Component 190,905 2,184,169 Various
2.1 - - - - 06/03/2003
2.2 - - - - 06/06/2003
- ------------------------------------------------------------------------------------------------------------------------
2.3 - - - - 06/06/2003
2.4 - - - - 06/06/2003
2.5 - - - - 06/06/2003
2.6 - - - - 06/06/2003
2.7 - - - - 06/06/2003
- ------------------------------------------------------------------------------------------------------------------------
2.8 - - - - 06/06/2003
2.9 - - - - 06/06/2003
2.10 - - - - 06/06/2003
2.11 - - - - 06/06/2003
2.12 - - - - 06/06/2003
- ------------------------------------------------------------------------------------------------------------------------
2.13 - - - - 06/06/2003
2.14 - - - - 06/06/2003
2.15 - - - - 06/06/2003
2.16 - - - - 06/06/2003
2.17 - - - - 06/06/2003
- ------------------------------------------------------------------------------------------------------------------------
2.18 - - - - 06/06/2003
2.19 - - - - 06/06/2003
2.20 - - - - 06/06/2003
2.21 - - - - 06/06/2003
2.22 - - - - 06/06/2003
- ------------------------------------------------------------------------------------------------------------------------
2.23 - - - - 06/06/2003
2.24 - - - - 06/06/2003
2.25 - - - - 06/06/2003
2.26 - - - - 06/06/2003
2.27 - - - - 06/06/2003
- ------------------------------------------------------------------------------------------------------------------------
2.28 - - - - 06/06/2003
2.29 - - - - 06/06/2003
2.30 - - - - 06/06/2003
2.31 - - - - 06/06/2003
2.32 - - - - 06/06/2003
- ------------------------------------------------------------------------------------------------------------------------
2.33 - - - - 06/06/2003
2.34 - - - - 06/06/2003
2.35 - - - - 06/06/2003
2.36 - - - - 06/06/2003
2.37 - - - - 06/06/2003
- ------------------------------------------------------------------------------------------------------------------------
2.38 - - - - 06/06/2003
2.39 - - - - 06/06/2003
2.40 - - - - 06/06/2003
2.41 - - - - 06/06/2003
2.42 - - - - 06/06/2003
- ------------------------------------------------------------------------------------------------------------------------
2.43 - - - - 06/06/2003
2.44 - - - - 06/06/2003
2.45 - - - - 06/06/2003
2.46 - - - - 06/06/2003
2.47 - - - - 06/06/2003
- ------------------------------------------------------------------------------------------------------------------------
2.48 - - - - 06/06/2003
2.49 - - - - 06/06/2003
2.50 - - - - 06/06/2003
2.51 - - - - 06/06/2003
2.52 - - - - 06/06/2003
- ------------------------------------------------------------------------------------------------------------------------
2.53 - - - - 06/06/2003
2.54 - - - - 06/06/2003
2.55 - - - - 06/06/2003
2.56 - - - - 06/06/2003
2.57 - - - - 06/06/2003
- ------------------------------------------------------------------------------------------------------------------------
2.58 - - - - 06/06/2003
2.59 - - - - 06/06/2003
2.60 - - - - 06/06/2003
2.61 - - - - 06/06/2003
2.62 - - - - 06/06/2003
- ------------------------------------------------------------------------------------------------------------------------
2.63 - - - - 06/06/2003
2.64 - - - - 06/06/2003
2.65 - - - - 06/06/2003
2.66 - - - - 06/06/2003
2.67 - - - - 06/06/2003
- ------------------------------------------------------------------------------------------------------------------------
ENGINEERING APPRAISAL
ID REPORT DATE AS-OF DATE (5) SPONSOR
- -----------------------------------------------------------------------------------------------------------------------------------
1 09/25/2003 08/25/2003 Wilmorite Properties, Inc. and Alaska Permanent Fund Corporation
2 Various Various American Financial Realty Trust
2.1 06/04/2003 05/22/2003
2.2 06/06/2003 05/01/2003
- -----------------------------------------------------------------------------------------------------------------------------------
2.3 06/06/2003 05/21/2003
2.4 06/06/2003 05/01/2003
2.5 06/06/2003 05/01/2003
2.6 06/06/2003 05/01/2003
2.7 06/06/2003 05/21/2003
- -----------------------------------------------------------------------------------------------------------------------------------
2.8 06/06/2003 05/01/2003
2.9 06/06/2003 05/12/2003
2.10 06/06/2003 05/15/2003
2.11 06/06/2003 05/13/2003
2.12 06/06/2003 05/13/2003
- -----------------------------------------------------------------------------------------------------------------------------------
2.13 06/06/2003 05/21/2003
2.14 06/06/2003 05/16/2003
2.15 06/06/2003 05/16/2003
2.16 06/06/2003 05/07/2003
2.17 06/06/2003 05/07/2003
- -----------------------------------------------------------------------------------------------------------------------------------
2.18 06/06/2003 05/07/2003
2.19 06/06/2003 05/06/2003
2.20 06/06/2003 05/21/2003
2.21 06/06/2003 05/14/2003
2.22 06/06/2003 05/16/2003
- -----------------------------------------------------------------------------------------------------------------------------------
2.23 06/06/2003 05/15/2003
2.24 06/06/2003 05/14/2003
2.25 06/06/2003 05/07/2003
2.26 06/06/2003 05/22/2003
2.27 06/06/2003 05/21/2003
- -----------------------------------------------------------------------------------------------------------------------------------
2.28 06/06/2003 05/15/2003
2.29 06/06/2003 05/14/2003
2.30 06/06/2003 05/15/2003
2.31 06/06/2003 05/16/2003
2.32 06/06/2003 05/08/2003
- -----------------------------------------------------------------------------------------------------------------------------------
2.33 06/06/2003 05/12/2003
2.34 06/06/2003 05/12/2003
2.35 06/06/2003 05/15/2003
2.36 06/06/2003 05/14/2003
2.37 06/06/2003 05/08/2003
- -----------------------------------------------------------------------------------------------------------------------------------
2.38 06/06/2003 05/15/2003
2.39 06/06/2003 05/15/2003
2.40 06/06/2003 05/07/2003
2.41 05/21/2003 05/16/2003
2.42 06/06/2003 05/07/2003
- -----------------------------------------------------------------------------------------------------------------------------------
2.43 06/06/2003 05/09/2003
2.44 06/06/2003 05/05/2003
2.45 06/06/2003 05/08/2003
2.46 06/06/2003 05/16/2003
2.47 06/06/2003 05/15/2003
- -----------------------------------------------------------------------------------------------------------------------------------
2.48 06/06/2003 05/09/2003
2.49 06/06/2003 05/06/2003
2.50 06/06/2003 05/02/2003
2.51 06/06/2003 05/05/2003
2.52 06/06/2003 05/15/2003
- -----------------------------------------------------------------------------------------------------------------------------------
2.53 06/06/2003 05/15/2003
2.54 06/06/2003 05/15/2003
2.55 06/06/2003 05/15/2003
2.56 06/06/2003 05/01/2003
2.57 06/06/2003 05/22/2003
- -----------------------------------------------------------------------------------------------------------------------------------
2.58 06/06/2003 05/15/2003
2.59 06/06/2003 05/15/2003
2.60 06/06/2003 05/07/2003
2.61 06/06/2003 05/07/2003
2.62 06/06/2003 06/01/2003
- -----------------------------------------------------------------------------------------------------------------------------------
2.63 06/06/2003 06/01/2003
2.64 06/06/2003 06/01/2003
2.65 06/06/2003 06/01/2003
2.66 06/06/2003 06/01/2003
2.67 06/06/2003 06/01/2003
- -----------------------------------------------------------------------------------------------------------------------------------
COMM 2004-LNB2
ANNEX A-1 - CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS AND MORTGAGED
PROPERTIES
% OF MORTGAGE
INITIAL POOL # OF LOAN ORIGINAL
ID PROPERTY NAME BALANCE PROPERTIES SELLER (1) BALANCE
- ---------------------------------------------------------------------------------------------------------------------------
2.68 Jacksonville Ops CTR/#700 0.17% GACC 1,624,675
2.69 Jacksonville Ops Ctr/School 0.03% GACC 322,455
2.70 Jacksonville Ops CTR/Daycare 0.03% GACC 316,253
2.71 Lighthouse Point 0.03% GACC 291,449
2.72 Mendham Operations Center 0.08% GACC 806,136
- ---------------------------------------------------------------------------------------------------------------------------
2.73 Miami Lakes Operation CTR 0.15% GACC 1,423,496
2.74 North Biscayne 0.02% GACC 166,075
2.75 North Hialeah 0.01% GACC 111,619
2.76 Ocala Downtown 0.02% GACC 235,640
2.77 Plaza 0.04% GACC 384,465
- ---------------------------------------------------------------------------------------------------------------------------
2.78 Port Charlotte 0.02% GACC 155,026
2.79 Ridgewood 0.01% GACC 99,645
2.80 San Jose 0.01% GACC 135,183
2.81 South Region TPC 0.18% GACC 1,723,891
2.82 Westshore Mall 0.03% GACC 334,857
- ---------------------------------------------------------------------------------------------------------------------------
2.83 Williams Islands 0.05% GACC 474,499
2.84 Winter Park 0.03% GACC 272,846
2.85 Albany Main Office 0.01% GACC 104,390
2.86 Bull Street 0.03% GACC 303,851
2.87 Cartersville Main 0.02% GACC 186,031
- ---------------------------------------------------------------------------------------------------------------------------
2.88 Moultrie Main 0.02% GACC 148,825
2.89 Valdosta Main 0.02% GACC 213,936
2.90 Winder (BS) 0.01% GACC 80,614
2.91 Coeur D'alene BDLG/BR 0.02% GACC 171,149
2.92 Bank of America Center 1.10% GACC 10,665,803
- ---------------------------------------------------------------------------------------------------------------------------
2.93 Mission Facility 0.02% GACC 192,233
2.94 Penn Street Facility 0.01% GACC 102,317
2.95 Annapolis Church Circle - BAL 0.05% GACC 446,475
2.96 Highlandtown - BAL 0.01% GACC 75,920
2.97 Columbia Facility 0.02% GACC 182,311
- ---------------------------------------------------------------------------------------------------------------------------
2.98 Concord Village 0.02% GACC 176,110
2.99 Downtown Facility 0.01% GACC 66,971
2.100 Florissant Facility 0.02% GACC 148,825
2.101 Hampton-Main Facility 0.02% GACC 177,350
2.102 Independence Square 0.02% GACC 147,585
- ---------------------------------------------------------------------------------------------------------------------------
2.103 Lexington Facility 0.01% GACC 52,709
2.104 Mexico Facility 0.02% GACC 171,149
2.105 Oak Trafficway Facility 0.03% GACC 260,444
2.106 Richland Facility 0.00% GACC -
2.107 South Glenstone Facility 0.01% GACC 111,619
- ---------------------------------------------------------------------------------------------------------------------------
2.108 West Sunshine Facility 0.00% GACC -
2.109 William Street Facility 0.02% GACC 164,328
2.110 525 N Tryon-Odell Building 0.51% GACC 4,985,643
2.111 Albuquerque Operations Center 0.04% GACC 421,671
2.112 East Central Facility 0.02% GACC 148,825
- ---------------------------------------------------------------------------------------------------------------------------
2.113 Henderson 0.01% GACC 142,624
2.114 Paradise Valley 0.03% GACC 260,444
2.115 Admiral 0.01% GACC 111,619
2.116 Muskogee Main Facility 0.00% GACC -
2.117 Aiken Main Office 0.02% GACC 189,752
- ---------------------------------------------------------------------------------------------------------------------------
2.118 Murfreesboro Main Office 0.02% GACC 186,031
2.119 Aransas Pass (CCNB) 0.00% GACC -
2.120 Brownwood 0.01% GACC 105,418
2.121 Carrollton 0.01% GACC 130,222
2.122 Dalhart Banking Center 0.01% GACC 114,719
- ---------------------------------------------------------------------------------------------------------------------------
2.123 Denison 0.01% GACC 108,518
2.124 Dumas Banking Center 0.01% GACC 124,021
2.125 Fort Sam Houston 0.08% GACC 737,925
2.126 Fort Worth East 0.02% GACC 158,127
2.127 Greenspoint 0.05% GACC 446,475
- ---------------------------------------------------------------------------------------------------------------------------
2.128 Mission 0.01% GACC 89,295
2.129 Mount Pleasant 0.01% GACC 102,317
2.130 South Austin 0.02% GACC 179,830
2.131 Waco 0.02% GACC 210,836
2.132 Charlottesville 0.04% GACC 403,068
- ---------------------------------------------------------------------------------------------------------------------------
2.133 Lynchburg 0.02% GACC 199,289
2.134 Norton - 7th Street 0.01% GACC 62,010
2.135 Old Hampton 0.01% GACC 124,021
2.136 Roanoke 0.02% GACC 235,640
2.137 South Boston 0.01% GACC 68,802
- ---------------------------------------------------------------------------------------------------------------------------
CUT-OFF GENERAL DETAILED
DATE PROPERTY PROPERTY INTEREST ADMINISTRATIVE
ID BALANCE TYPE TYPE RATE (9) FEE RATE
- ----------------------------------------------------------------------------------------------------------------------------
2.68 1,624,675 Office Office Space
2.69 322,455 Office Office Space
2.70 316,253 Office Office Space
2.71 291,449 Office Office Space
2.72 806,136 Office Operations Center
- ----------------------------------------------------------------------------------------------------------------------------
2.73 1,423,496 Office Operations Center
2.74 166,075 Office Office Space
2.75 111,619 Mixed Use Office / Retail
2.76 235,640 Office Office Space
2.77 384,465 Office Office Space
- ----------------------------------------------------------------------------------------------------------------------------
2.78 155,026 Mixed Use Office / Retail
2.79 99,645 Office Office Space
2.80 135,183 Mixed Use Office / Retail
2.81 1,723,891 Office Operations Center
2.82 334,857 Office Office Space
- ----------------------------------------------------------------------------------------------------------------------------
2.83 474,499 Office Office Space
2.84 272,846 Office Office Space
2.85 104,390 Office Office Space
2.86 303,851 Office Office Space
2.87 186,031 Office Office Space
- ----------------------------------------------------------------------------------------------------------------------------
2.88 148,825 Office Office Space
2.89 213,936 Office Office Space
2.90 80,614 Mixed Use Office / Retail
2.91 171,149 Office Office Space
2.92 10,665,803 Office Office Space
- ----------------------------------------------------------------------------------------------------------------------------
2.93 192,233 Office Office Space
2.94 102,317 Office Office Space
2.95 446,475 Office Office Space
2.96 75,920 Office Office Space
2.97 182,311 Mixed Use Office / Retail
- ----------------------------------------------------------------------------------------------------------------------------
2.98 176,110 Office Office Space
2.99 66,971 Mixed Use Office / Retail
2.100 148,825 Office Office Space
2.101 177,350 Office Office Space
2.102 147,585 Office Office Space
- ----------------------------------------------------------------------------------------------------------------------------
2.103 52,709 Mixed Use Office / Retail
2.104 171,149 Office Office Space
2.105 260,444 Office Office Space
2.106 - Mixed Use Office / Retail
2.107 111,619 Mixed Use Office / Retail
- ----------------------------------------------------------------------------------------------------------------------------
2.108 - Mixed Use Office / Retail
2.109 164,328 Office Office Space
2.110 4,985,643 Office Office Space
2.111 421,671 Office Operations Center
2.112 148,825 Office Office Space
- ----------------------------------------------------------------------------------------------------------------------------
2.113 142,624 Mixed Use Office / Retail
2.114 260,444 Office Office Space
2.115 111,619 Office Office Space
2.116 - Office Office Space
2.117 189,752 Office Office Space
- ----------------------------------------------------------------------------------------------------------------------------
2.118 186,031 Office Office Space
2.119 - Mixed Use Office / Retail
2.120 105,418 Office Office Space
2.121 130,222 Mixed Use Office / Retail
2.122 114,719 Mixed Use Office / Retail
- ----------------------------------------------------------------------------------------------------------------------------
2.123 108,518 Office Office Space
2.124 124,021 Mixed Use Office / Retail
2.125 737,925 Office Office Space
2.126 158,127 Office Office Space
2.127 446,475 Office Office Space
- ----------------------------------------------------------------------------------------------------------------------------
2.128 89,295 Mixed Use Office / Retail
2.129 102,317 Office Office Space
2.130 179,830 Office Office Space
2.131 210,836 Office Office Space
2.132 403,068 Office Office Space
- ----------------------------------------------------------------------------------------------------------------------------
2.133 199,289 Office Office Space
2.134 62,010 Office Office Space
2.135 124,021 Office Office Space
2.136 235,640 Office Office Space
2.137 68,802 Office Office Space
- ----------------------------------------------------------------------------------------------------------------------------
INTEREST ORIGINAL STATED REMAINING ORIGINAL REMAINING FIRST MATURITY
ACCRUAL TERM TO MATURITY TERM TO MATURITY AMORTIZATION AMORTIZATION PAYMENT DATE
ID BASIS OR APD (MOS.) OR APD (MOS.) TERM (MOS.) TERM (MOS.) DATE OR ARD
- ---------------------------------------------------------------------------------------------------------------------
2.68
2.69
2.70
2.71
2.72
- ---------------------------------------------------------------------------------------------------------------------
2.73
2.74
2.75
2.76
2.77
- ---------------------------------------------------------------------------------------------------------------------
2.78
2.79
2.80
2.81
2.82
- ---------------------------------------------------------------------------------------------------------------------
2.83
2.84
2.85
2.86
2.87
- ---------------------------------------------------------------------------------------------------------------------
2.88
2.89
2.90
2.91
2.92
- ---------------------------------------------------------------------------------------------------------------------
2.93
2.94
2.95
2.96
2.97
- ---------------------------------------------------------------------------------------------------------------------
2.98
2.99
2.100
2.101
2.102
- ---------------------------------------------------------------------------------------------------------------------
2.103
2.104
2.105
2.106
2.107
- ---------------------------------------------------------------------------------------------------------------------
2.108
2.109
2.110
2.111
2.112
- ---------------------------------------------------------------------------------------------------------------------
2.113
2.114
2.115
2.116
2.117
- ---------------------------------------------------------------------------------------------------------------------
2.118
2.119
2.120
2.121
2.122
- ---------------------------------------------------------------------------------------------------------------------
2.123
2.124
2.125
2.126
2.127
- ---------------------------------------------------------------------------------------------------------------------
2.128
2.129
2.130
2.131
2.132
- ---------------------------------------------------------------------------------------------------------------------
2.133
2.134
2.135
2.136
2.137
- ---------------------------------------------------------------------------------------------------------------------
ANNUAL MONTHLY REMAINING CROSSED
DEBT DEBT INTEREST ONLY ARD WITH DSCR
ID SERVICE (2) SERVICE (2) PERIOD (MOS.) LOCKBOX (3) (YES/NO) OTHER LOANS (12) (2)(4)(8)(14)
- --------------------------------------------------------------------------------------------------------------------------------
2.68
2.69
2.70
2.71
2.72
- --------------------------------------------------------------------------------------------------------------------------------
2.73
2.74
2.75
2.76
2.77
- --------------------------------------------------------------------------------------------------------------------------------
2.78
2.79
2.80
2.81
2.82
- --------------------------------------------------------------------------------------------------------------------------------
2.83
2.84
2.85
2.86
2.87
- --------------------------------------------------------------------------------------------------------------------------------
2.88
2.89
2.90
2.91
2.92
- --------------------------------------------------------------------------------------------------------------------------------
2.93
2.94
2.95
2.96
2.97
- --------------------------------------------------------------------------------------------------------------------------------
2.98
2.99
2.100
2.101
2.102
- --------------------------------------------------------------------------------------------------------------------------------
2.103
2.104
2.105
2.106
2.107
- --------------------------------------------------------------------------------------------------------------------------------
2.108
2.109
2.110
2.111
2.112
- --------------------------------------------------------------------------------------------------------------------------------
2.113
2.114
2.115
2.116
2.117
- --------------------------------------------------------------------------------------------------------------------------------
2.118
2.119
2.120
2.121
2.122
- --------------------------------------------------------------------------------------------------------------------------------
2.123
2.124
2.125
2.126
2.127
- --------------------------------------------------------------------------------------------------------------------------------
2.128
2.129
2.130
2.131
2.132
- --------------------------------------------------------------------------------------------------------------------------------
2.133
2.134
2.135
2.136
2.137
- --------------------------------------------------------------------------------------------------------------------------------
CUT-OFF
GRACE PAYMENT APPRAISED DATE LTV LTV RATIO AT
ID PERIOD DATE VALUE (5) RATIO (4)(8)(14) MATURITY/APD (4)(14)
- ---------------------------------------------------------------------------------------
2.68 13,100,000
2.69 2,600,000
2.70 2,550,000
2.71 2,350,000
2.72 6,500,000
- ---------------------------------------------------------------------------------------
2.73 15,000,000
2.74 1,750,000
2.75 900,000
2.76 1,900,000
2.77 3,100,000
- ---------------------------------------------------------------------------------------
2.78 1,250,000
2.79 1,050,000
2.80 1,090,000
2.81 13,900,000
2.82 2,700,000
- ---------------------------------------------------------------------------------------
2.83 5,000,000
2.84 2,200,000
2.85 900,000
2.86 2,450,000
2.87 1,500,000
- ---------------------------------------------------------------------------------------
2.88 850,000
2.89 1,725,000
2.90 650,000
2.91 1,380,000
2.92 86,000,000
- ---------------------------------------------------------------------------------------
2.93 1,550,000
2.94 825,000
2.95 3,600,000
2.96 800,000
2.97 1,470,000
- ---------------------------------------------------------------------------------------
2.98 1,420,000
2.99 540,000
2.100 1,200,000
2.101 1,430,000
2.102 1,190,000
- ---------------------------------------------------------------------------------------
2.103 425,000
2.104 1,390,000
2.105 2,100,000
2.106 575,000
2.107 900,000
- ---------------------------------------------------------------------------------------
2.108 1,200,000
2.109 1,325,000
2.110 40,200,000
2.111 3,400,000
2.112 1,200,000
- ---------------------------------------------------------------------------------------
2.113 1,150,000
2.114 2,100,000
2.115 900,000
2.116 1,375,000
2.117 1,530,000
- ---------------------------------------------------------------------------------------
2.118 1,500,000
2.119 825,000
2.120 850,000
2.121 1,050,000
2.122 925,000
- ---------------------------------------------------------------------------------------
2.123 875,000
2.124 1,000,000
2.125 5,950,000
2.126 1,275,000
2.127 3,600,000
- ---------------------------------------------------------------------------------------
2.128 720,000
2.129 825,000
2.130 1,450,000
2.131 1,700,000
2.132 3,250,000
- ---------------------------------------------------------------------------------------
2.133 2,100,000
2.134 500,000
2.135 1,000,000
2.136 1,900,000
2.137 725,000
- ---------------------------------------------------------------------------------------
ID ADDRESS
- --------------------------------------------------------------------------------------------
2.68 9000 Southside Boulevard
2.69 9000 Southside Boulevard
2.70 9000 Southside Boulevard
2.71 2850 North Federal Hwy
2.72 707 Mendham Boulevard
- --------------------------------------------------------------------------------------------
2.73 5875 NW 163rd Street
2.74 11755 Biscayne Boulevard
2.75 1 East 49th Street
2.76 35 SE 1st Avenue
2.77 900 South Federal Hwy
- --------------------------------------------------------------------------------------------
2.78 21175 Olean Boulevard
2.79 231 South Ridgewood Drive
2.80 3535 University Boulevard West
2.81 17100 N.W. 59th Avenue
2.82 100 North Westshore Boulevard
- --------------------------------------------------------------------------------------------
2.83 18305 Biscayne Boulevard
2.84 750 South Orlando Avenue
2.85 128 South Washington Street
2.86 22 Bull Street
2.87 102 East Main Street
- --------------------------------------------------------------------------------------------
2.88 300 South Main Street
2.89 106 South Patterson Street
2.90 102 North Broad Street
2.91 401 Front Street
2.92 231 South LaSalle Street
- --------------------------------------------------------------------------------------------
2.93 9500 Mission Road
2.94 501 Pennsylvania Avenue
2.95 10 Church Circle
2.96 3415/17 Eastern Avenue
2.97 800 Cherry Street
- --------------------------------------------------------------------------------------------
2.98 5353 South Lindbergh Boulevard
2.99 210 West 8th Street
2.100 880 Rue St. Francois
2.101 4301 and 4400 Hampton Avenue
2.102 129 West Lexington
- --------------------------------------------------------------------------------------------
2.103 1016 Main Street
2.104 222 South Jefferson
2.105 8320 North Oak Trafficway
2.106 112 McClurg
2.107 2940 South Glenstone
- --------------------------------------------------------------------------------------------
2.108 710 West Sunshine
2.109 2001 William Street
2.110 525 North Tryon Street
2.111 725 6th ST. NW
2.112 4401 Central Avenue NE
- --------------------------------------------------------------------------------------------
2.113 107 Water Street
2.114 1077 East Sahara Avenue
2.115 5950 East Admiral Place
2.116 230 West Broadway
2.117 167 Laurens Street
- --------------------------------------------------------------------------------------------
2.118 120 East Main Street
2.119 221 South Commercial
2.120 One Center Avenue
2.121 1101 South Josey Lane
2.122 323 Denver Avenue
- --------------------------------------------------------------------------------------------
2.123 300 West Main Street
2.124 501 Bliss Avenue
2.125 1422 East Grayson Street
2.126 5651 East Lancaster Avenue
2.127 12400 Interstate 45 North
- --------------------------------------------------------------------------------------------
2.128 1101 North Conway
2.129 302 North Jefferson Avenue
2.130 2501 South Congress
2.131 514 Austin Avenue
2.132 300 East Main Street
- --------------------------------------------------------------------------------------------
2.133 801 Main Street
2.134 702 Park Avenue NW
2.135 1 West Queens Way
2.136 302 South Jefferson Street, SE
2.137 606 Broad Street
- --------------------------------------------------------------------------------------------
YEAR YEAR
ID CITY COUNTY STATE ZIP CODE BUILT RENOVATED
- -----------------------------------------------------------------------------------------------------
2.68 Jacksonville Duval FL 32256 1990
2.69 Jacksonville Duval FL 32256 1990
2.70 Jacksonville Duval FL 32256 1990
2.71 Lighthouse Point Broward FL 33064 1970
2.72 Orlando Orange FL 32825 1985
- -----------------------------------------------------------------------------------------------------
2.73 Miami Lakes Miami-Dade FL 33014 1983
2.74 North Miami Miami-Dade FL 33181 1964 2001
2.75 Hialeah Miami-Dade FL 33013 1963
2.76 Ocala Marion FL 34471 1965/1985
2.77 Stuart Martin FL 34994 1973
- -----------------------------------------------------------------------------------------------------
2.78 Port Charlotte Charlotte FL 33952 1971 2002
2.79 Sebring Highlands FL 33870 1961 1999
2.80 Jacksonville Duval FL 32217 1997
2.81 Miami Lakes Miami-Dade FL 33015 1995
2.82 Tampa Hillsborough FL 33609 1997
- -----------------------------------------------------------------------------------------------------
2.83 Aventura Miami-Dade FL 33160 1986
2.84 Winter Park Orange FL 32789 1955
2.85 Albany Dougherty GA 31701 1960 1995
2.86 Savannah Chatham GA 31401 1905 1995
2.87 Cartersville Bartow GA 30120 1977
- -----------------------------------------------------------------------------------------------------
2.88 Moultrie Colquitt GA 31768 1989
2.89 Valdosta Lowndes GA 31601 1970 1994/1995
2.90 Winder Barrow GA 30680 1970
2.91 Coeur D'Alene Kootenai ID 83814 1969 1992
2.92 Chicago Cook IL 60604 1923 ongoing
- -----------------------------------------------------------------------------------------------------
2.93 Overland Park Johnson KS 66206 1964
2.94 Independence Montgomery KS 67301 1980
2.95 Annapolis Anne Arundel MD 21401 1970
2.96 Baltimore Baltimore City MD 21224 1950
2.97 Columbia Boone MO 65201 1948 1970/1981/1985
- -----------------------------------------------------------------------------------------------------
2.98 St. Louis Saint Louis MO 63126 1978
2.99 Rolla Phelps MO 65401 1927 1972/1983
2.100 Florissant Saint Louis MO 63031 1970 1980
2.101 St. Louis St. Louis MO 63109 1972
2.102 Independence Jackson MO 64050 1929 1972/1990
- -----------------------------------------------------------------------------------------------------
2.103 Lexington Lafayette MO 64607 1894 1979
2.104 Mexico Audrain MO 65265 1979
2.105 Kansas City Clay MO 64118 1978 1990
2.106 Richland Pulaski MO 65556 1951
2.107 Springfield Greene MO 65804 1970 1982
- -----------------------------------------------------------------------------------------------------
2.108 Springfield Greene MO 65807 1965 1981
2.109 Cape Girardeau Cape Girardeau MO 63703 1973
2.110 Charlotte Mecklenberg NC 28202 1996
2.111 Albuquerque Bernalillo NM 87102 1973/1983 1997
2.112 Albuquerque Bernalillo NM 87108 1958 1968
- -----------------------------------------------------------------------------------------------------
2.113 Henderson Clark NV 89015 1964 1977
2.114 Las Vegas Clark NV 89104 1966 1973/1994
2.115 Tulsa Tulsa OK 74115 1952
2.116 Muskogee Muskogee OK 74401 1920 1990
2.117 Aiken Aiken SC 29801 1898/1911/1960 1998
- -----------------------------------------------------------------------------------------------------
2.118 Murfreesboro Rutherford TN 37130 1978
2.119 Aransas Pass Asansas/San PatricioTX 78336 1972
2.120 Brownwood Brown TX 76801 1972
2.121 Carrollton Dallas TX 75006 1978
2.122 Dalhart Dallam TX 79022 1955 1995
- -----------------------------------------------------------------------------------------------------
2.123 Denison Grayson TX 75020 1965
2.124 Dumas Moore TX 79029 1976
2.125 San Antonio Bexar TX 78208 1968/1973 1983
2.126 Fort Worth Tarrant TX 76112 1956
2.127 Houston Harris TX 77060 1976
- -----------------------------------------------------------------------------------------------------
2.128 Mission Hidalgo TX 78572 1950 2001
2.129 Mt. Pleasant Titus TX 75455 1960
2.130 Austin Travis TX 78704 1964 1972
2.131 Waco McLennan TX 76701 1885
2.132 Charlottesville Charlottesville VA 22902 1875 1972
- -----------------------------------------------------------------------------------------------------
2.133 Lynchburg Lynchburg City VA 24504 1913
2.134 Norton Norton City VA 24273 1905 1992
2.135 Hampton Hampton City VA 23669 1970
2.136 Roanoke Roanoke City VA 24011 1915 1984-1986
2.137 South Boston Halifax VA 24592 1974
- -----------------------------------------------------------------------------------------------------
NET UNITS LOAN PER NET PREPAYMENT
RENTABLE OF RENTABLE AREA PROVISIONS
ID AREA SF/UNITS (6) MEASURE SF/UNITS (4)(6) (# OF PAYMENTS) (7)(13)
- -------------------------------------------------------------------------------------------------
2.68 118,963 Sq. Ft. 14
2.69 21,879 Sq. Ft. 15
2.70 21,425 Sq. Ft. 15
2.71 25,659 Sq. Ft. 11
2.72 112,217 Sq. Ft. 7
- -------------------------------------------------------------------------------------------------
2.73 141,366 Sq. Ft. 10
2.74 26,186 Sq. Ft. 6
2.75 10,212 Sq. Ft. 11
2.76 31,532 Sq. Ft. 7
2.77 35,389 Sq. Ft. 11
- -------------------------------------------------------------------------------------------------
2.78 13,119 Sq. Ft. 12
2.79 31,699 Sq. Ft. 3
2.80 10,670 Sq. Ft. 13
2.81 115,662 Sq. Ft. 15
2.82 20,740 Sq. Ft. 16
- -------------------------------------------------------------------------------------------------
2.83 36,578 Sq. Ft. 13
2.84 32,951 Sq. Ft. 8
2.85 35,610 Sq. Ft. 3
2.86 23,969 Sq. Ft. 13
2.87 21,455 Sq. Ft. 9
- -------------------------------------------------------------------------------------------------
2.88 22,692 Sq. Ft. 7
2.89 29,343 Sq. Ft. 7
2.90 11,500 Sq. Ft. 7
2.91 18,229 Sq. Ft. 9
2.92 1,027,783 Sq. Ft. 10
- -------------------------------------------------------------------------------------------------
2.93 24,945 Sq. Ft. 8
2.94 24,150 Sq. Ft. 4
2.95 24,922 Sq. Ft. 18
2.96 28,484 Sq. Ft. 3
2.97 20,094 Sq. Ft. 9
- -------------------------------------------------------------------------------------------------
2.98 20,429 Sq. Ft. 9
2.99 12,715 Sq. Ft. 5
2.100 21,600 Sq. Ft. 7
2.101 24,416 Sq. Ft. 7
2.102 32,530 Sq. Ft. 5
- -------------------------------------------------------------------------------------------------
2.103 12,300 Sq. Ft. 4
2.104 25,669 Sq. Ft. 7
2.105 34,145 Sq. Ft. 8
2.106 10,981 Sq. Ft. -
2.107 15,946 Sq. Ft. 7
- -------------------------------------------------------------------------------------------------
2.108 15,904 Sq. Ft. -
2.109 29,301 Sq. Ft. 6
2.110 413,407 Sq. Ft. 12
2.111 59,489 Sq. Ft. 7
2.112 23,855 Sq. Ft. 6
- -------------------------------------------------------------------------------------------------
2.113 12,642 Sq. Ft. 11
2.114 19,908 Sq. Ft. 13
2.115 19,088 Sq. Ft. 6
2.116 27,495 Sq. Ft. -
2.117 20,918 Sq. Ft. 9
- -------------------------------------------------------------------------------------------------
2.118 25,655 Sq. Ft. 7
2.119 14,970 Sq. Ft. -
2.120 22,643 Sq. Ft. 5
2.121 12,853 Sq. Ft. 10
2.122 21,292 Sq. Ft. 5
- -------------------------------------------------------------------------------------------------
2.123 23,236 Sq. Ft. 5
2.124 19,176 Sq. Ft. 6
2.125 61,095 Sq. Ft. 12
2.126 28,562 Sq. Ft. 6
2.127 37,846 Sq. Ft. 12
- -------------------------------------------------------------------------------------------------
2.128 12,079 Sq. Ft. 7
2.129 21,710 Sq. Ft. 5
2.130 26,417 Sq. Ft. 7
2.131 34,108 Sq. Ft. 6
2.132 57,945 Sq. Ft. 7
- -------------------------------------------------------------------------------------------------
2.133 63,374 Sq. Ft. 3
2.134 20,058 Sq. Ft. 3
2.135 24,059 Sq. Ft. 5
2.136 27,726 Sq. Ft. 8
2.137 24,151 Sq. Ft. 3
- -------------------------------------------------------------------------------------------------
FOURTH FOURTH THIRD THIRD MOST
MOST RECENT RECENT NOI MOST RECENT RECENT NOI
ID PROPERTY NAME NOI DATE NOI DATE
- ---------------------------------------------------------------------------------------------------------------------
2.68 Jacksonville Ops CTR/#700
2.69 Jacksonville Ops Ctr/School
2.70 Jacksonville Ops CTR/Daycare
2.71 Lighthouse Point
2.72 Mendham Operations Center
- ---------------------------------------------------------------------------------------------------------------------
2.73 Miami Lakes Operation CTR
2.74 North Biscayne
2.75 North Hialeah
2.76 Ocala Downtown
2.77 Plaza
- ---------------------------------------------------------------------------------------------------------------------
2.78 Port Charlotte
2.79 Ridgewood
2.80 San Jose
2.81 South Region TPC
2.82 Westshore Mall
- ---------------------------------------------------------------------------------------------------------------------
2.83 Williams Islands
2.84 Winter Park
2.85 Albany Main Office
2.86 Bull Street
2.87 Cartersville Main
- ---------------------------------------------------------------------------------------------------------------------
2.88 Moultrie Main
2.89 Valdosta Main
2.90 Winder (BS)
2.91 Coeur D'alene BDLG/BR
2.92 Bank of America Center
- ---------------------------------------------------------------------------------------------------------------------
2.93 Mission Facility
2.94 Penn Street Facility
2.95 Annapolis Church Circle - BAL
2.96 Highlandtown - BAL
2.97 Columbia Facility
- ---------------------------------------------------------------------------------------------------------------------
2.98 Concord Village
2.99 Downtown Facility
2.100 Florissant Facility
2.101 Hampton-Main Facility
2.102 Independence Square
- ---------------------------------------------------------------------------------------------------------------------
2.103 Lexington Facility
2.104 Mexico Facility
2.105 Oak Trafficway Facility
2.106 Richland Facility
2.107 South Glenstone Facility
- ---------------------------------------------------------------------------------------------------------------------
2.108 West Sunshine Facility
2.109 William Street Facility
2.110 525 N Tryon-Odell Building
2.111 Albuquerque Operations Center
2.112 East Central Facility
- ---------------------------------------------------------------------------------------------------------------------
2.113 Henderson
2.114 Paradise Valley
2.115 Admiral
2.116 Muskogee Main Facility
2.117 Aiken Main Office
- ---------------------------------------------------------------------------------------------------------------------
2.118 Murfreesboro Main Office
2.119 Aransas Pass (CCNB)
2.120 Brownwood
2.121 Carrollton
2.122 Dalhart Banking Center
- ---------------------------------------------------------------------------------------------------------------------
2.123 Denison
2.124 Dumas Banking Center
2.125 Fort Sam Houston
2.126 Fort Worth East
2.127 Greenspoint
- ---------------------------------------------------------------------------------------------------------------------
2.128 Mission
2.129 Mount Pleasant
2.130 South Austin
2.131 Waco
2.132 Charlottesville
- ---------------------------------------------------------------------------------------------------------------------
2.133 Lynchburg
2.134 Norton - 7th Street
2.135 Old Hampton
2.136 Roanoke
2.137 South Boston
- ---------------------------------------------------------------------------------------------------------------------
SECOND SECOND MOST MOST RECENT
MOST RECENT RECENT NOI MOST RECENT NOI UNDERWRITTEN UNDERWRITTEN UNDERWRITTEN
ID NOI DATE NOI DATE NOI (4) REVENUE EGI
- -------------------------------------------------------------------------------------------------------------------------
2.68 1,026,539 1,754,192 1,754,192
2.69 190,542 276,644 276,644
2.70 186,588 270,907 270,907
2.71 202,874 392,300 392,300
2.72 188,946 902,519 902,519
- -------------------------------------------------------------------------------------------------------------------------
2.73 (834,555) 551,352 (0)
2.74 (40,393) 126,755 126,755
2.75 48,744 152,562 124,063
2.76 130,565 427,864 344,930
2.77 238,337 394,962 394,962
- -------------------------------------------------------------------------------------------------------------------------
2.78 95,914 180,626 166,375
2.79 1,578 352,106 128,732
2.80 82,199 157,825 149,274
2.81 990,965 2,017,678 2,017,678
2.82 178,806 334,879 334,879
- -------------------------------------------------------------------------------------------------------------------------
2.83 368,530 606,833 606,833
2.84 19,188 347,443 250,201
2.85 47,926 216,382 157,483
2.86 206,799 380,857 380,857
2.87 35,771 147,621 112,859
- -------------------------------------------------------------------------------------------------------------------------
2.88 41,162 156,843 120,030
2.89 138,461 356,434 294,779
2.90 67,128 140,989 107,739
2.91 50,167 109,238 89,231
2.92 4,815,900 18,768,738 17,373,406
- -------------------------------------------------------------------------------------------------------------------------
2.93 136,325 339,800 280,520
2.94 26,921 235,517 158,063
2.95 216,469 338,085 338,085
2.96 54,703 99,454 99,454
2.97 111,220 259,635 201,590
- -------------------------------------------------------------------------------------------------------------------------
2.98 181,996 317,929 317,929
2.99 42,604 91,291 91,291
2.100 70,670 218,418 163,660
2.101 103,365 336,959 247,051
2.102 60,319 207,200 207,200
- -------------------------------------------------------------------------------------------------------------------------
2.103 33,613 145,447 87,022
2.104 164,644 248,721 248,721
2.105 119,181 375,466 318,465
2.106 35,582 121,375 59,626
2.107 41,503 212,955 170,964
- -------------------------------------------------------------------------------------------------------------------------
2.108 138,248 211,392 211,392
2.109 23,873 247,444 152,615
2.110 4,979,505 8,015,921 8,015,921
2.111 181,593 827,333 766,172
2.112 (11,322) 282,688 124,997
- -------------------------------------------------------------------------------------------------------------------------
2.113 46,078 136,183 94,459
2.114 77,092 199,193 139,344
2.115 52,678 187,107 138,525
2.116 40,802 300,755 130,477
2.117 65,978 191,313 170,764
- -------------------------------------------------------------------------------------------------------------------------
2.118 95,866 273,084 217,689
2.119 106,681 191,528 167,778
2.120 35,148 209,426 135,669
2.121 93,341 186,737 171,537
2.122 42,661 230,698 115,825
- -------------------------------------------------------------------------------------------------------------------------
2.123 67,367 225,543 187,543
2.124 29,077 210,026 89,908
2.125 522,766 834,049 826,449
2.126 41,026 291,480 177,480
2.127 294,137 482,837 482,837
- -------------------------------------------------------------------------------------------------------------------------
2.128 77,962 162,410 138,014
2.129 44,359 210,670 143,333
2.130 108,339 318,962 271,462
2.131 270,288 441,075 441,075
2.132 387,856 547,763 547,763
- -------------------------------------------------------------------------------------------------------------------------
2.133 176,603 481,150 419,276
2.134 27,023 98,114 88,614
2.135 103,948 179,160 179,160
2.136 170,199 305,249 257,426
2.137 26,202 153,669 104,953
- -------------------------------------------------------------------------------------------------------------------------
UNDERWRITTEN UNDERWRITTEN UNDERWRITTEN UNDERWRITTEN NET
ID EXPENSES RESERVES TI/LC (11) CASH FLOW (4)(11) LARGEST TENANT SF
- -----------------------------------------------------------------------------------------------------------------------------------
2.68 727,652 14 - 1,026,525 Bank of America N.A. 118,662
2.69 86,103 - - 190,542 Bank of America N.A. 21,879
2.70 84,320 - - 186,588 Bank of America N.A. 21,425
2.71 189,426 1,479 - 201,395 Bank of America N.A. 21,159
2.72 713,572 13,041 - 175,905 Bank of America N.A. 45,000
- -----------------------------------------------------------------------------------------------------------------------------------
2.73 834,555 64,996 - (899,551) Bank of America N.A. 58,037
2.74 167,148 4,795 - (45,188) Bank of America N.A. 5,503
2.75 75,319 2,055 - 46,689 Bank of America N.A. 10,212
2.76 214,365 4,447 - 126,118 Bank of America N.A. 29,147
2.77 156,626 1,840 - 236,497 Bank of America N.A. 24,955
- -----------------------------------------------------------------------------------------------------------------------------------
2.78 70,461 955 - 94,959 Bank of America N.A. 12,919
2.79 127,155 6,099 - (4,521) Bank of America N.A. 31,699
2.80 67,076 265 - 81,934 Bank of America N.A. 10,670
2.81 1,026,713 - - 990,965 Bank of America N.A. 115,662
2.82 156,073 - - 178,806 Bank of America N.A. 20,740
- -----------------------------------------------------------------------------------------------------------------------------------
2.83 238,303 10,367 - 358,163 Tradex Group 5,736
2.84 231,013 4,118 - 15,070 Bank of America N.A. 24,064
2.85 109,557 9,577 - 38,349 Bank of America N.A. 14,247
2.86 174,058 - - 206,799 Bank of America N.A. 23,969
2.87 77,088 7,812 - 27,959 Bank of America N.A. 11,159
- -----------------------------------------------------------------------------------------------------------------------------------
2.88 78,868 6,494 - 34,668 Bank of America N.A. 11,372
2.89 156,318 12,662 - 125,799 Bank of America N.A. 19,109
2.90 40,611 1,516 - 65,612 Bank of America N.A. 11,500
2.91 39,063 8,613 - 41,554 Bank of America N.A. 8,476
2.92 12,557,506 40,365 - 4,775,535 Bank of America N.A. 869,916
- -----------------------------------------------------------------------------------------------------------------------------------
2.93 144,194 2,711 - 133,614 Bank of America N.A. 23,865
2.94 131,142 2,927 - 23,994 Bank of America N.A. 17,653
2.95 121,616 - - 216,469 Bank of America N.A. 24,922
2.96 44,750 1,115 - 53,588 Bank of America N.A. 7,382
2.97 90,370 1,376 - 109,844 Bank of America N.A. 20,094
- -----------------------------------------------------------------------------------------------------------------------------------
2.98 135,933 1,347 - 180,650 Bank of America N.A. 15,320
2.99 48,687 2,449 - 40,155 Bank of America N.A. 6,200
2.100 92,990 4,722 - 65,948 Bank of America N.A. 16,627
2.101 143,686 5,035 - 98,330 Bank of America N.A. 24,416
2.102 146,881 7,532 - 52,787 Bank of America N.A. 11,353
- -----------------------------------------------------------------------------------------------------------------------------------
2.103 53,409 941 - 32,672 Bank of America N.A. 11,600
2.104 84,077 8,067 - 156,577 Bank of America N.A. 14,097
2.105 199,285 5,059 - 114,122 Bank of America N.A. 19,679
2.106 24,044 1,323 - 34,259 Bank of America N.A. 10,981
2.107 129,462 6,189 - 35,314 Bank of America N.A. 13,666
- -----------------------------------------------------------------------------------------------------------------------------------
2.108 73,144 - - 138,248 Bank of America N.A. 15,904
2.109 128,742 8,485 - 15,388 Bank of America N.A. 19,582
2.110 3,036,415 42,214 - 4,937,291 Bank of America N.A. 271,335
2.111 584,579 4,537 - 177,056 Bank of America N.A. 44,905
2.112 136,319 6,485 - (17,807) Bank of America N.A. 23,855
- -----------------------------------------------------------------------------------------------------------------------------------
2.113 48,381 1,860 - 44,218 Bank of America N.A. 10,557
2.114 62,252 3,491 - 73,601 Bank of America N.A. 16,335
2.115 85,847 5,565 - 47,113 Bank of America N.A. 14,114
2.116 89,675 2,244 - 38,558 Bank of America N.A. 26,495
2.117 104,786 1,549 - 64,429 Bank of America N.A. 13,019
- -----------------------------------------------------------------------------------------------------------------------------------
2.118 121,823 5,056 - 90,810 Bank of America N.A. 18,676
2.119 61,097 1,650 - 105,031 Bank of America N.A. 14,970
2.120 100,520 5,876 - 29,272 Bank of America N.A. 14,642
2.121 78,196 776 - 92,565 Bank of America N.A. 12,853
2.122 73,164 1,623 - 41,038 Bank of America N.A. 18,292
- -----------------------------------------------------------------------------------------------------------------------------------
2.123 120,176 4,864 - 62,503 Bank of America N.A. 14,506
2.124 60,831 4,249 - 24,828 Bank of America N.A. 18,784
2.125 303,683 75 - 522,691 Bank of America N.A. 61,095
2.126 136,454 7,149 - 33,877 Bank of America N.A. 23,097
2.127 188,700 3,251 - 290,886 Bank of America N.A. 34,333
- -----------------------------------------------------------------------------------------------------------------------------------
2.128 60,052 1,278 - 76,684 Bank of America N.A. 12,079
2.129 98,974 3,805 - 40,554 Bank of America N.A. 16,244
2.130 163,123 5,254 - 103,085 Bank of America N.A. 21,387
2.131 170,787 220 - 270,068 Bank of America N.A. 31,462
2.132 159,907 525 - 387,331 Bank of America N.A. 46,192
- -----------------------------------------------------------------------------------------------------------------------------------
2.133 242,673 9,388 - 167,215 Bank of America N.A. 17,121
2.134 61,591 5,931 - 21,092 Bank of America N.A. 6,637
2.135 75,212 4,790 - 99,158 Bank of America N.A. 9,600
2.136 87,227 2,245 - 167,954 Bank of America N.A. 24,760
2.137 78,751 5,630 - 20,572 Bank of America N.A. 10,128
- -----------------------------------------------------------------------------------------------------------------------------------
LEASE LEASE
ID EXPIRATION 2ND LARGEST TENANT SF EXPIRATION 3RD LARGEST TENANT
- ------------------------------------------------------------------------------------------------------------------------------------
2.68 06/30/2023
2.69 06/30/2023
2.70 06/30/2023
2.71 06/30/2023 The Parent's Info. 4,500 06/30/2006
2.72 06/30/2023 Diamond Technologies, Inc. 8,527 12/31/2003
- ------------------------------------------------------------------------------------------------------------------------------------
2.73 06/30/2023
2.74 06/30/2023 Nelvis Velasquez, MD 1,740 04/30/2004
2.75 06/30/2023
2.76 06/30/2023
2.77 06/30/2023 Title Guaranty & Trust Co. 1,251 10/31/2005 Campo Insurance Agency
- ------------------------------------------------------------------------------------------------------------------------------------
2.78 06/30/2023
2.79 06/30/2023
2.80 06/30/2023
2.81 06/30/2023
2.82 06/30/2023
- ------------------------------------------------------------------------------------------------------------------------------------
2.83 12/31/2003 Bank of America N.A. 4,299 06/30/2023 Goodstein Realty
2.84 06/30/2023
2.85 06/30/2023 Albany State University 6,572 09/30/2004
2.86 06/30/2023
2.87 06/30/2023
- ------------------------------------------------------------------------------------------------------------------------------------
2.88 06/30/2023 Moultrie Communities 1,835 01/31/2004 Keith L. Brown & Company
2.89 06/30/2023 General Services Administration 7,100 04/14/2004 Mark Gilbert
2.90 06/30/2023
2.91 06/30/2023 United Way Kootenai County 1,518 12/31/2003 Scott W. Reed
2.92 06/30/2023 Casual Corner Group, Inc. 7,157 04/30/2008 Cafe Baci, Inc
- ------------------------------------------------------------------------------------------------------------------------------------
2.93 06/30/2023 Integrity Resources Center 540 04/30/2004
2.94 06/30/2023
2.95 06/30/2023
2.96 06/30/2023
2.97 06/30/2023
- ------------------------------------------------------------------------------------------------------------------------------------
2.98 06/30/2023 Kinsley & Sons, Inc. 2,652 07/31/2005 National Appraisal Services
2.99 06/30/2023
2.100 06/30/2023
2.101 06/30/2023
2.102 06/30/2023 Outreach International 3,066 04/30/2005 June Short
- ------------------------------------------------------------------------------------------------------------------------------------
2.103 06/30/2023
2.104 06/30/2023 Van Matre & Krueger LLC 2,758 12/31/2003 Botts & McCure
2.105 06/30/2023 Cypress Media 3,833 12/31/2004 Stewart Title Kansas
2.106 06/30/2023
2.107 06/30/2023
- ------------------------------------------------------------------------------------------------------------------------------------
2.108 06/30/2023
2.109 06/30/2023
2.110 06/30/2023 HQ Global Workplaces 27,666 03/18/2009 Odell Associates, Inc.
2.111 06/30/2023
2.112 06/30/2023
- ------------------------------------------------------------------------------------------------------------------------------------
2.113 06/30/2023 Henderson Jet Sales 1,725 03/31/2004 Finish Line Graphics
2.114 06/30/2023
2.115 06/30/2023
2.116 06/30/2023 Muskogee Chamber Commerce 1,000 07/31/2004
2.117 06/30/2023
- ------------------------------------------------------------------------------------------------------------------------------------
2.118 06/30/2023 William P. Nelms 1,550 01/31/2004 John Drake
2.119 06/30/2023
2.120 06/30/2023 Mesa Family Services 2,600 03/31/2004 BB&G Services
2.121 06/30/2023
2.122 06/30/2023 Craig Fuller & Assct, PLLC 3,000 06/30/2006
- ------------------------------------------------------------------------------------------------------------------------------------
2.123 06/30/2023 Complete Estate Service, LLC 1,960 08/31/2007
2.124 06/30/2023
2.125 06/30/2023
2.126 06/30/2023
2.127 06/30/2023
- ------------------------------------------------------------------------------------------------------------------------------------
2.128 06/30/2023
2.129 06/30/2023
2.130 06/30/2023 Score 1,800 01/31/2004 Accion Texas, Inc
2.131 06/30/2023
2.132 06/30/2023 Thomas Jefferson Planning District 4,870 07/31/2005 Piedmont Council of the Arts
- ------------------------------------------------------------------------------------------------------------------------------------
2.133 06/30/2023 W.D. Campbell & Son, Inc 14,184 07/31/2006 Lynch's Landing
2.134 06/30/2023 Appalshop, Inc. 800 12/31/2003 Koltown Props
2.135 06/30/2023 Patrick B. McDermott 4,782 11/30/2005
2.136 06/30/2023
2.137 06/30/2023 Longwood College 2,283 09/30/2004 Rteam Nurse Inc
- ------------------------------------------------------------------------------------------------------------------------------------
UPFRONT ONGOING
LEASE OCCUPANCY OCCUPANCY ACTUAL REPLACEMENT ACTUAL REPLACEMENT UPFRONT
ID SF EXPIRATION RATE AS-OF DATE RESERVES RESERVES TI/LC
- -----------------------------------------------------------------------------------------------------------------------------------
2.68 99.75% 09/15/2003 - - -
2.69 100.00% 09/15/2003 - - -
2.70 100.00% 09/15/2003 - - -
2.71 100.00% 09/15/2003 - - -
2.72 47.70% 09/15/2003 - - -
- -----------------------------------------------------------------------------------------------------------------------------------
2.73 41.05% 09/15/2003 - - -
2.74 27.66% 09/15/2003 - - -
2.75 100.00% 09/15/2003 - - -
2.76 92.44% 09/15/2003 - - -
2.77 870 04/30/2005 78.49% 09/15/2003 - - -
- -----------------------------------------------------------------------------------------------------------------------------------
2.78 98.48% 09/15/2003 - - -
2.79 100.00% 09/15/2003 - - -
2.80 100.00% 09/15/2003 - - -
2.81 100.00% 09/15/2003 - - -
2.82 100.00% 09/15/2003 - - -
- -----------------------------------------------------------------------------------------------------------------------------------
2.83 3,075 01/31/2006 68.94% 09/15/2003 - - -
2.84 73.03% 09/15/2003 - - -
2.85 58.46% 09/15/2003 - - -
2.86 100.00% 09/15/2003 - - -
2.87 52.01% 09/15/2003 - - -
- -----------------------------------------------------------------------------------------------------------------------------------
2.88 943 08/31/2004 63.87% 09/15/2003 - - -
2.89 750 03/31/2004 94.10% 09/15/2003 - - -
2.90 100.00% 09/15/2003 - - -
2.91 1,419 10/31/2005 69.08% 09/15/2003 - - -
2.92 4,383 12/31/2007 87.30% 09/15/2003 - - -
- -----------------------------------------------------------------------------------------------------------------------------------
2.93 97.84% 09/15/2003 - - -
2.94 73.10% 09/15/2003 - - -
2.95 100.00% 09/15/2003 - - -
2.96 25.92% 09/15/2003 - - -
2.97 100.00% 09/15/2003 - - -
- -----------------------------------------------------------------------------------------------------------------------------------
2.98 1,954 12/31/2003 97.54% 09/15/2003 - - -
2.99 48.76% 09/15/2003 - - -
2.100 76.98% 09/15/2003 - - -
2.101 100.00% 09/15/2003 - - -
2.102 403 12/31/2003 46.61% 09/15/2003 - - -
- -----------------------------------------------------------------------------------------------------------------------------------
2.103 94.31% 09/15/2003 - - -
2.104 1,765 12/31/2005 87.98% 09/15/2003 - - -
2.105 1,056 08/31/2004 75.15% 09/15/2003 - - -
2.106 100.00% 09/15/2003 - - -
2.107 85.70% 09/15/2003 - - -
- -----------------------------------------------------------------------------------------------------------------------------------
2.108 100.00% 09/15/2003 - - -
2.109 66.83% 09/15/2003 - - -
2.110 26,596 02/28/2014 100.00% 09/15/2003 - - -
2.111 75.48% 09/15/2003 - - -
2.112 100.00% 09/15/2003 - - -
- -----------------------------------------------------------------------------------------------------------------------------------
2.113 360 05/31/2005 100.00% 09/15/2003 - - -
2.114 82.05% 09/15/2003 - - -
2.115 73.94% 09/15/2003 - - -
2.116 100.00% 09/15/2003 - - -
2.117 62.24% 09/15/2003 - - -
- -----------------------------------------------------------------------------------------------------------------------------------
2.118 700 12/31/2003 81.57% 09/15/2003 - - -
2.119 100.00% 09/15/2003 - - -
2.120 942 12/31/2003 86.71% 09/15/2003 - - -
2.121 100.00% 09/15/2003 - - -
2.122 100.00% 09/15/2003 - - -
- -----------------------------------------------------------------------------------------------------------------------------------
2.123 70.86% 09/15/2003 - - -
2.124 97.96% 09/15/2003 - - -
2.125 100.00% 09/15/2003 - - -
2.126 80.87% 09/15/2003 - - -
2.127 90.72% 09/15/2003 - - -
- -----------------------------------------------------------------------------------------------------------------------------------
2.128 100.00% 09/15/2003 - - -
2.129 74.82% 09/15/2003 - - -
2.130 500 01/31/2004 90.61% 09/15/2003 - - -
2.131 92.24% 09/15/2003 - - -
2.132 900 07/31/2004 91.10% 09/15/2003 - - -
- -----------------------------------------------------------------------------------------------------------------------------------
2.133 2,729 12/31/2003 78.50% 09/15/2003 - - -
2.134 660 12/31/2003 41.25% 09/15/2003 - - -
2.135 59.78% 09/15/2003 - - -
2.136 89.30% 09/15/2003 - - -
2.137 598 10/30/2005 59.24% 09/15/2003 - - -
- -----------------------------------------------------------------------------------------------------------------------------------
UPFRONT ENVIRONMENTAL
MONTHLY MONTHLY TAX MONTHLY INSURANCE ENGINEERING REPORT
ID TI/LC ESCROW ESCROW RESERVE DATE
- -----------------------------------------------------------------------------------------------------------------------
2.68 - - - - 06/06/2003
2.69 - - - - 06/06/2003
2.70 - - - - 06/06/2003
2.71 - - - - 06/06/2003
2.72 - - - - 06/06/2003
- -----------------------------------------------------------------------------------------------------------------------
2.73 - - - - 06/06/2003
2.74 - - - - 06/06/2003
2.75 - - - - 06/06/2003
2.76 - - - - 06/06/2003
2.77 - - - - 06/06/2003
- -----------------------------------------------------------------------------------------------------------------------
2.78 - - - - 06/06/2003
2.79 - - - - 06/06/2003
2.80 - - - - 06/06/2003
2.81 - - - - 06/06/2003
2.82 - - - - 06/06/2003
- -----------------------------------------------------------------------------------------------------------------------
2.83 - - - - 06/06/2003
2.84 - - - - 06/06/2003
2.85 - - - - 05/03/2003
2.86 - - - - 06/03/2003
2.87 - - - - 06/03/2003
- -----------------------------------------------------------------------------------------------------------------------
2.88 - - - - 05/03/2003
2.89 - - - - 05/03/2003
2.90 - - - - 05/03/2003
2.91 - - - - 05/03/2003
2.92 - - - - 06/06/2003
- -----------------------------------------------------------------------------------------------------------------------
2.93 - - - - 06/03/2003
2.94 - - - - 05/03/2003
2.95 - - - - 06/03/2003
2.96 - - - - 06/03/2003
2.97 - - - - 06/03/2003
- -----------------------------------------------------------------------------------------------------------------------
2.98 - - - - 05/03/2003
2.99 - - - - 05/03/2003
2.100 - - - - 05/03/2003
2.101 - - - - 05/03/2003
2.102 - - - - 06/03/2003
- -----------------------------------------------------------------------------------------------------------------------
2.103 - - - - 06/03/2003
2.104 - - - - 05/03/2003
2.105 - - - - 06/03/2003
2.106 - - - - 05/03/2003
2.107 - - - - 05/03/2003
- -----------------------------------------------------------------------------------------------------------------------
2.108 - - - - 05/03/2003
2.109 - - - - 05/03/2003
2.110 - - - - 06/03/2003
2.111 - - - - 05/03/2003
2.112 - - - - 05/03/2003
- -----------------------------------------------------------------------------------------------------------------------
2.113 - - - - 06/03/2003
2.114 - - - - 06/03/2003
2.115 - - - - 05/03/2003
2.116 - - - - 05/03/2003
2.117 - - - - 06/03/2003
- -----------------------------------------------------------------------------------------------------------------------
2.118 - - - - 05/03/2003
2.119 - - - - 06/03/2003
2.120 - - - - 06/03/2003
2.121 - - - - 05/03/2003
2.122 - - - - 06/03/2003
- -----------------------------------------------------------------------------------------------------------------------
2.123 - - - - 05/03/2003
2.124 - - - - 05/03/2003
2.125 - - - - 06/03/2003
2.126 - - - - 05/03/2003
2.127 - - - - 05/03/2003
- -----------------------------------------------------------------------------------------------------------------------
2.128 - - - - 06/03/2003
2.129 - - - - 06/03/2003
2.130 - - - - 06/03/2003
2.131 - - - - 06/03/2003
2.132 - - - - 05/03/2003
- -----------------------------------------------------------------------------------------------------------------------
2.133 - - - - 06/03/2003
2.134 - - - - 06/03/2003
2.135 - - - - 06/03/2003
2.136 - - - - 06/03/2003
2.137 - - - - 06/03/2003
- -----------------------------------------------------------------------------------------------------------------------
ENGINEERING APPRAISAL
ID REPORT DATE AS-OF DATE (5) SPONSOR
- ------------------------------------------------------------------------------------------------------------------------------------
2.68 06/06/2003 06/01/2003
2.69 06/06/2003 05/01/2003
2.70 06/06/2003 05/01/2003
2.71 06/06/2003 05/21/2003
2.72 06/06/2003 05/01/2003
- ------------------------------------------------------------------------------------------------------------------------------------
2.73 06/06/2003 04/30/2003
2.74 06/06/2003 05/20/2003
2.75 06/06/2003 05/07/2003
2.76 06/06/2003 05/01/2003
2.77 06/06/2003 05/07/2003
- ------------------------------------------------------------------------------------------------------------------------------------
2.78 06/06/2003 05/15/2003
2.79 06/06/2003 05/16/2003
2.80 06/06/2003 05/01/2003
2.81 06/06/2003 04/30/2003
2.82 06/06/2003 05/15/2003
- ------------------------------------------------------------------------------------------------------------------------------------
2.83 06/06/2003 05/20/2003
2.84 06/06/2003 05/01/2003
2.85 06/04/2003 05/05/2003
2.86 06/04/2003 05/14/2003
2.87 06/04/2003 05/27/2003
- ------------------------------------------------------------------------------------------------------------------------------------
2.88 06/04/2003 05/05/2003
2.89 06/04/2003 05/13/2003
2.90 06/02/2003 05/27/2003
2.91 06/04/2003 05/11/2003
2.92 06/06/2003 05/01/2003
- ------------------------------------------------------------------------------------------------------------------------------------
2.93 06/04/2003 05/15/2003
2.94 06/04/2003 05/15/2003
2.95 06/04/2003 05/15/2003
2.96 06/04/2003 06/01/2003
2.97 06/04/2003 05/13/2003
- ------------------------------------------------------------------------------------------------------------------------------------
2.98 06/04/2003 05/13/2003
2.99 06/04/2003 05/15/2003
2.100 06/04/2003 05/27/2003
2.101 06/04/2003 05/13/2003
2.102 06/04/2003 05/19/2003
- ------------------------------------------------------------------------------------------------------------------------------------
2.103 06/04/2003 05/19/2003
2.104 06/04/2003 05/10/2003
2.105 06/04/2003 05/19/2003
2.106 06/04/2003 05/20/2003
2.107 06/04/2003 05/20/2003
- ------------------------------------------------------------------------------------------------------------------------------------
2.108 06/04/2003 05/20/2003
2.109 06/04/2003 05/19/2003
2.110 06/04/2003 05/01/2003
2.111 06/04/2003 05/15/2003
2.112 06/04/2003 05/15/2003
- ------------------------------------------------------------------------------------------------------------------------------------
2.113 06/04/2003 05/16/2003
2.114 06/04/2003 05/15/2003
2.115 06/04/2003 05/20/2003
2.116 06/04/2003 05/01/2003
2.117 06/04/2003 05/19/2003
- ------------------------------------------------------------------------------------------------------------------------------------
2.118 06/04/2003 04/29/2003
2.119 06/04/2003 05/19/2003
2.120 06/04/2003 05/15/2003
2.121 06/04/2003 05/14/2003
2.122 06/04/2003 05/26/2003
- ------------------------------------------------------------------------------------------------------------------------------------
2.123 06/04/2003 05/19/2003
2.124 06/04/2003 05/26/2003
2.125 06/04/2003 05/15/2003
2.126 06/04/2003 05/17/2003
2.127 06/04/2003 05/15/2003
- ------------------------------------------------------------------------------------------------------------------------------------
2.128 06/04/2003 05/19/2003
2.129 06/04/2003 05/19/2003
2.130 06/04/2003 05/15/2003
2.131 06/04/2003 05/20/2003
2.132 06/04/2003 05/22/2003
- ------------------------------------------------------------------------------------------------------------------------------------
2.133 06/04/2003 05/28/2003
2.134 06/04/2003 06/02/2003
2.135 06/04/2003 05/29/2003
2.136 06/04/2003 05/01/2003
2.137 06/04/2003 05/28/2003
- ------------------------------------------------------------------------------------------------------------------------------------
COMM 2004-LNB2
ANNEX A-1 - CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS AND MORTGAGED
PROPERTIES
% OF MORTGAGE
INITIAL POOL # OF LOAN ORIGINAL
ID PROPERTY NAME BALANCE PROPERTIES SELLER (1) BALANCE
- ---------------------------------------------------------------------------------------------------------------------------
2.138 Aberdeen Bldg/BR 0.00% GACC -
2.139 Bank of America Financial Ctr 0.50% GACC 4,861,622
2.140 Bank of America Plaza 0.10% GACC 930,157
2.141 Bellingham 0.03% GACC 297,650
2.142 Bremerton 0.02% GACC 186,031
- ---------------------------------------------------------------------------------------------------------------------------
2.143 Forks 0.01% GACC 86,815
2.144 Moses Lake 0.01% GACC 124,021
2.145 North Wenatchee 0.01% GACC 111,619
2.146 Pasco 0.01% GACC 99,217
2.147 Port Angeles 0.01% GACC 94,900
- ---------------------------------------------------------------------------------------------------------------------------
2.148 Richland 0.03% GACC 291,449
2.149 Spokane Bankcard Services 0.12% GACC 1,116,189
2.150 University 0.03% GACC 260,444
2.151 Walla Walla 0.02% GACC 161,227
2.152 Yakima Valley Bldg/BR 0.02% GACC 210,836
- ---------------------------------------------------------------------------------------------------------------------------
3 The Watergate/600 New Hampshire Avenue 7.07% 1 GACC 68,500,000
4 Meadows Mall 5.74% 1 ABN AMRO 56,000,000
5 Fairstone at Riverview 3.61% 1 GACC 35,000,000
6 321 West 44th Street 3.10% 1 GACC 30,000,000
7 Wenatchee Valley Mall 2.68% 1 GACC 26,000,000
- ---------------------------------------------------------------------------------------------------------------------------
8 Shoppes at Grand Prairie 2.68% 1 GACC 26,090,000
9 Wiener Portfolio III (10) 2.47% 2 GACC 24,025,000
9.1 910-930 Thieriot Avenue 1.37% GACC 13,339,034
9.2 945-955 Underhill Avenue 1.10% GACC 10,685,966
10 1401 Enclave Parkway 2.43% 1 LaSalle 23,600,000
- ---------------------------------------------------------------------------------------------------------------------------
11 Empirian at Winter Park 2.32% 1 GACC 22,500,000
12 The Broadway Center 2.16% 1 GACC 21,000,000
13 Huron Village Shopping Center 2.06% 1 LaSalle 20,000,000
14 Tantra Lake Apartments 1.76% 1 GACC 17,000,000
15 1 Northbrook Corporate Center 1.58% 1 GACC 15,300,000
16 Frenchman's Wharf 1.48% 1 GACC 14,400,000
17 Hawthorne Apartments 1.40% 1 GACC 13,600,000
18 Centre Medical Plaza 1.39% 1 GACC 13,500,000
19 Tesla Park Apartments 1.34% 1 GACC 13,020,000
- ---------------------------------------------------------------------------------------------------------------------------
20 1301 Connecticut Avenue, Northwest 1.27% 1 GACC 12,300,000
21 151 West 46th Street 1.25% 1 GACC 12,200,000
22 Northbrook 1.15% 1 GACC 11,200,000
23 Willowbrooke Apartments 1.03% 1 LaSalle 10,000,000
24 Campus Edge Apartments 1.03% 1 GACC 10,000,000
- ---------------------------------------------------------------------------------------------------------------------------
25 114 Town Park 0.58% 1 GACC 5,640,000
26 112 Town Park 0.43% 1 GACC 4,200,000
27 Fountainview Townhomes 0.95% 1 GACC 9,200,000
28 Cambridge Station Apts. 0.90% 1 LaSalle 8,700,000
29 Centerpointe I II III (10) 0.88% 3 GACC 8,480,000
- ---------------------------------------------------------------------------------------------------------------------------
29.1 Centerpointe I 0.32% GACC 3,086,877
29.2 Centerpointe II 0.23% GACC 2,246,999
29.3 Centerpointe III 0.32% GACC 3,146,124
30 San Marcos Apartments 0.86% 1 LaSalle 8,350,000
31 Glenwood Place Portfolio II (10) 0.77% 4 GACC 7,500,000
- ---------------------------------------------------------------------------------------------------------------------------
31.1 Northampton Building 0.21% GACC 2,044,500
31.2 Chatham Building 0.24% GACC 2,296,500
31.3 McDowell Building 0.16% GACC 1,565,250
31.4 Caswell Building 0.16% GACC 1,593,750
32 Club Hill Apartments 0.74% 1 LaSalle 7,200,000
- ---------------------------------------------------------------------------------------------------------------------------
33 Glenwood Place Portfolio I (10) 0.72% 3 GACC 7,040,000
33.1 Cumberland Building 0.30% GACC 2,950,458
33.2 Dare Building 0.21% GACC 2,073,946
33.3 Camden Building 0.21% GACC 2,015,596
34 Woodstock Apartments 0.30% 1 LaSalle 2,925,000
- ---------------------------------------------------------------------------------------------------------------------------
35 Dogwood Apartments 0.26% 1 LaSalle 2,500,000
36 Kings Place 0.15% 1 LaSalle 1,500,000
37 East Garden Village MHC 0.61% 1 LaSalle 5,900,000
38 Forest Park Mobile Home Park 0.61% 1 GACC 5,900,000
39 Centennial Village 0.58% 1 LaSalle 5,600,000
- ---------------------------------------------------------------------------------------------------------------------------
CUT-OFF GENERAL DETAILED
DATE PROPERTY PROPERTY INTEREST ADMINISTRATIVE
ID BALANCE TYPE TYPE RATE (9) FEE RATE
- ----------------------------------------------------------------------------------------------------------------------------
2.138 - Office Office Space
2.139 4,861,622 Office Office Space
2.140 930,157 Office Office Space
2.141 297,650 Office Office Space
2.142 186,031 Office Office Space
- ----------------------------------------------------------------------------------------------------------------------------
2.143 86,815 Mixed Use Office / Retail
2.144 124,021 Mixed Use Office / Retail
2.145 111,619 Mixed Use Office / Retail
2.146 99,217 Office Office Space
2.147 94,900 Office Office Space
- ----------------------------------------------------------------------------------------------------------------------------
2.148 291,449 Office Office Space
2.149 1,116,189 Office Office Space
2.150 260,444 Office Office Space
2.151 161,227 Mixed Use Office / Retail
2.152 210,836 Office Office Space
- ----------------------------------------------------------------------------------------------------------------------------
3 68,500,000 Office CBD 6.1245% 0.03210%
4 55,587,072 Retail Regional Mall 5.4528% 0.03210%
5 35,000,000 Multifamily Conventional 5.2400% 0.03210%
6 30,000,000 Office CBD 5.9100% 0.03210%
7 26,000,000 Retail Anchored 5.5400% 0.06210%
- ----------------------------------------------------------------------------------------------------------------------------
8 25,974,625 Retail Anchored 5.3050% 0.03210%
9 23,911,302 Multifamily Conventional 4.9600% 0.03210%
9.1 13,275,907 Multifamily Conventional
9.2 10,635,395 Multifamily Conventional
10 23,549,204 Office Suburban 5.6000% 0.06210%
- ----------------------------------------------------------------------------------------------------------------------------
11 22,454,940 Multifamily Conventional 5.9800% 0.06210%
12 20,933,164 Office CBD 5.4400% 0.03210%
13 19,974,548 Retail Anchored 5.3600% 0.03210%
14 17,000,000 Multifamily Conventional 4.9300% 0.06210%
15 15,300,000 Office Conventional 5.7500% 0.03210%
16 14,368,535 Multifamily Conventional 5.5200% 0.06210%
17 13,600,000 Multifamily Conventional 5.1700% 0.03210%
18 13,500,000 Office Suburban 5.9500% 0.03210%
19 13,020,000 Multifamily Conventional 5.9600% 0.03210%
- ----------------------------------------------------------------------------------------------------------------------------
20 12,300,000 Office CBD 5.7000% 0.06210%
21 12,152,536 Office CBD 5.9400% 0.03210%
22 11,168,145 Office Suburban 5.9800% 0.03210%
23 9,978,923 Multifamily Conventional 5.7110% 0.06210%
24 9,968,304 Multifamily Student Housing 5.4600% 0.03210%
- ----------------------------------------------------------------------------------------------------------------------------
25 5,628,597 Office Suburban 5.9300% 0.03210%
26 4,191,508 Office Suburban 5.9300% 0.03210%
27 9,200,000 Multifamily Conventional 5.6000% 0.03210%
28 8,673,064 Multifamily Student Housing 5.5740% 0.09210%
29 8,480,000 Office Suburban 5.1900% 0.03210%
- ----------------------------------------------------------------------------------------------------------------------------
29.1 3,086,877 Office Suburban
29.2 2,246,999 Office Suburban
29.3 3,146,124 Office Suburban
30 8,315,576 Multifamily Conventional 6.0850% 0.03210%
31 7,464,043 Office Suburban 5.1600% 0.03210%
- ----------------------------------------------------------------------------------------------------------------------------
31.1 2,034,698 Office Suburban
31.2 2,285,490 Office Suburban
31.3 1,557,746 Office Suburban
31.4 1,586,109 Office Suburban
32 7,191,019 Multifamily Conventional 5.5000% 0.03210%
- ----------------------------------------------------------------------------------------------------------------------------
33 7,008,561 Office Suburban 5.6000% 0.03210%
33.1 2,937,282 Office Suburban
33.2 2,064,684 Office Suburban
33.3 2,006,595 Office Suburban
34 2,921,624 Multifamily Conventional 6.0500% 0.03210%
- ----------------------------------------------------------------------------------------------------------------------------
35 2,497,194 Multifamily Conventional 6.2500% 0.03210%
36 1,498,300 Multifamily Conventional 6.1810% 0.03210%
37 5,890,806 Mobile Home Park Mobile Home Park 6.2700% 0.03210%
38 5,887,842 Mobile Home Park Mobile Home Park 5.8300% 0.03210%
39 5,600,000 Multifamily Student Housing 5.6700% 0.03210%
- ----------------------------------------------------------------------------------------------------------------------------
INTEREST ORIGINAL STATED REMAINING ORIGINAL REMAINING FIRST MATURITY
ACCRUAL TERM TO MATURITY TERM TO MATURITY AMORTIZATION AMORTIZATION PAYMENT DATE
ID BASIS OR APD (MOS.) OR APD (MOS.) TERM (MOS.) TERM (MOS.) DATE OR ARD
- ---------------------------------------------------------------------------------------------------------------------
2.138
2.139
2.140
2.141
2.142
- ---------------------------------------------------------------------------------------------------------------------
2.143
2.144
2.145
2.146
2.147
- ---------------------------------------------------------------------------------------------------------------------
2.148
2.149
2.150
2.151
2.152
- ---------------------------------------------------------------------------------------------------------------------
3 Actual/360 180 177 360 360 01/1/2004 12/1/2018
4 Actual/360 120 113 360 353 09/1/2003 08/1/2013
5 Actual/360 84 83 360 360 03/1/2004 02/1/2011
6 Actual/360 120 118 360 360 02/1/2004 01/1/2014
7 Actual/360 84 80 360 360 12/1/2003 11/1/2010
- ---------------------------------------------------------------------------------------------------------------------
8 Actual/360 60 56 360 356 12/1/2003 11/1/2008
9 Actual/360 60 56 360 356 12/1/2003 11/1/2008
9.1
9.2
10 Actual/360 60 58 360 358 02/1/2004 01/1/2009
- ---------------------------------------------------------------------------------------------------------------------
11 Actual/360 120 118 360 358 02/1/2004 01/1/2014
12 Actual/360 60 57 360 357 01/1/2004 12/1/2008
13 Actual/360 124 119 360 359 11/1/2003 02/1/2014
14 Actual/360 60 59 360 360 03/1/2004 02/1/2009
15 Actual/360 120 120 360 360 04/1/2004 03/1/2014
16 Actual/360 84 82 360 358 02/1/2004 01/1/2011
17 Actual/360 60 57 360 360 01/1/2004 12/1/2008
18 Actual/360 120 120 360 360 04/1/2004 03/1/2014
19 Actual/360 180 180 360 360 04/1/2004 03/1/2019
- ---------------------------------------------------------------------------------------------------------------------
20 Actual/360 120 116 360 360 12/1/2003 11/1/2013
21 Actual/360 120 116 360 356 12/1/2003 11/1/2013
22 Actual/360 120 117 360 357 01/1/2004 12/1/2013
23 Actual/360 120 118 360 358 02/1/2004 01/1/2014
24 Actual/360 79 76 360 357 01/1/2004 07/1/2010
- ---------------------------------------------------------------------------------------------------------------------
25 Actual/360 120 118 360 358 02/1/2004 01/1/2014
26 Actual/360 120 118 360 358 02/1/2004 01/1/2014
27 Actual/360 120 120 360 360 04/1/2004 03/1/2014
28 Actual/360 120 117 360 357 01/1/2004 12/1/2013
29 Actual/360 60 58 360 360 02/1/2004 01/1/2009
- ---------------------------------------------------------------------------------------------------------------------
29.1
29.2
29.3
30 Actual/360 120 117 300 297 01/1/2004 12/1/2013
31 Actual/360 60 57 300 297 01/1/2004 12/1/2008
- ---------------------------------------------------------------------------------------------------------------------
31.1
31.2
31.3
31.4
32 Actual/360 120 119 360 359 03/1/2004 02/1/2014
- ---------------------------------------------------------------------------------------------------------------------
33 Actual/360 84 81 300 297 01/1/2004 12/1/2010
33.1
33.2
33.3
34 Actual/360 120 119 360 359 03/1/2004 02/1/2014
- ---------------------------------------------------------------------------------------------------------------------
35 Actual/360 120 119 360 359 03/1/2004 02/1/2014
36 Actual/360 120 119 360 359 03/1/2004 02/1/2014
37 Actual/360 120 119 300 299 03/1/2004 02/1/2014
38 Actual/360 120 118 360 358 02/1/2004 01/1/2014
39 Actual/360 120 118 348 348 02/1/2004 01/1/2014
- ---------------------------------------------------------------------------------------------------------------------
ANNUAL MONTHLY REMAINING CROSSED
DEBT DEBT INTEREST ONLY ARD WITH DSCR
ID SERVICE (2) SERVICE (2) PERIOD (MOS.) LOCKBOX (3) (YES/NO) OTHER LOANS (12) (2)(4)(8)(14)
- --------------------------------------------------------------------------------------------------------------------------------
2.138
2.139
2.140
2.141
2.142
- --------------------------------------------------------------------------------------------------------------------------------
2.143
2.144
2.145
2.146
2.147
- --------------------------------------------------------------------------------------------------------------------------------
2.148
2.149
2.150
2.151
2.152
- --------------------------------------------------------------------------------------------------------------------------------
3 4,994,293 416,191 33 Hard No No 1.31
4 3,795,674 316,306 - Hard No No 1.74
5 2,316,655 193,055 35 Soft No No 1.25
6 2,137,596 178,133 22 Hard No No 1.32
7 1,779,340 148,278 8 Hard No No 1.49
- --------------------------------------------------------------------------------------------------------------------------------
8 1,739,520 144,960 - Hard No No 1.28
9 1,540,617 128,385 - No No No 1.21
9.1
9.2
10 1,625,792 135,483 - Hard No No 1.51
- --------------------------------------------------------------------------------------------------------------------------------
11 1,615,316 134,610 - No No No 1.37
12 1,421,356 118,446 - No No No 1.25
13 1,341,687 111,807 - Hard No No 1.45
14 1,086,405 90,534 23 Soft No No 1.20
15 1,071,440 89,287 - No No No 1.27
16 983,309 81,942 - No No No 1.38
17 893,127 74,427 9 No No No 1.34
18 966,070 80,506 - No No No 1.31
19 932,724 77,727 - No No No 1.22
- --------------------------------------------------------------------------------------------------------------------------------
20 856,671 71,389 8 Hard No No 1.26
21 872,103 72,675 - No No No 1.22
22 804,069 67,006 - No No No 1.25
23 697,317 58,110 - No No No 1.47
24 678,338 56,528 - No No No 1.34
- --------------------------------------------------------------------------------------------------------------------------------
25 402,735 33,561 - Hard No Yes 1.87
26 299,909 24,992 - Hard No Yes 1.87
27 633,783 52,815 - No No No 1.38
28 597,628 49,802 - Springing Hard No No 1.38
29 558,147 46,512 10 Soft at Closing, Springing Hard No No 1.38
- --------------------------------------------------------------------------------------------------------------------------------
29.1
29.2
29.3
30 650,806 54,234 - Springing Hard No No 1.31
31 534,555 44,546 - No No Yes 1.43
- --------------------------------------------------------------------------------------------------------------------------------
31.1
31.2
31.3
31.4
32 490,570 40,881 - Springing Hard No No 1.64
- --------------------------------------------------------------------------------------------------------------------------------
33 523,838 43,653 - No No Yes 1.35
33.1
33.2
33.3
34 211,572 17,631 - Springing Hard No Yes 1.45
- --------------------------------------------------------------------------------------------------------------------------------
35 184,715 15,393 - Springing Hard No Yes 1.45
36 110,023 9,169 - Springing Hard No Yes 1.45
37 467,922 38,993 - Springing Hard No No 1.71
38 416,775 34,731 - No No No 1.60
39 393,895 32,825 10 No No No 1.42
- --------------------------------------------------------------------------------------------------------------------------------
CUT-OFF
GRACE PAYMENT APPRAISED DATE LTV LTV RATIO AT
ID PERIOD DATE VALUE (5) RATIO (4)(8)(14) MATURITY/APD (4)(14)
- ---------------------------------------------------------------------------------------
2.138 900,000
2.139 39,200,000
2.140 7,500,000
2.141 2,400,000
2.142 1,500,000
- ---------------------------------------------------------------------------------------
2.143 700,000
2.144 1,000,000
2.145 900,000
2.146 800,000
2.147 1,000,000
- ---------------------------------------------------------------------------------------
2.148 2,350,000
2.149 9,000,000
2.150 2,100,000
2.151 1,300,000
2.152 1,700,000
- ---------------------------------------------------------------------------------------
3 5 1 106,500,000 64.32% 52.01%
4 5 1 173,800,000 63.97% 53.76%
5 5 1 44,100,000 79.37% 74.76%
6 5 1 40,200,000 74.63% 66.00%
7 5 1 38,000,000 68.42% 62.46%
- ---------------------------------------------------------------------------------------
8 5 1 33,000,000 73.71% 73.25%
9 5 1 32,600,000 73.35% 67.93%
9.1 18,100,000
9.2 14,500,000
10 5 1 34,600,000 68.06% 63.47%
- ---------------------------------------------------------------------------------------
11 5 1 28,500,000 65.46% 66.92%
12 5 1 28,000,000 74.76% 69.63%
13 5 1 25,000,000 79.90% 66.53%
14 5 1 23,800,000 71.43% 68.22%
15 5 1 19,200,000 79.69% 67.08%
16 5 1 18,000,000 79.83% 71.60%
17 5 1 17,000,000 80.00% 75.30%
18 5 1 18,330,000 73.65% 62.37%
19 5 1 16,350,000 79.63% 58.00%
- ---------------------------------------------------------------------------------------
20 5 1 15,400,000 79.87% 68.75%
21 5 1 18,500,000 65.69% 55.83%
22 5 1 14,100,000 79.21% 67.34%
23 5 1 13,370,000 74.64% 62.89%
24 5 1 12,560,000 79.37% 71.77%
- ---------------------------------------------------------------------------------------
25 5 1 7,825,000 70.27% 59.59%
26 5 1 6,150,000 70.27% 59.59%
27 5 1 11,880,000 68.18% 64.89%
28 5 1 10,980,000 78.99% 66.35%
29 5 1 10,640,000 79.70% 75.04%
- ---------------------------------------------------------------------------------------
29.1 3,873,000
29.2 2,820,000
29.3 3,947,000
30 5 1 10,850,000 76.64% 59.78%
31 5 1 10,000,000 74.64% 66.92%
- ---------------------------------------------------------------------------------------
31.1 2,726,000
31.2 3,062,000
31.3 2,087,000
31.4 2,125,000
32 5 1 10,850,000 66.28% 55.43%
- ---------------------------------------------------------------------------------------
33 15 1 11,100,000 63.14% 53.86%
33.1 4,652,000
33.2 3,270,000
33.3 3,178,000
34 5 1 3,900,000 71.31% 60.81%
- ---------------------------------------------------------------------------------------
35 5 1 3,600,000 71.31% 60.81%
36 5 1 2,200,000 71.31% 60.81%
37 5 1 9,210,000 63.96% 50.05%
38 5 1 8,700,000 67.68% 57.23%
39 5 1 7,350,000 76.19% 64.70%
- ---------------------------------------------------------------------------------------
ID ADDRESS
- ---------------------------------------------------------------------------------------------
2.138 101 East Market Street
2.139 601 W Riverside Avenue
2.140 820 A Street
2.141 112 E Holly Street
2.142 1000 6th Street South
- ---------------------------------------------------------------------------------------------
2.143 481 S Forks Avenue
2.144 103 E 3rd Avenue
2.145 830 N Wenatchee Avenue
2.146 350 W Lewis Street
2.147 102 E Front Street
- ---------------------------------------------------------------------------------------------
2.148 1007 Knight Street
2.149 1616 S Rustle
2.150 4701 University Way NE
2.151 111 W Main Street
2.152 101 N 2nd Street
- ---------------------------------------------------------------------------------------------
3 600 New Hampshire Avenue
4 4300 Meadows Lane
5 4341 South Riverboat Road
6 321 West 44th Street
7 511 Valley Mall Parkway
- ---------------------------------------------------------------------------------------------
8 5201 West War Memorial Drive
9 Various
9.1 910-930 Thieriot Avenue
9.2 945-955 Underhill Avenue
10 1401 Enclave Parkway
- ---------------------------------------------------------------------------------------------
11 5 Autumn Breeze Way
12 111 East Broadway
13 3111-3245 Washtenaw Avenue
14 807-993 East Moorhead Circle & 880-999 West Moorhead Circle
15 1210 Northbrook Drive
16 6800 Interstate - 10 Service Road
17 15770 Bellaire Boulevard
18 855-865 3rd Avenue
19 4510 Tesla Park Drive
- ---------------------------------------------------------------------------------------------
20 1301 Connecticut Avenue, Northwest
21 151 West 46th Street
22 900 Northbrook Drive
23 1100 Oakbridge Parkway
24 1300 Varsity Lane
- ---------------------------------------------------------------------------------------------
25 114 Town Park Drive
26 112 Town Park Drive
27 18704-18705 Mesa Terrace, 14106-14115 Tarhill Court and 18756-18777 Diller Drive
28 801 Frontage Road
29 Various
- ---------------------------------------------------------------------------------------------
29.1 19712 MacArthur Boulevard
29.2 19722 MacArthur Boulevard
29.3 19732 MacArthur Boulevard
30 921 North Zaragoza Road
31 Various
- ---------------------------------------------------------------------------------------------
31.1 3725 National Drive
31.2 3716 National Drive
31.3 3717 National Drive
31.4 3700 National Drive
32 2840 Warm Springs Road
- ---------------------------------------------------------------------------------------------
33 Various
33.1 3739 National Drive
33.2 3733 National Drive
33.3 3724 National Drive
34 5950 Boca Raton Drive
- ---------------------------------------------------------------------------------------------
35 1501 South Magnolia Street
36 4700 King Street
37 4101 East U.S. Highway 50
38 7800 & 7850 Tayloe Drive
39 2310, 2311 & 2320 Crescent Creek Drive
- ---------------------------------------------------------------------------------------------
YEAR YEAR
ID CITY COUNTY STATE ZIP CODE BUILT RENOVATED
- -------------------------------------------------------------------------------------------------------
2.138 Aberdeen Grays Harbor WA 98520 1960
2.139 Spokane Spokane WA 99210 1979
2.140 Tacoma Pierce WA 98402 1980 1992
2.141 Bellingham Whatcom WA 98255 1960
2.142 Bremerton Kitsap WA 98337 1970 1990
- -------------------------------------------------------------------------------------------------------
2.143 Forks Clallam WA 98331 1980
2.144 Moses Lake Grant WA 98837 1955 1960
2.145 Wenatchee Chelan WA 98801 1960
2.146 Pasco Franklin WA 99301 1968/1974
2.147 Port Angeles Clallam WA 98362 1922 1972/1973
- -------------------------------------------------------------------------------------------------------
2.148 Richland Benton WA 99352 1979
2.149 Spokane Spokane WA 99224 1983 1988
2.150 Seattle King WA 98105 1957
2.151 Walla Walla Walla Walla WA 99362 1979
2.152 Yakima Yakima WA 98901 1951
- -------------------------------------------------------------------------------------------------------
3 Washington District of Columbia DC 20037 1972 2002
4 Las Vegas Clark NV 89107 1978 2003
5 Taylorsville Salt Lake UT 84123 1997
6 New York New York NY 10036 1929 2000
7 East Wenatchee Douglas WA 98802 1954 2003
- -------------------------------------------------------------------------------------------------------
8 Peoria Peoria IL 61615 2003
9 Bronx Bronx NY 10473 1965
9.1 Bronx Bronx NY 10473 1965
9.2 Bronx Bronx NY 10473 1965
10 Houston Harris TX 77077 1998
- -------------------------------------------------------------------------------------------------------
11 Winter Park Orange FL 32792 1972
12 Salt Lake City Salt Lake UT 84111 1991
13 Ann Arbor Washtenaw MI 48104 2003
14 Boulder Boulder CO 80305 1972 2003
15 Trevose Bucks PA 19053 1989
16 New Orleans Orleans Parish LA 70126 1977
17 Houston Harris TX 77083 1982
18 Chula Vista San Diego CA 91911 1976 2001
19 Wilmington New Hanover NC 28412 2002
- -------------------------------------------------------------------------------------------------------
20 Washington District of Columbia DC 20036 1918 1987
21 New York New York NY 10036 1928 2001
22 Bensalem Bucks PA 19053 2001
23 Lakeland Polk FL 33803 1989
24 Charlotte Mecklenburg NC 28262 1998
- -------------------------------------------------------------------------------------------------------
25 Kennesaw Cobb GA 30144 1989
26 Kennesaw Cobb GA 30144 1987
27 Hagerstown Washington MD 21742 2002
28 Oxford Lafayette MS 38655 1985 2000
29 Irvine Orange CA 92612 1979
- -------------------------------------------------------------------------------------------------------
29.1 Irvine Orange CA 92612 1979
29.2 Irvine Orange CA 92612 1979
29.3 Irvine Orange CA 92612 1979
30 El Paso El Paso TX 79907 1979
31 Raleigh Wake NC 27612 Various
- -------------------------------------------------------------------------------------------------------
31.1 Raleigh Wake NC 27612 1974
31.2 Raleigh Wake NC 27612 1977
31.3 Raleigh Wake NC 27612 1973
31.4 Raleigh Wake NC 27612 1974
32 Columbus Muscogee GA 31906 1971
- -------------------------------------------------------------------------------------------------------
33 Raleigh Wake NC 27612 Various
33.1 Raleigh Wake NC 27612 1975
33.2 Raleigh Wake NC 27612 1978
33.3 Raleigh Wake NC 27612 1977
34 Fort Worth Tarrant TX 76112 1978
- -------------------------------------------------------------------------------------------------------
35 Woodville Tyler TX 75979 1998
36 Greenville Hunt TX 75401 1973 2003
37 Garden City Finney KS 67846 1982
38 Manassas Prince William VA 20112 1973/1980
39 Raleigh Wake NC 27606 2003
- -------------------------------------------------------------------------------------------------------
NET UNITS LOAN PER NET PREPAYMENT
RENTABLE OF RENTABLE AREA PROVISIONS
ID AREA SF/UNITS (6) MEASURE SF/UNITS (4)(6) (# OF PAYMENTS) (7)(13)
- -------------------------------------------------------------------------------------------------
2.138 30,724 Sq. Ft. -
2.139 359,843 Sq. Ft. 14
2.140 79,243 Sq. Ft. 12
2.141 24,361 Sq. Ft. 12
2.142 20,435 Sq. Ft. 9
- -------------------------------------------------------------------------------------------------
2.143 12,327 Sq. Ft. 7
2.144 16,540 Sq. Ft. 7
2.145 11,413 Sq. Ft. 10
2.146 23,709 Sq. Ft. 4
2.147 16,187 Sq. Ft. 6
- -------------------------------------------------------------------------------------------------
2.148 25,878 Sq. Ft. 11
2.149 85,154 Sq. Ft. 13
2.150 20,076 Sq. Ft. 13
2.151 14,450 Sq. Ft. 11
2.152 28,702 Sq. Ft. 7
- -------------------------------------------------------------------------------------------------
3 281,898 Sq Ft 243 L(24);D(152);O(4)
4 312,210 Sq Ft 356 L(31);D(85);O(4)
5 492 Units 71,138 L(25);D(55);O(4)
6 212,364 Sq Ft 141 L(26);D(90);O(4)
7 340,406 Sq Ft 76 L(28);D(52);O(4)
- -------------------------------------------------------------------------------------------------
8 154,539 Sq Ft 168 L(28);YM(28);O(4)
9 459 Units 52,094 L(28);D(28);O(4)
9.1 252 Units 52,682
9.2 207 Units 51,379
10 207,435 Sq. Ft. 114 L(35);D(22);O(3)
- -------------------------------------------------------------------------------------------------
11 432 Units 51,979 L(26);D(90);O(4)
12 235,008 Sq Ft 89 L(27);D(29);O(4)
13 137,569 Sq. Ft. 145 L(35);D(86);O(3)
14 185 Units 91,892 L(25);D(31);O(4)
15 94,543 Sq Ft 162 L(24);D(92);O(4)
16 644 Units 22,311 L(26);D(54);O(4)
17 312 Units 43,590 L(27);D(29);O(4)
18 74,320 Sq Ft 182 L(24);D(92);O(4)
19 288 Units 45,208 L(24);D(152);O(4)
- -------------------------------------------------------------------------------------------------
20 63,962 Sq Ft 192 L(28);D(88);O(4)
21 64,850 Sq Ft 187 L(28);D(88);O(4)
22 66,285 Sq Ft 168 L(27);D(89);O(4)
23 302 Units 33,043 L(35);D(82);O(3)
24 384 Beds 25,959 L(27);D(48);O(4)
- -------------------------------------------------------------------------------------------------
25 81,814 Sq Ft 69 L(26);D(90);O(4)
26 65,234 Sq Ft 64 L(26);D(90);O(4)
27 127 Units 72,441 L(24);D(92);O(4)
28 176 Units 49,279 L(35);D(82);O(3)
29 67,557 Sq Ft 126 L(26);D(30);O(4)
- -------------------------------------------------------------------------------------------------
29.1 24,592 Sq Ft 126
29.2 17,901 Sq Ft 126
29.3 25,064 Sq Ft 126
30 468 Units 17,768 L(35);D(82);O(3)
31 107,297 Sq Ft 70 L(27);D(29);O(4)
- -------------------------------------------------------------------------------------------------
31.1 31,888 Sq Ft 64
31.2 29,713 Sq Ft 77
31.3 22,914 Sq Ft 68
31.4 22,782 Sq Ft 70
32 232 Units 30,996 L(35);D(82);O(3)
- -------------------------------------------------------------------------------------------------
33 113,332 Sq Ft 62 L(27);D(53);O(4)
33.1 45,988 Sq Ft 64
33.2 33,990 Sq Ft 61
33.3 33,354 Sq Ft 60
34 140 Units 20,869 L(35);D(82);O(3)
- -------------------------------------------------------------------------------------------------
35 100 Units 24,972 L(35);D(82);O(3)
36 80 Units 18,729 L(35);D(82);O(3)
37 668 Pads 8,819 L(35);D(82);O(3)
38 178 Pads 33,078 L(26);D(90);O(4)
39 72 Units 77,778 L(35);D(82);O(3)
- -------------------------------------------------------------------------------------------------
FOURTH FOURTH THIRD THIRD MOST
MOST RECENT RECENT NOI MOST RECENT RECENT NOI
ID PROPERTY NAME NOI DATE NOI DATE
- ---------------------------------------------------------------------------------------------------------------------
2.138 Aberdeen Bldg/BR
2.139 Bank of America Financial Ctr
2.140 Bank of America Plaza
2.141 Bellingham
2.142 Bremerton
- ---------------------------------------------------------------------------------------------------------------------
2.143 Forks
2.144 Moses Lake
2.145 North Wenatchee
2.146 Pasco
2.147 Port Angeles
- ---------------------------------------------------------------------------------------------------------------------
2.148 Richland
2.149 Spokane Bankcard Services
2.150 University
2.151 Walla Walla
2.152 Yakima Valley Bldg/BR
- ---------------------------------------------------------------------------------------------------------------------
3 The Watergate/600 New Hampshire Avenue 12/14/2000 6,456,357 6,678,139 12/14/2001
4 Meadows Mall
5 Fairstone at Riverview 2,815,493 12/31/2001
6 321 West 44th Street 12/31/2000 2,095,438 2,423,762 12/31/2001
7 Wenatchee Valley Mall 2,297,629 12/31/2001
- ---------------------------------------------------------------------------------------------------------------------
8 Shoppes at Grand Prairie
9 Wiener Portfolio III (10)
9.1 910-930 Thieriot Avenue
9.2 945-955 Underhill Avenue
10 1401 Enclave Parkway
- ---------------------------------------------------------------------------------------------------------------------
11 Empirian at Winter Park
12 The Broadway Center 12/31/2000 2,565,387 2,201,266 12/31/2001
13 Huron Village Shopping Center
14 Tantra Lake Apartments 3/31/2000 1,206,332 1,486,491 03/31/2001
15 1 Northbrook Corporate Center 1,532,104 12/31/2001
16 Frenchman's Wharf 12/31/2000 1,254,766 1,350,452 12/31/2001
17 Hawthorne Apartments 1,336,531 12/31/2001
18 Centre Medical Plaza 12/31/2000 585,671 580,850 12/31/2001
19 Tesla Park Apartments
- ---------------------------------------------------------------------------------------------------------------------
20 1301 Connecticut Avenue, Northwest 12/31/2000 1,051,233 1,221,384 12/31/2001
21 151 West 46th Street 615,607 12/31/2001
22 Northbrook
23 Willowbrooke Apartments 921,117 12/31/2001
24 Campus Edge Apartments 895,192 12/31/2001
- ---------------------------------------------------------------------------------------------------------------------
25 114 Town Park 12/31/2000 802,330 879,167 12/31/2001
26 112 Town Park 12/31/2000 142,759 331,122 12/31/2001
27 Fountainview Townhomes
28 Cambridge Station Apts. 376,841 12/31/2001
29 Centerpointe I II III (10)
- ---------------------------------------------------------------------------------------------------------------------
29.1 Centerpointe I
29.2 Centerpointe II
29.3 Centerpointe III
30 San Marcos Apartments 12/31/2000 926,231 766,089 12/31/2001
31 Glenwood Place Portfolio II (10) 12/31/2000 1,011,269 1,012,018 12/31/2001
- ---------------------------------------------------------------------------------------------------------------------
31.1 Northampton Building 12/31/2000 290,202 292,509 12/31/2001
31.2 Chatham Building 12/31/2000 267,490 269,299 12/31/2001
31.3 McDowell Building 12/31/2000 224,593 226,377 12/31/2001
31.4 Caswell Building 12/31/2000 228,984 223,833 12/31/2001
32 Club Hill Apartments 12/31/2000 561,815 781,883 12/31/2001
- ---------------------------------------------------------------------------------------------------------------------
33 Glenwood Place Portfolio I (10) 12/31/2000 938,743 946,198 12/31/2001
33.1 Cumberland Building 12/31/2000 398,714 401,880 12/31/2001
33.2 Dare Building 12/31/2000 244,780 246,723 12/31/2001
33.3 Camden Building 12/31/2000 295,249 297,595 12/31/2001
34 Woodstock Apartments 409,557 12/31/2001
- ---------------------------------------------------------------------------------------------------------------------
35 Dogwood Apartments
36 Kings Place 169,001 12/31/2001
37 East Garden Village MHC 810,489 12/31/2001
38 Forest Park Mobile Home Park 12/31/2000 470,642 551,451 12/31/2001
39 Centennial Village
- ---------------------------------------------------------------------------------------------------------------------
SECOND SECOND MOST MOST RECENT
MOST RECENT RECENT NOI MOST RECENT NOI UNDERWRITTEN UNDERWRITTEN UNDERWRITTEN
ID NOI DATE NOI DATE NOI (4) REVENUE EGI
- -------------------------------------------------------------------------------------------------------------------------
2.138 230,260 379,886 379,886
2.139 3,329,087 5,613,884 5,613,884
2.140 539,062 944,547 923,656
2.141 213,428 257,228 257,228
2.142 57,269 196,412 85,565
- -------------------------------------------------------------------------------------------------------------------------
2.143 51,372 110,386 65,128
2.144 26,373 192,861 93,899
2.145 12,720 132,091 60,689
2.146 70,884 257,672 152,374
2.147 18,706 136,512 37,302
- -------------------------------------------------------------------------------------------------------------------------
2.148 187,306 240,540 204,516
2.149 734,221 1,191,187 1,191,187
2.150 175,529 266,787 266,787
2.151 69,916 183,091 131,600
2.152 61,836 223,019 163,663
- -------------------------------------------------------------------------------------------------------------------------
3 6,427,710 12/14/2002 6,733,692 Ann. 06/15/2003 7,043,745 10,648,919 11,451,185
4 12,459,028 12/31/2002 13,094,481 T-12 05/31/2003 13,542,037 20,483,078 19,566,611
5 3,134,723 12/31/2002 2,987,067 T-12 10/31/2003 3,017,310 3,977,946 4,612,438
6 2,858,090 12/31/2002 2,904,470 T-12 09/30/2003 3,119,993 4,494,888 5,800,519
7 2,561,129 12/31/2002 2,419,562 T-12 07/31/2003 2,873,666 2,979,413 3,848,583
- -------------------------------------------------------------------------------------------------------------------------
8 1,753,554 T-12 09/30/2003 2,205,864 2,219,129 2,992,875
9 1,652,852 12/31/2002 1,696,272 T-12 06/30/2003 1,980,429 3,655,762 3,767,284
9.1 900,804 12/31/2002 1,002,155 T-12 06/30/2003 1,161,564 2,006,583 2,067,675
9.2 752,048 12/31/2002 694,117 T-12 06/30/2003 818,865 1,649,179 1,699,609
10 2,799,501 5,807,713 4,994,633
- -------------------------------------------------------------------------------------------------------------------------
11 1,720,574 12/31/2002 2,040,677 T-12 10/31/2003 1,947,710 3,030,509 3,331,300
12 2,072,063 12/31/2002 1,754,842 T-12 08/31/2003 2,095,973 3,197,130 3,740,993
13 2,021,586 3,246,308 3,149,443
14 1,374,662 03/31/2002 1,280,176 12/31/2003 1,353,801 2,020,765 2,005,925
15 1,515,047 12/31/2002 1,426,713 Ann. 11/30/2003 1,477,019 2,010,681 2,211,517
16 1,633,718 12/31/2002 1,719,461 T-12 10/31/2003 1,514,300 3,371,947 3,512,301
17 1,396,404 12/31/2002 1,304,231 Ann. 09/30/2003 1,271,594 2,372,189 2,460,489
18 712,081 12/31/2002 717,865 T-12 10/31/2003 1,378,978 1,655,689 1,846,668
19 626,086 12/31/2003 1,196,484 1,710,000 1,779,616
- -------------------------------------------------------------------------------------------------------------------------
20 1,087,797 12/31/2002 1,029,539 T-12 07/31/2003 1,184,880 1,794,398 1,953,069
21 780,680 12/31/2002 1,088,981 T-12 07/31/2003 1,141,555 1,393,208 1,822,681
22 360,736 12/31/2002 788,510 T-12 10/31/2003 1,091,175 1,452,872 1,784,688
23 809,383 12/31/2002 713,432 T-12 11/30/2003 1,103,035 2,157,433 2,193,080
24 928,323 12/31/2002 861,244 T-12 10/31/2003 937,506 1,565,485 1,701,587
- -------------------------------------------------------------------------------------------------------------------------
25 851,939 12/31/2002 917,031 Ann. 10/31/2003 850,817 1,334,088 1,371,286
26 288,200 12/31/2002 419,213 Ann. 10/31/2003 586,277 965,648 966,648
27 347,164 12/31/2002 556,959 12/31/2003 794,472 1,089,810 1,157,824
28 759,206 12/31/2002 788,566 T-12 07/31/2003 888,815 1,331,040 1,400,597
29 818,592 12/31/2002 888,631 Ann. 09/30/2003 877,910 1,317,618 1,363,670
- -------------------------------------------------------------------------------------------------------------------------
29.1 380,674 12/31/2002 379,091 Ann. 09/30/2003 318,055 504,439 522,827
29.2 213,789 12/31/2002 213,253 Ann. 09/30/2003 212,881 312,883 323,861
29.3 224,129 12/31/2002 296,287 Ann. 09/30/2003 346,974 500,295 516,981
30 783,317 12/31/2002 698,752 T-12 08/31/2003 967,013 2,039,126 2,113,850
31 998,497 12/31/2002 1,050,192 T-12 09/30/2003 928,165 1,578,886 1,578,886
- -------------------------------------------------------------------------------------------------------------------------
31.1 288,510 12/31/2002 306,750 Ann. 09/30/2003 220,648 406,586 406,586
31.2 265,936 12/31/2002 278,470 Ann. 09/30/2003 286,516 462,183 462,183
31.3 223,280 12/31/2002 233,848 Ann. 09/30/2003 225,091 371,155 371,155
31.4 220,771 12/31/2002 231,124 Ann. 09/30/2003 195,910 338,962 338,962
32 783,669 12/31/2002 828,125 T-12 09/30/2003 861,153 1,578,444 1,648,876
- -------------------------------------------------------------------------------------------------------------------------
33 936,990 12/31/2002 1,044,744 T-12 09/30/2003 863,204 1,486,307 1,486,307
33.1 396,386 12/31/2002 482,546 Ann. 09/30/2003 228,269 486,987 486,987
33.2 247,077 12/31/2002 254,831 Ann. 09/30/2003 262,982 428,990 428,990
33.3 293,527 12/31/2002 307,367 Ann. 09/30/2003 371,953 570,329 570,329
34 424,861 12/31/2002 450,918 T-12 08/31/2003 341,283 652,845 699,417
- -------------------------------------------------------------------------------------------------------------------------
35 350,096 12/31/2002 355,792 T-12 10/31/2003 289,196 501,386 504,844
36 194,414 12/31/2002 212,266 T-12 08/31/2003 185,684 445,620 446,741
37 864,644 12/31/2002 937,443 T-12 09/30/2003 831,345 1,120,614 1,673,735
38 579,514 12/31/2002 642,419 T-12 11/30/2003 676,131 957,141 1,042,556
39 585,555 866,624 895,307
- -------------------------------------------------------------------------------------------------------------------------
UNDERWRITTEN UNDERWRITTEN UNDERWRITTEN UNDERWRITTEN NET
ID EXPENSES RESERVES TI/LC (11) CASH FLOW (4)(11) LARGEST TENANT SF
- ---------------------------------------------------------------------------------------------------------------------------------
2.138 149,627 192 - 230,068 Bank of America N.A. 10,103
2.139 2,284,798 19,735 - 3,309,352 Bank of America N.A. 65,048
2.140 384,594 5,094 - 533,968 Bank of America N.A. 31,548
2.141 43,801 - - 213,428 Bank of America N.A. 24,361
2.142 28,296 1,877 - 55,392 Bank of America N.A. 20,435
- ---------------------------------------------------------------------------------------------------------------------------------
2.143 13,756 3,830 - 47,542 Bank of America N.A. 11,527
2.144 67,526 2,793 - 23,580 Bank of America N.A. 16,540
2.145 47,969 1,517 - 11,203 Bank of America N.A. 11,413
2.146 81,490 3,215 - 67,669 Bank of America N.A. 21,661
2.147 18,597 2,807 - 15,899 Bank of America N.A. 14,345
- ---------------------------------------------------------------------------------------------------------------------------------
2.148 17,210 639 - 186,667 Bank of America N.A. 25,878
2.149 456,966 132 - 734,089 Bank of America N.A. 84,515
2.150 91,259 - - 175,529 Bank of America N.A. 20,076
2.151 61,685 4,343 - 65,573 Bank of America N.A. 14,450
2.152 101,827 12,038 - 49,798 Bank of America N.A. 17,275
- ---------------------------------------------------------------------------------------------------------------------------------
3 4,407,440 70,475 437,670 6,535,601 DGB Enterprises, Inc. 161,716
4 6,024,574 31,221 307,945 13,202,871 Express, Inc. 8,342
5 1,595,128 123,000 - 2,894,310
6 2,680,526 44,219 249,690 2,826,084 Technicolor East Coast, Inc. 37,110
7 974,917 50,688 170,439 2,652,539 Bon Marche 87,040
- ---------------------------------------------------------------------------------------------------------------------------------
8 787,011 23,237 99,739 2,082,889 Galyan's 65,000
9 1,786,855 114,750 - 1,865,679
9.1 906,111 63,000 - 1,098,564
9.2 880,744 51,750 - 767,115
10 2,195,132 41,487 311,119 2,446,894 The Meridian Resource Corp 77,981
- ---------------------------------------------------------------------------------------------------------------------------------
11 1,383,590 108,432 - 1,839,278
12 1,645,020 47,200 273,582 1,775,191 Salt Lake County 51,573
13 1,127,857 18,132 54,428 1,949,025 Whole Foods 51,261
14 652,124 55,500 - 1,298,301
15 734,498 18,909 94,544 1,363,566 Bresler and Reiner, Inc. 13,237
16 1,998,001 161,000 - 1,353,300
17 1,188,895 78,000 - 1,193,594
18 467,690 14,864 94,624 1,269,490 Children's Primary Care 11,195
19 583,132 57,600 - 1,138,884
- ---------------------------------------------------------------------------------------------------------------------------------
20 768,190 12,792 89,547 1,082,540 McManus Schor Asmar & Darden, LLP 9,495
21 681,126 12,970 64,734 1,063,851 Skyline Duplication & Management 12,500
22 693,513 13,257 76,229 1,001,689 Option One/H&R Block 31,889
23 1,090,045 81,154 - 1,021,881
24 764,081 28,800 - 908,706
- ---------------------------------------------------------------------------------------------------------------------------------
25 520,469 16,363 35,096 799,359 Solvay Pharmaceuticals 51,559
26 380,370 13,047 55,187 518,044 Solvay Pharmaceuticals 17,659
27 363,352 25,400 - 769,072
28 511,783 61,600 - 827,215
29 485,760 13,511 93,710 770,689
- ---------------------------------------------------------------------------------------------------------------------------------
29.1 204,772 4,918 33,859 279,277 Maintenance Match 5,658
29.2 110,981 3,580 27,765 181,535 The Regents of the University 17,901
29.3 170,007 5,013 32,086 309,876 KLH Foreclosure Trustee 11,750
30 1,146,836 117,000 - 850,013
31 650,722 21,489 141,752 764,923
- ---------------------------------------------------------------------------------------------------------------------------------
31.1 185,938 6,378 34,513 179,757 Travel Management Partners, Inc. 8,414
31.2 175,667 5,943 46,037 234,536 Charles T. Hall 5,379
31.3 146,064 4,613 28,669 191,809 American Home Mortgage Corp 2,956
31.4 143,052 4,556 32,533 158,820 Carolinas AGC, Inc. 4,149
32 787,723 58,000 - 803,153
- ---------------------------------------------------------------------------------------------------------------------------------
33 623,103 22,666 131,113 709,424
33.1 258,718 9,198 40,726 178,346 N.C. Licensing Board for Gen Contractors 10,747
33.2 166,009 6,798 42,415 213,769 A.T. Allen & Company, LLP 6,471
33.3 198,376 6,671 47,972 317,310 N.C. Board of Nursing 13,572
34 358,135 35,280 - 306,003
- ---------------------------------------------------------------------------------------------------------------------------------
35 215,649 25,000 - 264,196
36 261,057 20,000 - 165,684
37 842,390 33,400 - 797,945
38 366,425 8,900 - 667,231
39 309,751 25,200 - 560,355
- ---------------------------------------------------------------------------------------------------------------------------------
LEASE LEASE
ID EXPIRATION 2ND LARGEST TENANT SF EXPIRATION 3RD LARGEST TENANT
- ------------------------------------------------------------------------------------------------------------------------------------
2.138 06/30/2023 Preszler, Lrnr, Mrtz & Co. 5,230 01/31/2004 Ingram, Zelatsko & Goodwin
2.139 06/30/2023 Merrill Lynch 18,125 05/23/2011 Lemaster & Daniels, PLLC
2.140 06/30/2023 Morton McGoldrick, PS 9,234 02/28/2005 Robert Half International
2.141 06/30/2023
2.142 06/30/2023
- ------------------------------------------------------------------------------------------------------------------------------------
2.143 06/30/2023
2.144 06/30/2023
2.145 06/30/2023
2.146 06/30/2023
2.147 06/30/2023 Clallem County EDC 1,146 12/31/2003
- ------------------------------------------------------------------------------------------------------------------------------------
2.148 06/30/2023
2.149 06/30/2023 US West Communications 210 02/29/2004
2.150 06/30/2023
2.151 06/30/2023
2.152 06/30/2023
- ------------------------------------------------------------------------------------------------------------------------------------
3 10/31/2023 Blank Rome 79,577 12/31/2018 Hill & Knowlton
4 01/31/2007 Anchor Blue 7,823 10/31/2010 Charlotte Russe
5
6 07/31/2013 HS Systems Inc. 30,611 09/30/2008 Fiesta La Revista, Inc.
7 9/30/2026 Sears 48,216 08/31/2013 Food Pavillion
- ------------------------------------------------------------------------------------------------------------------------------------
8 03/31/2018 Bombay 8,500 03/31/2013 Johnny's Italian Steakhouse
9
9.1
9.2
10 09/30/2006 Parker Drilling Co 53,591 08/31/2009 Sysco Corporation
- ------------------------------------------------------------------------------------------------------------------------------------
11
12 9/21/2008 Durham Jones & Pinegar 24,641 03/31/2005 Salt Lake Film Society
13 07/31/2023 Barnes & Noble 30,203 11/30/2020 Walgreens
14
15 12/31/2008 Technitrol 10,545 04/30/2006 Countrywide Home Loan
16
17
18 06/30/2013 Profil Institute 8,332 2/13/2011 San Ysidro Health Centers, Inc.
19
- ------------------------------------------------------------------------------------------------------------------------------------
20 07/10/2005 Citizens Against Government Waste 7,750 08/31/2005 National Congress of American Indians
21 05/31/2008 D.C. Group Inc. 5,000 08/31/2012 Lunney's Pub Inc.
22 05/31/2008 Prudential Insurance 12,399 03/31/2008 Yum! Brands
23
24
- ------------------------------------------------------------------------------------------------------------------------------------
25 03/31/2005 Bank of America, N.A. 6,490 02/14/2008 Dupont Commercial Floor Systems
26 03/31/2005 First Franklin Financial Corporation 11,548 07/31/2008 NISH
27
28
29
- ------------------------------------------------------------------------------------------------------------------------------------
29.1 04/17/2007 Dokich Court Reporters 3,868 11/30/2006 Centerpoint Law Offices
29.2 08/22/2005
29.3 07/31/2006 Benya & Skandalis 4,560 05/31/2006 Labmetrix
30
31
- ------------------------------------------------------------------------------------------------------------------------------------
31.1 10/31/2004 HDR Engineering, Inc. of the Carolinas 4,471 04/30/2004 Southern Rehabilitation Network, Inc.
31.2 08/31/2006 Moore & Alphin, PLLC 5,009 05/31/2005 ABB Power T&D Company, Inc.
31.3 09/30/2009 Atlantic Corp. of Wilmington, Inc. 1,869 04/30/2005 Omni Visions, Inc.
31.4 03/31/2008 Rod Frankel 2,151 07/31/2004 Grubb Management, Inc.
32
- ------------------------------------------------------------------------------------------------------------------------------------
33
33.1 08/31/2009 Public Schools Forum of NC, Inc. 9,054 10/31/2004 Siemens Energy and Automation
33.2 06/30/2008 Community Affordable Housing Equity Corp. 4,123 03/31/2005 Volt Information
33.3 10/31/2009 Jefferson-Pilot Life Insurance 5,229 12/31/2007 NES North Carolina
34
- ------------------------------------------------------------------------------------------------------------------------------------
35
36
37
38
39
- ------------------------------------------------------------------------------------------------------------------------------------
UPFRONT ONGOING
LEASE OCCUPANCY OCCUPANCY ACTUAL REPLACEMENT ACTUAL REPLACEMENT UPFRONT
ID SF EXPIRATION RATE AS-OF DATE RESERVES RESERVES TI/LC
- -----------------------------------------------------------------------------------------------------------------------------------
2.138 4,630 07/31/2004 95.17% 09/15/2003 - - -
2.139 15,688 05/31/2012 79.13% 09/15/2003 - - -
2.140 3,407 10/31/2005 69.66% 09/15/2003 - - -
2.141 100.00% 09/15/2003 - - -
2.142 100.00% 09/15/2003 - - -
- -----------------------------------------------------------------------------------------------------------------------------------
2.143 93.51% 09/15/2003 - - -
2.144 100.00% 09/15/2003 - - -
2.145 100.00% 09/15/2003 - - -
2.146 91.36% 09/15/2003 - - -
2.147 95.70% 09/15/2003 - - -
- -----------------------------------------------------------------------------------------------------------------------------------
2.148 100.00% 09/15/2003 - - -
2.149 99.50% 09/15/2003 - - -
2.150 100.00% 09/15/2003 - - -
2.151 100.00% 09/15/2003 - - -
2.152 60.19% 09/15/2003 - - -
- -----------------------------------------------------------------------------------------------------------------------------------
3 23,775 03/31/2006 100.00% 11/1/2003 - - 3,553,824
4 7,673 01/31/2006 96.55% 08/31/2003 - - -
5 96.95% 11/20/2003 - 10,250 -
6 12,000 03/31/2009 87.83% 12/12/2003 1,259,000 3,685 3,500,000
7 47,920 09/30/2020 96.12% 09/01/2003 - 4,224 398,370
- -----------------------------------------------------------------------------------------------------------------------------------
8 7,888 04/30/2013 85.15% 02/10/2004 - 1,932 225,000
9 97.82% 10/09/2003 - 9,563 -
9.1 97.22% 10/09/2003 - - -
9.2 98.55% 10/09/2003 - - -
10 50,597 10/31/2006 100.00% 08/31/2003 - 3,457 300,000
- -----------------------------------------------------------------------------------------------------------------------------------
11 96.53% 11/27/2003 - 9,036 -
12 22,482 04/30/2006 93.97% 02/01/2004 - 3,933 -
13 14,490 03/31/2023 98.61% 07/22/2003 - 1,511 -
14 93.51% 12/4/2003 - 3,855 -
15 10,424 10/31/2008 97.89% 1/15/2004 - 1,576 -
16 90.99% 12/9/2003 - 13,417 -
17 96.15% 10/29/2003 842,500 6,500 -
18 8,223 09/30/2007 91.20% 12/9/2003 - 1,236 -
19 89.24% 01/23/2004 - 2,500 -
- -----------------------------------------------------------------------------------------------------------------------------------
20 7,750 04/30/2008 96.05% 12/22/2003 - 1,066 50,000
21 5,000 07/31/2004 100.00% 10/03/2003 12,970 - 64,850
22 9,655 10/31/2008 94.00% 11/19/2003 - 1,114 -
23 92.72% 12/15/2003 - 6,775 -
24 97.40% 11/14/2003 - 2,000 -
- -----------------------------------------------------------------------------------------------------------------------------------
25 4,264 04/30/2004 89.09% 10/31/2003 - 1,364 -
26 9,114 12/31/2007 81.80% 10/31/2003 - 1,087 -
27 81.89% 1/1/2004 - 2,117 -
28 97.73% 10/17/2003 - 4,400 -
29 93.96% 12/01/2003 - 1,126 100,000
- -----------------------------------------------------------------------------------------------------------------------------------
29.1 3,608 08/31/2008 83.42% 12/01/2003 - - -
29.2 100.00% 12/01/2003 - - -
29.3 3,337 02/28/2010 100.00% 12/01/2003 - - -
30 97.01% 09/22/2003 - 9,750 -
31 88.37% 12/31/2003 - 1,782 600,000
- -----------------------------------------------------------------------------------------------------------------------------------
31.1 2,228 05/31/2008 75.96% 12/31/2003 - - -
31.2 3,421 MTM 88.14% 12/31/2003 - - -
31.3 1,794 12/31/2007 100.00% 12/31/2003 - - -
31.4 1,707 04/30/2008 94.34% 12/31/2003 - - -
32 99.57% 09/08/2003 - - -
- -----------------------------------------------------------------------------------------------------------------------------------
33 74.74% 12/31/2003 - 1,889 300,000
33.1 2,590 06/30/2004 60.21% 12/31/2003 - - -
33.2 2,231 04/30/2004 69.60% 12/31/2003 - - -
33.3 3,017 08/31/2009 100.00% 12/31/2003 - - -
34 92.86% 08/29/2003 - 2,940 -
- -----------------------------------------------------------------------------------------------------------------------------------
35 91.00% 11/12/2003 - 2,083 -
36 100.00% 09/30/2003 - 1,667 -
37 91.32% 11/01/2003 - 2,784 -
38 98.88% 12/3/2003 - 742 -
39 93.06% 11/12/2003 - 2,100 -
- -----------------------------------------------------------------------------------------------------------------------------------
UPFRONT ENVIRONMENTAL
MONTHLY MONTHLY TAX MONTHLY INSURANCE ENGINEERING REPORT
ID TI/LC ESCROW ESCROW RESERVE DATE
- -------------------------------------------------------------------------------------------------------------------------
2.138 - - - - 05/03/2003
2.139 - - - - 06/03/2003
2.140 - - - - 06/07/2003
2.141 - - - - 05/03/2003
2.142 - - - - 05/03/2003
- -------------------------------------------------------------------------------------------------------------------------
2.143 - - - - 05/03/2003
2.144 - - - - 06/03/2003
2.145 - - - - 06/03/2003
2.146 - - - - 06/03/2003
2.147 - - - - 06/03/2003
- -------------------------------------------------------------------------------------------------------------------------
2.148 - - - - 05/03/2003
2.149 - - - - 06/03/2003
2.150 - - - - 05/03/2003
2.151 - - - - 06/03/2003
2.152 - - - - 06/03/2003
- -------------------------------------------------------------------------------------------------------------------------
3 - 103,131 11,993 100,876 10/10/2003
4 - - - - 07/18/2003
5 - 18,311 7,754 20,375 11/25/2003
6 - 69,881 6,072 - 08/29/2003
7 14,468 27,853 5,558 36,588 07/28/2003
- -------------------------------------------------------------------------------------------------------------------------
8 8,242 30,469 2,176 - 08/20/2003
9 - 34,202 10,742 21,875 08/26/2003
9.1 - - - - 08/26/2003
9.2 - - - - 8/26/2003
10 25,927 69,167 2,698 - 11/05/2003
- -------------------------------------------------------------------------------------------------------------------------
11 - 23,254 10,708 117,000 10/30/2003
12 22,799 28,692 4,167 - 09/26/2003
13 4,536 17,337 1,720 - 07/22/2003
14 - 6,991 3,345 58,938 07/08/2003
15 - 19,504 3,869 - 11/25/2003
16 - 15,000 12,767 500,000 10/14/2003
17 - 27,322 8,536 7,500 09/03/2003
18 9,399 8,494 2,063 - 10/17/2003
19 - 6,533 9,688 - 12/10/2003
- -------------------------------------------------------------------------------------------------------------------------
20 7,463 20,154 3,790 - 09/08/2003
21 - 16,212 2,823 7,563 07/17/2003
22 25,000 16,289 2,678 - 09/12/2003
23 - 15,471 9,556 - 11/19/2003
24 - 7,296 4,730 5,000 10/24/2003
- -------------------------------------------------------------------------------------------------------------------------
25 2,917 7,963 453 - 10/17/2003
26 4,583 3,988 393 - 10/17/2003
27 - 8,598 2,263 - 09/02/2003
28 - 10,430 2,774 1,845 10/29/2003
29 7,825 5,677 1,042 93,906 11/20/2003
- -------------------------------------------------------------------------------------------------------------------------
29.1 - - - - 11/20/2003
29.2 - - - - 11/20/2003
29.3 - - - - 11/20/2003
30 - 16,435 8,970 - 08/18/2003
31 11,813 6,819 1,100 - 08/05/2003
- -------------------------------------------------------------------------------------------------------------------------
31.1 - - - - 08/05/2003
31.2 - - - - 08/05/2003
31.3 - - - - 08/05/2003
31.4 - - - - 08/05/2003
32 - 10,546 3,980 - 10/24/2003
- -------------------------------------------------------------------------------------------------------------------------
33 10,926 7,168 1,074 - 08/05/2003
33.1 - - - - 08/05/2003
33.2 - - - - 08/05/2003
33.3 - - - - 08/05/2003
34 - 6,503 3,060 - 11/26/2003
- -------------------------------------------------------------------------------------------------------------------------
35 - 8,719 2,270 - 12/02/2003
36 - 1,943 1,463 - 11/26/2003
37 - 5,469 4,032 - 10/20/2003
38 - 4,810 1,304 - 12/3/2003
39 - 6,290 1,527 2,500 11/25/2003
- -------------------------------------------------------------------------------------------------------------------------
ENGINEERING APPRAISAL
ID REPORT DATE AS-OF DATE (5) SPONSOR
- ------------------------------------------------------------------------------------------------------------------------------------
2.138 06/04/2003 05/14/2003
2.139 06/04/2003 05/01/2003
2.140 06/04/2003 05/15/2003
2.141 06/04/2003 05/12/2003
2.142 06/04/2003 05/14/2003
- ------------------------------------------------------------------------------------------------------------------------------------
2.143 06/04/2003 05/13/2003
2.144 06/04/2003 05/12/2003
2.145 06/04/2003 05/12/2003
2.146 06/04/2003 05/12/2003
2.147 06/04/2003 05/13/2003
- ------------------------------------------------------------------------------------------------------------------------------------
2.148 06/04/2003 05/12/2003
2.149 06/04/2003 05/16/2003
2.150 06/04/2003 05/15/2003
2.151 06/04/2003 05/15/2003
2.152 06/04/2003 05/15/2003
- ------------------------------------------------------------------------------------------------------------------------------------
3 10/10/2003 09/02/2003 David G. Bradley, Katherine B. Bradley
4 07/17/2003 07/18/2003 GGP Ivanhoe III, Inc.
5 11/26/2003 11/20/2003 Michael Strand, Tim Smith, Peter Morkill, Bob Miller and Greg Beckel
6 08/29/2003 08/27/2003 Joseph Sitt; Thor Equities; GVA Williams Real Estate
7 09/24/2003 06/18/2003 William O. Passo & Passco Real Estate Enterprises, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
8 08/20/2003 10/01/2003 Diane A. Oberhelman
9 08/27/2003 8/18/2003 Joel Wiener
9.1 08/27/2003 8/18/2003
9.2 08/27/2003 8/18/2003
10 11/05/2003 10/25/2003 Anthony W. Thompson
- ------------------------------------------------------------------------------------------------------------------------------------
11 10/31/2003 10/20/2003 Ezra Beyman; Empire Equity Group
12 09/26/2003 09/15/2003 Pentalon Corporation, Keith Nielson, Fred Morris, Richard Workman
13 07/22/2003 11/01/2003 R. Gordon Mathews
14 7/8/2003 10/1/2003 Michael G. Hilbert, William S. Lyons, Jr., Brett Torino
15 11/24/2003 12/10/2003 Bresler & Reiner, Inc.
16 10/10/2003 10/7/2003 Seyda N. Chaney, David R. Fine, Jonathan M. Fine
17 09/03/2003 08/20/2004 Yisroel Gluck
18 10/17/2003 11/5/2003 James Pieri
19 12/10/2003 03/01/2004 Mark L. Maynard
- ------------------------------------------------------------------------------------------------------------------------------------
20 09/08/2003 12/01/2003 Daniel G. Cohen
21 10/16/2003 07/08/2003 Jack Elo
22 09/12/2003 8/19/2003 Bresler & Reiner, Inc.
23 11/19/2003 11/20/2003 Garry N. Drummond
24 10/26/2003 10/24/2003 Robert N. Bradley
- ------------------------------------------------------------------------------------------------------------------------------------
25 10/16/2003 10/14/2003 Barry Levin
26 10/16/2003 10/14/2003 Barry Levin
27 09/02/2003 12/02/2003 Ben Shaool
28 10/29/2003 09/10/2003 George R. Walker, III, Bennett V. York
29 11/20/2003 11/07/2003 Robert Y. Strom, Eric C. Smyth, Charles A. McKenna, Jr.
- ------------------------------------------------------------------------------------------------------------------------------------
29.1 11/20/2003 11/07/2003
29.2 11/20/2003 11/07/2003
29.3 11/20/2003 11/07/2003
30 08/18/2003 09/01/2003 Richard Aguilar, Timothy C. Gray, Louis J. Gelfand
31 08/05/2003 08/13/2003 R. Gordon Grubb
- ------------------------------------------------------------------------------------------------------------------------------------
31.1 08/05/2003 08/13/2003
31.2 08/05/2003 08/13/2003
31.3 08/05/2003 08/13/2003
31.4 08/05/2003 08/13/2003
32 10/24/2003 10/23/2003 George C. Woodruff, Jr.
- ------------------------------------------------------------------------------------------------------------------------------------
33 08/05/2003 Various R. Gordon Grubb
33.1 08/05/2003 8/13/2003
33.2 08/05/2003 08/19/2003
33.3 08/05/2003 08/19/2003
34 11/26/2003 08/15/2003 Philip J. Cascavilla, Robert B. Acree
- ------------------------------------------------------------------------------------------------------------------------------------
35 12/02/2003 10/08/2003 Philip J. Cascavilla, Robert B. Acree
36 11/26/2003 07/31/2003 Philip J. Cascavilla, Robert B. Acree
37 10/20/2003 10/14/2003 Robert L. Martin
38 10/14/2003 10/10/2003 Albert J. Dwoskin
39 11/25/2003 10/29/2003 Michael P. Winstead, Jr., Joseph A. McKinney, Jr., Tyler B. Morris
- ------------------------------------------------------------------------------------------------------------------------------------
COMM 2004-LNB2
ANNEX A-1 - CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS AND MORTGAGED
PROPERTIES
% OF MORTGAGE
INITIAL POOL # OF LOAN ORIGINAL
ID PROPERTY NAME BALANCE PROPERTIES SELLER (1) BALANCE
- ---------------------------------------------------------------------------------------------------------------------------
40 Lone Peak Village 0.57% 1 LaSalle 5,500,000
41 Office Centre of Tinley Park 0.56% 1 LaSalle 5,475,000
42 Woodway Pines Apts 0.56% 1 LaSalle 5,400,000
43 Shops at Clarkson Corner 0.55% 1 LaSalle 5,300,000
44 Cabot Square 0.52% 1 LaSalle 5,100,000
45 Alpha Office Building 0.52% 1 GACC 5,050,000
46 Park Central 0.51% 1 GACC 4,950,000
47 Walgreens - Riverside 0.48% 1 LaSalle 4,650,000
48 Plymouth Rock MHP/RV 0.48% 1 LaSalle 4,640,000
- ---------------------------------------------------------------------------------------------------------------------------
49 Hampstead Place Apartments 0.48% 1 GACC 4,630,000
50 Oakbridge Shopping Centre 0.47% 1 LaSalle 4,600,000
51 Abbott Pointe Apartments 0.47% 1 LaSalle 4,600,000
52 Morningside Plaza 0.43% 1 LaSalle 4,230,000
- ---------------------------------------------------------------------------------------------------------------------------
53 Lake Myers RV 0.43% 1 LaSalle 4,200,000
54 Keesler Apartments 0.40% 1 LaSalle 3,840,000
55 Alta Mesa 0.38% 1 LaSalle 3,700,000
56 Douglas Estates MHC and Johnson Village MHC (10) 0.36% 2 LaSalle 3,500,000
56.1 Douglas Estates MHC 0.20% LaSalle 1,899,103
- ---------------------------------------------------------------------------------------------------------------------------
56.2 Johnson Village MHC 0.16% LaSalle 1,600,897
57 Madore Building 0.35% 1 LaSalle 3,430,000
58 Woodlawn Estates/Gaslight Village 0.35% 1 LaSalle 3,400,000
59 Walgreens - Kill Devil Hill 0.34% 1 LaSalle 3,350,000
60 121 High Hill Road 0.33% 1 LaSalle 3,240,000
- ---------------------------------------------------------------------------------------------------------------------------
61 Rosemont Country Club Apartment Community 0.31% 1 LaSalle 3,000,000
62 CVS Atlanta 0.29% 1 LaSalle 2,800,000
63 Walgreens College Station 0.28% 1 GACC 2,750,000
64 Fox Den 0.28% 1 LaSalle 2,720,000
65 Wyndover Apartments 0.28% 1 LaSalle 2,720,000
- ---------------------------------------------------------------------------------------------------------------------------
66 Brandemere Apartments 0.27% 1 LaSalle 2,630,000
67 Waples Mobile Home Park 0.27% 1 GACC 2,600,000
68 Ardsley Apartments 0.26% 1 LaSalle 2,500,000
69 Eldorado Mobile Home Estates 0.24% 1 LaSalle 2,344,000
70 Dundee Meadows MHC 0.23% 1 LaSalle 2,250,000
- ---------------------------------------------------------------------------------------------------------------------------
71 Mogadore Square Apartments 0.21% 1 LaSalle 2,080,000
72 Forest Grove 0.21% 1 LaSalle 2,080,000
73 Bull Run Mobile Home Park 0.21% 1 GACC 2,000,000
74 Chiesa Estates & Hill Crest MHC (10) 0.20% 2 LaSalle 1,930,000
74.1 Chiesa Estates 0.12% LaSalle 1,132,910
- ---------------------------------------------------------------------------------------------------------------------------
74.2 Hill Crest MHC 0.08% LaSalle 797,090
75 Chapman Pointe 0.19% 1 LaSalle 1,800,000
76 Dolphin Cove Apartments 0.18% 1 LaSalle 1,750,000
77 Canadian Shores Estates 0.18% 1 LaSalle 1,750,000
78 Meadow Pines MHP 0.18% 1 LaSalle 1,700,000
- ---------------------------------------------------------------------------------------------------------------------------
79 Briargate Apartments 0.16% 1 LaSalle 1,600,000
80 Cottonwood Heights 0.16% 1 LaSalle 1,520,000
81 Royal Mobile Estates 0.15% 1 LaSalle 1,450,000
82 Cedarbrook Apartments 0.15% 1 LaSalle 1,440,000
83 Elmwood Street Apartments 0.15% 1 LaSalle 1,425,000
- ---------------------------------------------------------------------------------------------------------------------------
84 Windmill and Century Heights Apartments (10) 0.15% 2 LaSalle 1,420,000
84.1 Windmill Apartments 0.05% LaSalle 520,000
84.2 Century Heights Apartments 0.09% LaSalle 900,000
85 Georgetown Apartments 0.14% 1 LaSalle 1,372,000
86 Western Crest and Windridge Apartments (10) 0.14% 2 LaSalle 1,358,000
- ---------------------------------------------------------------------------------------------------------------------------
86.1 Western Crest Apartments 0.08% LaSalle 793,856
86.2 Windridge Apartments 0.06% LaSalle 564,144
87 Imperial Courts MHP 0.14% 1 LaSalle 1,325,000
88 Village Crossing 0.12% 1 LaSalle 1,175,000
89 Arbor Point Apartments 0.12% 1 LaSalle 1,175,000
- ---------------------------------------------------------------------------------------------------------------------------
90 Tallow Briar MHP and Sunset Harbor MHP (10) 0.12% 2 LaSalle 1,176,000
90.1 Tallow Briar MHP 0.07% LaSalle 655,087
90.2 Sunset Harbor MHP 0.05% LaSalle 520,913
91 Smith Lake Shores Village 0.10% 1 LaSalle 1,000,000
CUT-OFF GENERAL DETAILED
DATE PROPERTY PROPERTY INTEREST ADMINISTRATIVE
ID BALANCE TYPE TYPE RATE (9) FEE RATE
- ----------------------------------------------------------------------------------------------------------------------------
40 5,500,000 Mixed Use Retail/Office 5.7530% 0.03210%
41 5,462,672 Office Suburban 5.3600% 0.03210%
42 5,384,833 Multifamily Conventional 6.1900% 0.03210%
43 5,287,900 Retail Shadow Anchored 5.2860% 0.03210%
44 5,071,994 Industrial Office/Warehouse 6.1840% 0.06210%
45 5,018,559 Office Suburban 5.3900% 0.03210%
46 4,939,992 Mixed Use Multifamily/Retail 5.9300% 0.06210%
47 4,637,107 Retail Anchored 6.1000% 0.03210%
48 4,626,436 Mobile Home Park Mobile Home Park 5.8500% 0.03210%
- ----------------------------------------------------------------------------------------------------------------------------
49 4,620,549 Multifamily Conventional 5.8800% 0.03210%
50 4,594,632 Retail Anchored 5.9710% 0.06210%
51 4,576,812 Multifamily Conventional 5.6600% 0.03210%
52 4,211,313 Retail Anchored 5.3100% 0.07210%
- ----------------------------------------------------------------------------------------------------------------------------
53 4,190,754 Mobile Home Park Mobile Home Park 5.4800% 0.03210%
54 3,832,698 Multifamily Conventional 6.2500% 0.03210%
55 3,692,433 Retail Shadow Anchored 5.8700% 0.03210%
56 3,492,677 Mobile Home Park Mobile Home Park 5.7500% 0.03210%
56.1 1,895,130 Mobile Home Park Mobile Home Park
- ----------------------------------------------------------------------------------------------------------------------------
56.2 1,597,547 Mobile Home Park Mobile Home Park
57 3,419,611 Office Suburban 5.6800% 0.03210%
58 3,392,330 Mobile Home Park Mobile Home Park 5.3500% 0.07210%
59 3,340,281 Retail Anchored 5.9800% 0.03210%
60 3,226,843 Industrial Office/Warehouse 5.7300% 0.03210%
- ----------------------------------------------------------------------------------------------------------------------------
61 2,996,455 Multifamily Conventional 5.8810% 0.06210%
62 2,796,746 Retail Anchored 6.0000% 0.03210%
63 2,734,953 Retail Anchored 6.7800% 0.03210%
64 2,714,828 Multifamily Conventional 6.2500% 0.03210%
65 2,714,828 Multifamily Conventional 6.2500% 0.03210%
- ----------------------------------------------------------------------------------------------------------------------------
66 2,625,642 Multifamily Conventional 5.7600% 0.03210%
67 2,594,642 Mobile Home Park Mobile Home Park 5.8300% 0.03210%
68 2,492,444 Multifamily Conventional 5.7120% 0.09210%
69 2,325,028 Mobile Home Park Mobile Home Park 5.0700% 0.03210%
70 2,243,546 Mobile Home Park Mobile Home Park 5.9400% 0.03210%
- ----------------------------------------------------------------------------------------------------------------------------
71 2,076,574 Multifamily Conventional 5.8100% 0.03210%
72 2,076,045 Multifamily Conventional 6.2500% 0.03210%
73 1,995,879 Mobile Home Park Mobile Home Park 5.8300% 0.03210%
74 1,927,834 Mobile Home Park Mobile Home Park 6.2500% 0.03210%
74.1 1,131,638 Mobile Home Park Mobile Home Park
- ----------------------------------------------------------------------------------------------------------------------------
74.2 796,195 Mobile Home Park Mobile Home Park
75 1,796,577 Multifamily Conventional 6.2500% 0.03210%
76 1,745,031 Multifamily Conventional 6.1200% 0.03210%
77 1,744,884 Mobile Home Park Mobile Home Park 5.9300% 0.03210%
78 1,696,595 Mobile Home Park Mobile Home Park 5.9800% 0.03210%
- ----------------------------------------------------------------------------------------------------------------------------
79 1,595,229 Multifamily Conventional 5.8000% 0.03210%
80 1,516,622 Mobile Home Park Mobile Home Park 5.4300% 0.03210%
81 1,447,046 Mobile Home Park Mobile Home Park 5.8900% 0.03210%
82 1,437,628 Multifamily Conventional 5.8100% 0.03210%
83 1,419,285 Multifamily Conventional 6.2500% 0.03210%
- ----------------------------------------------------------------------------------------------------------------------------
84 1,417,728 Multifamily Conventional 6.0500% 0.03210%
84.1 519,168 Multifamily Conventional
84.2 898,560 Multifamily Conventional
85 1,361,632 Multifamily Student Housing 5.3350% 0.03210%
86 1,355,811 Multifamily Conventional 5.9900% 0.03210%
- ----------------------------------------------------------------------------------------------------------------------------
86.1 792,576 Multifamily Conventional
86.2 563,235 Multifamily Conventional
87 1,323,470 Mobile Home Park Mobile Home Park 6.0450% 0.03210%
88 1,172,766 Multifamily Conventional 6.2500% 0.03210%
89 1,172,766 Multifamily Conventional 6.2500% 0.03210%
- ----------------------------------------------------------------------------------------------------------------------------
90 1,172,620 Mobile Home Park Mobile Home Park 6.0400% 0.03210%
90.1 653,204 Mobile Home Park Mobile Home Park
90.2 519,415 Mobile Home Park Mobile Home Park
91 997,050 Mobile Home Park Mobile Home Park 5.8700% 0.03210%
INTEREST ORIGINAL STATED REMAINING ORIGINAL REMAINING FIRST MATURITY
ACCRUAL TERM TO MATURITY TERM TO MATURITY AMORTIZATION AMORTIZATION PAYMENT DATE
ID BASIS OR APD (MOS.) OR APD (MOS.) TERM (MOS.) TERM (MOS.) DATE OR ARD
- ---------------------------------------------------------------------------------------------------------------------
40 Actual/360 120 120 360 360 04/1/2004 03/1/2014
41 Actual/360 60 58 360 358 02/1/2004 01/1/2009
42 Actual/360 120 118 300 298 02/1/2004 01/1/2014
43 Actual/360 60 58 360 358 02/1/2004 01/1/2009
44 Actual/360 120 114 360 354 10/1/2003 09/1/2013
45 Actual/360 60 56 300 296 12/1/2003 11/1/2008
46 Actual/360 120 118 360 358 02/1/2004 01/1/2014
47 Actual/360 120 117 360 357 01/1/2004 10/31/2028
48 Actual/360 84 81 360 357 01/1/2004 12/1/2010
- ---------------------------------------------------------------------------------------------------------------------
49 Actual/360 180 178 360 358 02/1/2004 01/1/2019
50 Actual/360 120 119 360 359 03/1/2004 02/1/2014
51 Actual/360 120 115 360 355 11/1/2003 10/1/2013
52 Actual/360 84 80 360 356 12/1/2003 11/1/2010
- ---------------------------------------------------------------------------------------------------------------------
53 Actual/360 60 58 360 358 02/1/2004 01/1/2009
54 Actual/360 120 118 360 358 02/1/2004 01/1/2014
55 Actual/360 120 118 360 358 02/1/2004 01/1/2014
56 Actual/360 120 118 360 358 02/1/2004 01/1/2014
56.1
- ---------------------------------------------------------------------------------------------------------------------
56.2
57 Actual/360 84 81 360 357 01/1/2004 12/1/2010
58 Actual/360 84 82 360 358 02/1/2004 01/1/2011
59 Actual/360 120 118 300 298 02/1/2004 01/1/2014
60 Actual/360 84 80 360 356 12/1/2003 11/1/2010
- ---------------------------------------------------------------------------------------------------------------------
61 Actual/360 120 119 360 359 03/1/2004 02/1/2014
62 Actual/360 120 119 360 359 03/1/2004 02/1/2014
63 Actual/360 293 289 293 289 12/1/2003 04/1/2028
64 Actual/360 120 118 360 358 02/1/2004 01/1/2014
65 Actual/360 120 118 360 358 02/1/2004 01/1/2014
- ---------------------------------------------------------------------------------------------------------------------
66 Actual/360 120 119 300 299 03/1/2004 02/1/2014
67 Actual/360 120 118 360 358 02/1/2004 01/1/2014
68 Actual/360 120 118 300 298 02/1/2004 01/1/2014
69 Actual/360 60 55 300 295 11/1/2003 10/1/2008
70 Actual/360 120 117 360 357 01/1/2004 12/1/2013
- ---------------------------------------------------------------------------------------------------------------------
71 Actual/360 120 119 300 299 03/1/2004 02/1/2014
72 Actual/360 120 118 360 358 02/1/2004 01/1/2014
73 Actual/360 120 118 360 358 02/1/2004 01/1/2014
74 Actual/360 120 119 360 359 03/1/2004 02/1/2014
74.1
- ---------------------------------------------------------------------------------------------------------------------
74.2
75 Actual/360 120 118 360 358 02/1/2004 01/1/2014
76 Actual/360 120 118 300 298 02/1/2004 01/1/2014
77 Actual/360 120 118 300 298 02/1/2004 01/1/2014
78 Actual/360 120 118 360 358 02/1/2004 01/1/2014
- ---------------------------------------------------------------------------------------------------------------------
79 Actual/360 120 118 300 298 02/1/2004 01/1/2014
80 Actual/360 60 58 360 358 02/1/2004 01/1/2009
81 Actual/360 120 118 360 358 02/1/2004 01/1/2014
82 Actual/360 120 119 300 299 03/1/2004 02/1/2014
83 Actual/360 120 117 300 297 01/1/2004 12/1/2013
- ---------------------------------------------------------------------------------------------------------------------
84 Actual/360 120 119 300 299 03/1/2004 02/1/2014
84.1
84.2
85 Actual/360 120 113 360 353 09/1/2003 08/1/2013
86 Actual/360 120 119 300 299 03/1/2004 02/1/2014
- ---------------------------------------------------------------------------------------------------------------------
86.1
86.2
87 Actual/360 120 119 360 359 03/1/2004 02/1/2014
88 Actual/360 120 118 360 358 02/1/2004 01/1/2014
89 Actual/360 120 118 360 358 02/1/2004 01/1/2014
- ---------------------------------------------------------------------------------------------------------------------
90 Actual/360 120 118 300 298 02/1/2004 01/1/2014
90.1
90.2
91 Actual/360 120 118 300 298 02/1/2004 01/1/2014
ANNUAL MONTHLY REMAINING CROSSED
DEBT DEBT INTEREST ONLY ARD WITH DSCR
ID SERVICE (2) SERVICE (2) PERIOD (MOS.) LOCKBOX (3) (YES/NO) OTHER LOANS (12) (2)(4)(8)(14)
- --------------------------------------------------------------------------------------------------------------------------------
40 385,284 32,107 - Springing Hard No No 1.52
41 367,287 30,607 - Springing Hard No No 1.49
42 425,066 35,422 - Springing Hard No No 1.27
43 352,621 29,385 - Springing Hard No No 1.54
44 374,196 31,183 - Springing Hard No No 1.32
45 368,167 30,681 - Springing Hard No No 1.25
46 353,464 29,455 - No No No 1.30
47 338,145 28,179 - No Yes No 1.41
48 328,479 27,373 - Springing Hard No No 1.39
- --------------------------------------------------------------------------------------------------------------------------------
49 328,836 27,403 - No No No 1.31
50 329,923 27,494 - Springing Hard No No 1.38
51 318,983 26,582 - Springing Hard No No 1.40
52 282,188 23,516 - Springing Hard No No 1.45
- --------------------------------------------------------------------------------------------------------------------------------
53 285,534 23,794 - Springing Hard No No 1.54
54 283,722 23,644 - No No No 1.35
55 262,501 21,875 - Springing Hard No No 1.44
56 245,101 20,425 - Springing Hard No No 1.43
56.1
- --------------------------------------------------------------------------------------------------------------------------------
56.2
57 238,371 19,864 - Springing Hard No No 1.58
58 227,833 18,986 - Springing Hard No No 3.17
59 258,518 21,543 - Springing Hard No No 1.33
60 226,399 18,867 - Springing Hard No No 1.41
- --------------------------------------------------------------------------------------------------------------------------------
61 213,092 17,758 - No No No 1.43
62 201,449 16,787 - Springing Hard No No 1.33
63 232,776 19,398 - Hard No No 1.16
64 200,970 16,748 - No No No 1.26
65 200,970 16,748 - No No No 1.27
- --------------------------------------------------------------------------------------------------------------------------------
66 198,737 16,561 - Springing Hard No No 1.37
67 183,663 15,305 - No No No 2.72
68 188,044 15,670 - Springing Hard No No 1.51
69 165,583 13,799 - Springing Hard No No 1.54
70 160,839 13,403 - Springing Hard No No 1.35
- --------------------------------------------------------------------------------------------------------------------------------
71 157,931 13,161 - Springing Hard No No 1.43
72 153,683 12,807 - No No No 1.34
73 141,280 11,773 - No No No 4.19
74 142,600 11,883 - Springing Hard No No 1.36
74.1
- --------------------------------------------------------------------------------------------------------------------------------
74.2
75 132,995 11,083 - No No No 1.30
76 136,848 11,404 - Springing Hard No No 1.43
77 134,406 11,201 - Springing Hard No No 1.31
78 122,046 10,171 - Springing Hard No No 1.46
- --------------------------------------------------------------------------------------------------------------------------------
79 121,369 10,114 - Springing Hard No No 1.34
80 102,765 8,564 - Springing Hard No No 1.41
81 103,094 8,591 - Springing Hard No No 3.40
82 109,337 9,111 - Springing Hard No No 1.30
83 112,803 9,400 - Springing Hard No No 1.41
- --------------------------------------------------------------------------------------------------------------------------------
84 110,310 9,193 - Springing Hard No No 1.44
84.1
84.2
85 91,784 7,649 - Springing Hard No No 1.63
86 104,896 8,741 - Springing Hard No No 1.52
- --------------------------------------------------------------------------------------------------------------------------------
86.1
86.2
87 95,789 7,982 - Springing Hard No No 1.34
88 86,816 7,235 - No No No 1.33
89 86,816 7,235 - No No No 1.31
- --------------------------------------------------------------------------------------------------------------------------------
90 91,269 7,606 - Springing Hard No No 1.45
90.1
90.2
91 76,365 6,364 - Springing Hard No No 2.13
CUT-OFF
GRACE PAYMENT APPRAISED DATE LTV LTV RATIO AT
ID PERIOD DATE VALUE (5) RATIO (4)(8)(14) MATURITY/APD (4)(14)
- ----------------------------------------------------------------------------------------
40 5 1 7,600,000 72.37% 60.93%
41 5 1 7,300,000 74.83% 69.55%
42 5 1 6,800,000 79.19% 61.89%
43 5 1 6,675,000 79.22% 73.55%
44 5 1 6,550,000 77.44% 66.39%
45 5 1 8,100,000 58.25% 55.84%
46 5 1 6,850,000 72.12% 61.16%
47 5 1 6,630,000 69.94% 59.66%
48 5 1 5,850,000 79.08% 71.47%
- ----------------------------------------------------------------------------------------
49 5 1 5,840,000 79.12% 57.50%
50 5 1 6,480,000 70.90% 60.15%
51 5 1 6,000,000 76.28% 64.37%
52 5 1 5,900,000 71.38% 63.89%
- ----------------------------------------------------------------------------------------
53 5 1 5,300,000 79.07% 73.61%
54 5 1 4,800,000 79.85% 68.34%
55 5 1 5,050,000 73.12% 61.90%
56 5 1 4,460,000 78.31% 66.06%
56.1 2,420,000
- ----------------------------------------------------------------------------------------
56.2 2,040,000
57 5 1 5,100,000 67.05% 60.40%
58 5 1 9,500,000 35.71% 31.92%
59 5 1 4,600,000 72.61% 56.36%
60 5 1 4,350,000 74.18% 66.95%
- ----------------------------------------------------------------------------------------
61 5 1 4,190,000 71.51% 60.50%
62 5 1 3,960,000 70.62% 59.96%
63 5 1 3,670,000 74.52% 0.00%
64 5 1 3,700,000 73.37% 62.80%
65 5 1 3,800,000 71.44% 61.15%
- ----------------------------------------------------------------------------------------
66 5 1 3,300,000 79.56% 61.21%
67 5 1 7,000,000 37.07% 31.34%
68 5 1 3,400,000 73.31% 56.39%
69 5 1 2,950,000 78.81% 70.79%
70 5 1 2,900,000 77.36% 65.69%
- ----------------------------------------------------------------------------------------
71 5 1 2,600,000 79.87% 61.55%
72 5 1 2,900,000 71.59% 61.27%
73 5 1 7,800,000 25.59% 21.64%
74 5 1 2,500,000 77.11% 65.94%
74.1 1,467,500
- ----------------------------------------------------------------------------------------
74.2 1,032,500
75 5 1 2,400,000 74.86% 64.07%
76 5 1 2,300,000 75.87% 59.16%
77 5 1 2,200,000 79.31% 61.46%
78 5 1 2,600,000 65.25% 55.42%
- ----------------------------------------------------------------------------------------
79 5 1 2,220,000 71.86% 55.44%
80 5 1 1,900,000 79.82% 74.26%
81 5 1 4,660,000 31.05% 26.30%
82 5 1 1,800,000 79.87% 61.55%
83 5 1 1,920,000 73.92% 57.97%
- ----------------------------------------------------------------------------------------
84 5 1 1,775,000 79.87% 62.05%
84.1 650,000
84.2 1,125,000
85 5 1 1,800,000 75.65% 63.35%
86 5 1 2,010,000 67.45% 52.30%
- ----------------------------------------------------------------------------------------
86.1 1,175,000
86.2 835,000
87 5 1 1,720,000 76.95% 65.41%
88 5 1 1,900,000 61.72% 52.83%
89 5 1 1,500,000 78.18% 66.92%
- ----------------------------------------------------------------------------------------
90 5 1 1,490,000 78.70% 61.20%
90.1 830,000
90.2 660,000
91 5 1 2,500,000 39.88% 30.84%
ID ADDRESS
- -----------------------------------------------------------------------------------------
40 Southwest Corner 11000 North Alpine Highway
41 16325 - 16345 South Harlem Avenue
42 2999 Woodway Drive
43 1580-1590 Clarkson Road
44 9350-9372 Cabot Drive
45 5171 Glenwood Avenue
46 1350-1364 Park Street and 2408-2414 Central Avenue
47 6600 Magnolia Avenue
48 North 7271 Lando Street
- -----------------------------------------------------------------------------------------
49 101 Leeward Lane
50 3600 Harden Boulevard
51 204 East Pointe Lane
52 12504 South Highway 301
- -----------------------------------------------------------------------------------------
53 150 Fred Lanier Road
54 890 Motsie Road
55 3401 Alta Mesa Boulevard
56 Various
56.1 3000 Blue Star Highway
- -----------------------------------------------------------------------------------------
56.2 6832 Maple Lane
57 1501 Western Avenue
58 2801 Northwest 1st Street and 100 Nance Avenue
59 1200 South Croatan Highway
60 121 High Hill Road
- -----------------------------------------------------------------------------------------
61 5528-B Cinderlane Parkway
62 485 Peachtree Industrial Boulevard
63 1751 Rock Prairie Road
64 614 North Water Avenue
65 1335 Bradyville Pike
- -----------------------------------------------------------------------------------------
66 220 Fulmer Avenue
67 11269 Mobile Drive
68 1530 Ardsley Street
69 2320 Eslinger Road
70 235 Emerald Circle
- -----------------------------------------------------------------------------------------
71 2888 Mogadore Road
72 2350 Blackburn Road Southeast
73 7410 Old Centreville Road
74 Various
74.1 7400 Chiesa Estates
- -----------------------------------------------------------------------------------------
74.2 2500 Fort Worth Drive
75 500 Chapman Pointe Circle
76 47 Jacaranda Cay Court
77 4400 West Main Street
78 23750 Carson Drive
- -----------------------------------------------------------------------------------------
79 216 Tudor Circle
80 251 East Cottonwood Street
81 1055 North 5th Street
82 1230 South Avenue
83 209 and 217 Elmwood Street; 228 Summer Street
- -----------------------------------------------------------------------------------------
84 Various
84.1 1305 West Woodrow Road
84.2 1311 and 1355 West Woodrow Road
85 1000 East Grand Avenue
86 Various
- -----------------------------------------------------------------------------------------
86.1 3901 Avenue O
86.2 5400 College Avenue
87 5155 Imperial Drive
88 1122 Spring Villa Circle
89 100 Diary Road
- -----------------------------------------------------------------------------------------
90 Various
90.1 5500 FM 2004
90.2 634 North Pine Road
91 9701 East Highway 25
YEAR YEAR
ID CITY COUNTY STATE ZIP CODE BUILT RENOVATED
- ----------------------------------------------------------------------------------------------------
40 Highland Utah UT 84003 1994 2003
41 Tinley Park Cook IL 60477 1989
42 Huntsville Madison AL 35805 1984 2002
43 Chesterfield Saint Louis MO 63017 2003
44 San Diego San Diego CA 92126 1976 2002
45 Raleigh Wake NC 27612 1982 1997
46 Alameda Alameda CA 94501 1889 2003
47 Riverside Riverside CA 92506 2003
48 Plymouth Sheboygan WI 53020 1969
- ----------------------------------------------------------------------------------------------------
49 Hampstead Pender NC 28443 2003
50 Lakeland Polk FL 33803 1989
51 East Lansing Ingham MI 48823 1965 2002
52 Dade City Pasco FL 33525 1985
- ----------------------------------------------------------------------------------------------------
53 Mocksville Davie NC 27028 1970 1999
54 Biloxi Harrison MS 39532 1997
55 Fort Worth Tarrant TX 76133 1982
56 Various Allegan MI Various Various
56.1 Douglas Allegan MI 49406 1970
- ----------------------------------------------------------------------------------------------------
56.2 Fennville Allegan MI 49408 1980
57 Seattle King WA 98101 1915 1980
58 Lincoln Lancaster NE 68521 1970
59 Kill Devil Hills Dare NC 27948 2003
60 Woolrich Township Gloucester NJ 08085 1952 1970
- ----------------------------------------------------------------------------------------------------
61 Orlando Orange FL 32808 1974
62 Suwanee Gwinnett GA 30024 2003
63 College Station Brazos TX 77845 2003
64 Gallatin Sumner TN 37066 1998
65 Murfreesboro Rutherford TN 37130 1997
- ----------------------------------------------------------------------------------------------------
66 Akron Summit OH 44312 1973 2003
67 Fairfax Fairfax VA 22030 1957
68 Winston-Salem Forsyth NC 27103 1969 1999
69 New Smyrna Beach Volusia FL 32168 1972 1982
70 Dundee Monroe MI 48131 1995
- ----------------------------------------------------------------------------------------------------
71 Akron Summit OH 44312 1972 2003
72 Cleveland Bradey TN 37311 1997
73 Manassas Prince William VA 20111 1975
74 Various Various TX Various Various 2003
74.1 Rowlett Dallas TX 75030 1970 2003
- ----------------------------------------------------------------------------------------------------
74.2 Denton Denton TX 76205 1953 2003
75 Dallas Gaston NC 28034 2000
76 New Smyrna Beach Volusia FL 32169 1986 2002
77 Norman Cleveland OK 73072 1972
78 Pioneer Amador CA 95666 1984
- ----------------------------------------------------------------------------------------------------
79 Portage Kalamazoo MI 49024 1973
80 Cottonwood Yavapai AZ 86326 1998
81 Jacksonville Jackson OR 97530 1970
82 Barberton Summit OH 44203 1980
83 Buffalo Erie NY 14222 1950 2002
- ----------------------------------------------------------------------------------------------------
84 Slaton Lubbock TX 79364 Various
84.1 Slaton Lubbock TX 79364 1978
84.2 Slaton Lubbock TX 79364 1984
85 Carbondale Jackson IL 62901 1975 2000
86 Snyder Scurry TX 79549 Various
- ----------------------------------------------------------------------------------------------------
86.1 Snyder Scurry TX 79549 1984
86.2 Snyder Scurry TX 79549 1974
87 New Port Richey Pasco FL 34652 1970
88 Birmingham Jefferson AL 35215 1972
89 Mobile Mobile AL 36612 1998
- ----------------------------------------------------------------------------------------------------
90 Various Galveston TX Various Various
90.1 Hitchcock Galveston TX 77563 1988
90.2 Texas City Galveston TX 77591 1985
91 Belleview Marion FL 34420 1984
NET UNITS LOAN PER NET PREPAYMENT
RENTABLE OF RENTABLE AREA PROVISIONS
ID AREA SF/UNITS (6) MEASURE SF/UNITS (4)(6) (# OF PAYMENTS) (7)(13)
- ------------------------------------------------------------------------------------------------
40 46,950 Sq. Ft. 117 L(35);D(82);O(3)
41 70,006 Sq. Ft. 78 L(26);D(31);O(3)
42 281 Units 19,163 L(35);D(82);O(3)
43 20,423 Sq. Ft. 259 L(35);D(22);O(3)
44 64,180 Sq. Ft. 79 L(35);D(79);O(6)
45 92,484 Sq Ft 54 L(28);D(28);O(4)
46 23,641 Sq Ft 209 L(26);D(90);O(4)
47 12,804 Sq. Ft. 362 L(27);D(87);O(6)
48 625 Pads 7,402 L(35);D(46);O(3)
- ------------------------------------------------------------------------------------------------
49 120 Units 38,505 L(26);D(150);O(4)
50 79,100 Sq. Ft. 58 L(35);D(82);O(3)
51 172 Units 26,609 L(35);D(82);O(3)
52 75,155 Sq. Ft. 56 L(35);D(46);O(3)
- ------------------------------------------------------------------------------------------------
53 425 Pads 9,861 L(35);D(22);O(3)
54 144 Units 26,616 L(35);D(82);O(3)
55 59,933 Sq. Ft. 62 L(35);D(82);O(3)
56 176 Pads 19,845 L(35);D(82);O(3)
56.1 99 Pads 19,143
- ------------------------------------------------------------------------------------------------
56.2 77 Pads 20,747
57 36,662 Sq. Ft. 93 L(36);D(45);O(3)
58 691 Pads 4,909 L(35);D(46);O(3)
59 14,560 Sq. Ft. 229 L(35);D(82);O(3)
60 162,500 Sq. Ft. 20 L(35);D(45);O(4)
- ------------------------------------------------------------------------------------------------
61 120 Units 24,970 L(35);D(82);O(3)
62 10,880 Sq. Ft. 257 L(35);D(82);O(3)
63 13,650 Sq Ft 200 L(28);D(264);O(1)
64 96 Units 28,279 L(35);D(82);O(3)
65 96 Units 28,279 L(35);D(82);O(3)
- ------------------------------------------------------------------------------------------------
66 80 Units 32,821 L(35);D(82);O(3)
67 152 Pads 17,070 L(26);D(90);O(4)
68 96 Units 25,963 L(35);D(82);O(3)
69 126 Pads 18,453 L(35);D(22);O(3)
70 80 Pads 28,044 L(35);D(82);O(3)
- ------------------------------------------------------------------------------------------------
71 83 Units 25,019 L(35);D(82);O(3)
72 96 Units 21,625 L(35);D(82);O(3)
73 150 Pads 13,306 L(26);D(90);O(4)
74 138 Pads 13,970 L(35);D(82);O(3)
74.1 81 Pads 13,971
- ------------------------------------------------------------------------------------------------
74.2 57 Pads 13,968
75 76 Units 23,639 L(35);D(82);O(3)
76 50 Units 34,901 L(35);D(82);O(3)
77 175 Pads 9,971 L(35);D(82);O(3)
78 50 Pads 33,932 L(35);D(82);O(3)
- ------------------------------------------------------------------------------------------------
79 72 Units 22,156 L(35);D(82);O(3)
80 68 Pads 22,303 L(35);D(22);O(3)
81 155 Pads 9,336 L(35);D(82);O(3)
82 40 Units 35,941 L(35);D(82);O(3)
83 72 Units 19,712 L(35);D(82);O(3)
- ------------------------------------------------------------------------------------------------
84 85 Units 16,679 L(35);D(82);O(3)
84.1 37 Units 14,032
84.2 48 Units 18,720
85 40 Units 34,041 L(35);D(82);O(3)
86 101 Units 13,424 L(35);D(82);O(3)
- ------------------------------------------------------------------------------------------------
86.1 53 Units 14,954
86.2 48 Units 11,734
87 84 Pads 15,756 L(35);D(82);O(3)
88 56 Units 20,942 L(35);D(82);O(3)
89 56 Units 20,942 L(35);D(82);O(3)
- ------------------------------------------------------------------------------------------------
90 110 Pads 10,660 L(35);D(82);O(3)
90.1 58 Pads 11,262
90.2 52 Pads 9,989
91 272 Pads 3,666 L(35);D(82);O(3)
FOURTH FOURTH THIRD THIRD MOST
MOST RECENT RECENT NOI MOST RECENT RECENT NOI
ID PROPERTY NAME NOI DATE NOI DATE
- ---------------------------------------------------------------------------------------------------------------------
40 Lone Peak Village 348,896 12/31/2000 256,666 12/31/2001
41 Office Centre of Tinley Park
42 Woodway Pines Apts 504,133 12/31/2000 577,890 12/31/2001
43 Shops at Clarkson Corner
44 Cabot Square 376,008 12/31/2001
45 Alpha Office Building 842,989 12/31/2000 894,573 12/31/2001
46 Park Central 115,732 12/31/2001
47 Walgreens - Riverside
48 Plymouth Rock MHP/RV 415,379 12/31/2001
- ---------------------------------------------------------------------------------------------------------------------
49 Hampstead Place Apartments
50 Oakbridge Shopping Centre 353,253 12/31/2000 645,547 12/31/2001
51 Abbott Pointe Apartments 488,879 12/31/2000 523,697 12/31/2001
52 Morningside Plaza 469,495 12/31/2001
- ---------------------------------------------------------------------------------------------------------------------
53 Lake Myers RV 532,247 12/31/2001
54 Keesler Apartments 307,428 12/31/2000 388,983 12/31/2001
55 Alta Mesa
56 Douglas Estates MHC and Johnson Village MHC (10) 303,758 12/31/2000 311,037 12/31/2001
56.1 Douglas Estates MHC
- ---------------------------------------------------------------------------------------------------------------------
56.2 Johnson Village MHC
57 Madore Building 531,816 12/31/2001
58 Woodlawn Estates/Gaslight Village 770,880 12/31/2000 709,972 12/31/2001
59 Walgreens - Kill Devil Hill
60 121 High Hill Road 240,558 12/31/2001
- ---------------------------------------------------------------------------------------------------------------------
61 Rosemont Country Club Apartment Community 377,553 12/31/2000 322,598 12/31/2001
62 CVS Atlanta
63 Walgreens College Station
64 Fox Den 229,128 12/31/2000 290,961 12/31/2001
65 Wyndover Apartments 319,998 12/31/2000 300,291 12/31/2001
- ---------------------------------------------------------------------------------------------------------------------
66 Brandemere Apartments 297,943 12/31/2000 308,445 12/31/2001
67 Waples Mobile Home Park 418,949 12/31/2000 439,286 12/31/2001
68 Ardsley Apartments
69 Eldorado Mobile Home Estates 254,757 12/31/2000 270,445 12/31/2001
70 Dundee Meadows MHC 254,023 12/31/2000 269,691 12/31/2001
- ---------------------------------------------------------------------------------------------------------------------
71 Mogadore Square Apartments 239,219 12/31/2000 242,148 12/31/2001
72 Forest Grove 164,274 12/31/2000 186,850 12/31/2001
73 Bull Run Mobile Home Park 526,928 12/31/2000 498,283 12/31/2001
74 Chiesa Estates & Hill Crest MHC (10) 248,248 12/31/2001
74.1 Chiesa Estates
- ---------------------------------------------------------------------------------------------------------------------
74.2 Hill Crest MHC
75 Chapman Pointe 173,614 12/31/2001
76 Dolphin Cove Apartments 214,719 12/31/2000 204,429 12/31/2001
77 Canadian Shores Estates 74,905 12/31/2000 85,080 12/31/2001
78 Meadow Pines MHP 171,356 12/31/2000 172,565 12/31/2001
- ---------------------------------------------------------------------------------------------------------------------
79 Briargate Apartments 202,357 12/31/2000 151,251 12/31/2001
80 Cottonwood Heights 56,055 12/31/2000 82,371 12/31/2001
81 Royal Mobile Estates 286,592 12/31/2001
82 Cedarbrook Apartments 148,247 12/31/2000 163,233 12/31/2001
83 Elmwood Street Apartments
- ---------------------------------------------------------------------------------------------------------------------
84 Windmill and Century Heights Apartments (10) 182,501 12/31/2001
84.1 Windmill Apartments
84.2 Century Heights Apartments
85 Georgetown Apartments 194,213 12/31/2000 253,545 12/31/2001
86 Western Crest and Windridge Apartments (10) 115,755 12/31/2001
- ---------------------------------------------------------------------------------------------------------------------
86.1 Western Crest Apartments
86.2 Windridge Apartments
87 Imperial Courts MHP 101,064 12/31/2000 93,861 12/31/2001
88 Village Crossing 59,395 12/31/2000 149,882 12/31/2001
89 Arbor Point Apartments 124,895 12/31/2000 101,660 12/31/2001
- ---------------------------------------------------------------------------------------------------------------------
90 Tallow Briar MHP and Sunset Harbor MHP (10) 136,364 12/31/2000 150,523 12/31/2001
90.1 Tallow Briar MHP
90.2 Sunset Harbor MHP
91 Smith Lake Shores Village 140,072 12/31/2000 146,727 12/31/2001
SECOND SECOND MOST MOST RECENT
MOST RECENT RECENT NOI MOST RECENT NOI UNDERWRITTEN UNDERWRITTEN UNDERWRITTEN
ID NOI DATE NOI DATE NOI (4) REVENUE EGI
- --------------------------------------------------------------------------------------------------------------------------
40 374,302 12/31/2002 528,573 T-12 10/31/2003 638,143 882,901 796,254
41 601,011 12/31/2002 661,723 T-12 10/31/2003 621,942 1,457,533 1,318,405
42 554,697 12/31/2002 567,436 T-12 08/31/2003 610,523 1,047,188 1,158,902
43 559,985 742,949 696,084
44 472,626 12/31/2002 516,545 T-12 06/30/2003 529,853 694,595 646,826
45 959,156 12/31/2002 932,303 T-12 06/30/2003 542,662 1,024,299 1,024,299
46 71,387 12/31/2002 212,150 T-12 09/30/2003 486,994 412,572 612,247
47 479,435 495,500 495,500
48 473,622 12/31/2002 536,292 T-12 08/31/2003 486,984 455,337 907,322
- --------------------------------------------------------------------------------------------------------------------------
49 449,292 1 mo. Ann. 11/30/2003 454,275 677,776 706,970
50 452,272 12/31/2002 530,032 T-12 09/30/2003 508,665 821,409 759,830
51 500,703 12/31/2002 376,531 T-12 06/30/2003 500,169 1,203,483 1,241,963
52 474,915 12/31/2002 470,381 T-12 06/30/2003 457,704 755,275 682,282
- --------------------------------------------------------------------------------------------------------------------------
53 544,474 12/31/2002 497,986 T-12 08/31/2003 460,510 648,247 930,594
54 429,832 12/31/2002 382,898 T-12 09/30/2003 418,437 829,812 841,058
55 511,779 Ann. 11/03/2003 418,109 718,042 622,496
56 356,730 12/31/2002 351,835 T-12 09/30/2003 359,557 535,424 577,087
56.1 - - -
- --------------------------------------------------------------------------------------------------------------------------
56.2 - - -
57 465,973 12/31/2002 496,710 T-12 08/31/2003 415,906 762,833 712,847
58 633,372 12/31/2002 547,453 T-12 07/31/2003 757,601 1,453,822 1,587,456
59 345,691 357,620 357,620
60 153,182 12/31/2002 138,653 Ann. 06/30/2003 377,974 723,424 661,933
- --------------------------------------------------------------------------------------------------------------------------
61 271,283 12/31/2002 240,273 T-12 11/30/2003 337,011 781,278 791,309
62 269,107 277,440 277,440
63 269,500 269,500 269,500
64 285,868 12/31/2002 287,869 T-12 11/30/2003 277,736 541,911 554,092
65 284,544 12/31/2002 300,745 T-12 11/30/2003 280,168 563,462 578,105
- --------------------------------------------------------------------------------------------------------------------------
66 286,193 12/31/2002 290,082 T-12 10/31/2003 296,034 470,547 474,984
67 466,995 12/31/2002 526,890 T-12 11/30/2003 507,187 765,096 809,838
68 160,530 12/31/2002 194,609 T-12 09/30/2003 310,039 507,734 515,384
69 266,862 12/31/2002 277,251 T-12 06/30/2003 260,887 431,518 460,447
70 236,908 12/31/2002 259,623 T-12 09/30/2003 221,327 292,356 324,337
- --------------------------------------------------------------------------------------------------------------------------
71 229,050 12/31/2002 228,700 T-12 10/31/2003 251,240 419,924 428,104
72 219,821 12/31/2002 218,756 T-12 09/30/2003 229,637 480,488 485,447
73 541,851 12/31/2002 615,148 T-12 11/30/2003 600,036 838,987 890,565
74 176,542 12/31/2002 155,687 T-12 11/30/2003 200,335 418,140 418,700
74.1 - - -
- --------------------------------------------------------------------------------------------------------------------------
74.2 - - -
75 216,832 12/31/2002 212,165 T-12 11/30/2003 192,063 398,460 405,235
76 205,568 12/31/2002 222,046 T-12 08/31/2003 208,296 357,235 371,088
77 123,169 12/31/2002 160,987 T-12 10/31/2003 185,247 364,643 389,038
78 197,757 12/31/2002 192,447 T-12 09/30/2003 180,859 227,354 250,023
- --------------------------------------------------------------------------------------------------------------------------
79 187,456 12/31/2002 177,721 T-12 08/31/2003 180,539 385,252 395,849
80 116,054 12/31/2002 157,931 T-12 10/31/2003 148,814 202,107 202,107
81 306,611 12/31/2002 426,897 T-12 09/30/2003 358,637 603,254 603,254
82 167,400 12/31/2002 143,381 T-12 10/31/2003 154,091 262,132 262,132
83 325,280 T-12 07/31/2003 177,563 398,202 398,202
- --------------------------------------------------------------------------------------------------------------------------
84 179,527 12/31/2002 195,673 T-12 09/30/2003 182,274 371,727 393,817
84.1 - - -
84.2 - - -
85 248,019 12/31/2002 163,343 272,424 290,522
86 142,988 12/31/2002 169,010 T-12 09/30/2003 187,718 474,070 502,711
- --------------------------------------------------------------------------------------------------------------------------
86.1 - - -
86.2 - - -
87 109,212 12/31/2002 117,687 T-12 09/30/2003 132,677 229,824 231,824
88 145,548 12/31/2002 125,977 T-12 11/30/2003 129,451 292,009 297,526
89 107,236 12/31/2002 126,069 T-12 11/30/2003 127,621 297,662 301,769
- --------------------------------------------------------------------------------------------------------------------------
90 159,217 12/31/2002 161,044 T-12 09/30/2003 135,657 218,044 218,044
90.1 - - -
90.2 - - -
91 151,377 12/31/2002 164,862 T-12 06/30/2003 176,619 699,898 461,933
UNDERWRITTEN UNDERWRITTEN UNDERWRITTEN UNDERWRITTEN NET
ID EXPENSES RESERVES TI/LC (11) CASH FLOW (4)(11) LARGEST TENANT SF
- ----------------------------------------------------------------------------------------------------------------------------------
40 158,111 7,058 46,971 584,114 One Stop Dollar Shop 6,000
41 696,463 14,332 61,707 545,904 Office Support Service 7,303
42 548,379 70,000 - 540,523
43 136,099 3,079 14,312 542,594 Talbot's 14,090
44 116,973 9,627 27,077 493,149 A to Z Metal Finishing 9,600
45 481,637 18,497 91,940 432,226 Golden Corral Corporation 19,526
46 125,253 7,092 19,474 460,428 Alliance Title 3,628
47 16,065 1,921 - 477,514 Walgreen Co. 12,804
48 420,338 31,250 - 455,734
- ----------------------------------------------------------------------------------------------------------------------------------
49 252,695 24,000 - 430,275
50 251,166 11,865 40,193 456,607 Publix 56,000
51 741,794 53,373 - 446,796
52 224,578 11,273 37,884 408,547 Kash n' Karry 36,296
- ----------------------------------------------------------------------------------------------------------------------------------
53 470,084 21,250 - 439,260
54 422,621 36,000 - 382,437
55 204,386 9,192 30,016 378,901 Sam's $1.00 8,916
56 217,530 8,700 - 350,857
56.1 - - -
- ----------------------------------------------------------------------------------------------------------------------------------
56.2 - - -
57 296,941 7,778 32,458 375,670 Kasala / Dan Flickinger 6,510
58 829,855 34,550 - 723,051
59 11,929 2,184 - 343,507 Walgreen's 14,560
60 283,959 24,375 34,269 319,329 Mitsui 69,600
- ----------------------------------------------------------------------------------------------------------------------------------
61 454,298 32,250 - 304,761
62 8,333 1,632 - 267,475 CVS Peachtree Suwanee, Inc. 10,880
63 - - - 269,500 Walgreen Co. 13,650
64 276,356 24,000 - 253,736
65 297,937 24,000 - 256,168
- ----------------------------------------------------------------------------------------------------------------------------------
66 178,950 24,000 - 272,034
67 302,650 7,600 - 499,587
68 205,345 26,400 - 283,639
69 199,560 6,300 - 254,587
70 103,010 4,000 - 217,327
- ----------------------------------------------------------------------------------------------------------------------------------
71 176,864 25,200 - 226,040
72 255,809 24,000 - 205,637
73 290,529 7,500 - 592,536
74 218,365 6,800 - 193,535
74.1 - - -
- ----------------------------------------------------------------------------------------------------------------------------------
74.2 - - -
75 213,173 19,000 - 173,063
76 162,792 12,500 - 195,796
77 203,791 8,750 - 176,497
78 69,163 2,500 - 178,359
- ----------------------------------------------------------------------------------------------------------------------------------
79 215,310 18,000 - 162,539
80 53,293 3,450 - 145,364
81 244,617 7,750 - 350,887
82 108,041 12,000 - 142,091
83 220,639 18,000 - 159,563
- ----------------------------------------------------------------------------------------------------------------------------------
84 211,543 23,375 - 158,899
84.1 - - -
84.2 - - -
85 127,180 14,000 - 149,343
86 314,993 27,775 - 159,943
- ----------------------------------------------------------------------------------------------------------------------------------
86.1 - - -
86.2 - - -
87 99,147 4,200 - 128,477
88 168,074 14,329 - 115,122
89 174,148 14,000 - 113,621
- ----------------------------------------------------------------------------------------------------------------------------------
90 82,387 3,000 - 132,657
90.1 - - -
90.2 - - -
91 285,313 13,600 - 163,019
LEASE LEASE
ID EXPIRATION 2ND LARGEST TENANT SF EXPIRATION 3RD LARGEST TENANT
- ------------------------------------------------------------------------------------------------------------------------------------
40 08/31/2008 Westfield Real Estate 2,805 10/31/2008 Canyon Copy & Mail
41 10/31/2004 General Services Admin 6,856 03/31/2005 Medquist, Inc.
42
43 01/31/2014 Chico's 3,250 01/31/2009 White House/Black Market
44 09/30/2006 Contract Carpet Corp 6,130 06/30/2004 DeSoto Sales
45 12/31/2005 FMI Corporation 9,547 12/31/2011 North Carolina Farm Bureau
46 07/31/2007 Sumbody 1,670 01/31/2009 Prometrics
47 12/31/2077
48
- ------------------------------------------------------------------------------------------------------------------------------------
49
50 10/31/2007 Dollar Depot 3,200 07/31/2004 Drummond Company, Inc.
51
52 06/30/2005 Eckerds 10,356 06/30/2005 Rent A Center
- ------------------------------------------------------------------------------------------------------------------------------------
53
54
55 11/30/2005 Salon Suites 7,462 02/28/2007 Saigon Palace
56
56.1
- ------------------------------------------------------------------------------------------------------------------------------------
56.2
57 01/31/2009 Edaw, Inc. 5,360 05/31/2005 Tiger Oak Publications, Inc.
58
59 08/31/2028
60 04/30/2013 Coralfi 57,750 12/31/2008 Erdners
- ------------------------------------------------------------------------------------------------------------------------------------
61
62 08/19/2024
63 04/30/2028
64
65
- ------------------------------------------------------------------------------------------------------------------------------------
66
67
68
69
70
- ------------------------------------------------------------------------------------------------------------------------------------
71
72
73
74
74.1
- ------------------------------------------------------------------------------------------------------------------------------------
74.2
75
76
77
78
- ------------------------------------------------------------------------------------------------------------------------------------
79
80
81
82
83
- ------------------------------------------------------------------------------------------------------------------------------------
84
84.1
84.2
85
86
- ------------------------------------------------------------------------------------------------------------------------------------
86.1
86.2
87
88
89
- ------------------------------------------------------------------------------------------------------------------------------------
90
90.1
90.2
91
UPFRONT ONGOING
LEASE OCCUPANCY OCCUPANCY ACTUAL REPLACEMENT ACTUAL REPLACEMENT UPFRONT
ID SF EXPIRATION RATE AS-OF DATE RESERVES RESERVES TI/LC
- -----------------------------------------------------------------------------------------------------------------------------------
40 2,680 10/31/2008 100.00% 01/06/2004 - 589 -
41 6,288 10/31/2005 94.71% 12/31/2003 - 1,194 100,000
42 90.04% 11/30/2003 - 5,834 -
43 1,800 01/31/2009 93.72% 11/01/2003 - 257 -
44 4,800 03/31/2004 83.73% 07/31/2003 - 803 -
45 7,588 09/30/2006 72.86% 8/6/2003 - 1,541 75,000
46 1,527 03/31/2008 94.56% 12/01/2003 - 592 -
47 100.00% 03/01/2004 - - -
48 97.12% 11/31/2003 - 2,605 -
- -----------------------------------------------------------------------------------------------------------------------------------
49 100.00% 12/16/2003 - 2,000 -
50 2,600 10/31/2004 100.00% 12/04/2003 - 989 -
51 93.02% 09/03/2003 90,000 4,448 -
52 5,000 12/31/2007 89.85% 09/01/2003 - 954 -
- -----------------------------------------------------------------------------------------------------------------------------------
53 100.00% 12/31/2003 - 1,771 -
54 97.92% 09/03/2003 - 3,000 -
55 5,306 12/31/2007 87.43% 12/08/2003 - 766 400,000
56 98.86% 10/30/2003 - 4,350 -
56.1 97.98% 10/30/2003 - - -
- -----------------------------------------------------------------------------------------------------------------------------------
56.2 100.00% 10/30/2003 - - -
57 4,181 09/30/2008 93.64% 10/31/2003 - 649 100,000
58 76.70% 10/20/2003 - 2,880 -
59 100.00% 03/01/2004 - 182 -
60 35,150 04/30/2005 100.00% 09/01/2003 - 2,032 -
- -----------------------------------------------------------------------------------------------------------------------------------
61 93.33% 10/31/2003 - 2,690 -
62 100.00% 03/01/2004 - 136 -
63 100.00% 10/14/2003 - - -
64 92.71% 10/15/2003 - 2,000 -
65 97.92% 10/15/2003 - 2,000 -
- -----------------------------------------------------------------------------------------------------------------------------------
66 96.25% 10/31/2003 - 2,000 -
67 99.34% 11/25/2003 - 633 -
68 96.88% 09/30/2003 - 2,200 -
69 96.83% 07/30/2003 - 525 -
70 96.25% 10/27/2003 - 333 -
- -----------------------------------------------------------------------------------------------------------------------------------
71 93.98% 10/31/2003 - 2,100 -
72 95.83% 11/30/2003 - 2,000 -
73 100.00% 12/3/2003 - 625 -
74 92.75% 12/03/2003 - 567 -
74.1 93.83% 12/03/2003 - - -
- -----------------------------------------------------------------------------------------------------------------------------------
74.2 91.23% 12/03/2003 - - -
75 97.37% 11/30/2003 - 1,583 -
76 98.00% 08/31/2003 - 1,042 -
77 92.00% 11/30/2003 - 729 -
78 100.00% 12/31/2003 - 208 -
- -----------------------------------------------------------------------------------------------------------------------------------
79 90.28% 12/23/2003 6,106 1,500 -
80 97.06% 11/30/2003 - 288 -
81 98.71% 10/31/2003 - - -
82 92.50% 11/21/2003 - 1,000 -
83 100.00% 10/31/2003 - 1,500 -
- -----------------------------------------------------------------------------------------------------------------------------------
84 88.24% 10/01/2003 - 1,948 -
84.1 83.78% 10/01/2003 - - -
84.2 91.67% 10/01/2003 - - -
85 77.50% 09/29/2003 - 1,167 -
86 90.10% 11/13/2003 - 2,315 -
- -----------------------------------------------------------------------------------------------------------------------------------
86.1 86.79% 11/13/2003 - - -
86.2 93.75% 11/13/2003 - - -
87 100.00% 10/30/2003 - 350 -
88 94.64% 11/30/2003 - 1,194 -
89 100.00% 12/31/2003 - 1,167 -
- -----------------------------------------------------------------------------------------------------------------------------------
90 87.27% 11/30/2003 - 250 -
90.1 89.66% 11/30/2003 - - -
90.2 84.62% 11/30/2003 - - -
91 67.65% 07/31/2003 - 1,133 -
UPFRONT ENVIRONMENTAL
MONTHLY MONTHLY TAX MONTHLY INSURANCE ENGINEERING REPORT
ID TI/LC ESCROW ESCROW RESERVE DATE
- ------------------------------------------------------------------------------------------------------------------------------
40 3,915 4,055 531 - 12/19/2003
41 5,142 34,316 1,027 - 12/03/2003
42 - 5,169 5,901 2,188 10/29/2003
43 1,193 6,349 1,635 - 11/25/2003
44 2,257 4,251 701 2,625 07/17/2003
45 7,662 8,472 1,137 74,250 07/23/2003
46 1,627 2,002 2,467 4,375 10/24/2003
47 - - - - 10/08/2003
48 - 1,845 2,670 12,250 10/01/2003
- ------------------------------------------------------------------------------------------------------------------------------
49 - 2,501 5,124 - 12/10/2003
50 3,350 6,857 2,639 - 11/19/2003
51 - 10,465 3,120 103,625 08/20/2003
52 3,157 6,644 984 - 10/10/2003
- ------------------------------------------------------------------------------------------------------------------------------
53 - 858 3,074 56,188 10/01/2003
54 - 6,314 4,614 5,000 12/15/2003
55 - 8,295 1,727 6,563 12/04/2003
56 - 4,740 532 5,625 Various
56.1 - - - - 12/01/2003
- ------------------------------------------------------------------------------------------------------------------------------
56.2 - - - - 12/12/2003
57 2,705 4,306 1,067 12,500 11/13/2003
58 - 8,591 2,871 1,250 09/19/2003
59 - - 72 62,500 08/27/2003
60 2,856 6,230 1,980 - 09/19/2003
- ------------------------------------------------------------------------------------------------------------------------------
61 - 6,623 4,881 - 11/20/2003
62 - - - - 12/23/2003
63 - - - - 06/24/2003
64 - 5,217 3,308 33,000 12/15/2003
65 - 5,289 3,327 - 12/15/2003
- ------------------------------------------------------------------------------------------------------------------------------
66 - 3,556 1,459 29,813 12/23/2003
67 - 4,187 1,452 - 12/3/2003
68 - 1,900 2,402 - 11/20/2003
69 - 2,720 342 137,500 08/25/2003
70 - 2,317 169 - 10/28/2003
- ------------------------------------------------------------------------------------------------------------------------------
71 - 1,676 1,703 16,000 12/23/2003
72 - 5,434 3,259 6,625 12/15/2003
73 - 4,522 1,190 - 12/3/2003
74 - 2,025 752 17,750 11/26/2003
74.1 - - - - 11/26/2003
- ------------------------------------------------------------------------------------------------------------------------------
74.2 - - - - 11/26/2003
75 - 3,622 2,525 - 12/15/2003
76 - 3,277 3,517 - 10/22/2003
77 - 735 733 - 11/28/2003
78 - 1,515 227 - 10/16/2003
- ------------------------------------------------------------------------------------------------------------------------------
79 - 3,527 1,671 - 12/26/2003
80 - 376 154 - 12/05/2003
81 - 3,174 322 - 10/29/2003
82 - 2,428 1,459 22,500 12/23/2003
83 - 3,549 631 - 10/21/2003
- ------------------------------------------------------------------------------------------------------------------------------
84 - 2,931 1,050 11,050 Various
84.1 - - - - 12/05/2003
84.2 - - - - 11/12/2003
85 - 3,172 1,150 1,250 07/08/2003
86 - 2,722 1,172 56,763 Various
- ------------------------------------------------------------------------------------------------------------------------------
86.1 - - - - 11/11/2003
86.2 - - - - 12/05/2003
87 - 3,052 366 2,500 11/06/2003
88 - 1,133 1,896 19,875 12/15/2003
89 - 2,112 1,895 - 12/15/2003
- ------------------------------------------------------------------------------------------------------------------------------
90 - 1,106 494 - 11/25/2003
90.1 - - - - 11/25/2003
90.2 - - - - 11/25/2003
91 - 5,132 693 - 09/16/2003
ENGINEERING APPRAISAL
ID REPORT DATE AS-OF DATE (5) SPONSOR
- ------------------------------------------------------------------------------------------------------------------------------------
40 12/19/2003 12/10/2003 Richard L.K. Mendenhall, Charles R. Paul, Wayne Corbridge, Stanford J. Ricks
41 12/04/2003 11/26/2003 Michael A. Tobin, Bruce A. Kaplan
42 08/06/2003 09/23/2003 Patrick C. Stacker
43 11/25/2003 11/20/2003 Main Street America, LLC
44 07/17/2003 07/01/2003 J. Stephen Quinn
45 07/23/2003 8/19/2003 Robert F. Andrews, III, Ira J. Jackson, III, Floyd E. McCall, John L. Hughes, Jr.
46 10/24/2003 10/09/2003 John F. Knowles; Daphne Knowles
47 10/08/2003 10/05/2003 Andrew Sun, John Young
48 09/23/2003 11/11/2003 Barry L. Haase, Philip S. Moreau
- ------------------------------------------------------------------------------------------------------------------------------------
49 12/10/2003 12/08/2003 Mark L. Maynard
50 11/19/2003 11/20/2003 Peggy M. Drummond
51 09/05/2003 08/14/2003 Iqbal S. Uppal, Thomas F. Kuschinski
52 10/09/2003 09/23/2003 Patrick K. Dempsey, James M. Cope, Robert A. Whelan
- ------------------------------------------------------------------------------------------------------------------------------------
53 10/01/2003 11/13/2003 Barry L. Haase, Philip S. Moreau
54 12/15/2003 09/03/2003 Robert T. Singleton
55 12/04/2003 12/01/2003 Ralph M. Isenberg
56 Various 11/20/2003 Nathan S. Leader, David Leader
56.1 12/01/2003 11/20/2003
- ------------------------------------------------------------------------------------------------------------------------------------
56.2 12/12/2003 11/20/2003
57 11/13/2003 10/20/2003 Michael G. Peterson
58 09/19/2003 09/08/2003 Boris B. Vukovich, Mirko B. Vukovich, Richard N. Brown
59 08/28/2003 09/08/2003 Lawrence B. Levey
60 09/07/2003 09/09/2003 Benjamin I. Cohen
- ------------------------------------------------------------------------------------------------------------------------------------
61 11/20/2003 12/01/2003 Garry N. Drummond
62 12/23/2003 12/10/2003 Robert A. Schreier
63 06/25/2003 04/29/2003 Isaac Moradi & Fred Rizk
64 12/15/2003 09/19/2003 Robert T. Singleton
65 12/15/2003 09/19/2003 Robert T. Singleton
- ------------------------------------------------------------------------------------------------------------------------------------
66 12/23/2003 12/02/2003 Gary L. Tullius
67 10/14/2003 10/10/2003 Albert J. Dwoskin
68 11/20/2003 11/05/2003 Charles E. Douthit
69 08/25/2003 08/18/2003 Ayman F. Khalil, Jeffrey J. Oshona
70 10/28/2003 10/08/2003 Angelo Constantine
- ------------------------------------------------------------------------------------------------------------------------------------
71 12/23/2003 12/02/2003 Gary L. Tullius
72 12/15/2003 09/19/2003 Robert T. Singleton
73 10/14/2003 10/10/2003 Albert J. Dwoskin
74 11/26/2003 11/13/2003 Frank E. Rolfe, American Home Communities, L.P.
74.1 11/26/2003 11/13/2003
- ------------------------------------------------------------------------------------------------------------------------------------
74.2 11/26/2003 11/13/2003
75 12/15/2003 09/24/2003 Robert T. Singleton
76 07/25/2003 07/10/2003 Robert L. Astorino
77 11/28/2003 12/02/2003 Ray K. Farris, II
78 10/16/2003 10/22/2003 Arno F. Chauvel, Jerry D. Jacobson
- ------------------------------------------------------------------------------------------------------------------------------------
79 12/26/2003 11/14/2003 Paulus C. Heule
80 12/05/2003 11/18/2003 Charles R. Catalano
81 10/29/2003 10/21/2003 Mark J. Ryan, Jr.
82 12/23/2003 12/02/2003 Gary L. Tullius
83 10/21/2003 10/13/2003 Anthony F. Trusso
- ------------------------------------------------------------------------------------------------------------------------------------
84 Various 11/15/2003 Karen Otaka, Kazuhiro Otaka
84.1 12/05/2003 11/15/2003
84.2 11/12/2003 11/15/2003
85 06/25/2003 06/18/2003 Kirk R. Mills
86 Various 11/14/2003 Karen Otaka, Kazuhiro Otaka
- ------------------------------------------------------------------------------------------------------------------------------------
86.1 11/11/2003 11/14/2003
86.2 12/05/2003 11/14/2003
87 11/06/2003 10/20/2003 George Rice, Jr.
88 12/15/2003 09/23/2003 Robert T. Singleton
89 12/15/2003 09/03/2003 Robert T. Singleton
- ------------------------------------------------------------------------------------------------------------------------------------
90 11/25/2003 11/06/2003 James W. McCartney V
90.1 11/25/2003 11/06/2003
90.2 11/25/2003 11/06/2003
91 09/16/2003 09/04/2003 Robert I. Rissman, Burton S. Rissman
COMM 2004-LNB2
ANNEX A-2 - CERTAIN CHARACTERISTICS OF THE MULTIFAMILY AND MANUFACTURED HOUSING
LOANS
% OF MORTGAGE CUT-OFF
INITIAL POOL # OF LOAN DATE
ID PROPERTY NAME BALANCE PROPERTIES SELLER (1) BALANCE
- --------------------------------------------------------------------------------------------------------------------------
5 Fairstone at Riverview 3.61% 1 GACC 35,000,000
9 Wiener Portfolio III (2) 2.47% 2 GACC 23,911,302
9.1 910-930 THIERIOT AVENUE 1.37% GACC 13,275,907
9.2 945-955 UNDERHILL AVENUE 1.10% GACC 10,635,395
11 Empirian at Winter Park 2.32% 1 GACC 22,454,940
- --------------------------------------------------------------------------------------------------------------------------
14 Tantra Lake Apartments 1.76% 1 GACC 17,000,000
16 Frenchman's Wharf 1.48% 1 GACC 14,368,535
17 Hawthorne Apartments 1.40% 1 GACC 13,600,000
19 Tesla Park Apartments 1.34% 1 GACC 13,020,000
23 Willowbrooke Apartments 1.03% 1 LaSalle 9,978,923
- --------------------------------------------------------------------------------------------------------------------------
24 Campus Edge Apartments 1.03% 1 GACC 9,968,304
27 Fountainview Townhomes 0.95% 1 GACC 9,200,000
28 Cambridge Station Apartments 0.90% 1 LaSalle 8,673,064
30 San Marcos Apartments 0.86% 1 LaSalle 8,315,576
32 Club Hill Apartments 0.74% 1 LaSalle 7,191,019
- --------------------------------------------------------------------------------------------------------------------------
37 East Garden Village MHC 0.61% 1 LaSalle 5,890,806
38 Forest Park Mobile Home Park 0.61% 1 GACC 5,887,842
39 Centennial Village 0.58% 1 LaSalle 5,600,000
42 Woodway Pines Apts 0.56% 1 LaSalle 5,384,833
48 Plymouth Rock MHP/RV 0.48% 1 LaSalle 4,626,436
- --------------------------------------------------------------------------------------------------------------------------
49 Hampstead Place Apartments 0.48% 1 GACC 4,620,549
51 Abbott Pointe Apartments 0.47% 1 LaSalle 4,576,812
53 Lake Myers RV 0.43% 1 LaSalle 4,190,754
54 Keesler Apartments 0.40% 1 LaSalle 3,832,698
56 Douglas Estates MHC and Johnson Village MHC (2) 0.36% 2 LaSalle 3,492,677
- --------------------------------------------------------------------------------------------------------------------------
56.1 DOUGLAS ESTATES MHC 0.20% LASALLE 1,895,130
56.2 JOHNSON VILLAGE MHC 0.16% LASALLE 1,597,547
58 Woodlawn Estates/Gaslight Village 0.35% 1 LaSalle 3,392,330
61 Rosemont Country Club Apartment Community 0.31% 1 LaSalle 2,996,455
34 Woodstock Apartments 0.30% 1 LaSalle 2,921,624
- --------------------------------------------------------------------------------------------------------------------------
64 Fox Den 0.28% 1 LaSalle 2,714,828
65 Wyndover Apartments 0.28% 1 LaSalle 2,714,828
66 Brandemere Apartments 0.27% 1 LaSalle 2,625,642
67 Waples Mobile Home Park 0.27% 1 GACC 2,594,642
35 Dogwood Apartments 0.26% 1 LaSalle 2,497,194
- --------------------------------------------------------------------------------------------------------------------------
68 Ardsley Apartments 0.26% 1 LaSalle 2,492,444
69 Eldorado Mobile Home Estates 0.24% 1 LaSalle 2,325,028
70 Dundee Meadows MHC 0.23% 1 LaSalle 2,243,546
71 Mogadore Square Apartments 0.21% 1 LaSalle 2,076,574
72 Forest Grove 0.21% 1 LaSalle 2,076,045
- --------------------------------------------------------------------------------------------------------------------------
73 Bull Run Mobile Home Park 0.21% 1 GACC 1,995,879
74 Chiesa Estates & Hill Crest MHC (2) 0.20% 2 LaSalle 1,927,834
74.1 CHIESA ESTATES 0.12% LASALLE 1,131,638
74.2 HILL CREST MHC 0.08% LASALLE 796,195
75 Chapman Pointe 0.19% 1 LaSalle 1,796,577
- --------------------------------------------------------------------------------------------------------------------------
76 Dolphin Cove Apartments 0.18% 1 LaSalle 1,745,031
77 Canadian Shores Estates 0.18% 1 LaSalle 1,744,884
78 Meadow Pines MHP 0.18% 1 LaSalle 1,696,595
79 Briargate Apartments 0.16% 1 LaSalle 1,595,229
80 Cottonwood Heights 0.16% 1 LaSalle 1,516,622
- --------------------------------------------------------------------------------------------------------------------------
36 Kings Place 0.15% 1 LaSalle 1,498,300
81 Royal Mobile Estates 0.15% 1 LaSalle 1,447,046
82 Cedarbrook Apartments 0.15% 1 LaSalle 1,437,628
83 Elmwood Street Apartments 0.15% 1 LaSalle 1,419,285
84 Windmill and Century Heights Apartments (2) 0.15% 2 LaSalle 1,417,728
- --------------------------------------------------------------------------------------------------------------------------
84.1 WINDMILL APARTMENTS 0.05% LASALLE 519,168
84.2 CENTURY HEIGHTS APARTMENTS 0.09% LASALLE 898,560
85 Georgetown Apartments 0.14% 1 LaSalle 1,361,632
86 Western Crest and Windridge Apartments (2) 0.14% 2 LaSalle 1,355,811
86.1 WESTERN CREST APARTMENTS 0.08% LASALLE 792,576
- --------------------------------------------------------------------------------------------------------------------------
86.2 WINDRIDGE APARTMENTS 0.06% LASALLE 563,235
87 Imperial Courts MHP 0.14% 1 LaSalle 1,323,470
88 Village Crossing 0.12% 1 LaSalle 1,172,766
89 Arbor Point Apartments 0.12% 1 LaSalle 1,172,766
90 Tallow Briar MHP and Sunset Harbor MHP (2) 0.12% 2 LaSalle 1,172,620
- --------------------------------------------------------------------------------------------------------------------------
90.1 TALLOW BRIAR MHP 0.07% LASALLE 653,204
90.2 SUNSET HARBOR MHP 0.05% LASALLE 519,415
91 Smith Lake Shores Village 0.10% 1 LaSalle 997,050
GENERAL DETAILED
PROPERTY PROPERTY
ID TYPE TYPE ADDRESS
- ---------------------------------------------------------------------------------------------------------------------
5 Multifamily Conventional 4341 South Riverboat Road
9 Multifamily Conventional Various
9.1 MULTIFAMILY CONVENTIONAL 910-930 THIERIOT AVENUE
9.2 MULTIFAMILY CONVENTIONAL 945-955 UNDERHILL AVENUE
11 Multifamily Conventional 5 Autumn Breeze Way
- ---------------------------------------------------------------------------------------------------------------------
14 Multifamily Conventional 807-993 East Moorhead Circle & 880-999 West Moorhead Circle
16 Multifamily Conventional 6800 Interstate -10 Service Road
17 Multifamily Conventional 15770 Bellaire Boulevard
19 Multifamily Conventional 4510 Tesla Park Drive
23 Multifamily Conventional 1100 Oakbridge Parkway
- ---------------------------------------------------------------------------------------------------------------------
24 Multifamily Student Housing 1300 Varsity Lane
27 Multifamily Conventional 18704-18705 Mesa Terrace, 14106-14115 Tarhill Court and 18756-18777 Diller Drive
28 Multifamily Student Housing 801 Frontage Road
30 Multifamily Conventional 921 North Zaragoza Road
32 Multifamily Conventional 2840 Warm Springs Road
- ---------------------------------------------------------------------------------------------------------------------
37 Mobile Home Park Mobile Home Park 4101 East U.S. Highway 50
38 Mobile Home Park Mobile Home Park 7800 & 7850 Tayloe Drive
39 Multifamily Student Housing 2310, 2311 & 2320 Crescent Creek Drive
42 Multifamily Conventional 2999 Woodway Drive
48 Mobile Home Park Mobile Home Park North 7271 Lando Street
- ---------------------------------------------------------------------------------------------------------------------
49 Multifamily Conventional 101 Leeward Lane
51 Multifamily Conventional 204 East Pointe Lane
53 Mobile Home Park Mobile Home Park 150 Fred Lanier Road
54 Multifamily Conventional 890 Motsie Road
56 Mobile Home Park Mobile Home Park Various
- ---------------------------------------------------------------------------------------------------------------------
56.1 MOBILE HOME PARK MOBILE HOME PARK 3000 BLUE STAR HIGHWAY
56.2 MOBILE HOME PARK MOBILE HOME PARK 6832 MAPLE LANE
58 Mobile Home Park Mobile Home Park 2801 Northwest 1st Street and 100 Nance Avenue
61 Multifamily Conventional 5528-B Cinderlane Parkway
34 Multifamily Conventional 5950 Boca Raton Drive
- ---------------------------------------------------------------------------------------------------------------------
64 Multifamily Conventional 614 North Water Avenue
65 Multifamily Conventional 1335 Bradyville Pike
66 Multifamily Conventional 220 Fulmer Avenue
67 Mobile Home Park Mobile Home Park 11269 Mobile Drive
35 Multifamily Conventional 1501 South Magnolia Street
- ---------------------------------------------------------------------------------------------------------------------
68 Multifamily Conventional 1530 Ardsley Street
69 Mobile Home Park Mobile Home Park 2320 Eslinger Road
70 Mobile Home Park Mobile Home Park 235 Emerald Circle
71 Multifamily Conventional 2888 Mogadore Road
72 Multifamily Conventional 2350 Blackburn Road Southeast
- ---------------------------------------------------------------------------------------------------------------------
73 Mobile Home Park Mobile Home Park 7410 Old Centreville Road
74 Mobile Home Park Mobile Home Park Various
74.1 MOBILE HOME PARK MOBILE HOME PARK 7400 CHIESA ESTATES
74.2 MOBILE HOME PARK MOBILE HOME PARK 2500 FORT WORTH DRIVE
75 Multifamily Conventional 500 Chapman Pointe Circle
- ---------------------------------------------------------------------------------------------------------------------
76 Multifamily Conventional 47 Jacaranda Cay Court
77 Mobile Home Park Mobile Home Park 4400 West Main Street
78 Mobile Home Park Mobile Home Park 23750 Carson Drive
79 Multifamily Conventional 216 Tudor Circle
80 Mobile Home Park Mobile Home Park 251 East Cottonwood Street
- ---------------------------------------------------------------------------------------------------------------------
36 Multifamily Conventional 4700 King Street
81 Mobile Home Park Mobile Home Park 1055 North 5th Street
82 Multifamily Conventional 1230 South Avenue
83 Multifamily Conventional 209 and 217 Elmwood Street; 228 Summer Street
84 Multifamily Conventional Various
- ---------------------------------------------------------------------------------------------------------------------
84.1 MULTIFAMILY CONVENTIONAL 1305 WEST WOODROW ROAD
84.2 MULTIFAMILY CONVENTIONAL 1311 AND 1355 WEST WOODROW ROAD
85 Multifamily Student Housing 1000 East Grand Avenue
86 Multifamily Conventional Various
86.1 MULTIFAMILY CONVENTIONAL 3901 AVENUE O
- ---------------------------------------------------------------------------------------------------------------------
86.2 MULTIFAMILY CONVENTIONAL 5400 COLLEGE AVENUE
87 Mobile Home Park Mobile Home Park 5155 Imperial Drive
88 Multifamily Conventional 1122 Spring Villa Circle
89 Multifamily Conventional 100 Diary Road
90 Mobile Home Park Mobile Home Park Various
- ---------------------------------------------------------------------------------------------------------------------
90.1 MOBILE HOME PARK MOBILE HOME PARK 5500 FM 2004
90.2 MOBILE HOME PARK MOBILE HOME PARK 634 NORTH PINE ROAD
91 Mobile Home Park Mobile Home Park 9701 East Highway 25
NET LOAN PER NET
RENTABLE RENTABLE AREA OCCUPANCY OCCUPANCY
ID CITY COUNTY STATE ZIP CODE UNITS/PADS UNITS/PADS RATE AS-OF DATE
- ----------------------------------------------------------------------------------------------------------------------------------
5 Taylorsville Salt Lake UT 84123 492 Units 96.95% 11/20/2003
9 Bronx Bronx NY 10473 459 Units 97.82% 10/09/2003
9.1 BRONX BRONX NY 10473 252 UNITS 97.22% 10/09/2003
9.2 BRONX BRONX NY 10473 207 UNITS 98.55% 10/09/2003
11 Winter Park Orange FL 32792 432 Units 96.53% 11/27/2003
- ----------------------------------------------------------------------------------------------------------------------------------
14 Boulder Boulder CO 80305 185 Units 93.51% 12/4/2003
16 New Orleans Orleans Parish LA 70126 644 Units 90.99% 12/9/2003
17 Houston Harris TX 77083 312 Units 96.15% 10/29/2003
19 Wilmington New Hanover NC 28412 288 Units 89.24% 01/23/2004
23 Lakeland Polk FL 33803 302 Units 92.72% 12/15/2003
- ----------------------------------------------------------------------------------------------------------------------------------
24 Charlotte Mecklenburg NC 28262 384 Beds 97.40% 11/14/2003
27 Hagerstown Washington MD 21742 127 Units 81.89% 1/1/2004
28 Oxford Lafayette MS 38655 176 Units 97.73% 10/17/2003
30 El Paso El Paso TX 79907 468 Units 97.01% 09/22/2003
32 Columbus Muscogee GA 31906 232 Units 99.57% 09/08/2003
- ----------------------------------------------------------------------------------------------------------------------------------
37 Garden City Finney KS 67846 668 Pads 91.32% 11/01/2003
38 Manassas Prince William VA 20112 178 Pads 98.88% 12/3/2003
39 Raleigh Wake NC 27606 72 Units 93.06% 11/12/2003
42 Huntsville Madison AL 35805 281 Units 90.04% 11/30/2003
48 Plymouth Sheboygan WI 53020 625 Pads 97.12% 11/31/2003
- ----------------------------------------------------------------------------------------------------------------------------------
49 Hampstead Pender NC 28443 120 Units 100.00% 12/16/2003
51 East Lansing Ingham MI 48823 172 Units 93.02% 09/03/2003
53 Mocksville Davie NC 27028 425 Pads 100.00% 12/31/2003
54 Biloxi Harrison MS 39532 144 Units 97.92% 09/03/2003
56 Various Allegan MI Various 176 Pads 98.86% 10/30/2003
- ----------------------------------------------------------------------------------------------------------------------------------
56.1 DOUGLAS ALLEGAN MI 49406 99 PADS 97.98% 10/30/2003
56.2 FENNVILLE ALLEGAN MI 49408 77 PADS 100.00% 10/30/2003
58 Lincoln Lancaster NE 68521 691 Pads 76.70% 10/20/2003
61 Orlando Orange FL 32808 120 Units 93.33% 10/31/2003
34 Fort Worth Tarrant TX 76112 140 Units 92.86% 08/29/2003
- ----------------------------------------------------------------------------------------------------------------------------------
64 Gallatin Sumner TN 37066 96 Units 92.71% 10/15/2003
65 Murfreesboro Rutherford TN 37130 96 Units 97.92% 10/15/2003
66 Akron Summit OH 44312 80 Units 96.25% 10/31/2003
67 Fairfax Fairfax VA 22030 152 Pads 99.34% 11/25/2003
35 Woodville Tyler TX 75979 100 Units 91.00% 11/12/2003
- ----------------------------------------------------------------------------------------------------------------------------------
68 Winston-Salem Forsyth NC 27103 96 Units 96.88% 09/30/2003
69 New Smyrna Beach Volusia FL 32168 126 Pads 96.83% 07/30/2003
70 Dundee Monroe MI 48131 80 Pads 96.25% 10/27/2003
71 Akron Summit OH 44312 83 Units 93.98% 10/31/2003
72 Cleveland Bradey TN 37311 96 Units 95.83% 11/30/2003
- ----------------------------------------------------------------------------------------------------------------------------------
73 Manassas Prince William VA 20111 150 Pads 100.00% 12/3/2003
74 Various Various TX Various 138 Pads 92.75% 12/03/2003
74.1 ROWLETT DALLAS TX 75030 81 PADS 93.83% 12/03/2003
74.2 DENTON DENTON TX 76205 57 PADS 91.23% 12/03/2003
75 Dallas Gaston NC 28034 76 Units 97.37% 11/30/2003
- ----------------------------------------------------------------------------------------------------------------------------------
76 New Smyrna Beach Volusia FL 32169 50 Units 98.00% 08/31/2003
77 Norman Cleveland OK 73072 175 Pads 92.00% 11/30/2003
78 Pioneer Amador CA 95666 50 Pads 100.00% 12/31/2003
79 Portage Kalamazoo MI 49024 72 Units 90.28% 12/23/2003
80 Cottonwood Yavapai AZ 86326 68 Pads 97.06% 11/30/2003
- ----------------------------------------------------------------------------------------------------------------------------------
36 Greenville Hunt TX 75401 80 Units 100.00% 09/30/2003
81 Jacksonville Jackson OR 97530 155 Pads 98.71% 10/31/2003
82 Barberton Summit OH 44203 40 Units 92.50% 11/21/2003
83 Buffalo Erie NY 14222 72 Units 100.00% 10/31/2003
84 Slaton Lubbock TX 79364 85 Units 88.24% 10/01/2003
- ----------------------------------------------------------------------------------------------------------------------------------
84.1 SLATON LUBBOCK TX 79364 37 UNITS 83.78% 10/01/2003
84.2 SLATON LUBBOCK TX 79364 48 UNITS 91.67% 10/01/2003
85 Carbondale Jackson IL 62901 40 Units 77.50% 09/29/2003
86 Snyder Scurry TX 79549 101 Units 90.10% 11/13/2003
86.1 SNYDER SCURRY TX 79549 53 UNITS 86.79% 11/13/2003
- ----------------------------------------------------------------------------------------------------------------------------------
86.2 SNYDER SCURRY TX 79549 48 UNITS 93.75% 11/13/2003
87 New Port Richey Pasco FL 34652 84 Pads 100.00% 10/30/2003
88 Birmingham Jefferson AL 35215 56 Units 94.64% 11/30/2003
89 Mobile Mobile AL 36612 56 Units 100.00% 12/31/2003
90 Various Galveston TX Various 110 Pads 87.27% 11/30/2003
- ----------------------------------------------------------------------------------------------------------------------------------
90.1 HITCHCOCK GALVESTON TX 77563 58 PADS 89.66% 11/30/2003
90.2 TEXAS CITY GALVESTON TX 77591 52 PADS 84.62% 11/30/2003
91 Belleview Marion FL 34420 272 Pads 67.65% 07/31/2003
STUDIOS / PADS
-----------------------------------------
ELEVATOR(S) UTILITIES # AVG RENT PER MAX
ID (YES/NO) PAID BY TENANT UNITS MO. ($) RENT ($)
- --------------------------------------------------------------------------------------------------------------------------------
5 No Gas, Water, Sewer - - -
9 Yes None 26 579 -
9.1 YES ELECTRIC 4 502 675
9.2 YES ELECTRIC 22 593 832
11 No Electric, Gas, Water, Sewer - - -
- --------------------------------------------------------------------------------------------------------------------------------
14 No Electric, Gas, Water, Sewer - - -
16 No Electric - - -
17 No Electric, Water, Sewer - - -
19 No Electric, Water, Sewer - - -
23 No Electric - - -
- --------------------------------------------------------------------------------------------------------------------------------
24 No Electric - - -
27 No Electric - - -
28 No Electric, Water - - -
30 No Electric, 40% of Water and Sewer - - -
32 No Electric 3 400 400
- --------------------------------------------------------------------------------------------------------------------------------
37 No Electric, Gas, Water, Sewer - - -
38 No Electric, Gas, Water, Sewer - - -
39 No None - - -
42 No Electric - - -
48 No Electric - - -
- --------------------------------------------------------------------------------------------------------------------------------
49 No Electric, Water, Sewer 40 395 395
51 No Electric - - -
53 No None - - -
54 No Electric - - -
56 No Electric, Gas, Water, Sewer - - -
- --------------------------------------------------------------------------------------------------------------------------------
56.1 NO ELECTRIC, GAS, WATER, SEWER - - -
56.2 NO ELECTRIC, GAS, WATER, SEWER - - -
58 No None - - -
61 No Electric - - -
34 No Electric - - -
- --------------------------------------------------------------------------------------------------------------------------------
64 No Electric - - -
65 No Electric - - -
66 No Electric - - -
67 No Electric, Gas, Water, Sewer - - -
35 No Electric - - -
- --------------------------------------------------------------------------------------------------------------------------------
68 No Electric - - -
69 No Electric - - -
70 No Electric, Gas, Water, Sewer - - -
71 No None 1 379 379
72 No Electric - - -
- --------------------------------------------------------------------------------------------------------------------------------
73 No Electric, Gas, Water, Sewer - - -
74 No None - - -
74.1 NO NONE - - -
74.2 NO NONE - - -
75 No Electric - - -
- --------------------------------------------------------------------------------------------------------------------------------
76 No Water, Sewer - - -
77 No None - - -
78 No Electric, Water, Sewer - - -
79 No Electric, Gas 24 431 650
80 No Electric - - -
- --------------------------------------------------------------------------------------------------------------------------------
36 No Electric, Gas 4 450 450
81 No Electric, Gas, Water, Sewer - - -
82 No Electric, Gas - - -
83 No Studio and 1 bedroom pay none; 2 and 3 bedroom pay Electric and Water 17 425 425
84 No Electric, Water - - -
- --------------------------------------------------------------------------------------------------------------------------------
84.1 NO ELECTRIC, WATER - - -
84.2 NO ELECTRIC, WATER - - -
85 No Electric, Water, Sewer - - -
86 No Electric - - -
86.1 NO ELECTRIC - - -
- --------------------------------------------------------------------------------------------------------------------------------
86.2 NO ELECTRIC - - -
87 0 Electric - - -
88 No Electric - - -
89 No Electric - - -
90 0 Various - - -
- --------------------------------------------------------------------------------------------------------------------------------
90.1 0 ELECTRIC, WATER, SEWER - - -
90.2 0 ELECTRIC - - -
91 No Electric - - -
1 BEDROOM 2 BEDROOM
------------------------------------- -------------------------------------
# AVG RENT PER MAX # AVG RENT PER MAX
ID UNITS MO. ($) RENT ($) UNITS MO. ($) RENT ($)
- ----------------------------------------------------------------------------------------------------------------
5 164 655 655 244 765 775
9 125 657 - 203 686 -
9.1 83 640 1,142 103 670 1,560
9.2 42 690 1,043 100 702 1,290
11 155 579 695 130 695 715
- ----------------------------------------------------------------------------------------------------------------
14 69 793 800 102 1,051 1,150
16 440 462 504 204 547 559
17 32 635 635 200 702 835
19 144 504 560 144 599 650
23 124 580 700 146 670 715
- ----------------------------------------------------------------------------------------------------------------
24 384 400 400 - - -
27 - - - 82 759 840
28 - - - 176 670 1,500
30 184 387 415 284 418 450
32 69 568 600 156 635 745
- ----------------------------------------------------------------------------------------------------------------
37 - - - - - -
38 - - - - - -
39 - - - - - -
42 217 340 380 64 465 505
48 - - - - - -
- ----------------------------------------------------------------------------------------------------------------
49 - - - 80 548 560
51 7 566 595 165 657 775
53 - - - - - -
54 - - - 66 475 475
56 - - - - - -
- ----------------------------------------------------------------------------------------------------------------
56.1 - - - - - -
56.2 - - - - - -
58 - - - - - -
61 40 570 570 80 655 655
34 88 376 405 40 519 566
- ----------------------------------------------------------------------------------------------------------------
64 - - - 64 530 580
65 8 481 525 56 530 595
66 - - - 80 540 549
67 - - - - - -
35 20 410 460 60 467 505
- ----------------------------------------------------------------------------------------------------------------
68 - - - 88 469 469
69 - - - - - -
70 - - - - - -
71 80 450 474 2 539 539
72 - - - 57 409 500
- ----------------------------------------------------------------------------------------------------------------
73 - - - - - -
74 - - - - - -
74.1 - - - - - -
74.2 - - - - - -
75 12 475 475 48 545 545
- ----------------------------------------------------------------------------------------------------------------
76 - - - 50 645 730
77 - - - - - -
78 - - - - - -
79 24 495 530 24 566 599
80 - - - - - -
- ----------------------------------------------------------------------------------------------------------------
36 72 525 525 4 575 575
81 - - - - - -
82 20 499 549 20 661 704
83 39 500 500 13 635 635
84 52 392 420 33 499 535
- ----------------------------------------------------------------------------------------------------------------
84.1 20 370 370 17 465 465
84.2 32 405 420 16 535 535
85 - - - 26 598 675
86 25 430 550 76 524 550
86.1 1 550 550 52 538 550
- ----------------------------------------------------------------------------------------------------------------
86.2 24 425 425 24 495 495
87 - - - - - -
88 8 424 424 32 504 504
89 - - - 24 420 450
90 - - - - - -
- ----------------------------------------------------------------------------------------------------------------
90.1 - - - - - -
90.2 - - - - - -
91 - - - - - -
3 BEDROOM 4 BEDROOM
------------------------------------- ------------------------------------
# AVG RENT PER MAX # AVG RENT PER MAX
ID UNITS MO. ($) RENT ($) UNITS MO. ($) RENT ($)
- ---------------------------------------------------------------------------------------------------------------------------
5 84 929 935 - - -
9 100 781 - - - -
9.1 60 779 1,382 - - -
9.2 40 784 1,404 - - -
11 147 815 815 - - -
- ---------------------------------------------------------------------------------------------------------------------------
14 14 1,400 1,400 - - -
16 - - - - - -
17 80 820 845 - - -
19 - - - - - -
23 32 860 895 - - -
- ---------------------------------------------------------------------------------------------------------------------------
24 - - - - - -
27 36 958 1,090 9 1,209 1,215
28 - - - - - -
30 - - - - - -
32 4 730 730 - - -
- ---------------------------------------------------------------------------------------------------------------------------
37 - - - - - -
38 - - - - - -
39 72 1,137 1,275 - - -
42 - - - - - -
48 - - - - - -
- ---------------------------------------------------------------------------------------------------------------------------
49 - - - - - -
51 - - - - - -
53 - - - - - -
54 61 555 555 17 601 601
56 - - - - - -
- ---------------------------------------------------------------------------------------------------------------------------
56.1 - - - - - -
56.2 - - - - - -
58 - - - - - -
61 - - - - - -
34 12 585 665 - - -
- ---------------------------------------------------------------------------------------------------------------------------
64 32 606 630 - - -
65 32 637 665 - - -
66 - - - - - -
67 - - - - - -
35 20 574 620 - - -
- ---------------------------------------------------------------------------------------------------------------------------
68 8 575 575 - - -
69 - - - - - -
70 - - - - - -
71 - - - - - -
72 39 489 540 - - -
- ---------------------------------------------------------------------------------------------------------------------------
73 - - - - - -
74 - - - - - -
74.1 - - - - - -
74.2 - - - - - -
75 16 615 615 - - -
- ---------------------------------------------------------------------------------------------------------------------------
76 - - - - - -
77 - - - - - -
78 - - - - - -
79 - - - - - -
80 - - - - - -
- ---------------------------------------------------------------------------------------------------------------------------
36 - - - - - -
81 - - - - - -
82 - - - - - -
83 3 635 635 - - -
84 - - - - - -
- ---------------------------------------------------------------------------------------------------------------------------
84.1 - - - - - -
84.2 - - - - - -
85 14 690 820 - - -
86 - - - - - -
86.1 - - - - - -
- ---------------------------------------------------------------------------------------------------------------------------
86.2 - - - - - -
87 - - - - - -
88 16 589 589 - - -
89 32 500 500 - - -
90 - - - - - -
- ---------------------------------------------------------------------------------------------------------------------------
90.1 - - - - - -
90.2 - - - - - -
91 - - - - - -
FOOTNOTES FOR THE ANNEX A-1
1 GACC -- German American Capital Corporation, ABN AMRO -- ABN AMRO Bank
N.V., Chicago Branch, LaSalle -- LaSalle Bank National Association.
2 Annual Debt Service, Monthly Debt Service and DSCR for loans with partial
interest-only periods are shown after the expiration of the interest-only
period.
3 "Hard" means each tenant transfers its rent directly to the Lock Box
Account; "Soft" means each tenant transfers its rent to the related
borrower or property manager who then is required to transfer the funds
into the Lock Box Account; "Soft at Closing, Springing Hard" means that a
Soft Lock Box exists at closing, but upon the occurrence of a trigger
event, as defined in the related loan documents, each tenant will be
required to transfer its rent directly to the Lock Box Account.
4 For purposes of calculating the Cut-off Date LTV Ratio, LTV Ratio at
Maturity, Loan per Net Rentable Area SF/Units and DSCR, the loan amounts
used for the Tysons Corner Center Loan, the AFR/Bank of America Portfolio
Loan and the Meadows Mall Loan is the aggregate balance of (a) such
mortgage loans and (b) the other mortgage loans or portions thereof in the
split loan structure that are pari passu in right of payment with such
mortgage loans. With respect to the AFR/Bank of America Portfolio Loan,
the Underwritten NOI and Underwritten Net Cash Flow do not include income
related to the Shadow Occupied Release Space. If such income were
included, Underwritten NOI, Underwritten NCF and DSCR would be
$55,341,545, $53,645,125, and 2.24x, respectively.
5 For those mortgage loans indicating an Appraisal As-Of Date beyond the
Cut-off Date, the Appraised Value and the corresponding Appraisal As-of
Date are based on stabilization.
6 Net Rentable Area SF/Units includes square footage for ground lease
tenants.
7 Prior to December 18, 2005, up to 13.6% of the AFR/Bank of America
Portfolio Whole Loan may be prepaid (subject to a yield charge) in
connection with the release of certain designated properties. Defeasance
for the AFR/Bank of America Portfolio Whole Loan is permitted on and after
December 18, 2005, subject to certain conditions set forth in the loan
documents.
8 For purposes of calculating DSCR and Cut-off Date LTV Ratio, the Cut-off
Date Balance is calculated after netting out holdback amounts for Shoppes
at Grand Prairie, ($1,650,000), Alpha Office Building ($300,000),
Fountainview Townhomes ($1,100,000) and Empirian at Winter Park
($3,800,000).
9 The AFR/Bank of America Portfolio Mortgage Loan interest rate is
5.489117647%.
10 One loan secured by multiple properties.
11 For purposes of calculating Underwritten Net Cash Flow, Underwritten TI/LC
has been included at the individual AFR/Bank of America Portfolio property
level.
12 The Glenwood Place Portfolio Loan I and Glenwood Place Portfolio Loan II
are cross-collateralized and cross-defaulted. The mortgage loan documents
permit the mortgage loans to be released from the cross-collateralization
and cross-default provisions upon satisfaction of certain conditions,
including: (i) each of the crossed mortgage loans maintains an occupancy
rate of at least 90% for six consecutive months, and (ii) each of the
crossed mortgage loans maintain a minimum DSCR of 1.25x.
13 Lockout for the Tysons Corner Center Loan is the earlier of: a) 24 months
from the last securitization of the A-1, A-2, A-3 and A-4 notes to occur
or b) 36 months from the closing date.
14 With respect to the mortgage loans that are cross-collateralized and
cross-defaulted (other than the mortgage loans known as "Glenwood Place
Portfolio Loan I" and "Glenwood Place Portfolio Loan II"), Cut-off Date
LTV Ratio, LTV Ratio at Maturity and DSCR were calculated in the
aggregate.
FOOTNOTES FOR THE ANNEX A-2
1 GACC -- German American Capital Corporation, ABN AMRO -- ABN AMRO Bank
N.V., Chicago Branch, LaSalle -- LaSalle Bank National Association.
2 One loan secured by multiple properties.
CMBS NEW ISSUE
STRUCTURAL AND COLLATERAL TERM SHEET
-------------------------------
$900,610,000
(APPROXIMATE OFFERED CERTIFICATES)
$968,398,042
(APPROXIMATE TOTAL COLLATERAL BALANCE)
COMM 2004-LNB2
-------------------------------
COMMERCIAL MORTGAGE
PASS-THROUGH CERTIFICATES
GERMAN AMERICAN CAPITAL CORPORATION
LASALLE BANK NATIONAL ASSOCIATION
ABN AMRO BANK N.V.
MORTGAGE LOAN SELLERS
-------------------------------
- -----------------------------------------------------------------------------------------------------------------------
CLASS APPROX. SIZE INITIAL PASS- RATINGS SUBORDINATION PRINCIPAL ASSUMED FINAL
(FACE) THROUGH RATE (S&P/FITCH/DBRS) LEVELS WAL (YRS.) WINDOW (MO.) DISTRIBUTION DATE
=======================================================================================================================
A-1 $135,894,000 [ ]% AAA/AAA/AAA 13.500% 3.90 4/04-12/08 12/10/08
- -----------------------------------------------------------------------------------------------------------------------
A-2 $138,594,000 [ ]% AAA/AAA/AAA 13.500% 5.50 12/08-12/10 12/10/10
- -----------------------------------------------------------------------------------------------------------------------
A-3 $108,197,000 [ ]% AAA/AAA/AAA 13.500% 7.50 12/10-8/13 8/10/13
- -----------------------------------------------------------------------------------------------------------------------
A-4 $454,979,000 [ ]% AAA/AAA/AAA 13.500% 9.80 8/13-3/14 3/10/14
- -----------------------------------------------------------------------------------------------------------------------
B $ 25,420,000 [ ]% AA/AA/AA 10.875% 9.98 3/14-3/14 3/10/14
- -----------------------------------------------------------------------------------------------------------------------
C $ 9,684,000 [ ]% AA-/AA-/AA (low) 9.875% 9.98 3/14-3/14 3/10/14
- -----------------------------------------------------------------------------------------------------------------------
D $ 19,368,000 [ ]% A/A/A 7.875% 10.09 3/14-10/15 10/10/15
- -----------------------------------------------------------------------------------------------------------------------
E $ 8,474,000 [ ]% A-/A-/A (low) 7.000% 13.59 10/15-12/18 12/10/18
- -----------------------------------------------------------------------------------------------------------------------
DEUTSCHE BANK SECURITIES ABN AMRO INCORPORATED
Sole Book Running Manager and Co-Lead Manager Co-Lead Manager
BANC OF AMERICA SECURITIES LLC CITIGROUP MERRILL LYNCH & CO
Co-Manager Co-Manager Co-Manager
-----------------
FEBRUARY 18, 2004
This information has been prepared solely for information purposes and is not an
offer to buy or sell or solicitation of an offer to buy or sell any security or
instrument or to participate in any trading strategy. No representation or
warranty can be given with respect to the accuracy or completeness of the
information, or that any future offer of securities will conform to the terms
hereof. If any such offer of securities is made, it will be made pursuant to a
definitive Prospectus and Prospectus Supplement, prepared by the Depositor,
which will contain material information not contained herein and to which
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded in its entirety by such Prospectus and
Prospectus Supplement. ANY DECISION TO INVEST IN SUCH SECURITIES SHOULD BE MADE
ONLY AFTER REVIEWING SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT. Deutsche Bank
Securities Inc., ABN AMRO Incorporated, Banc of America Securities LLC,
Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriters") disclaim any and all liability relating to
this information, including without limitation, any express or implied
representations or warranties for, statements contained in, and omissions from,
this information. This information should only be considered after reading the
Statement Regarding Assumptions as to Securities, Pricing Estimates, and Other
Information (the "Statement") which is attached. Do not use or rely on this
information if you have not received the Statement. You may obtain a copy of the
Statement from your sales representative.
B-1
$900,610,000 (APPROXIMATE)
COMM 2004-LNB2
- --------------------------------------------------------------------------------
TRANSACTION FEATURES
o SELLERS:
NO. OF CUT-OFF DATE %
SELLERS LOANS BALANCE ($) OF POOL
- ----------------------------------------------------------------------------------------------------------------------
German American Capital Corporation 33 687,416,676 70.98
- ----------------------------------------------------------------------------------------------------------------------
LaSalle Bank National Association 57 225,394,294 23.27
- ----------------------------------------------------------------------------------------------------------------------
ABN AMRO Bank N.V., Chicago Branch 1 55,587,072 5.74
======================================================================================================================
TOTAL: 91 968,398,042 100.00
- ----------------------------------------------------------------------------------------------------------------------
o LOAN POOL:
o Average Cut-off Date Balance: $10,641,737
o Largest Mortgage Loan by Cut-off Date Balance:
$147,500,000 (SHADOW RATED AAA/AA/AAA BY S&P, FITCH AND
DBRS)
o Five largest and ten largest loans:
40.44% and 53.80% of pool, respectively
o CREDIT STATISTICS:
o Weighted average underwritten DSCR of 1.53x
o Weighted average cut-off date LTV ratio of 66.72%; weighted
average balloon LTV ratio of 58.01%
o PROPERTY TYPES:
[Data below represents pie chart in the printed piece]
MULTIFAMILY(1) 31.42%
RETAIL 31.63%
MIXED USE 1.51%
INDUSTRIAL 0.86%
OFFICE 34.58%
(1) Consists of Multifamily (26.41%) and Mobile Home Park (5.00%).
o CALL PROTECTION: (AS APPLICABLE)
o 88.54% of the pool (Cut-off Date Balance) has a lockout
period ranging from 24 to 36 payments from origination,
then defeasance.
o 2.68% of the pool (Cut-off Date Balance) has a lockout
period of 28 payments from origination, then yield
maintenance.
o 8.78% of the pool (Cut-off Date Balance) is open to partial
prepayment with yield maintenance, then defeasance.
o BOND INFORMATION:
o Cash flows are expected to be modeled by TREPP, CONQUEST
and INTEX and are expected to be available on BLOOMBERG.
This information has been prepared solely for information purposes and is not an
offer to buy or sell or solicitation of an offer to buy or sell any security or
instrument or to participate in any trading strategy. No representation or
warranty can be given with respect to the accuracy or completeness of the
information, or that any future offer of securities will conform to the terms
hereof. If any such offer of securities is made, it will be made pursuant to a
definitive Prospectus and Prospectus Supplement, prepared by the Depositor,
which will contain material information not contained herein and to which
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded in its entirety by such Prospectus and
Prospectus Supplement. ANY DECISION TO INVEST IN SUCH SECURITIES SHOULD BE MADE
ONLY AFTER REVIEWING SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT. Deutsche Bank
Securities Inc., ABN AMRO Incorporated, Banc of America Securities LLC,
Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriters") disclaim any and all liability relating to
this information, including without limitation, any express or implied
representations or warranties for, statements contained in, and omissions from,
this information. This information should only be considered after reading the
Statement Regarding Assumptions as to Securities, Pricing Estimates, and Other
Information (the "Statement") which is attached. Do not use or rely on this
information if you have not received the Statement. You may obtain a copy of the
Statement from your sales representative.
B-2
$900,610,000 (APPROXIMATE)
COMM 2004-LNB2
- --------------------------------------------------------------------------------
OFFERED CERTIFICATES
ASSUMED FINAL INITIAL
CLASS INITIAL CERTIFICATE SUBORDINATION RATINGS AVERAGE PRINCIPAL DISTRIBUTION PASS-THROUGH
BALANCE(1) LEVELS (S&P/FITCH/DBRS) LIFE (YRS.)(2) WINDOW (MO.)(2) DATE(2) RATE (APPROX.)(3)
- -----------------------------------------------------------------------------------------------------------------------------------
A-1 $135,894,000 13.500%(6) AAA/AAA/AAA 3.90 4/04-12/08 12/10/08 %
- -----------------------------------------------------------------------------------------------------------------------------------
A-2 $138,594,000 13.500%(6) AAA/AAA/AAA 5.50 12/08-12/10 12/10/10
- -----------------------------------------------------------------------------------------------------------------------------------
A-3 $108,197,000 13.500%(6) AAA/AAA/AAA 7.50 12/10-8/13 08/10/13
- -----------------------------------------------------------------------------------------------------------------------------------
A-4 $454,979,000 13.500%(6) AAA/AAA/AAA 9.80 8/13-3/14 03/10/14
- -----------------------------------------------------------------------------------------------------------------------------------
B $ 25,420,000 10.875% AA/AA/AA 9.98 3/14-3/14 03/10/14
- -----------------------------------------------------------------------------------------------------------------------------------
C $ 9,684,000 9.875% AA-/AA-/AA (low) 9.98 3/14-3/14 03/10/14
- -----------------------------------------------------------------------------------------------------------------------------------
D $ 19,368,000 7.875% A/A/A 10.09 3/14-10/15 10/10/15
- -----------------------------------------------------------------------------------------------------------------------------------
E $ 8,474,000 7.000% A-/A-/A (low) 13.59 10/15-12/18 12/10/18
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
PRIVATE CERTIFICATES(4)
ASSUMED FINAL INITIAL
CLASS INITIAL CERTIFICATE SUBORDINATION RATINGS AVERAGE PRINCIPAL DISTRIBUTION PASS-THROUGH
BALANCE(1) LEVELS (S&P/FITCH/DBRS) LIFE (YRS.)(2) WINDOW (MO.)(2) DATE(2) RATE (APPROX.)(3)
- -----------------------------------------------------------------------------------------------------------------------------------
X-1(5) $968,398,042 NA AAA/AAA/AAA NA NA 04/10/28 %
- -----------------------------------------------------------------------------------------------------------------------------------
X-2(5) $935,698,000 NA AAA/AAA/AAA NA NA 03/10/11
- -----------------------------------------------------------------------------------------------------------------------------------
F $ 9,684,000 6.000% BBB+/BBB+/BBB (high) 14.73 12/18-12/18 12/10/18
- -----------------------------------------------------------------------------------------------------------------------------------
G $ 10,894,000 4.875% BBB/BBB/BBB 14.73 12/18-12/18 12/10/18
- -----------------------------------------------------------------------------------------------------------------------------------
H $ 10,895,000 3.750% BBB-/BBB-/BBB (low) 14.73 12/18-12/18 12/10/18
- -----------------------------------------------------------------------------------------------------------------------------------
J $ 4,842,000 3.250% BB+/BB+/BB (high) 14.73 12/18-12/18 12/10/18
- -----------------------------------------------------------------------------------------------------------------------------------
K $ 6,052,000 2.625% BB/BB/BB 14.73 12/18-12/18 12/10/18
- -----------------------------------------------------------------------------------------------------------------------------------
L $ 3,632,000 2.250% BB-/BB-/BB (low) 14.73 12/18-12/18 12/10/18
- -----------------------------------------------------------------------------------------------------------------------------------
M $ 4,842,000 1.750% B+/B+/B (high) 14.73 12/18-12/18 12/10/18
- -----------------------------------------------------------------------------------------------------------------------------------
N $ 2,421,000 1.500% B/B/B 14.73 12/18-1/19 01/10/19
- -----------------------------------------------------------------------------------------------------------------------------------
O $ 1,210,000 1.375% B-/B-/B (low) 14.81 1/19-1/19 01/10/19
- -----------------------------------------------------------------------------------------------------------------------------------
P $ 13,316,042 0.000% NR/NR/NR 15.55 1/19-4/28 04/10/28
NOTES:
(1) Subject to a permitted variance of plus or minus 5%.
(2) Based on the structuring assumptions, assuming 0% CPR, described in the
Prospectus Supplement.
(3) The Class A-1, A-2, A-3 and A-4 Certificates will accrue interest at a fixed
rate. The Class B, C, D, E, F, G and H Certificates will each accrue
interest at (i) a fixed rate, (ii) a fixed rate subject to a cap at the
weighted average net mortgage interest rate, (iii) a rate equal to the
weighted average net mortgage interest rate less a specified percentage or
(iv) a rate equal to the weighted average net mortgage interest rate. The
Class J, K, L, M, N, O and P will accrue interest at a fixed rate subject to
a Net WAC Cap.
(4) Certificates to be offered privately pursuant to Rule 144A and Regulation S.
(5) The Class X Certificates were structured assuming that the AFR/Bank of
America Portfolio B Loan absorbs any loss prior to the AFR/Bank of America
Portfolio Senior Loans. For more information regarding this loan, see
"Description of the Mortgage Pool - Split Loan Structures" in the Prospectus
Supplement.
(6) Represents the approximate subordination levels for the Class A-1, Class
A-2, Class A-3 and Class A-4 Certificates in the aggregate.
This information has been prepared solely for information purposes and is not an
offer to buy or sell or solicitation of an offer to buy or sell any security or
instrument or to participate in any trading strategy. No representation or
warranty can be given with respect to the accuracy or completeness of the
information, or that any future offer of securities will conform to the terms
hereof. If any such offer of securities is made, it will be made pursuant to a
definitive Prospectus and Prospectus Supplement, prepared by the Depositor,
which will contain material information not contained herein and to which
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded in its entirety by such Prospectus and
Prospectus Supplement. ANY DECISION TO INVEST IN SUCH SECURITIES SHOULD BE MADE
ONLY AFTER REVIEWING SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT. Deutsche Bank
Securities Inc., ABN AMRO Incorporated, Banc of America Securities LLC,
Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriters") disclaim any and all liability relating to
this information, including without limitation, any express or implied
representations or warranties for, statements contained in, and omissions from,
this information. This information should only be considered after reading the
Statement Regarding Assumptions as to Securities, Pricing Estimates, and Other
Information (the "Statement") which is attached. Do not use or rely on this
information if you have not received the Statement. You may obtain a copy of the
Statement from your sales representative.
B-3
$900,610,000 (APPROXIMATE)
COMM 2004-LNB2
- --------------------------------------------------------------------------------
I. ISSUE CHARACTERISTICS
ISSUE TYPE: Public: Classes A-1, A-2, A-3, A-4, B, C, D and E
(the "Offered Certificates"). Private (Rule 144A,
Regulation S): Classes X-1, X-2, F, G, H, J, K, L,
M, N, O and P.
SECURITIES OFFERED: $900,610,000 monthly pay, multi-class, sequential
pay commercial mortgage REMIC Pass-Through
Certificates, consisting of four fixed-rate
principal and interest classes (Classes A-1, A-2,
A-3 and A-4) and four principal and interest
classes (Classes B, C, D and E) which will accrue
interest at (i) a fixed rate, (ii) a fixed rate
subject to a cap at the weighted average net
mortgage interest rate, (iii) a rate equal to the
weighted average net mortgage interest rate less a
specified percentage or (iv) a rate equal to the
weighted average net mortgage interest rate.
MORTGAGE POOL: The Mortgage Pool consists of 91 mortgage loans
with an aggregate balance as of the Cut-Off Date
of $968,398,042. The mortgage loans are secured by
255 properties located throughout 32 states and
the District of Columbia.
SELLERS: German American Capital Corporation ("GACC");
LaSalle Bank National Association ("LaSalle"); and
ABN AMRO Bank N.V., Chicago Branch ("ABN AMRO
Bank")
BOOKRUNNER: Deutsche Bank Securities Inc.
CO-LEAD MANAGERS: Deutsche Bank Securities Inc. and ABN AMRO
Incorporated.
CO-MANAGERS: Banc of America Securities LLC, Citigroup Global
Markets Inc. and Merrill Lynch, Pierce, Fenner &
Smith Incorporated
MASTER SERVICER: GMAC Commercial Mortgage Corporation, a California
corporation, with respect to all of the mortgage
loans other than two mortgage loans known as the
AFR/Bank of America Portfolio Loan and the Meadows
Mall Loan (collectively, the "Non-Serviced
Mortgage Loans").
SPECIAL SERVICER: Lennar Partners, Inc., a Florida corporation, with
respect to all of the mortgage loans other than
the Non-Serviced Mortgage Loans.
TRUSTEE: Wells Fargo Bank, N.A.
BOND ADMINISTRATOR: LaSalle Bank National Association.
CUT-OFF DATE: March 1, 2004
EXPECTED CLOSING DATE: On or about March ___, 2004.
DISTRIBUTION DATES: The 10th day of each month or, if such 10th day is
not a business day, the business day immediately
following such 10th day, beginning in April 2004.
MINIMUM DENOMINATIONS: $10,000 for the Offered Certificates and in
multiples of $1 thereafter.
SETTLEMENT TERMS: DTC, Euroclear and Clearstream, same day funds,
with accrued interest.
ERISA/SMMEA STATUS: Classes A-1, A-2, A-3, A-4, B, C, D and E are
expected to be ERISA eligible. No Class of
Certificates is SMMEA eligible.
RATING AGENCIES: The Offered Certificates will be rated by Standard
& Poor's Rating Services, a division of the
McGraw-Hill Companies, Inc. ("S&P"), Fitch, Inc.
("Fitch") and Dominion Bond Rating Service Limited
("DBRS").
RISK FACTORS: THE CERTIFICATES INVOLVE CERTAIN RISKS AND MAY NOT
BE SUITABLE FOR ALL INVESTORS. SEE THE "RISK
FACTORS" SECTION OF THE PROSPECTUS SUPPLEMENT AND
THE "RISK FACTORS" SECTION OF THE PROSPECTUS.
This information has been prepared solely for information purposes and is not an
offer to buy or sell or solicitation of an offer to buy or sell any security or
instrument or to participate in any trading strategy. No representation or
warranty can be given with respect to the accuracy or completeness of the
information, or that any future offer of securities will conform to the terms
hereof. If any such offer of securities is made, it will be made pursuant to a
definitive Prospectus and Prospectus Supplement, prepared by the Depositor,
which will contain material information not contained herein and to which
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded in its entirety by such Prospectus and
Prospectus Supplement. ANY DECISION TO INVEST IN SUCH SECURITIES SHOULD BE MADE
ONLY AFTER REVIEWING SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT. Deutsche Bank
Securities Inc., ABN AMRO Incorporated, Banc of America Securities LLC,
Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriters") disclaim any and all liability relating to
this information, including without limitation, any express or implied
representations or warranties for, statements contained in, and omissions from,
this information. This information should only be considered after reading the
Statement Regarding Assumptions as to Securities, Pricing Estimates, and Other
Information (the "Statement") which is attached. Do not use or rely on this
information if you have not received the Statement. You may obtain a copy of the
Statement from your sales representative.
B-4
$900,610,000 (APPROXIMATE)
COMM 2004-LNB2
- --------------------------------------------------------------------------------
II. STRUCTURE CHARACTERISTICS
The Class A-1, A-2, A-3 and A-4 Certificates will accrue interest at a fixed
rate. The Class B, C, D, E, F, G and H Certificates will each accrue interest at
(i) a fixed rate, (ii) a fixed rate subject to a cap at the weighted average net
mortgage interest rate, (iii) a rate equal to the weighted average net mortgage
interest rate less a specified percentage or (iv) a rate equal to the weighted
average net mortgage interest rate. The Class J, K, L, M, N, O and P will accrue
interest at a fixed rate subject to a Net WAC Cap. The Class X-1 and X-2
Certificates will accrue interest at a variable rate.
Class X-1, X-2(1)
[Data below represents Diagram in the printed piece]
[Graphic Omitted]
Class A-1 AAA/AAA/AAA $135.9MM
[]%
Class A-2 AAA/AAA/AAA $138.6MM
[]%
Class A-3 AAA/AAA/AAA $108.2MM
[]%
Class A-4 AAA/AAA/AAA $455.0MM
[]%
Class B AA/AA/AA $25.4MM
[]%
Class C AA-/AA-/AA (LOW) $9.7MM
[]%
Class D A/A/A (LOW) $19.4MM
[]%
Class E A-/A-/A (LOW) $8.5MM
[]%
Class F(1) BBB+/BBB+/BBB (HIGH) $9.7MM
[]%
Class G(1) BBB/BBB/BBB) $10.9MM
[]%
Class H(1) BBB-/BBB-/BBB (LOW) $10.9MM
[]%
Class J(1) BB+/BB+/BB (HIGH) $4.8MM
[]%
Class K(1) BB/BB/BB $6.1MM
[]%
Class L(1) BB-/BB-/BB (LOW) $3.6MM
[]%
Class M-P(1) B+/B+/B (HIGH) TO NR $21.8MM
[]%
NR=Not Rated
(1) Offered privately pursuant to Rule 144A and Regulation S.
THE FOREGOING TERMS AND STRUCTURAL CHARACTERISTICS OF THE CERTIFICATES ARE IN
ALL RESPECTS SUBJECT TO THE MORE DETAILED DESCRIPTION THEREOF IN THE PROSPECTUS
AND PROSPECTUS SUPPLEMENT.
This information has been prepared solely for information purposes and is not an
offer to buy or sell or solicitation of an offer to buy or sell any security or
instrument or to participate in any trading strategy. No representation or
warranty can be given with respect to the accuracy or completeness of the
information, or that any future offer of securities will conform to the terms
hereof. If any such offer of securities is made, it will be made pursuant to a
definitive Prospectus and Prospectus Supplement, prepared by the Depositor,
which will contain material information not contained herein and to which
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded in its entirety by such Prospectus and
Prospectus Supplement. ANY DECISION TO INVEST IN SUCH SECURITIES SHOULD BE MADE
ONLY AFTER REVIEWING SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT. Deutsche Bank
Securities Inc., ABN AMRO Incorporated, Banc of America Securities LLC,
Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriters") disclaim any and all liability relating to
this information, including without limitation, any express or implied
representations or warranties for, statements contained in, and omissions from,
this information. This information should only be considered after reading the
Statement Regarding Assumptions as to Securities, Pricing Estimates, and Other
Information (the "Statement") which is attached. Do not use or rely on this
information if you have not received the Statement. You may obtain a copy of the
Statement from your sales representative.
B-5
$900,610,000 (APPROXIMATE)
COMM 2004-LNB2
- --------------------------------------------------------------------------------
III. FULL COLLATERAL CHARACTERISTICS
CUT-OFF DATE BALANCE ($)
- --------------------------------------------------------------------------------
NO. OF AGGREGATE
MORTGAGE CUT-OFF DATE % OF
LOANS BALANCE ($) POOL
- --------------------------------------------------------------------------------
997,050-1,999,999 20 29,794,752 3.08
2,000,000-2,999,999 14 35,810,549 3.70
3,000,000-3,999,999 7 24,396,874 2.52
4,000,000-5,999,999 19 95,322,307 9.84
7,000,000-9,999,999 9 76,279,489 7.88
10,000,000-14,999,999 7 90,109,216 9.30
15,000,000-29,999,999 9 195,097,783 20.15
30,000,000-49,999,999 2 65,000,000 6.71
50,000,000-69,999,999 2 124,087,072 12.81
70,000,000--147,500,000 2 232,500,000 24.01
- --------------------------------------------------------------------------------
TOTAL 91 968,398,042 100.00
- --------------------------------------------------------------------------------
Min: 997,050 Max: 147,500,000 Average: 10,641,737
- --------------------------------------------------------------------------------
STATE
- --------------------------------------------------------------------------------
NO. OF AGGREGATE
MORTGAGE CUT-OFF DATE % OF
PROPERTIES BALANCE ($) POOL
- --------------------------------------------------------------------------------
Virginia 10 159,071,194 16.43
District Of Columbia 2 80,800,000 8.34
Florida 39 75,778,462 7.83
North Carolina 17 69,505,715 7.18
New York 5 67,483,123 6.97
Texas 29 67,190,981 6.94
Utah 3 61,433,164 6.34
California 54 59,552,370 6.15
Nevada 3 55,990,140 5.78
Illinois 4 43,464,733 4.49
Washington 17 38,251,788 3.95
Michigan 6 31,882,812 3.29
Pennsylvania 2 26,468,145 2.73
Other States (a) 64 131,525,415 13.58
- --------------------------------------------------------------------------------
TOTAL 255 968,398,042 100.00
- --------------------------------------------------------------------------------
(a) Includes 20 states.
PROPERTY TYPE
- --------------------------------------------------------------------------------
NO. OF AGGREGATE
MORTGAGE CUT-OFF DATE % OF
PROPERTIES BALANCE ($) POOL
- --------------------------------------------------------------------------------
Office 139 334,850,585 34.58
Retail 13 306,331,612 31.63
ANCHORED 11 297,351,278 30.71
SHADOW ANCHORED 2 8,980,334 0.93
Multifamily 62 304,251,002 31.42
MULTIFAMILY 41 255,784,941 26.41
MOBILE HOME PARK 21 48,466,061 5.00
Mixed Use 39 14,666,006 1.51
Industrial 2 8,298,837 0.86
- --------------------------------------------------------------------------------
TOTAL 255 968,398,042 100.00
- --------------------------------------------------------------------------------
MORTGAGE RATE (%)
- --------------------------------------------------------------------------------
NO. OF AGGREGATE
MORTGAGE CUT-OFF DATE % OF
LOANS BALANCE ($) POOL
- --------------------------------------------------------------------------------
4.930%-4.999% 2 40,911,302 4.22
5.000%-5.249% 6 214,369,071 22.14
5.250%-5.449% 10 93,133,367 9.62
5.450%-5.749% 18 292,331,144 30.19
5.750%-5.999% 31 192,917,550 19.92
6.000%-6.449% 23 132,000,655 13.63
6.450%-6.780% 1 2,734,953 0.28
- --------------------------------------------------------------------------------
TOTAL 91 968,398,042 100.00
- --------------------------------------------------------------------------------
Min: 4.930 Max: 6.780 Average: 5.583
- --------------------------------------------------------------------------------
ORIGINAL TERM TO STATED MATURITY (MOS)(a)
- --------------------------------------------------------------------------------
NO. OF AGGREGATE
MORTGAGE CUT-OFF DATE % OF
LOANS BALANCE ($) POOL
- --------------------------------------------------------------------------------
60 14 164,713,874 17.01
61-80 1 9,968,304 1.03
81-100 9 101,253,629 10.46
101-120 62 583,612,185 60.27
121 -180 4 106,115,098 10.96
281-293 1 2,734,953 0.28
- --------------------------------------------------------------------------------
TOTAL 91 968,398,042 100.00
- --------------------------------------------------------------------------------
Min: 60 Max: 293 Average: 112
- --------------------------------------------------------------------------------
(a) Calculated with respect to the anticipated repayment date for one mortgage
loan, representing 0.48% of outstanding pool balance as of the cut-off
date.
REMAINING TERM TO STATED MATURITY (MOS)(a)
- --------------------------------------------------------------------------------
NO. OF AGGREGATE
MORTGAGE CUT-OFF DATE % OF
LOANS BALANCE ($) POOL
- --------------------------------------------------------------------------------
55-59 14 164,713,874 17.01
60-84 10 111,221,933 11.49
85-114 3 62,020,698 6.40
115-119 55 350,566,035 36.20
120-139 5 191,000,000 19.72
140-199 3 86,140,549 8.90
200-289 1 2,734,953 0.28
- --------------------------------------------------------------------------------
TOTAL 91 968,398,042 100.00
- --------------------------------------------------------------------------------
Min: 55 Max: 289 Average: 109
- --------------------------------------------------------------------------------
(a) Calculated with respect to the anticipated repayment date for one mortgage
loan, representing 0.48% of outstanding pool balance as of the cut-off
date.
LOANS WITH RESERVE REQUIREMENTS(a)
- --------------------------------------------------------------------------------
NO. OF AGGREGATE
MORTGAGE CUT-OFF DATE % OF
LOANS BALANCE ($) POOL
- --------------------------------------------------------------------------------
Replacement 84 680,800,845 70.30
TI/LC(b) 28 432,250,881 65.08
Insurance 86 755,142,164 77.98
Tax 85 751,801,883 77.63
Engineering 40 575,003,076 59.38
Other 25 391,812,661 40.46
- --------------------------------------------------------------------------------
(a) Includes upfront or on-going reserves.
(b) Based only on portion of mortgage pool secured by retail, office and
industrial properties.
CUT-OFF DATE LOAN-TO-VALUE RATIO (%)(a)(b)
- --------------------------------------------------------------------------------
NO. OF AGGREGATE
MORTGAGE CUT-OFF DATE % OF
LOANS BALANCE ($) POOL
- --------------------------------------------------------------------------------
25.59%- 29.99% 1 1,995,879 0.21
30.00%-39.99% 4 8,431,068 0.87
40.00%-49.99% 1 85,000,000 8.78
50.00%-59.99% 2 152,518,559 15.75
60.00%-69.99% 19 263,890,873 27.25
70.00%-74.99% 28 215,617,833 22.27
75.00%--80.00% 36 240,943,830 24.88
- --------------------------------------------------------------------------------
TOTAL 91 968,398,042 100.00
- --------------------------------------------------------------------------------
Min: 25.59 Max: 80.00 Average: 66.72
- --------------------------------------------------------------------------------
(a) Calculated on loan balances after netting out a holdback amount for four
loans (6.47% of the outstanding pool balance as of the cut-off date).
(b) In the case of three mortgage loans with one or more companion loans that
are not included in the Trust, calculated only with respect to the mortgage
loans included in the Trust and the mortgage loans that are not included in
the Trust but are PARI PASSU in right of payment with the mortgage loans
included in the Trust.
LOAN-TO-VALUE RATIO AT MATURITY (%)(a)
- --------------------------------------------------------------------------------
NO. OF AGGREGATE
MORTGAGE CUT-OFF DATE % OF
LOANS BALANCE ($) POOL
- --------------------------------------------------------------------------------
0.00%-29.99% 3 6,177,878 0.64
30.00%-39.99% 4 91,984,022 9.50
40.00%-49.99% 1 147,500,000 15.23
50.00%-59.99% 24 223,630,819 23.09
60.00%-69.99% 48 373,767,119 38.60
70.00%-75.30% 11 125,338,205 12.94
- --------------------------------------------------------------------------------
TOTAL 91 968,398,042 100.00
- --------------------------------------------------------------------------------
Min: 0.00 Max: 75.30 Average: 58.01
- --------------------------------------------------------------------------------
(a) In the case of three mortgage loans with one or more companion loans that
are not included in the Trust, calculated only with respect to the mortgage
loans included in the Trust and the mortgage loans that are not included in
the Trust but are PARI PASSU in right of payment with the mortgage loans
included in the Trust.
DEBT SERVICE COVERAGE RATIOS (X)(a)(b)
- --------------------------------------------------------------------------------
NO. OF AGGREGATE
MORTGAGE CUT-OFF DATE % OF
LOANS BALANCE ($) POOL
- --------------------------------------------------------------------------------
1.16x+-1.19x 1 2,734,953 0.28
1.20x+-1.29x 14 202,592,819 20.92
1.30x+-1.39x 31 267,008,694 27.57
1.40x+-1.49x 22 117,777,101 12.16
1.50x+-1.59x 9 49,619,052 5.12
1.60x+-1.74x 6 80,109,880 8.27
1.75x+-1.99x 3 238,128,597 24.59
2.00x+-2.49x 1 997,050 0.10
2.50x+-4.19x 4 9,429,897 0.97
- --------------------------------------------------------------------------------
TOTAL 91 968,398,042 100.00
- --------------------------------------------------------------------------------
Min: 1.16 Max: 4.19 Average: 1.53
- --------------------------------------------------------------------------------
(a) Calculated on loan balances after netting out a holdback amount for four
loans (6.47% of the outstanding pool balance as of the cut-off date).
(b) In the case of three mortgage loans with one or more companion loans that
are not included in the Trust, calculated only with respect to the mortgage
loans included in the Trust and the mortgage loans that are not included in
the Trust but are PARI PASSU in right of payment with the mortgage loans
included in the Trust.
All numerical information concerning the mortgage loans is approximate. All
weighted average information regarding the mortgage loans reflects the weighting
of the mortgage loans based on their outstanding principal balances as of the
Cut-off Date. State and Property Type tables reflect allocated loan amounts in
the case of mortgage loans secured by multiple properties. Sum of columns may
not match "Total" due to rounding.
This information has been prepared solely for information purposes and is not an
offer to buy or sell or solicitation of an offer to buy or sell any security or
instrument or to participate in any trading strategy. No representation or
warranty can be given with respect to the accuracy or completeness of the
information, or that any future offer of securities will conform to the terms
hereof. If any such offer of securities is made, it will be made pursuant to a
definitive Prospectus and Prospectus Supplement, prepared by the Depositor,
which will contain material information not contained herein and to which
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded in its entirety by such Prospectus and
Prospectus Supplement. ANY DECISION TO INVEST IN SUCH SECURITIES SHOULD BE MADE
ONLY AFTER REVIEWING SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT. Deutsche Bank
Securities Inc., ABN AMRO Incorporated, Banc of America Securities LLC,
Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriters") disclaim any and all liability relating to
this information, including without limitation, any express or implied
representations or warranties for, statements contained in, and omissions from,
this information. This information should only be considered after reading the
Statement Regarding Assumptions as to Securities, Pricing Estimates, and Other
Information (the "Statement") which is attached. Do not use or rely on this
information if you have not received the Statement. You may obtain a copy of the
Statement from your sales representative.
B-6
$900,610,000 (APPROXIMATE)
COMM 2004-LNB2
- --------------------------------------------------------------------------------
IV. LARGE LOAN DESCRIPTIONS
TEN LARGEST LOANS
PROPERTY CUT-OFF DATE
NO. PROPERTY NAME CITY STATE TYPE BALANCE % OF POOL UNITS/SF
- ------------------------------------------------------------------------------------------------------------------------------
1. Tysons Corner Center McLean VA Super Regional Mall $147,500,000 15.23% 1,554,116
- ------------------------------------------------------------------------------------------------------------------------------
2. AFR/Bank of America Portfolio Various Various Office 85,000,000 8.78% 7,774,995
- ------------------------------------------------------------------------------------------------------------------------------
3. The Watergate/
600 New Hampshire Avenue Washington DC CBD Office 68,500,000 7.07% 281,898
- ------------------------------------------------------------------------------------------------------------------------------
4. Meadows Mall Las Vegas NV Regional Mall 55,587,072 5.74% 312,210
- ------------------------------------------------------------------------------------------------------------------------------
5. Fairstone at Riverview Taylorsville UT Multifamily 35,000,000 3.61% 492
- ------------------------------------------------------------------------------------------------------------------------------
6. 321 West 44th Street New York NY CBD Office 30,000,000 3.10% 212,364
- ------------------------------------------------------------------------------------------------------------------------------
7. Wenatchee Valley Mall East Wenatchee WA Regional Mall 26,000,000 2.68% 340,406
8. Shoppes at Grand Prairie Peoria IL Retail 25,974,625 2.68% 154,539
- ------------------------------------------------------------------------------------------------------------------------------
9. Wiener Portfolio III Bronx NY Multifamily 23,911,302 2.47% 459
- ------------------------------------------------------------------------------------------------------------------------------
10. 1401 Enclave Parkway Houston TX Office 23,549,204 2.43% 207,435
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL/WEIGHTED AVERAGES $521,022,203 53.80%
- ------------------------------------------------------------------------------------------------------------------------------
LOAN PER CUT-OFF BALLOON
NO. PROPERTY NAME UNIT/SF DSCR(1) DATE LTV (1) LTV(1)
- --------------------------------------------------------------------------------------
1. Tysons Corner Center 218.77 1.88x 52.31% 45.14%
- --------------------------------------------------------------------------------------
2. AFR/Bank of America Portfolio 43.73 1.92x 47.24% 39.64%
- -------------------------------------------------------------------------------------
3. The Watergate/
600 New Hampshire Avenue 243.00 1.31x 64.32% 52.01%
- --------------------------------------------------------------------------------------
4. Meadows Mall 356.09 1.74x 63.97% 53.76%
- --------------------------------------------------------------------------------------
5. Fairstone at Riverview 71,138.21 1.25x 79.37% 74.76%
- --------------------------------------------------------------------------------------
6. 321 West 44th Street 141.27 1.32x 74.63% 66.00%
- --------------------------------------------------------------------------------------
7. Wenatchee Valley Mall 76.38 1.49x 68.42% 62.46%
8. Shoppes at Grand Prairie 168.08 1.28x 73.71% 73.25%
- --------------------------------------------------------------------------------------
9. Wiener Portfolio III 52,094.34 1.21x 73.35% 67.93%
- --------------------------------------------------------------------------------------
10. 1401 Enclave Parkway 113.53 1.51x 68.06% 63.47%
- --------------------------------------------------------------------------------------
TOTAL/WEIGHTED AVERAGES 1.63X 60.96% 53.40%
- --------------------------------------------------------------------------------------
(1) For purposes of calculating Cut-Off Date LTV Ratio, Balloon LTV Ratio and
DSCR, the loan amount used for the Tysons Corner Center Loan, the AFR/Bank
of America Portfolio Loan and the Meadows Mall Loan is the principal balance
of the Mortgage Loan included in the trust together with their respective
companion loans that are pari passu to the subject Mortgage Loans.
This information has been prepared solely for information purposes and is not an
offer to buy or sell or solicitation of an offer to buy or sell any security or
instrument or to participate in any trading strategy. No representation or
warranty can be given with respect to the accuracy or completeness of the
information, or that any future offer of securities will conform to the terms
hereof. If any such offer of securities is made, it will be made pursuant to a
definitive Prospectus and Prospectus Supplement, prepared by the Depositor,
which will contain material information not contained herein and to which
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded in its entirety by such Prospectus and
Prospectus Supplement. ANY DECISION TO INVEST IN SUCH SECURITIES SHOULD BE MADE
ONLY AFTER REVIEWING SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT. Deutsche Bank
Securities Inc., ABN AMRO Incorporated, Banc of America Securities LLC,
Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriters") disclaim any and all liability relating to
this information, including without limitation, any express or implied
representations or warranties for, statements contained in, and omissions from,
this information. This information should only be considered after reading the
Statement Regarding Assumptions as to Securities, Pricing Estimates, and Other
Information (the "Statement") which is attached. Do not use or rely on this
information if you have not received the Statement. You may obtain a copy of the
Statement from your sales representative.
B-7
$900,610,000 (APPROXIMATE)
COMM 2004-LNB2
- --------------------------------------------------------------------------------
V. COLLATERAL DESCRIPTION
PARI PASSU AND SUBORDINATE COMPANION LOANS(1)
NO. PROPERTY NAME A-NOTE BALANCES TRANSACTION SERVICER(2) LOAN SPECIAL SERVICER(3)
- -----------------------------------------------------------------------------------------------------------------------------------
1. Tysons Corner Center $147,500,000 COMM 2004-LNB2 GMAC Commercial Lennar Partners, Inc.*
Mortgage Corporation*
$95,000,000 TBD -- --
$35,000,000 TBD -- --
$62,500,000 TBD -- --
- -----------------------------------------------------------------------------------------------------------------------------------
2. AFR/Bank of America Portfolio $100,000,000 GMAC 2003-C3 GMAC Commercial Midland Loan Services, Inc.*
Mortgage Corporation*
$75,000,000 GECMC 2004-C1 --
$85,000,000 COMM 2004-LNB2 --
$80,000,000 TBD -- --
- -----------------------------------------------------------------------------------------------------------------------------------
3. Meadows Mall $55,587,072 Wachovia 2003-C9 Wachovia Bank, Lennar Partners, Inc.*
$55,587,072 COMM 2004-LNB2 National Association*
- -----------------------------------------------------------------------------------------------------------------------------------
NO. PROPERTY NAME B-NOTE BALANCE
- --------------------------------------------------------------
1. Tysons Corner Center
None
- ---------------------------------------------------------------
2. AFR/Bank of America Portfolio
$100,000,000
(BBB-/Baa3/BBB-
by S/M/F)
- ---------------------------------------------------------------
3. Meadows Mall
None
- ---------------------------------------------------------------
* Denotes lead servicer or special servicer, as applicable.
- -------------------
(1) Does not include one mortgage loan with a subordinate companion loan:
Walgreens-Riverside ($4,637,107 mortgage loan and $560,811 subordinate
loan).
(2) The AFR/Bank of America Portfolio Loan will initially be serviced by GMAC
Commercial Mortgage Corporation, pursuant to a separate pooling and
servicing agreement. The Meadows Mall Loan will initially be serviced by
Wachovia Bank National Association, pursuant to a separate pooling and
servicing agreement.
(3) The AFR/Bank of America Portfolio Loan will initially be specially serviced
by Midland Loan Services, Inc., pursuant to a separate pooling and servicing
agreement. The Meadows Mall Loan will initially be specially serviced by
Lennar Partners, Inc., pursuant to a separate pooling and servicing
agreement.
This information has been prepared solely for information purposes and is not an
offer to buy or sell or solicitation of an offer to buy or sell any security or
instrument or to participate in any trading strategy. No representation or
warranty can be given with respect to the accuracy or completeness of the
information, or that any future offer of securities will conform to the terms
hereof. If any such offer of securities is made, it will be made pursuant to a
definitive Prospectus and Prospectus Supplement, prepared by the Depositor,
which will contain material information not contained herein and to which
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded in its entirety by such Prospectus and
Prospectus Supplement. ANY DECISION TO INVEST IN SUCH SECURITIES SHOULD BE MADE
ONLY AFTER REVIEWING SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT. Deutsche Bank
Securities Inc., ABN AMRO Incorporated, Banc of America Securities LLC,
Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriters") disclaim any and all liability relating to
this information, including without limitation, any express or implied
representations or warranties for, statements contained in, and omissions from,
this information. This information should only be considered after reading the
Statement Regarding Assumptions as to Securities, Pricing Estimates, and Other
Information (the "Statement") which is attached. Do not use or rely on this
information if you have not received the Statement. You may obtain a copy of the
Statement from your sales representative.
B-8
[THIS PAGE INTENTIONALLY LEFT BLANK]
B-9
$900,610,800 (APPROXIMATE)
COMM 2004-LNB2
- --------------------------------------------------------------------------------
COLLATERAL TERM SHEET BALANCE $147,500,000
TYSONS CORNER CENTER DSCR: 1.88x
LTV: 52.31%
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
This information has been prepared solely for information purposes and is not an
offer to buy or sell or solicitation of an offer to buy or sell any security or
instrument or to participate in any trading strategy. No representation or
warranty can be given with respect to the accuracy or completeness of the
information, or that any future offer of securities will conform to the terms
hereof. If any such offer of securities is made, it will be made pursuant to a
definitive Prospectus and Prospectus Supplement, prepared by the Depositor,
which will contain material information not contained herein and to which
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded in its entirety by such Prospectus and
Prospectus Supplement. ANY DECISION TO INVEST IN SUCH SECURITIES SHOULD BE MADE
ONLY AFTER REVIEWING SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT. Deutsche Bank
Securities Inc., ABN AMRO Incorporated, Banc of America Securities LLC,
Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriters") disclaim any and all liability relating to
this information, including without limitation, any express or implied
representations or warranties for, statements contained in, and omissions from,
this information. This information should only be considered after reading the
Statement Regarding Assumptions as to Securities, Pricing Estimates, and Other
Information (the "Statement") which is attached. Do not use or rely on this
information if you have not received the Statement. You may obtain a copy of the
Statement from your sales representative.
B-10
$900,610,800 (APPROXIMATE)
COMM 2004-LNB2
- --------------------------------------------------------------------------------
COLLATERAL TERM SHEET BALANCE $147,500,000
TYSONS CORNER CENTER DSCR: 1.88x
LTV: 52.31%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MORTGAGE LOAN INFORMATION
- --------------------------------------------------------------------------------
LOAN SELLER: GACC
LOAN PURPOSE: Refinance
SHADOW RATING
(S&P/FITCH/DBRS): AAA/AA/AAA
ORIGINAL TMA BALANCE: $147,500,000(1)
CUT-OFF TMA BALANCE: $147,500,000(1)
% BY INITIAL UPB: 15.23%
INTEREST RATE: 5.2240%
PAYMENT DATE: 1st of each month
FIRST PAYMENT DATE: April 1, 2004
MATURITY DATE: March 1, 2014
AMORTIZATION: Interest only through the payment date occurring on
March 1, 2006, and thereafter monthly amortization
on a 30-year schedule.
CALL PROTECTION: Lockout until the earlier of: a) 24 months from the
last securitization of the A-1, A-2, A-3 and A-4
notes to occur, or b) 36 months from origination,
then defeasance is permitted. On and after
September 1, 2013, prepayment can be made without
penalty.
SPONSOR: Wilmorite Properties, Inc. and the Alaska Permanent
Fund Corporation
BORROWERS: Tysons Corner Holdings LLC and Tysons Corner
Property Holdings LLC
PARI PASSU DEBT: $192,500,000(1)
SUBORDINATE DEBT: None
LOCKBOX: Hard
INITIAL RESERVES: Engineering: $478,664
MONTHLY RESERVES(2): Tax: $489,126
Insurance: $83,507
TI/LC $56,562
Replacement: $14,140
Ground Rent: $101,000
- --------------------------------------------------------------------------------
1. The subject $147,500,000 represents the A-1 note in a $340,000,000 loan. The
A-2, A-3 and A-4 notes are pari passu and are not included in the Trust. All
numbers under the heading "Financial Information" are based on the combined
A-1, A-2, A-3 and A-4 notes.
2. Monthly reserves will only be collected in any period following a quarterly
test on which the DSCR declines below 1.45x and ending on the last day of
the third consecutive month on which the DSCR equals or exceeds 1.45x.
- --------------------------------------------------------------------------------
FINANCIAL INFORMATION(1)
- --------------------------------------------------------------------------------
LOAN BALANCE/SQ. FT.: $218.77
BALLOON BALANCE/SQ. FT.: $188.80
LTV: 52.31%
BALLOON LTV: 45.14%
DSCR: 1.88x
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
SINGLE ASSET/PORTFOLIO: Single Asset
PROPERTY TYPE: Super Regional Mall
COLLATERAL: Fee simple and leasehold interests in a
super-regional mall
LOCATION: McLean, VA
YEAR BUILT/RENOVATED: 1968, 1988/2003
MORTGAGED COLLATERAL SF: 1,554,116 sq. ft.
TOTAL MALL SF: 1,873,616 sq. ft.
PROPERTY MANAGEMENT: An affiliate of the Borrowers
OVERALL MALL
OCCUPANCY (9/1/03): 98.1%(3)
UNDERWRITTEN
NET CASH FLOW: $42,224,855
APPRAISED VALUE: $650,000,000
APPRAISAL DATE: August 25, 2003
- --------------------------------------------------------------------------------
3. Occupancy calculated including the four anchors and excluding the vacant JC
Penney building, which is part of the contemplated expansion plan.
This information has been prepared solely for information purposes and is not an
offer to buy or sell or solicitation of an offer to buy or sell any security or
instrument or to participate in any trading strategy. No representation or
warranty can be given with respect to the accuracy or completeness of the
information, or that any future offer of securities will conform to the terms
hereof. If any such offer of securities is made, it will be made pursuant to a
definitive Prospectus and Prospectus Supplement, prepared by the Depositor,
which will contain material information not contained herein and to which
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded in its entirety by such Prospectus and
Prospectus Supplement. ANY DECISION TO INVEST IN SUCH SECURITIES SHOULD BE MADE
ONLY AFTER REVIEWING SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT. Deutsche Bank
Securities Inc., ABN AMRO Incorporated, Banc of America Securities LLC,
Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriters") disclaim any and all liability relating to
this information, including without limitation, any express or implied
representations or warranties for, statements contained in, and omissions from,
this information. This information should only be considered after reading the
Statement Regarding Assumptions as to Securities, Pricing Estimates, and Other
Information (the "Statement") which is attached. Do not use or rely on this
information if you have not received the Statement. You may obtain a copy of the
Statement from your sales representative.
B-11
$900,610,800 (APPROXIMATE)
COMM 2004-LNB2
- --------------------------------------------------------------------------------
COLLATERAL TERM SHEET BALANCE $147,500,000
TYSONS CORNER CENTER DSCR: 1.88x
LTV: 52.31%
- --------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
TENANTS RATINGS (S/M/F) LEASE AREA (SF) % OF TOTAL GLA LEASE EXPIRATION 2002 TOTAL SALES 2002 SALES PSF
- ----------------------------------------------------------------------------------------------------------------------------------
Bloomingdale's BBB+/Baa1/BBB+(4) 255,888 13.7% 7/22/2008 $56.8MM $222
- ----------------------------------------------------------------------------------------------------------------------------------
Hecht's BBB+/Baa1/BBB+(5) 237,076 12.7% 7/24/2008 $86.2MM $364
- ----------------------------------------------------------------------------------------------------------------------------------
Nordstrom(6) A-/Baa1/- 200,000 10.7% 4/15/2025 $104.4MM $522
- ----------------------------------------------------------------------------------------------------------------------------------
Lord & Taylor(7) BBB+/Baa1/BBB+(5) 119,500 6.4% 1/31/2006 $28.0MM $234
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL/WA 812,464 43.4% $275.4MM $339
- ----------------------------------------------------------------------------------------------------------------------------------
4. Ratings of parent company, Federated Department Stores, Inc. (Federated
Department Stores, Inc. has not guaranteed the lease).
5. Ratings of parent company, The May Department Stores Co.
6. Nordstrom operates under a ground lease, which expires April 15, 2025, with
12 five-year renewal options. 7. Lord & Taylor operates under a ground
lease, which expires January 31, 2006, with 10 five-year renewal options.
- --------------------------------------------------------------------------------
2002 SALES PSF OCC. COST AS % OF SALES
- --------------------------------------------------------------------------------
IN-LINE TENANTS $597 13.8%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
MAJOR IN-LINE TENANTS
- --------------------------------------------------------------------------------------------------------------------------------
TENANTS RATINGS (S/M/F) LEASE AREA (SF) % OF TOTAL GLA LEASE EXPIRATION NET RENT 2002 SALES/SF
- --------------------------------------------------------------------------------------------------------------------------------
LL Bean -/-/- 75,778 4.0% 5/31/2020 $45.63 $293
- --------------------------------------------------------------------------------------------------------------------------------
Circuit City -/-/- 28,000 1.5% 1/31/2005 $20.28 $998
- --------------------------------------------------------------------------------------------------------------------------------
H & M -/-/- 15,880 0.8% 4/30/2013 $27.83 N/A
- --------------------------------------------------------------------------------------------------------------------------------
Foot Locker, Lady's Kid's -/-/- 14,471 0.8% 1/31/2010 $32.00 $298
- --------------------------------------------------------------------------------------------------------------------------------
The Gap(8) BB+/Ba3/BB-(8) 14,000 0.7% 9/30/2007 $56.00 $501
- --------------------------------------------------------------------------------------------------------------------------------
Banana Republic(8) BB+/Ba3/BB-(8) 13,116 0.7% 5/31/2005 $58.25 $730
- ---------------------------------------------------------------------------------------------------------------------------
Restoration Hardware -/-/- 12,889 0.7% 1/15/2010 $35.00 $466
- --------------------------------------------------------------------------------------------------------------------------------
Express9 BBB+/Baa1/-(9) 12,081 0.6% 1/31/2014 $46.00 $342
- --------------------------------------------------------------------------------------------------------------------------------
Abercrombie & Fitch -/-/- 10,828 0.6% 1/31/2006 $40.00 $398
- --------------------------------------------------------------------------------------------------------------------------------
The Limited(9) BBB+/Baa1/-(9) 10,662 0.6% 1/31/2006 $42.50 $1,091
- --------------------------------------------------------------------------------------------------------------------------------
Talbots -/-/- 10,567 0.6% 1/31/2015 $56.24 $649
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL/WEIGHTED AVERAGE 218,272 11.6% $41.07 $514(10)
- --------------------------------------------------------------------------------------------------------------------------------
8. Ratings of parent company, The Gap Inc.
9. Ratings of parent company, Limited Brands.
10. Weighted average calculation does not include H&M.
This information has been prepared solely for information purposes and is not an
offer to buy or sell or solicitation of an offer to buy or sell any security or
instrument or to participate in any trading strategy. No representation or
warranty can be given with respect to the accuracy or completeness of the
information, or that any future offer of securities will conform to the terms
hereof. If any such offer of securities is made, it will be made pursuant to a
definitive Prospectus and Prospectus Supplement, prepared by the Depositor,
which will contain material information not contained herein and to which
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded in its entirety by such Prospectus and
Prospectus Supplement. ANY DECISION TO INVEST IN SUCH SECURITIES SHOULD BE MADE
ONLY AFTER REVIEWING SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT. Deutsche Bank
Securities Inc., ABN AMRO Incorporated, Banc of America Securities LLC,
Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriters") disclaim any and all liability relating to
this information, including without limitation, any express or implied
representations or warranties for, statements contained in, and omissions from,
this information. This information should only be considered after reading the
Statement Regarding Assumptions as to Securities, Pricing Estimates, and Other
Information (the "Statement") which is attached. Do not use or rely on this
information if you have not received the Statement. You may obtain a copy of the
Statement from your sales representative.
B-12
$900,610,800 (APPROXIMATE)
COMM 2004-LNB2
- --------------------------------------------------------------------------------
COLLATERAL TERM SHEET BALANCE $147,500,000
TYSONS CORNER CENTER DSCR: 1.88x
LTV: 52.31%
- --------------------------------------------------------------------------------
THE LOAN. The Tysons Corner Center loan is secured by a first mortgage on
1,554,116 sq. ft. of retail space located in McLean, Virginia. The collateral
comprises the major portion of the larger 1,873,616 sq. ft. Tysons Corner Center
super regional mall. While the mortgaged property includes the underlying fee
interest in the land on which the Nordstrom and Lord & Taylor stores are
located, those two anchors own their own stores.
The whole loan is a $340 million loan that is shadow rated AAA/AA/AAA by S&P,
Fitch and DBRS, respectively. The whole loan is comprised of four pari passu
senior notes. The A-2, A-3 and A-4 notes will not be included in the COMM
2004-LNB2 trust. Based on a $650MM appraised value, there is $310MM of implied
equity in the property.
THE BORROWERS. Each borrower, Tysons Corner Property Holdings LLC and Tysons
Corner Holdings LLC, is a single-purpose, bankruptcy-remote entity for which a
non-consolidation opinion was obtained. The sponsorship of the loan is a joint
venture between Wilmorite Properties, Inc. (50%) and the Alaska Permanent Fund
Corporation (50%).
WILMORITE PROPERTIES, INC. (WILMORITE), a leading commercial real estate
development and management company, is one of the largest shopping center
owners and managers in the United States. Organized as a private REIT, the
company, through its operating partnership, Wilmorite Holdings, L.P., owns
and manages fourteen regional enclosed shopping malls and two open-air
regional shopping centers. In total, the portfolio encompasses more than 15
million square feet of retail space and is located in eight states.
Additionally, Wilmorite, Inc. is an affiliated construction management
company that is one of the largest construction companies in upstate New
York. J.P. Wilmot founded the company in 1950 and during the last 50 plus
years the company has developed retail, office, hotel and residential real
estate. In 1967, Wilmorite built Greece Ridge Mall, one of the first enclosed
regional malls in New York State. Since that time, Wilmorite's core business
has become regional mall development and management. Shopping Center World
ranks Wilmorite in the top 30 of retail owners and managers in the United
States. Wilmorite also has been involved with many other non-retail projects
such as the development and construction of the Rochester Convention Center
and Hyatt Hotel, and the Monroe County International Airport. In the last ten
years, Wilmorite has developed over 8 million square feet of commercial real
estate.
Wilmorite is a repeat sponsor of a previous Deutsche Bank borrower.
The ALASKA PERMANENT FUND CORPORATION is the manager of a $25 billion fund
that was established as a public trust in 1976 by a voter-approved amendment
to the Alaska Constitution. The fund's portfolio is comprised of 53% equity,
37% fixed income and 10% real estate. A six member, governor-appointed board
of trustees is responsible for managing the corporation. The fund's real
estate portfolio consists of 58 properties and also includes a portfolio of
REIT stocks. Of the approximately $2.2 billion real estate fund, 65% is
comprised of direct investments in real estate properties. The fund is
diversified across four property types: 24% office, 17% retail, 16%
residential and 8% industrial. Additionally, the properties are diversified
geographically throughout the East, West, Mid-West and Southern regions of
the United States, with two properties located in Alaska.
THE PROPERTY. The Tysons Corner Center loan collateral encompasses 1,554,116 sq.
ft. of retail space, consisting of the major portion of a 1,837,616 sq. ft.
super-regional mall. Located in McLean, Virginia and originally constructed in
1968, the property was redeveloped to its current format in 1988. Tysons Corner
Center had comparable in-line sales of $597 psf and total gross sales of over
$615 million in 2002 (placing it in the top 1% of all malls in the U.S.).
Current anchor tenants at Tyson's Corner Center are: Bloomingdale's, Hecht's,
Lord & Taylor and Nordstrom. The Hecht's and Nordstrom department stores are
reportedly among the top performing stores in their respective chains. According
to the appraiser, Tysons Corner Center is considered the region's dominant mall
and its location is highly regarded by retailers and shoppers alike.
Tysons Corner Center was one of the first fully enclosed, climate controlled
shopping centers in the Washington metropolitan area. Due to the tenant mix and
location, the mall draws customers from a multi-state area. Developed by the
Lerner Corporation, the mall originally consisted of 1.2 million square feet.
After a $165 million renovation, which was completed in 1988, the mall now
contains over 1.8 million sq. ft. and has two levels, four department stores,
and more than 210 stores, restaurants, and eateries.
The loan documents for the Tysons Corner Center Loan permit the borrowers to
renovate and expand a portion of the mall at their own expense. Construction of
the project is underway and is expected to be completed on or before the fourth
quarter of 2005. The scope of work approved under the loan documents, if
completed, will include, (a) the redevelopment of the currently vacant JC Penney
building containing approximately 230,000 sq. ft. of gross building area and the
construction of a new attached building containing approximately 288,000 sq. ft.
of gross building area (creating approximately 518,000 sq. feet of gross
building area and approximately 365,000 sq. ft. of gross leasable area on three
levels) and the leasing of such space to a movie theater (approximately 105,000
sq. ft. on level three
This information has been prepared solely for information purposes and is not an
offer to buy or sell or solicitation of an offer to buy or sell any security or
instrument or to participate in any trading strategy. No representation or
warranty can be given with respect to the accuracy or completeness of the
information, or that any future offer of securities will conform to the terms
hereof. If any such offer of securities is made, it will be made pursuant to a
definitive Prospectus and Prospectus Supplement, prepared by the Depositor,
which will contain material information not contained herein and to which
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded in its entirety by such Prospectus and
Prospectus Supplement. ANY DECISION TO INVEST IN SUCH SECURITIES SHOULD BE MADE
ONLY AFTER REVIEWING SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT. Deutsche Bank
Securities Inc., ABN AMRO Incorporated, Banc of America Securities LLC,
Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriters") disclaim any and all liability relating to
this information, including without limitation, any express or implied
representations or warranties for, statements contained in, and omissions from,
this information. This information should only be considered after reading the
Statement Regarding Assumptions as to Securities, Pricing Estimates, and Other
Information (the "Statement") which is attached. Do not use or rely on this
information if you have not received the Statement. You may obtain a copy of the
Statement from your sales representative.
B-13
$900,610,800 (APPROXIMATE)
COMM 2004-LNB2
- --------------------------------------------------------------------------------
COLLATERAL TERM SHEET BALANCE $147,500,000
TYSONS CORNER CENTER DSCR: 1.88x
LTV: 52.31%
- --------------------------------------------------------------------------------
leased to AMC Theatres), food court, restaurants and additional tenants and (b)
the construction of an adjacent multi-level parking garage, having approximately
1,612 parking spaces. The movie theater, if completed, will be the only modern,
stadium-seating theater in the Tysons Corner Center market (based on current
market conditions). According to an AMCEntertainment Inc. (AMEX:AEN) press
release dated May 14, 2003, the theatre complex is targeted for an August 2005
opening and will anchor a new entertainment wing at the Tysons Corner Center,
which also will include restaurants, cafes, a bookstore and other leisure and
retail venues. The expansion and renovation, if completed, will provide
additional collateral for the Tysons Corner Center Loan, but no income from such
space was including in the underwriting of the mortgage loan. The loan documents
do not require a reserve or completion guaranty in connection with the project.
THE APPRAISAL VALUED THE PROPERTY POST-EXPANSION AT $830 MILLION, WHICH WOULD
RESULT IN AN LTV AT THAT TIME OF 41.0% (BASED ON THE INTIAL LOAN AMOUNT).
SIGNIFICANT TENANTS. The subject's in-line occupancy is 95.9%. The mall is
anchored by Bloomingdale's, Hecht's, Nordstrom's and Lord & Taylor and has over
210 in-line tenants. The Bloomingdale's and Hecht's improvements serve as
collateral for the loan; Lord & Taylor and Nordstrom's each occupy their space
under ground leases which expire in 2006 and 2025, respectively, with renewal
options. Overall occupancy including Nordstrom's and Lord & Taylor (and
excluding the vacant JCPenney building) is 98.1%. The mall is also occupied by
many national retailers, including LL Bean, The Gap, Inc., The Limited, Williams
Sonoma, Bombay and A/X Armani Exchange.
BLOOMINGDALE'S, an upscale department store, occupies 255,888 sq. ft. (16.47%
of collateral space) under a lease expiring July 22, 2008 at a fixed rent of
$1.45 psf. Bloomingdale's, a division of Federated Department Stores (NYSE:
FD; Ratings: BBB+, Baa1 and BBB+ by S&P, Moody's and Fitch, respectively),
was founded in 1872 and operates 31 stores in New York, New Jersey,
Massachusetts, Pennsylvania, Maryland, Virginia, Illinois, Minnesota,
Georgia, Nevada, Florida and California.
HECHT'S, a mid-range department store, is owned by parent company, May
Department Stores (NYSE: MAY, Ratings: BBB+, Baa1, BBB+ by S&P, Moody's and
Fitch, respectively). Hecht's occupies 237,076 sq. ft. (15.25% of collateral
space) under a lease expiring July, 2008 (currently in its first 10-year
renewal option, with two, 10-year renewal options outstanding), with a rent
of $1.00 annually plus additional percentage rent.
NORDSTROM INC. (NYSE: JWN, Ratings: A- and Baa1 by S&P and Moody's,
respectively) is one of the nation's leading fashion specialty retailers,
with 148 US stores located in 27 states. Founded in 1901 as a shoe store in
Seattle, Nordstrom operates under the Nordstrom Racks, Faconnable boutiques
and Nordstrom names. Nordstrom's occupies 200,000 sq. ft. (10.67% of total
GLA) and operates under a ground lease which expires April 2025, with 12
five-year renewal options.
LORD & TAYLOR a leading fashion retailer, is owned by parent company, May
Department Stores (NYSE:MAY, Rating BBB+, Baa1, BBB+ by S&P, Moody's and
Fitch, respectively). Lord &Taylor occupies 119,500 sq. Ft. (6.38% of total
GLA) under a ground lease which expires in January 2006, with 10 five-year
renewal options.
THE MARKET. Tysons Corner Center is located in the Tyson's Corner market of
Fairfax county, Virginia. One of the mall's attributes is its accessibility to
the entire Washington D.C. metropolitan area including Montgomery County, MD,
Arlington, Alexandria, Prince William, and Fairfax counties, VA. The mall is
located at the intersection of the two main thoroughfares for northern Virginia,
USRoute 7 (Leesburg Pike) and US Route 123 (Chain Bridge Rd). In addition, the
Capital Beltway (I-495), the major thoroughfare around Washington DC, allows
convenient ingress and egress to the mall as well as other major highways, the
Dulles Tollway and Route I-66.
Fairfax County is one of the most affluent areas in the United States. According
to the appraisal, the average household income within five miles of the subject
was approximately $153,580 (or 123% above the Virginia average of $68,945);
within ten miles it was approximately $125,639 (82% above the Virginia average).
REIS, Inc. shows a total retail inventory for the Tyson's Corner sub-market
(suburban Fairfax county) of 12.5 million square feet at the end of 2003, up
3.5% from 2002. Vacancy rates for this sub-market are low, and have remained
stable at 1.9% at the end of 2003.
The area is well served by transportation systems that offer access to regional
markets and make Fairfax County a central location for businesses that serve
Northern Virginia and D.C. Washington Dulles Airport is less than 15 minutes
away and Washington National Airport is within a 20-minute drive of the
property. The local market area is best known for its two malls, which are the
subject property, and Tyson's Galleria (a fashion center mall owned by General
Growth Properties). In addition, the Tyson's Corner office market is the 13th
largest office market in the country and is considered a prestigious office
location that includes headquarters for Freddie Mac, Gannett/USA Today, Capital
One and others. There are several hotels in the immediate area of the mall
including a Ritz Carlton just across Chain Bridge Rd.
This information has been prepared solely for information purposes and is not an
offer to buy or sell or solicitation of an offer to buy or sell any security or
instrument or to participate in any trading strategy. No representation or
warranty can be given with respect to the accuracy or completeness of the
information, or that any future offer of securities will conform to the terms
hereof. If any such offer of securities is made, it will be made pursuant to a
definitive Prospectus and Prospectus Supplement, prepared by the Depositor,
which will contain material information not contained herein and to which
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded in its entirety by such Prospectus and
Prospectus Supplement. ANY DECISION TO INVEST IN SUCH SECURITIES SHOULD BE MADE
ONLY AFTER REVIEWING SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT. Deutsche Bank
Securities Inc., ABN AMRO Incorporated, Banc of America Securities LLC,
Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriters") disclaim any and all liability relating to
this information, including without limitation, any express or implied
representations or warranties for, statements contained in, and omissions from,
this information. This information should only be considered after reading the
Statement Regarding Assumptions as to Securities, Pricing Estimates, and Other
Information (the "Statement") which is attached. Do not use or rely on this
information if you have not received the Statement. You may obtain a copy of the
Statement from your sales representative.
B-14
$900,610,800 (APPROXIMATE)
COMM 2004-LNB2
- --------------------------------------------------------------------------------
COLLATERAL TERM SHEET BALANCE $147,500,000
TYSONS CORNER CENTER DSCR: 1.88x
LTV: 52.31%
- --------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
DISTANCE FROM COMPLETED/ MALL SHOP IN-LINE SALES
PROPERTY NAME SUBJECT (MILES) RENOVATED TOTAL GLA OCCUPANCY PSF ANCHOR TENANTS
- ---------------------------------------------------------------------------------------------------------------------------------
TYSONS CORNER CENTER N/A 1968 /1988 1,873,616(1) 95.9%(1) $597 BLOOMINGDALES,
HECHT'S, NORDSTROM'S,
LORD & TAYLOR
- ---------------------------------------------------------------------------------------------------------------------------------
The Galleria at Tyson's II < 1 1988 / 1997 810,959 88% N/A Macy's, Neiman Marcus,
Saks Fifth Avenue
- ---------------------------------------------------------------------------------------------------------------------------------
Fashion Centre at Pentagon City 10 1990 821,697 98% $750 Macy's, Nordstrom,
- ---------------------------------------------------------------------------------------------------------------------------------
Montgomery Mall 8 1968 / 1991 1,253,482 >93% N/A Hecht's, Nordstrom,
Sears
- ---------------------------------------------------------------------------------------------------------------------------------
Springfield Mall 11 1973 / 1987 / 1991 1,700,000 >90% $340 JC Penney, Macy's,
Target
- ---------------------------------------------------------------------------------------------------------------------------------
Fair Oaks Mall 10 1980 / 2000 1,584,000 >85% N/A Hecht's, Lord & Taylor,
Sears, JC Penney,
Macy's
- ---------------------------------------------------------------------------------------------------------------------------------
(1)Information for loan collateral.
Source: Appraisal and supplied directly by borrower.
PROPERTY MANAGEMENT. The property is managed by Wilmorite Property Management,
LLC, an affiliate of the borrower. Wilmorite Property Management manages
fourteen regional enclosed shopping malls and two open-air regional shopping
centers. In total, its management portfolio encompasses more than 15 million
square feet of retail space and is located in eight states.
CASH MANAGEMENT. The loan has been structured with a hard, pass-through lockbox.
CURRENT MEZZANINE OR SUBORDINATE INDEBTEDNESS. None.
FUTURE MEZZANINE OR SUBORDINATE INDEBTEDNESS. None permitted.
This information has been prepared solely for information purposes and is not an
offer to buy or sell or solicitation of an offer to buy or sell any security or
instrument or to participate in any trading strategy. No representation or
warranty can be given with respect to the accuracy or completeness of the
information, or that any future offer of securities will conform to the terms
hereof. If any such offer of securities is made, it will be made pursuant to a
definitive Prospectus and Prospectus Supplement, prepared by the Depositor,
which will contain material information not contained herein and to which
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded in its entirety by such Prospectus and
Prospectus Supplement. ANY DECISION TO INVEST IN SUCH SECURITIES SHOULD BE MADE
ONLY AFTER REVIEWING SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT. Deutsche Bank
Securities Inc., ABN AMRO Incorporated, Banc of America Securities LLC,
Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriters") disclaim any and all liability relating to
this information, including without limitation, any express or implied
representations or warranties for, statements contained in, and omissions from,
this information. This information should only be considered after reading the
Statement Regarding Assumptions as to Securities, Pricing Estimates, and Other
Information (the "Statement") which is attached. Do not use or rely on this
information if you have not received the Statement. You may obtain a copy of the
Statement from your sales representative.
B-15
$900,610,800 (APPROXIMATE)
COMM 2004-LNB2
- --------------------------------------------------------------------------------
COLLATERAL TERM SHEET BALANCE $147,500,000
TYSONS CORNER CENTER DSCR: 1.88x
LTV: 52.31%
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
This information has been prepared solely for information purposes and is not an
offer to buy or sell or solicitation of an offer to buy or sell any security or
instrument or to participate in any trading strategy. No representation or
warranty can be given with respect to the accuracy or completeness of the
information, or that any future offer of securities will conform to the terms
hereof. If any such offer of securities is made, it will be made pursuant to a
definitive Prospectus and Prospectus Supplement, prepared by the Depositor,
which will contain material information not contained herein and to which
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded in its entirety by such Prospectus and
Prospectus Supplement. ANY DECISION TO INVEST IN SUCH SECURITIES SHOULD BE MADE
ONLY AFTER REVIEWING SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT. Deutsche Bank
Securities Inc., ABN AMRO Incorporated, Banc of America Securities LLC,
Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriters") disclaim any and all liability relating to
this information, including without limitation, any express or implied
representations or warranties for, statements contained in, and omissions from,
this information. This information should only be considered after reading the
Statement Regarding Assumptions as to Securities, Pricing Estimates, and Other
Information (the "Statement") which is attached. Do not use or rely on this
information if you have not received the Statement. You may obtain a copy of the
Statement from your sales representative.
B-16
[THIS PAGE INTENTIONALLY LEFT BLANK]
B-17
$900,610,800 (APPROXIMATE)
COMM 2004-LNB2
- --------------------------------------------------------------------------------
COLLATERAL TERM SHEET BALANCE $85,500,000
AFR/BANK OF AMERICA PORTFOLIO DSCR: 1.92x
LTV: 47.24%
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
JACKSONVILLE OPERATION CENTER
Jacksonville, FL
RICHLAND
Richland, WA
BANK OF AMERICA CENTER -- CHICAGO
Chicago, IL
ALBANY MAIN OFFICE
Albany, GA
BANK OF AMERICA CENTER -- PHOENIX
Phoenix, AZ
This information has been prepared solely for information purposes and is not an
offer to buy or sell or solicitation of an offer to buy or sell any security or
instrument or to participate in any trading strategy. No representation or
warranty can be given with respect to the accuracy or completeness of the
information, or that any future offer of securities will conform to the terms
hereof. If any such offer of securities is made, it will be made pursuant to a
definitive Prospectus and Prospectus Supplement, prepared by the Depositor,
which will contain material information not contained herein and to which
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded in its entirety by such Prospectus and
Prospectus Supplement. ANY DECISION TO INVEST IN SUCH SECURITIES SHOULD BE MADE
ONLY AFTER REVIEWING SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT. Deutsche Bank
Securities Inc., ABN AMRO Incorporated, Banc of America Securities LLC,
Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriters") disclaim any and all liability relating to
this information, including without limitation, any express or implied
representations or warranties for, statements contained in, and omissions from,
this information. This information should only be considered after reading the
Statement Regarding Assumptions as to Securities, Pricing Estimates, and Other
Information (the "Statement") which is attached. Do not use or rely on this
information if you have not received the Statement. You may obtain a copy of the
Statement from your sales representative.
B-18
$900,610,800 (APPROXIMATE)
COMM 2004-LNB2
- --------------------------------------------------------------------------------
COLLATERAL TERM SHEET BALANCE $85,500,000
AFR/BANK OF AMERICA PORTFOLIO DSCR: 1.92x
LTV: 47.24%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MORTGAGE LOAN INFORMATION
- --------------------------------------------------------------------------------
LOAN SELLER: GACC
LOAN PURPOSE: Acquisition
SHADOW RATING
(S&P/MOODY'S/FITCH/DBRS): A+/A2/AAA/AA
ORIGINAL TMA BALANCE: $85,000,000
CUT-OFF TMA BALANCE: $85,000,000
% BY INITIAL UPB: 8.78%
INTEREST RATE: 5.489117647%
PAYMENT DATE: 1st of each month
FIRST PAYMENT DATE: January 1, 2004
MATURITY DATE: December 1, 2013
AMORTIZATION: Interest only through the payment date occurring
June 1, 2005. Thereafter, monthly amortization on
27.5 year schedule.
CALL PROTECTION: Prior to December 18, 2005, up to 13.6% of the
AFR/Bank of America Portfolio Whole Loan may be
prepaid (subject to a yield maintenance charge) in
connection with the release of certain designated
properties. Defeasance permitted on and after
December 18, 2005. On and after August 1, 2013,
prepayment can be made without penalty.
SPONSORS: American Financial Realty Trust ("AFR")
BORROWER: First States Investors 5000A, LLC
PARI PASSU DEBT: $255,000,000(2)
SUBORDINATE DEBT: $100,000,000(2)
LOCKBOX: Hard
INITIAL RESERVES: Interest: $11,341,191
Tax: $3,201,064
Engineering: $2,184,169
Insurance: $637,117
Environmental: $300,000
TI/LC: $205,965
MONTHLY RESERVES(1): Tax: $318,078
Insurance: $190,905
Replacement: $54,468
TI/LC: $86,110
1. With respect to tenants other than Bank of America (BofA is a NNN lease).
- --------------------------------------------------------------------------------
FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
SENIOR WHOLE
LOAN(2) LOAN(2)
------- -------
LOAN BALANCE/SQ.FT.: $43.73 $56.59
MATURITY BALANCE/SQ.FT.: $36.70 $47.46
LTV: 47.2% 61.1%
BALLOON LTV: 39.6% 51.3%
DSCR: 1.92x(3) 1.49x(3)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
SINGLE ASSET/PORTFOLIO: Portfolio
PROPERTY TYPE: Office buildings, operation centers and bank
branches
COLLATERAL: 138 fee properties, 5 fee and leasehold properties,
9 leasehold properties
LOCATION: The properties are located in 19 states
YEARS BUILT: Various (1875-1997)
YEARS RENOVATED: Various (1960-2003)
TOTAL PORTFOLIO AREA: 7,774,995 sq. ft.
PROPERTY MANAGEMENT: First States Management Corp., LLC and sub-managed
by Trammell Crow, Jones Lang and Lincoln Harris
PORTFOLIO OCCUPANCY
(AS OF 09/15/03): 86.39%
PORTFOLIO UNDERWRITTEN
NET CASH FLOW: $46,007,301(3)
PORTFOLIO APPRAISED VALUE: $719,705,000
APPRAISAL DATES: Various (4/29/03-6/2/03)
- --------------------------------------------------------------------------------
2. The subject $85,000,000 loan represents the A-3 note in a $340,000,000
investment grade senior loan. The A-1, A-2 and A-4 notes are not included in
the trust and are pari passu with the A-3 note, and a B-note (with a cut-off
date balance of $100,000,000) is subordinate to the A notes (the loans
evidenced by the A notes and the B note are collectively referred to as the
"AFR/Bank of America Portfolio Whole Loan"). Numbers under the column
heading "Senior Loan" are based on the combined A notes. Numbers in the
column entitled "Whole Loan" are based on the entire $440,000,000 principal
balance.
3. Does not include income relating to the Shadow Occupied Release Space (as
defined under "The Properties" below). If such income were included, Senior
Loan Underwritten NCF, Senior Loan Underwritten DSCR and Whole Loan DSCR
would be $53,645,125, 2.24x and 1.73x, respectively.
This information has been prepared solely for information purposes and is not an
offer to buy or sell or solicitation of an offer to buy or sell any security or
instrument or to participate in any trading strategy. No representation or
warranty can be given with respect to the accuracy or completeness of the
information, or that any future offer of securities will conform to the terms
hereof. If any such offer of securities is made, it will be made pursuant to a
definitive Prospectus and Prospectus Supplement, prepared by the Depositor,
which will contain material information not contained herein and to which
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded in its entirety by such Prospectus and
Prospectus Supplement. ANY DECISION TO INVEST IN SUCH SECURITIES SHOULD BE MADE
ONLY AFTER REVIEWING SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT. Deutsche Bank
Securities Inc., ABN AMRO Incorporated, Banc of America Securities LLC,
Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriters") disclaim any and all liability relating to
this information, including without limitation, any express or implied
representations or warranties for, statements contained in, and omissions from,
this information. This information should only be considered after reading the
Statement Regarding Assumptions as to Securities, Pricing Estimates, and Other
Information (the "Statement") which is attached. Do not use or rely on this
information if you have not received the Statement. You may obtain a copy of the
Statement from your sales representative.
B-19
$900,610,800 (APPROXIMATE)
COMM 2004-LNB2
- --------------------------------------------------------------------------------
COLLATERAL TERM SHEET BALANCE $85,500,000
AFR/BANK OF AMERICA PORTFOLIO DSCR: 1.92x
LTV: 47.24%
- --------------------------------------------------------------------------------
THE LOAN. The AFR/Bank of America Portfolio Loan is secured by a first mortgage
on a 152 property portfolio of office buildings, operation centers and bank
branches. The subject $85,000,000 loan is one of four pari passu loans totaling
$340,000,000 as of February 1, 2004. The remaining three A-notes, totaling
$255,000,000, as of February 1, 2004 (shadow rated A+, A2, AAA and AA by
S/M/F/DBRS and collectively, the "AFR/Bank of America Portfolio Senior Companion
Loans") have the same interest rate, maturity date and amortization term as the
subject loan and are held outside of the trust. There also exists an investment
grade subordinate B-note of $100,000,000, as of February 1, 2004 (the "AFR/Bank
of America Portfolio B Note", shadow rated BBB-, Baa3, BBB- and BBB- by S&P,
Moody's, Fitch and DBRS, respectively) held outside of the trust. The loan
provides for monthly payments of interest only through June 1, 2005, and
thereafter monthly payments of principal and interest based on a 330-month
schedule. Based on the acquisition cost of the portfolio of $752,868,160, the
borrower has $314,624,356 of hard equity remaining in the deal.
THE BORROWER. The borrower, First States Investors 5000A, LLC, is a
single-purpose, bankruptcy remote entity, for which a non-consolidation opinion
was obtained. The sponsor of the borrower is American Financial Realty Trust,
(NYSE: AFR). AFR, headquartered in Jenkintown, Pennsylvania, is a newly
organized, self-administered and self-managed real estate investment trust
(REIT) led by its CEO, Nick Schorsch and its chairman, Lewis Raineri. AFR is
engaged in the acquisition of corporate owned real estate assets, primarily
multi-tenant office buildings and single-tenant bank branches, leased to
financial institutions. AFR provides property management, brokerage, leasing,
project management and other services to its properties. AFR's high credit
client base includes many of the largest financial institutions in the country
including Bank of America, Wachovia Bank, Citibank, Sovereign Bank, and Key Bank
as well as other large regional institutions. Including transactions under
contract, the company's portfolio consists of 592 office buildings and bank
branches aggregating 16.6 million rentable sq. ft.
As of June 30, 2003, the company had total assets of $2.032 billion of which
total real estate investments consisted of $1.446 billion. AFR had total
liabilities of $948.730 million, total shareholder's equity of $1.050 billion
and minority interest of $33.521 million for the same period.
AFR is a repeat sponsor of a Deutsche Bank borrower.
THE PROPERTIES. The AFR/Bank of America Portfolio properties consist of the
borrower's fee interests in 138 properties, fee and leasehold interests in five
properties and leasehold interest in nine properties, which together contain
7,774,995 sq. ft. of space. The assets consist of 93 office properties, 47 bank
branches and 12 operations centers located across the US. Approximately 87% of
the net cash flow from the properties is from the Bank of America master lease
with the balance from various third party tenants. The assets range in size from
10,067 to 1,027,783 sq. ft. The assets are located in the following 19 states:
Arkansas, Arizona, California, Florida, Georgia, Idaho, Illinois, Kansas,
Maryland, Missouri, Nevada, New Mexico, North Carolina, Oklahoma, South
Carolina, Tennessee, Texas, Virginia and Washington. Approximately 76.8%
(5,972,887 sq. ft.) of the portfolio's space is master leased by Bank of
America, N.A. (rated Aa2, A+, AA and AA by Moody's, S&P, Fitch and DBRS
respectively).
The AFR/Bank of America Portfolio properties are subject to a twenty-year master
lease between the borrower and Bank of America, N.A. The lease commenced on June
30, 2003, and terminates June 30, 2023, subject to six (6) successive renewal
periods of five (5) years each. Of the total 5,972,887 sq. ft. covered under the
master lease, 5,168,907 sq. ft. is deemed "Leased Premises" and is leased to
Bank of America, N.A. for the full 20 year term under the master lease. Bank of
America, N.A. has the right to surrender up to 313,290 square feet of Leased
Premises during the term of the master lease after the first three and one-half
years of the master lease term, subject to certain restrictions. Under the terms
of the master lease, Bank of America, N.A. is required to pay base rent ("Annual
Basic Rent"), plus additional rent consisting of its PRO RATA share of operating
expenses, taxes and insurance, on the Leased Premises.
This information has been prepared solely for information purposes and is not an
offer to buy or sell or solicitation of an offer to buy or sell any security or
instrument or to participate in any trading strategy. No representation or
warranty can be given with respect to the accuracy or completeness of the
information, or that any future offer of securities will conform to the terms
hereof. If any such offer of securities is made, it will be made pursuant to a
definitive Prospectus and Prospectus Supplement, prepared by the Depositor,
which will contain material information not contained herein and to which
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded in its entirety by such Prospectus and
Prospectus Supplement. ANY DECISION TO INVEST IN SUCH SECURITIES SHOULD BE MADE
ONLY AFTER REVIEWING SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT. Deutsche Bank
Securities Inc., ABN AMRO Incorporated, Banc of America Securities LLC,
Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriters") disclaim any and all liability relating to
this information, including without limitation, any express or implied
representations or warranties for, statements contained in, and omissions from,
this information. This information should only be considered after reading the
Statement Regarding Assumptions as to Securities, Pricing Estimates, and Other
Information (the "Statement") which is attached. Do not use or rely on this
information if you have not received the Statement. You may obtain a copy of the
Statement from your sales representative.
B-20
$900,610,800 (APPROXIMATE)
COMM 2004-LNB2
- --------------------------------------------------------------------------------
COLLATERAL TERM SHEET BALANCE $85,500,000
AFR/BANK OF AMERICA PORTFOLIO DSCR: 1.92x
LTV: 47.24%
- --------------------------------------------------------------------------------
In addition to the Leased Premises, the master lease provides for approximately
803,980 sq. ft. of "Shadow Occupied Release Space." This Shadow Occupied Release
Space can either be vacated by Bank of America, N.A. by December 31, 2004, or
retained in whole or in part, subject to certain terms and conditions contained
within the master lease. If Bank of America, N.A. elects to add the Shadow
Occupied Release Space to the leased premises, it has the right to surrender up
to an additional 125,000 sq. ft. of space to the landlord, subject to certain
restrictions. The master lease generally provides Bank of America, N.A. with
rights of first refusal to the extent any of the mortgaged properties are sold
by the borrower. The cash flow associated with the Shadow Occupied Release Space
was not included in the underwritten NCF and underwritten DSCR.
Approximately 9.6% of the space is leased to third party tenants. The overall
vacancy rate of the portfolio is 13.6%. The following table shows certain
information regarding the ten largest tenants of the AFR/Bank of America
Portfolio properties:
- --------------------------------------------------------------------------------
TEN LARGEST TENANTS BASED ON ANNUALIZED UNDERWRITTEN BASE RENT(3)
- --------------------------------------------------------------------------------
% OF TOTAL
ANNUALIZED ANNUALIZED
% OF U/W BASE U/W BASE
TENANT SF TOTAL SF RENT RENT RENT/SF LEASE EXPIRATION
- ----------------------------------------------------------------------------------------------------------------------------------
Bank of America(4) 5,972,887(4) 76.8%(4) $44,504,289 77.8% $ 8.61 6/30/2023(4)
- ----------------------------------------------------------------------------------------------------------------------------------
California Pacific Medical 77,276 1.0 2,086,452 3.6 $27.00 1/31/2012
- ----------------------------------------------------------------------------------------------------------------------------------
California State Compensation Fund 55,043 0.7 1,154,075 2.0 $20.97 7/31/2007
- ----------------------------------------------------------------------------------------------------------------------------------
HQ Global Workplaces 27,666 0.4 672,057 1.2 $24.29 3/18/2009
- ----------------------------------------------------------------------------------------------------------------------------------
Odell Associates, Inc. 48,777 0.6 627,272 1.1 $12.86 2/28/2014
- ----------------------------------------------------------------------------------------------------------------------------------
Cherry Bakaert Holland LLP 23,758 0.3 534,080 0.9 $22.48 9/30/2011
- ----------------------------------------------------------------------------------------------------------------------------------
Lemaster and Daniels 24,866 0.3 472,454 0.8 $19.00 5/31/2012
- ----------------------------------------------------------------------------------------------------------------------------------
Moss Adams, LLP 21,283 0.3 388,037 0.7 $18.23 7/31/2011
- ----------------------------------------------------------------------------------------------------------------------------------
Morris York Williams 16,511 0.2 363,244 0.6 $22.00 11/10/2006
- ----------------------------------------------------------------------------------------------------------------------------------
Potlach Corp. 18,363 0.2 362,637 0.6 $19.75 8/31/2007
- ----------------------------------------------------------------------------------------------------------------------------------
TOP TEN TOTALS/WEIGHTED AVERAGE 6,288,430 80.9% $51,164,596 89.4% $ 8.14
- ----------------------------------------------------------------------------------------------------------------------------------
3. Annualized Underwritten Base Rent excludes vacant space.
4. Includes 803,890 of Shadow Occupied Release Space.
This information has been prepared solely for information purposes and is not an
offer to buy or sell or solicitation of an offer to buy or sell any security or
instrument or to participate in any trading strategy. No representation or
warranty can be given with respect to the accuracy or completeness of the
information, or that any future offer of securities will conform to the terms
hereof. If any such offer of securities is made, it will be made pursuant to a
definitive Prospectus and Prospectus Supplement, prepared by the Depositor,
which will contain material information not contained herein and to which
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded in its entirety by such Prospectus and
Prospectus Supplement. ANY DECISION TO INVEST IN SUCH SECURITIES SHOULD BE MADE
ONLY AFTER REVIEWING SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT. Deutsche Bank
Securities Inc., ABN AMRO Incorporated, Banc of America Securities LLC,
Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriters") disclaim any and all liability relating to
this information, including without limitation, any express or implied
representations or warranties for, statements contained in, and omissions from,
this information. This information should only be considered after reading the
Statement Regarding Assumptions as to Securities, Pricing Estimates, and Other
Information (the "Statement") which is attached. Do not use or rely on this
information if you have not received the Statement. You may obtain a copy of the
Statement from your sales representative.
B-21
$900,610,800 (APPROXIMATE)
COMM 2004-LNB2
- --------------------------------------------------------------------------------
COLLATERAL TERM SHEET BALANCE $85,500,000
AFR/BANK OF AMERICA PORTFOLIO DSCR: 1.92x
LTV: 47.24%
- --------------------------------------------------------------------------------
The following table shows certain information regarding the five largest
properties of the AFR/Bank of America Portfolio:
- --------------------------------------------------------------------------------
FIVE LARGEST ASSETS BASED ON SQUARE FOOTAGE
- --------------------------------------------------------------------------------
NRSF APPROXIMATE %
LEASED TO OF NRSF
YEAR(S) BUILT/ OVERALL BANK OF LEASED TO
PROPERTY NAME LOCATION NRSF RENOVATED OCCUPANCY AMERICA BANK OF AMERICA
- ----------------------------------------------------------------------------------------------------------------------------------
Jacksonville Operations Center Jacksonville, FL 1,217,260 1990/NAP 94.5% 1,149,685 94.4%
- ----------------------------------------------------------------------------------------------------------------------------------
Bank of America Center-Chicago Chicago, IL 1,027,783 1923/ongoing 87.3% 869,916 84.6%
- ----------------------------------------------------------------------------------------------------------------------------------
Bank of America Center-Phoenix Phoenix, AZ 507,559 1989, 1995/NAP 75.5% 383,076 75.5%
- ----------------------------------------------------------------------------------------------------------------------------------
Van Ness & Market San Francisco, CA 481,064 1959/1989 85.3% 277,524 57.7%
- ----------------------------------------------------------------------------------------------------------------------------------
525 N. Tryon-Odell Building Charlotte, NC 413,407 1996/NAP 100.0% 271,335 65.6%
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL/WTD. AVERAGE: 3,647,073 89.2% 2,951,536 80.9%
- ----------------------------------------------------------------------------------------------------------------------------------
JACKSONVILLE CENTER OFFICE PARK, JACKSONVILLE, FLORIDA (1,217,260 SF; 15.66% OF
PORTFOLIO)
PROPERTY INFORMATION. The Jacksonville Center is an office park located at 9000
Southside Boulevard in Jacksonville, Florida. Bank of America is the fourth
largest private employer in Jacksonville. The office park consists of six Class
A office buildings (#100, 200, 300, 400, 500, and 700), one operations center, a
one-story daycare center, a one story preschool and a parking garage which are
99% leased to Bank of America. The office complex serves as Bank of America's
regional operations center for the State of Florida. The office complex was
built in 1990, and is comprised of 90.08 acres of land. The buildings and office
park are well designed to accommodate multiple tenants.
MARKET. The properties are included in the Southside submarket of Jacksonville.
According to the appraisal, the Southside market has the largest inventory of
office space and comprises 55% of the market's total supply. According to the
appraisal, for the first quarter 2003, occupancy for the Jacksonville office
market was 80.6% and occupancy for the Southside submarket was 80.1%. According
to the appraisal, comparable office properties have an average occupancy of
88.4%. According to the appraisal, the Southside submarket has posted positive
absorption for the past six years and this trend is expected to continue.
Based on the appraisal's survey of most comparable properties, rental rates
ranged from $16.50 to $19.00 psf on a gross basis with an average of $17.42 psf.
The subject is leased on a triple net basis and the appraisal's triple net
market rent is approximately $11.00 psf. All of the properties under the Bank of
America master lease pay rent equal to $8.61 per square foot.
BANK OF AMERICA CENTER--CHICAGO, CHICAGO, ILLINOIS (1,027,783 SF; 13.22% OF
PORTFOLIO)
PROPERTY INFORMATION.The Bank of America Center is a 23-story, 1,027,783 SF
office building located in the Central Loop at 231 South LaSalle Street in
Chicago, Illinois. The building is 85% occupied by Bank of America and has an
overall occupancy rate of 87.30%. According to the appraisal, the building can
be easily converted into multi-tenant space. The ground level retail arcade runs
through the entire building with entrances on Clark, Jackson and LaSalle Street.
The building was built in 1923 and has been renovated several times, including
an extensive renovation in 1999.
The building is situated on a 1.38 acre parcel with frontage along LaSalle
Street to the west, Jackson Street to the south, Clark Street to the east, and
Quincy Street to the north. The subject is located in the Central Loop with
neighborhood access provided by the "EL" train, one block northwest of the
subject; the Northwestern Train Station and Union Station; and freeway access
via Congress Parkway, where the I-290, I-90/94 interchange is located.
MARKET. The property is included within the Central Loop submarket of Chicago.
According to the appraisal, the Central Loop submarket has the largest inventory
of office space and comprises 40.89% of the Chicago Central Business District
market total supply. According to the appraisal, comparable office properties
have an average occupancy of 86.15%.
Based on the appraisal's survey of comparable properties, rental rates range
from $25.00 to $30.00 psf on a gross basis and $15.00 psf on a triple-net basis.
All of the properties under the Bank of America master lease pay rent equal to
$8.61 psf.
This information has been prepared solely for information purposes and is not an
offer to buy or sell or solicitation of an offer to buy or sell any security or
instrument or to participate in any trading strategy. No representation or
warranty can be given with respect to the accuracy or completeness of the
information, or that any future offer of securities will conform to the terms
hereof. If any such offer of securities is made, it will be made pursuant to a
definitive Prospectus and Prospectus Supplement, prepared by the Depositor,
which will contain material information not contained herein and to which
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded in its entirety by such Prospectus and
Prospectus Supplement. ANY DECISION TO INVEST IN SUCH SECURITIES SHOULD BE MADE
ONLY AFTER REVIEWING SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT. Deutsche Bank
Securities Inc., ABN AMRO Incorporated, Banc of America Securities LLC,
Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriters") disclaim any and all liability relating to
this information, including without limitation, any express or implied
representations or warranties for, statements contained in, and omissions from,
this information. This information should only be considered after reading the
Statement Regarding Assumptions as to Securities, Pricing Estimates, and Other
Information (the "Statement") which is attached. Do not use or rely on this
information if you have not received the Statement. You may obtain a copy of the
Statement from your sales representative.
B-22
$900,610,800 (APPROXIMATE)
COMM 2004-LNB2
- --------------------------------------------------------------------------------
COLLATERAL TERM SHEET BALANCE $85,500,000
AFR/BANK OF AMERICA PORTFOLIO DSCR: 1.92x
LTV: 47.24%
- --------------------------------------------------------------------------------
BANK OF AMERICA CENTER - PHOENIX, PHOENIX, ARIZONA (507,559 SF; 6.53% OF
PORTFOLIO)
PROPERTY INFORMATION. The Bank of America Center is a five building office
campus located at 1825 East Buckeye Road in Phoenix, Arizona. The buildings were
built between 1989 and 1995. The buildings and office park are well designed to
accomodate multiple tenants.
The campus is less than one mile from I-10, I-17 and Route 51, granting access
from the entire metropolitan area. The Phoenix Sky Harbor International Airport
is adjacent to the property The campus is encumbered by a 65-year ground lease
with the City of Phoenix that commenced July 1, 1988. The ground rent through
June 30, 2008 is $0.26 psf and increases to $0.52 psf for the remainder of the
term.
MARKET. The property is located in the Airport Area submarket as defined by the
appraisal. According to the appraisal, the submarket includes 42 office
buildings in excess of 10,000 sq. ft. and a total leaseable area of nearly 3.4
million sq. ft. According to the appraisal, the total submarket vacancy at
year-end 2002 was 20.2%, representing a decrease from the year-end 2001 level of
21.4%. Based on the appraisal's survey of comparable properties, rental rates
range from $15.00 to $21.50 psf on a gross basis and the market average is
approximately $19.00 psf. The subject properties are leased on a triple net
lease basis and the appraisals concluded that the triple net market rent is
approximately $12.00 psf. All of the properties under the BofA master lease pay
rent equal to $8.61 psf.
PROPERTY MANAGEMENT. The properties are managed by First States Management
Corp., LLC and sub-managed by Trammell Crow, Jones Lang and Lincoln Harris.
CASH MANAGEMENT: The loan has been structured with a hard lockbox.
CURRENT MEZZANINE OR SUBORDINATE INDEBTEDNESS. $100,000,000 investment grade
B-Note held outside of the trust.
FUTURE MEZZANINE OR SUBORDINATE INDEBTEDNESS. None permitted.
RELEASE PROVISIONS. At any time during the term of the loan, the borrower may
obtain the release of one or more of 13 designated AFR/Bank of America
properties. If the release occurs prior to December 18, 2005, the borrower is
required to prepay the loan subject to a yield maintenance charge and to payment
equal to 110% of loan amounts allocated to the related mortgaged property.
At any time after December 18, 2005, the borrower may obtain a release of any of
the AFR/Bank of America Portfolio properties (including the 13 designated
properties that may be released with a prepayment and payment of a yield
maintenance charge prior to December 18, 2005) by defeasance with U.S.
Treasuries in an amount equal to a scaled percentage between 110% and 125% of
the loan amounts allocated to the related mortgaged property, subject to
satisfaction of certain tests required by the loan documents. In event that the
aggregate release amounts exceed $150,000,000 a confirmation from each of the
rating agencies that such defeasance will not result in the downgrade,
qualification or withdrawal or any rating then assigned to a class of
certificates by such rating agency will be required. With respect to certain
properties that were not assigned an allocated loan amount, the required
defeasance amount will be the lesser of (i) the actual consideration received by
the borrower from Bank of America, N.A. in the event such individual property is
transferred by the borrower to Bank of America, N.A. and (ii) 50% of the
origination date appraised value of the release property.
This information has been prepared solely for information purposes and is not an
offer to buy or sell or solicitation of an offer to buy or sell any security or
instrument or to participate in any trading strategy. No representation or
warranty can be given with respect to the accuracy or completeness of the
information, or that any future offer of securities will conform to the terms
hereof. If any such offer of securities is made, it will be made pursuant to a
definitive Prospectus and Prospectus Supplement, prepared by the Depositor,
which will contain material information not contained herein and to which
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded in its entirety by such Prospectus and
Prospectus Supplement. ANY DECISION TO INVEST IN SUCH SECURITIES SHOULD BE MADE
ONLY AFTER REVIEWING SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT. Deutsche Bank
Securities Inc., ABN AMRO Incorporated, Banc of America Securities LLC,
Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriters") disclaim any and all liability relating to
this information, including without limitation, any express or implied
representations or warranties for, statements contained in, and omissions from,
this information. This information should only be considered after reading the
Statement Regarding Assumptions as to Securities, Pricing Estimates, and Other
Information (the "Statement") which is attached. Do not use or rely on this
information if you have not received the Statement. You may obtain a copy of the
Statement from your sales representative.
B-23
$900,610,800 (APPROXIMATE)
COMM 2004-LNB2
- --------------------------------------------------------------------------------
COLLATERAL TERM SHEET BALANCE $85,500,000
AFR/BANK OF AMERICA PORTFOLIO DSCR: 1.92x
LTV: 47.24%
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
AFR PORTFOLIO
- --------------------------------------------------------------------------------
Harrison Main Harrison AR Redding Main Branch Redding CA
Mesa Main Mesa AZ Riverside Main Riverside CA
Camelback-Bank of America Center Phoenix AZ North Sacramento Branch Sacramento CA
Camelback Uptown Phoenix AZ Oak Park Branch Sacramento CA
Catalina-Bank of America Center Phoenix AZ Salinas Main Branch Salinas CA
Maricopa-Bank of America Center Phoenix AZ San Bernadino Main San Bernadino CA
McDowell-Bank of America Center Phoenix AZ Van Ness & Market San Francisco CA
South Mountain-Bank of America Phoenix AZ Santa Barbara Santa Barbara CA
Auburn Auburn CA Santa Maria Branch Santa Maria CA
East Bakersfield Office Bakersfield CA Stockton Main Office Stockton CA
Stockdale Bakersfield CA Sunnyvale Main Branch Sunnyvale CA
East Compton Branch Compton CA Torrance Sartori Torrance CA
Coronado Branch Coronado CA Ventura Main Office Ventura CA
El Segundo El Segundo CA Whittier Office Whittier CA
Escondido Main Office Escondido CA Yuba City Branch Yuba City CA
Calwa Fresno CA Williams Islands Aventura FL
Cedar & Shields Fresno CA Gulf to Bay Clearwater FL
Fresno Proof/Vault Fresno CA Clermont Clermont FL
Gardena Main Gardena CA Hallandale Beach Hallandale FL
Glendale Main Glendale CA North Hialeah Hialeah FL
Inglewood Main Office Inglewood CA Hollywood/Tyler Hollywood FL
La Jolla Main La Jolla CA San Jose Jacksonville FL
Bixby-Atlantic Long Beach CA Jacksonville Ops Center/#100 Jacksonville FL
Willow-Daisy Branch Long Beach CA Jacksonville Ops Center/#200 Jacksonville FL
Long Beach Financial Long Beach CA Jacksonville Ops Center/#300 Jacksonville FL
Lincoln Heights Branch Los Angeles CA Jacksonville Opa Center/#400 Jacksonville FL
Pico-Vermont Branch Los Angeles CA Jacksonville Ops Center/#500 Jacksonville FL
Lynwood Branch Lynwood CA Jacksonville Ops Center/#600 Jacksonville FL
Sepulveda-Devonshire BR Mission Hills CA Jacksonville Ops Center/#700 Jacksonville FL
Irvine Industrial Newport Beach CA Jacksonville Ops Center/School Jacksonville FL
North Hollywood North Hollywood CA Jacksonville Ops Center/Daycare Jacksonville FL
Inland Empire Cash Vault Ontario CA Lighthouse Point Lighthouse Point FL
Palmdale Branch Palmdale CA Miami Lakes Operation Center Miami Lakes FL
Lake & Colorado Branch Pasadena CA South Region TPC Miami Lakes FL
Ellinwood Center #500 Pleasant Hill CA North Biscayne North Miami FL
Ellinwood Center #300 Pleasant Hill CA Ocala Downtown Ocala FL
Ellinwood Center #400 Pleasant Hill CA Mendham Operations Center Orlando FL
Pomona Main Pomona CA Downtown Palmetto Palmetto FL
Red Bluff Branch Red Bluff CA Cordova Pensacola FL
Port Charlotte Port Charlotte FL Muskogee Main Facility Muskogee OK
Ridgewood Sebring FL Admiral Tulsa OK
Plaza Stuart FL Aiken Main Office Aiken SC
Century Park Tampa FL Murfreesboro Main Office Murfreesboro TN
Westshore Mall Tampa FL Aransas Pass (CCNB) Aransas Pass TX
Winter Park Winter Park FL South Austin Austin TX
Albany Main Office Albany GA Brownwood Brownwood TX
Cartersville Main Cartersville GA Carrollton Carrollton TX
Moultrie Main Moultrie GA Dalhart Banking Center Dalhart TX
Bull Street Savannah GA Denison Denison TX
Valdosta Main Valdosta GA Dumas Banking Canter Dumas TX
Winder (BS) Winder GA Fort Worth East Fort Worth TX
Coeur d'Alene Building/Branch Coeur d'Alene ID Greenspoint Houston TX
Bank of America Center Chicago IL Mission Mission TX
Penn Street Facility Independence KS Mount Pleasant Mount Pleasant TX
Mission Facility Overland Park KS Fort Sam Houston San Antonio TX
Annapolis Church Circle-BAL Annapolis MD Waco Waco TX
Highlandtown-BAL Baltimore MD Charlottesville Charlottesville VA
William Street Facility Cape Girardeau MO Old Hampton Hampton VA
Columbia Facility Columbia MO Lynchburg Lynchburg VA
Florissant Facility Florissant MO Norton-7th Street Norton VA
Independence Square Independence MO Roanoke Roanoke VA
Oak Trafficway Facility Kansas City MO South Boston South Boston VA
Lexington Facility Lexington MO Aberdeen Building/Branch Aberdeen WA
Mexico Facility Mexico MO Bellingham Bellingham WA
Richland Facility Richland MO Bremerton Bremerton WA
Downtown Facility Rolla MO Forks Forks WA
South Glenstone Facility Springfield MO Moses Lake Moses Lake WA
West Sunshine Facility Springfield MO Pasco Pasco WA
Concord Village St. Louis MO Port Angeles Port Angeles WA
Hampton-Main Facility St. Louis MO Richland Richland WA
525 N Tryon-Odell Building Charlotte NC University Seattle WA
Albuquerque Operations Center Albuquerque NM Bank of America Financial Center Spokane WA
East Central Facility Albuquerque NM Spokane Bankcard Services Spokane WA
Henderson Henderson NV Bank of America Plaza Tacoma WA
Paradise Valley Las Vegas NV Walla Walla Walla Walla WA
N Wenatchee Wenatchee WA
Yakima Valley Building/Branch Yakima WA
This information has been prepared solely for information purposes and is not an
offer to buy or sell or solicitation of an offer to buy or sell any security or
instrument or to participate in any trading strategy. No representation or
warranty can be given with respect to the accuracy or completeness of the
information, or that any future offer of securities will conform to the terms
hereof. If any such offer of securities is made, it will be made pursuant to a
definitive Prospectus and Prospectus Supplement, prepared by the Depositor,
which will contain material information not contained herein and to which
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded in its entirety by such Prospectus and
Prospectus Supplement. ANY DECISION TO INVEST IN SUCH SECURITIES SHOULD BE MADE
ONLY AFTER REVIEWING SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT. Deutsche Bank
Securities Inc., ABN AMRO Incorporated, Banc of America Securities LLC,
Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriters") disclaim any and all liability relating to
this information, including without limitation, any express or implied
representations or warranties for, statements contained in, and omissions from,
this information. This information should only be considered after reading the
Statement Regarding Assumptions as to Securities, Pricing Estimates, and Other
Information (the "Statement") which is attached. Do not use or rely on this
information if you have not received the Statement. You may obtain a copy of the
Statement from your sales representative.
B-24
[THIS PAGE INTENTIONALLY LEFT BLANK]
B-25
$900,610,800 (APPROXIMATE)
COMM 2004-LNB2
- --------------------------------------------------------------------------------
COLLATERAL TERM SHEET BALANCE $68,500,000
THE WATERGATE/600 NEW HAMPSHIRE AVENUE DSCR: 1.31x
LTV: 64.32%
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
This information has been prepared solely for information purposes and is not an
offer to buy or sell or solicitation of an offer to buy or sell any security or
instrument or to participate in any trading strategy. No representation or
warranty can be given with respect to the accuracy or completeness of the
information, or that any future offer of securities will conform to the terms
hereof. If any such offer of securities is made, it will be made pursuant to a
definitive Prospectus and Prospectus Supplement, prepared by the Depositor,
which will contain material information not contained herein and to which
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded in its entirety by such Prospectus and
Prospectus Supplement. ANY DECISION TO INVEST IN SUCH SECURITIES SHOULD BE MADE
ONLY AFTER REVIEWING SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT. Deutsche Bank
Securities Inc., ABN AMRO Incorporated, Banc of America Securities LLC,
Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriters") disclaim any and all liability relating to
this information, including without limitation, any express or implied
representations or warranties for, statements contained in, and omissions from,
this information. This information should only be considered after reading the
Statement Regarding Assumptions as to Securities, Pricing Estimates, and Other
Information (the "Statement") which is attached. Do not use or rely on this
information if you have not received the Statement. You may obtain a copy of the
Statement from your sales representative.
B-26
$900,610,800 (APPROXIMATE)
COMM 2004-LNB2
- --------------------------------------------------------------------------------
COLLATERAL TERM SHEET BALANCE $68,500,000
THE WATERGATE/600 NEW HAMPSHIRE AVENUE DSCR: 1.31x
LTV: 64.32%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MORTGAGE LOAN INFORMATION
- --------------------------------------------------------------------------------
LOAN SELLER: GACC
LOAN PURPOSE: Acquisition
ORIGINAL TMA BALANCE: $68,500,000
CUT-OFF TMA BALANCE: $68,500,000
% BY INITIAL UPB: 7.07%
INTEREST RATE: 6.1245%
PAYMENT DATE: 1st of each month
FIRST PAYMENT DATE: January 1, 2004
MATURITY DATE: December 1, 2018
AMORTIZATION: Interest only through the payment date on December
1, 2006. Thereafter, monthly amortization on a 30
year schedule.
CALL PROTECTION: Lockout for 24 months from securitization date,
then defeasance is permitted. On and after
September 1, 2018, prepayment can be made without
penalty.
SPONSOR: David G. Bradley, Katherine B. Bradley
BORROWERS: Watergate Holdings I, LLC and Watergate Holdings
II, LLC, as tenants-in-common
ADDITIONAL FINANCING: None
LOCKBOX: Hard
INITIAL RESERVES: TI/LC(1): $3,553,824
Tax: $417,606
Insurance: $35,977
Engineering: $100,876
Letters of Credit(1): $13,117,160
Free Rent Reserve(1): $43,967
MONTHLY RESERVES: Tax: $103,131
Insurance: $11,993
- --------------------------------------------------------------------------------
1. See "Letters of Credit and Reserves" section herein
- --------------------------------------------------------------------------------
FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
LOAN BALANCE/SQ.FT.: $243.00
BALLOON BALANCE/SQ.FT.: $196.50
LTV: 64.32%
BALLOON LTV: 52.01%
DSCR: 1.31x
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
SINGLE ASSET/PORTFOLIO: Single Asset
PROPERTY TYPE: Class "A" Office
COLLATERAL: Fee simple interest in a twelve-story office
building and 198 spaces in the parking garage
located beneath the building
LOCATION: Washington, D.C.
YEAR BUILT/RENOVATED: 1972/2002
TOTAL AREA: 281,898 sq. ft.
PROPERTY MANAGEMENT: Jones Lang LaSalle
OCCUPANCY (AS OF 11/01/03): 100.00%
UNDERWRITTEN
NET CASH FLOW: $6,535,601
APPRAISED VALUE: $106,500,000
APPRAISAL DATE: September 2, 2003
- --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
MAJOR TENANTS
- ------------------------------------------------------------------------------------------------------------------------------
TENANT NRSF % NRSF RENT PSF LEASE EXPIRATION RATINGS (S/M/F)
- ------------------------------------------------------------------------------------------------------------------------------
DGB Enterprises, Inc.(3) 161,716 57.37% $40.00 10/31/2023 -/-/-
- ------------------------------------------------------------------------------------------------------------------------------
Blank Rome LLP 79,577 28.23% $42.08 12/31/2018(4) -/-/-
- ------------------------------------------------------------------------------------------------------------------------------
Hill & Knowlton USA 23,775 8.43% $37.67 3/31/2006 -/-/-
- ------------------------------------------------------------------------------------------------------------------------------
3. DGB Enterprises, Inc., is a borrower affiliate owned by David G. Bradley,
the key principal in the subject transaction. Three of his media companies,
The National Journal Group, The Advisory Board and The Corporate Executive
Board, occupy the space leased by DGB.
4. Blank Rome LLP has a one-time right to terminate its lease after June 1,
2010 if 5,000 sq. ft of expansion space is not made available to them.
However, the lease with DGB Enterprises, Inc. provides that the borrower can
require this tenant to reduce its space by 5,000 sq. ft. if neccessary to
accommodate Blank Rome LLP.
This information has been prepared solely for information purposes and is not an
offer to buy or sell or solicitation of an offer to buy or sell any security or
instrument or to participate in any trading strategy. No representation or
warranty can be given with respect to the accuracy or completeness of the
information, or that any future offer of securities will conform to the terms
hereof. If any such offer of securities is made, it will be made pursuant to a
definitive Prospectus and Prospectus Supplement, prepared by the Depositor,
which will contain material information not contained herein and to which
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded in its entirety by such Prospectus and
Prospectus Supplement. ANY DECISION TO INVEST IN SUCH SECURITIES SHOULD BE MADE
ONLY AFTER REVIEWING SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT. Deutsche Bank
Securities Inc., ABN AMRO Incorporated, Banc of America Securities LLC,
Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriters") disclaim any and all liability relating to
this information, including without limitation, any express or implied
representations or warranties for, statements contained in, and omissions from,
this information. This information should only be considered after reading the
Statement Regarding Assumptions as to Securities, Pricing Estimates, and Other
Information (the "Statement") which is attached. Do not use or rely on this
information if you have not received the Statement. You may obtain a copy of the
Statement from your sales representative.
B-27
$900,610,800 (APPROXIMATE)
COMM 2004-LNB2
- --------------------------------------------------------------------------------
COLLATERAL TERM SHEET BALANCE $68,500,000
THE WATERGATE/600 NEW HAMPSHIRE AVENUE DSCR: 1.31x
LTV: 64.32%
- --------------------------------------------------------------------------------
THE LOAN. The Watergate/600 New Hampshire Avenue loan is secured by a first
mortgage on 600 New Hampshire Avenue, a 12-story, Class "A" office building
located in Washington, D.C. containing 281,898 sq. ft. of net rentable area. The
collateral also includes 198 parking spaces in the subterranean parking garage
located beneath the building and the neighboring Watergate Complex. The purchase
price of the property was approximately $110.25 million (including estimated
closing costs of $2.25 million), resulting in a loan to cost ratio of 62.1% and
cash equity of $41.75 million (38%).
THE BORROWERS. The borrowers, Watergate Holdings I, LLC and Watergate Holdings
II, LLC, own the subject property jointly and severally as tenants-in-common,
and are each structured as single-purpose, bankruptcy-remote entities for which
a non-consolidation opinion was obtained. The borrowing entities are owned by
David G. Bradley (also the sponsor) and his wife, Katherine B. Bradley,
respectively. Mr. Bradley is the Chairman and owner of several publishing, news
and media companies including The National Journal Group, The Corporate
Executive Board and The Atlantic Monthly. The Atlantic Monthly has been one of
the nation's leading publications on current affairs, politics, culture and the
arts since 1857. Prior to purchasing these media companies, Mr. Bradley was the
founder and sole owner of a syndicated best practices research company, The
Advisory Board Company (founded in the late 1970's). As of October 20, 2003, Mr.
and Mrs. Bradley have a combined stated net worth of approximately $281.6
million including liquidity of approximately $198.5 million.
THE PROPERTY. The Watergate/600 New Hampshire Avenue is an attractive, 12-story
Class "A" office building with large 26,000 sq. ft. floor plates. The subject
property is located in the West End area of Washington, D.C., on the north side
of New Hampshire Avenue at its intersection with Virginia Avenue. It is the
southernmost of the six buildings that comprise the Watergate Complex, which
consists of hotel, office and residential developments. Immediately south of the
subject property, across F Street, is The Kennedy Center for the Performing
Arts, which is currently undergoing a $400 million expansion and renovation. The
subject's parking garage, which is additional collateral for the loan, benefits
from its proximity to the Kennedy Center by the lack of parking in the area and
generates additional income from patrons at the Center.
Built in 1972, the subject has been periodically renovated over the years.
Between 1994 and 2002, various substantial improvements were made to the
property at a reported cost of $20 million. Renovations included upgrades to the
common areas, new roofing, new mechanical and electrical systems including new
chillers, cooling towers and elevator controls. Repairs and improvements to the
parking garage were made between 2001 and 2003.
SIGNIFICANT TENANTS. The property is 100.00% occupied by seven tenants that
include four office tenants (96.4% of NRA) and three retail tenants (3.6% of
NRA, including a restaurant, coffee shop and dry cleaner). The subject has been
100.00% occupied since 1999. Of the seven tenants, six have occupied the
building since between 1994 and 1996 and approximately 86% by NRA are under long
term leases until either 2018 or 2023.
The subject property's largest tenant, DGB ENTERPRISES, INC. ("DGB"), which
is an affiliate of the borrower, is owned by David G. Bradley, the key
principal in the subject transaction. DGB leases 161,716 sq. ft. (57.37% of
the subject's NRA; 57.4% of its GPR) under a long-term lease expiring in
2023, and has occupied space in the building since 1994. DGB operates as an
umbrella company, coordinating the management of Mr. Bradley's various media
companies. Its space is currently used by three media businesses owned by Mr.
Bradley:
o THE CORPORATE EXECUTIVE BOARD (NASDAQ: EXBD, market capitalization of
approximately $1.9 million as of February 10, 2004, and occupies the
majority of the space under the lease. The Corporate Executive Board
Company provides research and analysis focusing corporate strategy,
operations, and general management issues. The Company provides its
services to corporations located throughout the world. Corporate Executive
currently offers programs focusing on finance, sales, information
technology, corporate strategy, human resources, and bank operations.
o THE ADVISORY BOARD (NASDAQ: ABCO, market capitalization of approximately
$606 million as of February 10, 2004) and The Advisory Board Company
provides best practice research and analysis to the health care industry.
The Company focuses on business strategy, operations, and general
management issues. Advisory provides its services through discrete annual
programs to a membership of hospitals, health systems, pharmaceutical and
biotechnology companies, health care insurers, and medical device
companies.
o THE NATIONAL JOURNAL GROUP. Mr. Bradley acquired The Watergate/600 New
Hampshire Avenue in order to consolidate the offices of The National
Journal Group under one roof (consolidation expected to be completed on or
about May 2004).
This information has been prepared solely for information purposes and is not an
offer to buy or sell or solicitation of an offer to buy or sell any security or
instrument or to participate in any trading strategy. No representation or
warranty can be given with respect to the accuracy or completeness of the
information, or that any future offer of securities will conform to the terms
hereof. If any such offer of securities is made, it will be made pursuant to a
definitive Prospectus and Prospectus Supplement, prepared by the Depositor,
which will contain material information not contained herein and to which
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded in its entirety by such Prospectus and
Prospectus Supplement. ANY DECISION TO INVEST IN SUCH SECURITIES SHOULD BE MADE
ONLY AFTER REVIEWING SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT. Deutsche Bank
Securities Inc., ABN AMRO Incorporated, Banc of America Securities LLC,
Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriters") disclaim any and all liability relating to
this information, including without limitation, any express or implied
representations or warranties for, statements contained in, and omissions from,
this information. This information should only be considered after reading the
Statement Regarding Assumptions as to Securities, Pricing Estimates, and Other
Information (the "Statement") which is attached. Do not use or rely on this
information if you have not received the Statement. You may obtain a copy of the
Statement from your sales representative.
B-28
$900,610,800 (APPROXIMATE)
COMM 2004-LNB2
- --------------------------------------------------------------------------------
COLLATERAL TERM SHEET BALANCE $68,500,000
THE WATERGATE/600 NEW HAMPSHIRE AVENUE DSCR: 1.31x
LTV: 64.32%
- --------------------------------------------------------------------------------
Headquartered in Washington D.C., The National Journal Group currently
employs 250 people and leases space at the subject and at other locations
throughout the District of Columbia. Since its founding in 1969, The
National Journal Group has become a leading publisher of magazines,
newsletters, books and directories for people who have a professional
interest in politics, policy and government. The National Journal Group's
portfolio includes a number of market leading companies including The
National Journal, CongressDaily AM, National Journal.com, The Capital
Source, and Government Executive. Mr. Bradley acquired The National
Journal Group in 1997 from the Times Mirror Co.
BLANK ROME LLP, leases 79,577 sq. ft. (28.23% of NRA; 29.7% of GPR) under a
long-term lease expiring in 2018. Founded in 1948, Blank Rome LLP is a
multi-practice national law firm with over 400 attorneys. The Washington,
D.C. office specializes in U.S. and foreign patent, trademark and copyright
law, international trade and government relations. Government relations
consist of improving client's legislative and regulatory relationships by
providing a comprehensive road map through the federal and state legislative
and regulatory systems.
HILL & KNOWLTON USA, leases 23,775 sq. ft. (8.43% of NRA; 8.0% of GPR) under
a long-term lease expiring in 2006. Hill & Knowlton USA is part of WPP Group
PLC (NASDAQ: WPPGY) and is one of the world's largest full service
communications consulting firms, providing services to local and
multinational clients. Hill & Knowlton USA is headquartered in New York City
and has 17 offices in the United States. It provides services in the fields
of corporate communications, health and pharmaceuticals, marketing, public
affairs, and technology. Hill & Knowlton USA has been a tenant of the
building since 1996.
The fourth largest tenant, ARLINGTON CAPITAL, and the retail tenants have
occupied the subject property since 1996.
THE MARKET. The property is located in the West End area (also known as the
Foggy Bottom Area) of the Washington, D.C. metropolitan area. Located between
the Central Business District and Georgetown, the subject is adjacent to the
Kennedy Center for the Performing Arts and lies just east of the popular
Georgetown retail district located along Wisconsin Avenue. The Foggy Bottom
Metro rail station is just a few blocks from the subject and Reagan National
Airport is less than three miles away.
According to the appraisal, as of first quarter 2003, the overall office vacancy
rate within the sub-market was 3.6%, and the Class "A" occupancy rate was 2.92%.
According to the appraisal, the estimated market rent for the subject property's
office space ranged from $24.00 psf for ground level space to $48.00 psf for the
upper floors of the building (compared to the subject's four office tenants
paying rental rates ranging from $37.67 psf to $44.38 psf). The appraisal
estimated the overall/blended market rent for the subject office space to be
$43.44 psf, almost 7% higher than average rents paid at the subject ($40.51
psf). The subject property's three retail tenants pay rental rates ranging from
$20.81 psf to $36.54 psf, and averaging $25.52 psf, approximately 27% below the
appraisal's estimate of market retail rent of $35.00 psf.
According to the appraisal, as of year-end 2002, the Washington, D.C. MSA had
279.1 million square feet of multi-tenant office space. Approximately 91 million
square feet (or 33% of the total) is concentrated within the city of Washington,
D.C., with the remainder located in Maryland (19%) and Virginia (48%). The total
office inventory in the West End sub-market was 5.8 million square feet (in 40
buildings) as of the first quarter 2003. Approximately 3.5 million square feet
(or 60% of the total) is considered Class "A" office space similar to the
subject.
According to the appraisal, for 2002, the Washington, D.C. MSA had an average
household income of approximately $92,535 (44% above the national average) and a
median household income of approximately $72,791 (53% above the national
average). The population of the Washington, D.C. MSA and within a three-mile
radius of the subject was approximately 5.1 million and 281,055 in 2002,
respectively.
LETTERS OF CREDIT AND RESERVES. In lieu of the lender collecting ongoing
reserves for replacements and reserves for tenant improvements and leasing
commissions, the borrower, at closing, provided lender with an irrevocable
"evergreen" letter of credit in the amount of $10 million, which will be held by
the lender as additional collateral until the end of the loan term.
Additionally, the borrower assigned two letters of credit ("LOC") in lieu of
rent security deposits to the lender at closing: (i) a $1.5 million LOC from
Blank Rome LLP, and (ii) a $1,617,160 LOC from DGB. The face amount of the Blank
Rome LOC declines 1/7 per year over the 7 years ending 1/1/10.
At loan closing, $3,553,824 was deposited to the TI/LC Reserve for certain
construction costs and tenant improvement work that the borrower is obligated to
make on behalf of tenants Blank Rome LLP ($2,922,798) and DGB ($631,026). The
funds will be released to the borrower once the work has been completed in
accordance with the loan documents.
This information has been prepared solely for information purposes and is not an
offer to buy or sell or solicitation of an offer to buy or sell any security or
instrument or to participate in any trading strategy. No representation or
warranty can be given with respect to the accuracy or completeness of the
information, or that any future offer of securities will conform to the terms
hereof. If any such offer of securities is made, it will be made pursuant to a
definitive Prospectus and Prospectus Supplement, prepared by the Depositor,
which will contain material information not contained herein and to which
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded in its entirety by such Prospectus and
Prospectus Supplement. ANY DECISION TO INVEST IN SUCH SECURITIES SHOULD BE MADE
ONLY AFTER REVIEWING SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT. Deutsche Bank
Securities Inc., ABN AMRO Incorporated, Banc of America Securities LLC,
Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriters") disclaim any and all liability relating to
this information, including without limitation, any express or implied
representations or warranties for, statements contained in, and omissions from,
this information. This information should only be considered after reading the
Statement Regarding Assumptions as to Securities, Pricing Estimates, and Other
Information (the "Statement") which is attached. Do not use or rely on this
information if you have not received the Statement. You may obtain a copy of the
Statement from your sales representative.
B-29
$900,610,800 (APPROXIMATE)
COMM 2004-LNB2
- --------------------------------------------------------------------------------
COLLATERAL TERM SHEET BALANCE $68,500,000
THE WATERGATE/600 NEW HAMPSHIRE AVENUE DSCR: 1.31x
LTV: 64.32%
- --------------------------------------------------------------------------------
CASH MANAGEMENT. The loan has been structured with a hard, pass-through lockbox.
A cash flow sweep will be instituted (i) upon an event of default under the loan
documents, and/or (ii) if the DSCR drops below 1.05x based upon the property's
trailing 12-month income and expenses. A cash flow sweep instituted pursuant to
clause (i) of the preceding sentence will continue until such event of default
is cured in lender's sole discretion. The cash flow sweep instituted pursuant to
clause (ii) of the second preceding sentence will continue until the DSCR
exceeds 1.05x for two consecutive calendar quarters, provided no event of
default exists.
PROPERTY MANAGEMENT. The Watergate/600 New Hampshire is managed and leased by
Jones Lang LaSalle, one of the world's leading real estate services and
investment management firm. Jones Lang LaSalle operates in more than 100 markets
worldwide and currently manages a portfolio totaling approximately 735 million
sq. ft. With nearly 17,000 employees, the company serves three major geographic
areas, The Americas, Asia/Pacific and Europe, and has a strong presence in the
Washington, D.C. area.
CURRENT MEZZANINE OR SUBORDINATE INDEBTEDNESS. None.
FUTURE MEZZANINE OR SUBORDINATE INDEBTEDNESS. After the 60th month of the loan
term, the equity owners of the borrowers may incur mezzanine debt secured by an
ownership interest in the borrowers, provided that: (i) the amount of the
mezzanine debt, together with the then outstanding principal balance of the
subject loan, has an LTV not in excess of 75%, (ii) the DSCR is at least 1.35x,
based on the combined debt, (iii) the mezzanine financing terms and
intercreditor agreement are acceptable to the lender, and (iv) rating agency
confirmation is received.
This information has been prepared solely for information purposes and is not an
offer to buy or sell or solicitation of an offer to buy or sell any security or
instrument or to participate in any trading strategy. No representation or
warranty can be given with respect to the accuracy or completeness of the
information, or that any future offer of securities will conform to the terms
hereof. If any such offer of securities is made, it will be made pursuant to a
definitive Prospectus and Prospectus Supplement, prepared by the Depositor,
which will contain material information not contained herein and to which
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded in its entirety by such Prospectus and
Prospectus Supplement. ANY DECISION TO INVEST IN SUCH SECURITIES SHOULD BE MADE
ONLY AFTER REVIEWING SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT. Deutsche Bank
Securities Inc., ABN AMRO Incorporated, Banc of America Securities LLC,
Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriters") disclaim any and all liability relating to
this information, including without limitation, any express or implied
representations or warranties for, statements contained in, and omissions from,
this information. This information should only be considered after reading the
Statement Regarding Assumptions as to Securities, Pricing Estimates, and Other
Information (the "Statement") which is attached. Do not use or rely on this
information if you have not received the Statement. You may obtain a copy of the
Statement from your sales representative.
B-30
$900,610,800 (APPROXIMATE)
COMM 2004-LNB2
- --------------------------------------------------------------------------------
COLLATERAL TERM SHEET BALANCE $68,500,000
THE WATERGATE/600 NEW HAMPSHIRE AVENUE DSCR: 1.31x
LTV: 64.32%
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
This information has been prepared solely for information purposes and is not an
offer to buy or sell or solicitation of an offer to buy or sell any security or
instrument or to participate in any trading strategy. No representation or
warranty can be given with respect to the accuracy or completeness of the
information, or that any future offer of securities will conform to the terms
hereof. If any such offer of securities is made, it will be made pursuant to a
definitive Prospectus and Prospectus Supplement, prepared by the Depositor,
which will contain material information not contained herein and to which
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded in its entirety by such Prospectus and
Prospectus Supplement. ANY DECISION TO INVEST IN SUCH SECURITIES SHOULD BE MADE
ONLY AFTER REVIEWING SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT. Deutsche Bank
Securities Inc., ABN AMRO Incorporated, Banc of America Securities LLC,
Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriters") disclaim any and all liability relating to
this information, including without limitation, any express or implied
representations or warranties for, statements contained in, and omissions from,
this information. This information should only be considered after reading the
Statement Regarding Assumptions as to Securities, Pricing Estimates, and Other
Information (the "Statement") which is attached. Do not use or rely on this
information if you have not received the Statement. You may obtain a copy of the
Statement from your sales representative.
B-31
$900,610,800 (APPROXIMATE)
COMM 2004-LNB2
- --------------------------------------------------------------------------------
COLLATERAL TERM SHEET BALANCE $55,587,072
MEADOWS MALL DSCR: 1.74x
LTV: 63.97%
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
This information has been prepared solely for information purposes and is not an
offer to buy or sell or solicitation of an offer to buy or sell any security or
instrument or to participate in any trading strategy. No representation or
warranty can be given with respect to the accuracy or completeness of the
information, or that any future offer of securities will conform to the terms
hereof. If any such offer of securities is made, it will be made pursuant to a
definitive Prospectus and Prospectus Supplement, prepared by the Depositor,
which will contain material information not contained herein and to which
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded in its entirety by such Prospectus and
Prospectus Supplement. ANY DECISION TO INVEST IN SUCH SECURITIES SHOULD BE MADE
ONLY AFTER REVIEWING SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT. Deutsche Bank
Securities Inc., ABN AMRO Incorporated, Banc of America Securities LLC,
Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriters") disclaim any and all liability relating to
this information, including without limitation, any express or implied
representations or warranties for, statements contained in, and omissions from,
this information. This information should only be considered after reading the
Statement Regarding Assumptions as to Securities, Pricing Estimates, and Other
Information (the "Statement") which is attached. Do not use or rely on this
information if you have not received the Statement. You may obtain a copy of the
Statement from your sales representative.
B-32
$900,610,800 (APPROXIMATE)
COMM 2004-LNB2
- --------------------------------------------------------------------------------
COLLATERAL TERM SHEET BALANCE $55,587,072
MEADOWS MALL DSCR: 1.74x
LTV: 63.97%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MORTGAGE LOAN INFORMATION
- --------------------------------------------------------------------------------
LOAN SELLER: ABN AMRO Bank
LOAN PURPOSE: Refinance
SHADOW RATING
(S&P/FITCH/DBRS): BBB-/A-/BBB (high)
ORIGINAL TMA BALANCE: $56,000,0001
CUT-OFF TMA BALANCE: $55,587,072
% BY INITIAL UPB: 5.7400%
INTEREST RATE: 5.45282%
PAYMENT DATE: 1st of each month
FIRST PAYMENT DATE: September 1, 2003
MATURITY DATE: August 1, 2013
AMORTIZATION: 360 Months
CALL PROTECTION: Lockout for 24 months from the securitization date,
then defeasance is permitted. On and after May 1,
2013, prepayment can be made without penalty.
SPONSOR: GGP Ivanhoe III, Inc., a subsidiary of General G
rowth Properties, Inc.
BORROWER: GGP Meadows Mall L.L.C.
PARI PASSU DEBT: $55,587,072(1)
SUBORDINATE DEBT: None
LOCKBOX: Hard
INITIAL RESERVES: None
MONTHLY RESERVES: None
- --------------------------------------------------------------------------------
1. The subject $56,000,000 represents the A-2 note in a loan with an original
balance of $112,000,000 (and a cut-off date balance of $111,174,143). An A-1
note (with a cut-off date balance of $55,587,072) is pari passu with the A-2
note. At the time the original loan was split and the notes were issued,
each of the A-1 note and the A-2 note had a principal balance of
$55,830,656. The A-1 note is not included in the trust. All LTV and DSCR
numbers are based on the combined A-1 note and A-2 note.
- --------------------------------------------------------------------------------
FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
MORTGAGE LOAN INFORMATION
- --------------------------------------------------------------------------------
LOAN BALANCE/SQ.FT.: $356.09
BALLOON BALANCE/SQ.FT.: $299.28
LTV: 63.97%
BALLOON LTV: 53.76%
DSCR: 1.74x
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
SINGLE ASSET/PORTFOLIO: Single Asset
PROPERTY TYPE: Regional Mall
COLLATERAL: Fee simple interest in a regional mall
LOCATION: Las Vegas, Nevada
YEAR BUILT/RENOVATED: 1978 / 2003
COLLATERAL AREA/TOTAL AREA: 312,210 sq. ft./949,063 sq. ft.
PROPERTY MANAGEMENT: Borrower
COLLATERAL/MALL OCCUPANCY: 96.55%/98.86%(2)
UNDERWRITTEN
NET CASH FLOW: $13,202,871
APPRAISED VALUE: $173,800,000
APPRAISAL DATE: 7/18/03
- --------------------------------------------------------------------------------
2. Occupancy levels represent underwritten sq. ft. occupancy.
- ---------------------------------------------------------------------------------------------------------------------------
ANCHOR TENANTS(3) RATING (S/M/F) LEASE AREA (SQ.FT.) % OF TOTAL(4)
- ---------------------------------------------------------------------------------------------------------------------------
Dillard's BB/B2/BB- 182,493 19.23%
- ---------------------------------------------------------------------------------------------------------------------------
Macy's(5) BBB+/Baa1/BBB+ 163,250 17.20%
- ---------------------------------------------------------------------------------------------------------------------------
JCPenney BB+/Ba3/BB 146,519 15.44%
- ---------------------------------------------------------------------------------------------------------------------------
Sears BBB/Baa1/BBB+ 144,591 15.24%
- ---------------------------------------------------------------------------------------------------------------------------
3. Dillard's, Macy's, JC Penney and Sears own their stores, which are not part
of the loan collateral. 4. Represents total area owned by tenant as a
percentage of the total mall area. 5. Ratings of parent, Federated
Department Stores (NYSE: FD).
- ---------------------------------------------------------------------------------------------------------------------------
2003 SALES PSF OCC. COST AS % OF SALES
- ---------------------------------------------------------------------------------------------------------------------------
In-Line Tenants $374 12.86%
- ---------------------------------------------------------------------------------------------------------------------------
This information has been prepared solely for information purposes and is not an
offer to buy or sell or solicitation of an offer to buy or sell any security or
instrument or to participate in any trading strategy. No representation or
warranty can be given with respect to the accuracy or completeness of the
information, or that any future offer of securities will conform to the terms
hereof. If any such offer of securities is made, it will be made pursuant to a
definitive Prospectus and Prospectus Supplement, prepared by the Depositor,
which will contain material information not contained herein and to which
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded in its entirety by such Prospectus and
Prospectus Supplement. ANY DECISION TO INVEST IN SUCH SECURITIES SHOULD BE MADE
ONLY AFTER REVIEWING SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT. Deutsche Bank
Securities Inc., ABN AMRO Incorporated, Banc of America Securities LLC,
Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriters") disclaim any and all liability relating to
this information, including without limitation, any express or implied
representations or warranties for, statements contained in, and omissions from,
this information. This information should only be considered after reading the
Statement Regarding Assumptions as to Securities, Pricing Estimates, and Other
Information (the "Statement") which is attached. Do not use or rely on this
information if you have not received the Statement. You may obtain a copy of the
Statement from your sales representative.
B-33
$900,610,800 (APPROXIMATE)
COMM 2004-LNB2
- --------------------------------------------------------------------------------
COLLATERAL TERM SHEET BALANCE $55,587,072
MEADOWS MALL DSCR: 1.74x
LTV: 63.97%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
NET
RENTABLE % OF TOTAL
IN-LINE RATINGS AREA NET RENTABLE ACTUAL LEASE 2003 SALES OCC. COST
TENANTS S/M/F (SQ.FT.) AREA(6) RENT (SQ.FT.) EXPIRATION PSF(7) PSF(8) AS % OF SALES
- ---------------------------------------------------------------------------------------------------------------------------------
Express(9) BBB+/Baa1/NR 8,342 2.67% $22.00 01/31/2007 $186.00 $32.84 17.66%
- ---------------------------------------------------------------------------------------------------------------------------------
Anchor Blue NR/NR/NR 7,823 2.51% $21.00 10/31/2010 $270.00 $35.14 13.01%
- ---------------------------------------------------------------------------------------------------------------------------------
Charlotte Russe NR/NR/NR 7,673 2.46% $20.00 01/31/2006 $228.00 $33.17 14.55%
- ---------------------------------------------------------------------------------------------------------------------------------
6. Represents net rentable area as a percentage of the collateral net rentable
area.
7. Trailing 12 months reported sales per sq. ft. to November 2003.
8. Trailing 12 months reported occupancy costs per sq. ft. to November 2003.
9. Ratings are those of the parent company which does not guarantee the lease.
THE MEADOWS MALL LOAN
THE LOAN. The Meadows Mall Loan is secured by a first deed of trust on a portion
of the Meadows Mall, an approximately 949,063 sq.ft. (collateral approximately
312,210 sq. ft.) two-level enclosed regional mall located in Las Vegas, Nevada.
The Meadows Mall Loan is shadow rated "BBB-" by S&P, "A-" by Fitch and "BBB
(high)" by DBRS. The Meadows Mall Loan is evidenced by one note, the A-2 note,
which is pari passu with another note also secured by the Meadows Mall Loan
collateral. The other note, the A-1 note, was securitized in the Wachovia
2003-C9 Securitization.
The Meadows Mall Loan has a remaining term of 113 months and matures on August
1, 2013. The Meadows Mall Loan may be prepaid on or after May 1, 2013.
Defeasance with United States government obligations is permitted beginning two
years from the securitization date.
THE BORROWER. The borrower is GGP Meadows Mall L.L.C., a special purpose entity
sponsored by GGP Ivanhoe III, Inc., which is a subsidiary of General Growth
Properties, Inc. ("General Growth"). General Growth is a self-administered and
self-managed publicly traded real estate investment trust rated "BBB-" by S&P,
"Ba3" by Moody's and "BB" by Fitch. General Growth owns, leases, manages,
acquires and develops regional shopping malls and single tenant retail
properties in the United States. General Growth and its affiliates currently
have interests in approximately 150 properties in 41 states, totaling
approximately 146 million square feet.
THE PROPERTY. The Meadows Mall Loan collateral is approximately 312,210 sq. ft.
of an approximately 949,063 sq. ft. regional mall situated on approximately 88.9
acres. The Meadows Mall, located in Las Vegas, Nevada, was constructed in 1978
and renovated in 1987, 1996 and 2003. The Meadows Mall is anchored by four
department stores: Dillard's, Macy's, JCPenney and Sears, which own their stores
and are not part of the loan collateral.
SIGNIFICANT TENANTS. The underwritten occupancy rate for the mortgaged property
securing the Meadows Mall Loan was approximately 96.55%. The Meadows Mall is
anchored by Dillard's, Macy's, JCPenney and Sears which own their stores and are
not part of the loan collateral. The three largest collateral tenants are:
Express, Inc. ("Express"); HUB Distributing, Inc., doing business as Anchor Blue
("Anchor Blue"); and Lawrence Merchandising Corporation of Nevada, Inc., doing
business as Charlotte Russe ("Charlotte Russe").
Express occupies approximately 8,342 sq. ft. (approximately 2.67% of the net
rentable area). Express is wholly owned by Limited Brands Inc. As of February 2,
2004, Limited Brands Inc. was rated "Baa1" by Moody's and "BBB+" by S&P. The
Express lease expires in January 2007. Anchor Blue occupies approximately 7,823
sq. ft. (approximately 2.51% of the net rentable area). The Anchor Blue lease
expires in October 2010. Charlotte Russe occupies approximately 7,673 sq. ft.
(approximately 2.46% of the net rentable area). The Charlotte Russe lease
expires in January 2006.
THE MARKET. The Meadows Mall is located within the Las Vegas Metropolitan
Statistical Area ("MSA"), in Clark County, Nevada. Its primary competition
consists of the Boulevard Mall (also owned by General Growth), the Galleria at
Sunset and the Fashion Show Mall. Boulevard Mall, anchored by Dillard's,
JCPenney, Macy's and Sears, is located 6.3 miles southeast of the Meadows Mall.
Boulevard Mall was opened in 1968. Average mall shop rents at Boulevard Mall
range from approximately $44 to $55 per square foot and occupancy is
approximately 90%. Galleria at Sunset, which opened in 1996, is the region's
newest regional mall and is located 14.5 miles southeast of the Meadows Mall.
Galleria at Sunset is anchored by Dillard's, JCPenney, Mervyn's and
Robinson-May. Average mall shop
This information has been prepared solely for information purposes and is not an
offer to buy or sell or solicitation of an offer to buy or sell any security or
instrument or to participate in any trading strategy. No representation or
warranty can be given with respect to the accuracy or completeness of the
information, or that any future offer of securities will conform to the terms
hereof. If any such offer of securities is made, it will be made pursuant to a
definitive Prospectus and Prospectus Supplement, prepared by the Depositor,
which will contain material information not contained herein and to which
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded in its entirety by such Prospectus and
Prospectus Supplement. ANY DECISION TO INVEST IN SUCH SECURITIES SHOULD BE MADE
ONLY AFTER REVIEWING SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT. Deutsche Bank
Securities Inc., ABN AMRO Incorporated, Banc of America Securities LLC,
Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriters") disclaim any and all liability relating to
this information, including without limitation, any express or implied
representations or warranties for, statements contained in, and omissions from,
this information. This information should only be considered after reading the
Statement Regarding Assumptions as to Securities, Pricing Estimates, and Other
Information (the "Statement") which is attached. Do not use or rely on this
information if you have not received the Statement. You may obtain a copy of the
Statement from your sales representative.
B-34
$900,610,800 (APPROXIMATE)
COMM 2004-LNB2
- --------------------------------------------------------------------------------
COLLATERAL TERM SHEET BALANCE $55,587,072
MEADOWS MALL DSCR: 1.74x
LTV: 63.97%
- --------------------------------------------------------------------------------
rents at Galleria at Sunset range from approximately $28 to $60 per square foot
and occupancy is approximately 99%. The Fashion Show Mall, which opened in 1981,
is the area's dominant upscale mall and is anchored by Dillard's, Macy's, Neiman
Marcus, Robinsons-May and Saks Fifth Avenue. The Fashion Show Mall is located
4.5 miles southeast of the Meadows Mall. Average mall shop rents at the Fashion
Show Mall range from approximately $20 to $65 per sq. ft., while occupancy is
approximately 96%. The Las Vegas MSA has been among the fastest-growing areas in
the nation with a population growing from 528,002 in the early 1980's to
1,712,856 as of 2002. Household income levels in the region have also grown.
Between 1980 and 2002, average household income increased from $21,302 to
$66,340. (The data set forth in this section reflects market conditions as of
the appraisal date, July 18, 2003.)
PROPERTY MANAGEMENT. The property is managed by the Borrower.
CURRENT MEZZANINE OR SUBORDINATE INDEBTEDNESS. None.
FUTURE MEZZANINE OR SUBORDINATE INDEBTEDNESS. None permitted.
This information has been prepared solely for information purposes and is not an
offer to buy or sell or solicitation of an offer to buy or sell any security or
instrument or to participate in any trading strategy. No representation or
warranty can be given with respect to the accuracy or completeness of the
information, or that any future offer of securities will conform to the terms
hereof. If any such offer of securities is made, it will be made pursuant to a
definitive Prospectus and Prospectus Supplement, prepared by the Depositor,
which will contain material information not contained herein and to which
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded in its entirety by such Prospectus and
Prospectus Supplement. ANY DECISION TO INVEST IN SUCH SECURITIES SHOULD BE MADE
ONLY AFTER REVIEWING SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT. Deutsche Bank
Securities Inc., ABN AMRO Incorporated, Banc of America Securities LLC,
Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriters") disclaim any and all liability relating to
this information, including without limitation, any express or implied
representations or warranties for, statements contained in, and omissions from,
this information. This information should only be considered after reading the
Statement Regarding Assumptions as to Securities, Pricing Estimates, and Other
Information (the "Statement") which is attached. Do not use or rely on this
information if you have not received the Statement. You may obtain a copy of the
Statement from your sales representative.
B-35
$900,610,800 (APPROXIMATE)
COMM 2004-LNB2
- --------------------------------------------------------------------------------
COLLATERAL TERM SHEET BALANCE $55,587,072
MEADOWS MALL DSCR: 1.74x
LTV: 63.97%
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
This information has been prepared solely for information purposes and is not an
offer to buy or sell or solicitation of an offer to buy or sell any security or
instrument or to participate in any trading strategy. No representation or
warranty can be given with respect to the accuracy or completeness of the
information, or that any future offer of securities will conform to the terms
hereof. If any such offer of securities is made, it will be made pursuant to a
definitive Prospectus and Prospectus Supplement, prepared by the Depositor,
which will contain material information not contained herein and to which
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded in its entirety by such Prospectus and
Prospectus Supplement. ANY DECISION TO INVEST IN SUCH SECURITIES SHOULD BE MADE
ONLY AFTER REVIEWING SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT. Deutsche Bank
Securities Inc., ABN AMRO Incorporated, Banc of America Securities LLC,
Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriters") disclaim any and all liability relating to
this information, including without limitation, any express or implied
representations or warranties for, statements contained in, and omissions from,
this information. This information should only be considered after reading the
Statement Regarding Assumptions as to Securities, Pricing Estimates, and Other
Information (the "Statement") which is attached. Do not use or rely on this
information if you have not received the Statement. You may obtain a copy of the
Statement from your sales representative.
B-36
[THIS PAGE INTENTIONALLY LEFT BLANK]
B-37
$900,610,800 (APPROXIMATE)
COMM 2004-LNB2
- --------------------------------------------------------------------------------
COLLATERAL TERM SHEET BALANCE $35,000,000
FAIRSTONE AT RIVERVIEW DSCR: 1.25x
LTV: 79.37%
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
This information has been prepared solely for information purposes and is not an
offer to buy or sell or solicitation of an offer to buy or sell any security or
instrument or to participate in any trading strategy. No representation or
warranty can be given with respect to the accuracy or completeness of the
information, or that any future offer of securities will conform to the terms
hereof. If any such offer of securities is made, it will be made pursuant to a
definitive Prospectus and Prospectus Supplement, prepared by the Depositor,
which will contain material information not contained herein and to which
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded in its entirety by such Prospectus and
Prospectus Supplement. ANY DECISION TO INVEST IN SUCH SECURITIES SHOULD BE MADE
ONLY AFTER REVIEWING SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT. Deutsche Bank
Securities Inc., ABN AMRO Incorporated, Banc of America Securities LLC,
Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriters") disclaim any and all liability relating to
this information, including without limitation, any express or implied
representations or warranties for, statements contained in, and omissions from,
this information. This information should only be considered after reading the
Statement Regarding Assumptions as to Securities, Pricing Estimates, and Other
Information (the "Statement") which is attached. Do not use or rely on this
information if you have not received the Statement. You may obtain a copy of the
Statement from your sales representative.
B-38
$900,610,800 (APPROXIMATE)
COMM 2004-LNB2
- --------------------------------------------------------------------------------
COLLATERAL TERM SHEET BALANCE $35,000,000
FAIRSTONE AT RIVERVIEW DSCR: 1.25x
LTV: 79.37%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MORTGAGE LOAN INFORMATION
- --------------------------------------------------------------------------------
LOAN SELLER: GACC
LOAN PURPOSE: Acquisition
ORIGINAL PRINCIPAL BALANCE: $35,000,000
CUT-OFF PRINCIPAL BALANCE: $35,000,000
% BY INITIAL UPB: 3.61%
INTEREST RATE: 5.2400%
PAYMENT DATE: 1st of each month
FIRST PAYMENT DATE: March 1, 2004
MATURITY DATE: February 1, 2011
AMORTIZATION: Interest only through the payment date occurring on
February 1, 2007. Thereafter, monthly amortization
on a 30 year schedule.
CALL PROTECTION: Lockout for 24 months from securitization date,
then defeasance is permitted. On and after November
1, 2010, prepayment can be made without penalty.
SPONSOR: Michael Strand, Tim Smith, Peter Morkill, Bob
Miller and Greg Beckel
BORROWERS: Fairstone Investors LLC and Cascade Heights
Fairstone LLC, as tenants- in-common
ADDITIONAL FINANCING: None
LOCKBOX: Soft
INITIAL RESERVES: Tax: $73,245
Insurance: $15,509
Engineering: $20,375
MONTHLY RESERVES: Tax: $18,311
Insurance: $7,754
Replacement: $10,250
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
LOAN BALANCE/UNIT: $71,138
BALLOON BALANCE/UNIT: $67,015
LTV: 79.37%
BALLOON LTV: 74.8%
DSCR: 1.25x
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
SINGLE ASSET/PORTFOLIO: Single Asset
PROPERTY TYPE: Multifamily
COLLATERAL: Fee simple interest in a multifamily property
situated on a 28.61-acre site
LOCATION: Taylorsville, UT
YEAR BUILT/RENOVATED: 1997/NAP
TOTAL UNITS: 492
PROPERTY MANAGEMENT: Horizon Realty Advisors, an affiliate of the
borrower
OCCUPANCY (11/20/03): 96.95%
UNDERWRITTEN NET
CASH FLOW: $2,894,310
APPRAISED VALUE: $44,100,000
APPRAISAL DATE: November 20, 2003
- --------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
PROPERTY INFORMATION
- ---------------------------------------------------------------------------------------------------------------------------------
NUMBER OF AVERAGE SQUARE AVERAGE RENT COMPARABLE MARKET RENT
UNIT TYPE UNITS FEET/UNIT (PER MONTH) RANGE (PER MONTH)
- ---------------------------------------------------------------------------------------------------------------------------------
One Bedroom 164 742 $655 $629-$780
- ---------------------------------------------------------------------------------------------------------------------------------
Two Bedroom 244 982 $765 $729-$965
- ---------------------------------------------------------------------------------------------------------------------------------
Three Bedroom 84 1,274 $929 $895-$1,110
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL/WEIGHTED AVG. 492 952 $756 $826(1)
- ---------------------------------------------------------------------------------------------------------------------------------
1. Calculated based on a straight average of the comparable market rent ranges
on a weighted average for the subject number of units.
This information has been prepared solely for information purposes and is not an
offer to buy or sell or solicitation of an offer to buy or sell any security or
instrument or to participate in any trading strategy. No representation or
warranty can be given with respect to the accuracy or completeness of the
information, or that any future offer of securities will conform to the terms
hereof. If any such offer of securities is made, it will be made pursuant to a
definitive Prospectus and Prospectus Supplement, prepared by the Depositor,
which will contain material information not contained herein and to which
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded in its entirety by such Prospectus and
Prospectus Supplement. ANY DECISION TO INVEST IN SUCH SECURITIES SHOULD BE MADE
ONLY AFTER REVIEWING SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT. Deutsche Bank
Securities Inc., ABN AMRO Incorporated, Banc of America Securities LLC,
Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriters") disclaim any and all liability relating to
this information, including without limitation, any express or implied
representations or warranties for, statements contained in, and omissions from,
this information. This information should only be considered after reading the
Statement Regarding Assumptions as to Securities, Pricing Estimates, and Other
Information (the "Statement") which is attached. Do not use or rely on this
information if you have not received the Statement. You may obtain a copy of the
Statement from your sales representative.
B-39
$900,610,800 (APPROXIMATE)
COMM 2004-LNB2
- --------------------------------------------------------------------------------
COLLATERAL TERM SHEET BALANCE $35,000,000
FAIRSTONE AT RIVERVIEW DSCR: 1.25x
LTV: 79.37%
- --------------------------------------------------------------------------------
THE FAIRSTONE AT RIVERVIEW LOAN
THE LOAN. The Fairstone at Riverview Loan is secured by a first mortgage on the
Fairstone at Riverview, a 492-unit, Class A multifamily property situated on a
28.6-acre site and located in Taylorsville, Utah. The borrower acquired the
subject property for $42.6 million (including $572,000 of closing costs) from
Archstone Communities Limited, resulting in cash equity of approximately $7.6
million.
THE BORROWER. The borrowers, Fairstone Investors LLC and Cascade Heights
Fairstone LLC, own the property jointly and severally as tenants-in-common, and
are each structured as a single-purpose, bankruptcy-remote entity for which a
non-consolidation opinion was obtained. The sponsor of the borrower is Horizon
Realty Advisors ("Horizon"), a Seattle based company that specializes in
multifamily investment and management in major metropolitan areas in the western
US and owns or manages 19 residential properties with over 3,400 residential
units. The sponsor's key principals, Mike Strand, Greg Beckel, Robert Miller,
Peter Morkill and Tim Smith have over 60 years of combined experience in the
acquisition, development, management, and sales of multifamily real estate
properties and have a combined stated net worth of approximately $55 million.
Mr. Strand, Mr. Beckel, Mr. Miller, Mr. Morkill and Mr. Smith are repeat
sponsors of a Deutsche Bank borrower.
THE PROPERTY. Fairstone at Riverview Apartments is a 492-unit, Class "A,"
garden-style multifamily community located in Taylorsville, Salt Lake County,
Utah, approximately 9 miles from the Salt Lake City central business district
("CBD"). The complex is comprised of 23 two and three-story buildings (including
two clubhouses) constructed in 1997 on a 28.61-acre site. The unit mix consists
of 164 one-bedroom, one-bath units, 72 two-bedroom, one-bath units, 172
two-bedroom, two-bath units and 84 three-bedroom, two-bath units. Unit amenities
include refrigerator, gas range/oven, garbage disposal, dishwasher, washer/dryer
hook ups, central air conditioning and private patio or balcony. Community
amenities include outdoor swimming pool and wading pool, five children's
playgrounds, two basketball courts, barbecue/picnic areas with gazebos, three
community laundry rooms and two tennis courts. Additional amenities within the
complex's two clubhouses include a fitness center, lounge, kitchen, TV room,
children's activity center and business center. All units are individually
metered for electricity, and tenants pay for all utilities. Parking is provided
for 1,011 vehicles including 108 garages and 162 carports (2.05 spaces per
unit).
The property is located within a neighborhood that consists of a mixture of
commercial, recreational and residential development. The subject property is
adjacent to a golf course and several office buildings, including the Sorenson
Research Park. In addition, the subject is located next to the Jordan River
Parkway, which contains a 40-mile trail system for biking and hiking. The Valley
Fair Mall, containing three major anchors and over 100 stores, is located three
miles northwest of the subject. The subject is convenient to various highways
including Interstate 215 and 15 that provide access throughout the metropolitan
area. Public transportation is available one mile from the subject at a TRAX
light rail station. The subject has frontage along Interstate 15.
THE MARKET. The property is located in Taylorsville, near the center of Salt
Lake County, approximately nine miles from the Salt Lake City CBD. Salt Lake
County contains approximately 40% of Utah's total population. Between 1990 and
2003, population within a one-mile radius of the subject reportedly increased by
40.3%. As of July 2003, Salt Lake City experienced an unemployment rate of 5.4%,
significantly lower than that of the nation (6.2%). Some of the largest
employers in the Salt Lake City metro statistical area (MSA) include
Intermountain Health Care, State of Utah, PacifiCorp-Utah Power and Wal-Mart.
According to the appraiser, as of 2003, the average household income within a
five-mile radius of the subject was $57,911.
According to the appraisal, as of third quarter 2003, Salt Lake County had an
overall occupancy rate of 90.5%; Class "A" properties in the Salt Lake County
market had an average monthly rental rate of $859 for apartments five years or
newer. As of third quarter 2003, the subject's West Side submarket had a
slightly higher overall occupancy rate of 90.8%. Average occupancy for the
subject since December 2000 has been 96.7%. The appraisal identified five
comparable apartment communities that have an average occupancy of 92.6%.
According to the appraisal, monthly rents for comparable one-bedroom units range
from $629 to $780; monthly rents for subject one-bedroom units and average $655.
Monthly rents for comparable two-bedroom units range from $729 to $965; monthly
rents for subject two-bedroom units average $765. Monthly rents for comparable
three-bedroom units range from $895 to $1,110; monthly rents for subject
three-bedroom units average $929.
PROPERTY MANAGEMENT. Horizon Realty Advisors, an affiliate of the Borrower.
Horizon Realty Advisors currently owns or manages 19 properties with over 3,400
residential units in the Western United States.
CURRENT MEZZANINE OR SUBORDINATE INDEBTEDNESS. None.
FUTURE MEZZANINE OR SUBORDINATE INDEBTEDNESS. None permitted.
This information has been prepared solely for information purposes and is not an
offer to buy or sell or solicitation of an offer to buy or sell any security or
instrument or to participate in any trading strategy. No representation or
warranty can be given with respect to the accuracy or completeness of the
information, or that any future offer of securities will conform to the terms
hereof. If any such offer of securities is made, it will be made pursuant to a
definitive Prospectus and Prospectus Supplement, prepared by the Depositor,
which will contain material information not contained herein and to which
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded in its entirety by such Prospectus and
Prospectus Supplement. ANY DECISION TO INVEST IN SUCH SECURITIES SHOULD BE MADE
ONLY AFTER REVIEWING SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT. Deutsche Bank
Securities Inc., ABN AMRO Incorporated, Banc of America Securities LLC,
Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriters") disclaim any and all liability relating to
this information, including without limitation, any express or implied
representations or warranties for, statements contained in, and omissions from,
this information. This information should only be considered after reading the
Statement Regarding Assumptions as to Securities, Pricing Estimates, and Other
Information (the "Statement") which is attached. Do not use or rely on this
information if you have not received the Statement. You may obtain a copy of the
Statement from your sales representative.
B-40
$900,610,800 (APPROXIMATE)
COMM 2004-LNB2
- --------------------------------------------------------------------------------
COLLATERAL TERM SHEET BALANCE $35,000,000
FAIRSTONE AT RIVERVIEW DSCR: 1.25x
LTV: 79.37%
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
This information has been prepared solely for information purposes and is not an
offer to buy or sell or solicitation of an offer to buy or sell any security or
instrument or to participate in any trading strategy. No representation or
warranty can be given with respect to the accuracy or completeness of the
information, or that any future offer of securities will conform to the terms
hereof. If any such offer of securities is made, it will be made pursuant to a
definitive Prospectus and Prospectus Supplement, prepared by the Depositor,
which will contain material information not contained herein and to which
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded in its entirety by such Prospectus and
Prospectus Supplement. ANY DECISION TO INVEST IN SUCH SECURITIES SHOULD BE MADE
ONLY AFTER REVIEWING SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT. Deutsche Bank
Securities Inc., ABN AMRO Incorporated, Banc of America Securities LLC,
Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriters") disclaim any and all liability relating to
this information, including without limitation, any express or implied
representations or warranties for, statements contained in, and omissions from,
this information. This information should only be considered after reading the
Statement Regarding Assumptions as to Securities, Pricing Estimates, and Other
Information (the "Statement") which is attached. Do not use or rely on this
information if you have not received the Statement. You may obtain a copy of the
Statement from your sales representative.
B-41
$900,610,800 (APPROXIMATE)
COMM 2004-LNB2
- --------------------------------------------------------------------------------
COLLATERAL TERM SHEET BALANCE $30,000,000
321 WEST 44TH STREET DSCR: 1.32x
LTV: 74.63%
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
This information has been prepared solely for information purposes and is not an
offer to buy or sell or solicitation of an offer to buy or sell any security or
instrument or to participate in any trading strategy. No representation or
warranty can be given with respect to the accuracy or completeness of the
information, or that any future offer of securities will conform to the terms
hereof. If any such offer of securities is made, it will be made pursuant to a
definitive Prospectus and Prospectus Supplement, prepared by the Depositor,
which will contain material information not contained herein and to which
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded in its entirety by such Prospectus and
Prospectus Supplement. ANY DECISION TO INVEST IN SUCH SECURITIES SHOULD BE MADE
ONLY AFTER REVIEWING SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT. Deutsche Bank
Securities Inc., ABN AMRO Incorporated, Banc of America Securities LLC,
Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriters") disclaim any and all liability relating to
this information, including without limitation, any express or implied
representations or warranties for, statements contained in, and omissions from,
this information. This information should only be considered after reading the
Statement Regarding Assumptions as to Securities, Pricing Estimates, and Other
Information (the "Statement") which is attached. Do not use or rely on this
information if you have not received the Statement. You may obtain a copy of the
Statement from your sales representative.
B-42
$900,610,800 (APPROXIMATE)
COMM 2004-LNB2
- --------------------------------------------------------------------------------
COLLATERAL TERM SHEET BALANCE $30,000,000
321 WEST 44TH STREET DSCR: 1.32x
LTV: 74.63%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MORTGAGE LOAN INFORMATION
- --------------------------------------------------------------------------------
LOAN SELLER: GACC
LOAN PURPOSE: Acquisition
ORIGINAL TMA BALANCE: $30,000,000
CUT-OFF TMA BALANCE: $30,000,000
% BY INITIAL UPB: 3.10%
INTEREST RATE: 5.9100%
PAYMENT DATE: 1st of each month
FIRST PAYMENT DATE: February 1, 2004
MATURITY DATE: January 1, 2014
AMORTIZATION: Interest only through the payment date occurring on
January 1, 2006, thereafter monthly amortization
on a 30 year schedule.
CALL PROTECTION: Lockout for 24 months from securitization date,
then defeasance is permitted. On and after October
1, 2013, prepayment can be made without penalty.
SPONSORS: Joseph Sitt; Thor Equities; GVA Williams Real
Estate
BORROWER: 321 West 44th Street, LLC
ADDITIONAL FINANCING: None
LOCKBOX: Hard
INITIAL RESERVES: TI/LC(1): $3,500,000
Replacement(1): $1,259,000
Tax: $69,881
Insurance: $28,720
MONTHLY RESERVES: Tax: $69,881
TI/LC(1): $20,883
Insurance: $6,072
Replacement: $3,685
- --------------------------------------------------------------------------------
1. See "Reserves" section herein.
- --------------------------------------------------------------------------------
FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
Loan Balance/sq.ft.: $141.27
Balloon Balance/sq.ft.: $124.93
LTV: 74.63%
Balloon LTV: 66.00%
DSCR: 1.32x
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
SINGLE ASSET/PORTFOLIO: Single Asset
PROPERTY TYPE: CBD Office
COLLATERAL: Fee simple interest in a ten-story office building
LOCATION: New York, NY
YEAR BUILT/RENOVATED: 1929/2000
TOTAL AREA: 212,364 sq. ft.
PROPERTY MANAGEMENT: Williams USA Realty Services Inc.
OCCUPANCY (AS OF 12/12/03): 87.83%
UNDERWRITTEN
NET CASH FLOW: $2,826,084
APPRAISED VALUE: $40,200,000
APPRAISAL DATE: August 27, 2003
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
MAJOR TENANTS
- --------------------------------------------------------------------------------------------------------------------------
TENANT SF % NRSF RENT PSF LEASE EXPIRATION RATINGS (S/M/F)
- --------------------------------------------------------------------------------------------------------------------------
Technicolor East Coast, Inc. 37,110 17.47% $20.66 7/31/2013 BBB+/-/-(2)
- -------------------------------------------------------------------------------------------------------------------------
HS Systems Inc. 30,611 14.41% $30.88 9/30/2008 -/-/-
- -------------------------------------------------------------------------------------------------------------------------
2. Ratings of parent company, Thomson, not a guarantor of the lease.
This information has been prepared solely for information purposes and is not an
offer to buy or sell or solicitation of an offer to buy or sell any security or
instrument or to participate in any trading strategy. No representation or
warranty can be given with respect to the accuracy or completeness of the
information, or that any future offer of securities will conform to the terms
hereof. If any such offer of securities is made, it will be made pursuant to a
definitive Prospectus and Prospectus Supplement, prepared by the Depositor,
which will contain material information not contained herein and to which
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded in its entirety by such Prospectus and
Prospectus Supplement. Any decision to invest in such securities should be made
only after reviewing such Prospectus and Prospectus Supplement. Deutsche Bank
Securities Inc., ABN AMRO Incorporated, Banc of America Securities LLC,
Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriters") disclaim any and all liability relating to
this information, including without limitation, any express or implied
representations or warranties for, statements contained in, and omissions from,
this information. This information should only be considered after reading the
Statement Regarding Assumptions as to Securities, Pricing Estimates, and Other
Information (the "Statement") which is attached. Do not use or rely on this
information if you have not received the Statement. You may obtain a copy of the
Statement from your sales representative.
B-43
$900,610,000 (APPROXIMATE)
COMM 2004-LNB2
- --------------------------------------------------------------------------------
COLLATERAL TERM SHEET BALANCE $30,000,000
321 WEST 44TH STREET DSCR: 1.32x
LTV: 74.63%
- --------------------------------------------------------------------------------
THE 321 WEST 44TH STREET LOAN
THE LOAN. The 321 West 44th Street Loan is secured by a first mortgage on 321 W.
44th Street, a 10-story, Class B office building containing 212,364 sq. ft. of
net rentable area which is located in midtown Manhattan, New York, New York. The
purchase price of the property was approximately $40.2 million (including
estimated closing costs of approximately $469,000 and re-tenanting and capital
improvements costs of approximately $4.7 million) resulting in a loan to cost
ratio of 73.8% and cash equity of $10.2 million.
THE BORROWER. The borrower, 321 West 44th Street, LLC. is a single-purpose,
bankruptcy-remote entity with an independent director and for which a
non-consolidation opinion was obtained. The loan sponsors/principals are Joseph
Sitt (Founder, Chairman and CEO of Thor Equities), Thor Equities and GVA
Williams Real Estate. Thor Equities is a national development and redevelopment
company founded in 1986 and specializing in urban real estate projects and in
public-private partnerships. As of June 2003, Mr. Sitt and his affiliates had a
stated net worth of approximately $75.0 million including liquidity of
approximately $4.3 million. Founded in 1926, GVA Williams Real Estate is one of
New York City's oldest and most respected full-service real estate companies.
GVA Williams Real Estate presently manages over 15 million square feet of office
space, the vast majority of which is in New York City. The primary principals of
GVA are Kenneth Carmel, Ed Ross and Jerry Cohen, who had a stated combined net
worth of over $75 million as of July 2002.
GVA Williams Real Estate is a repeat sponsor of a Deutsche Bank borrower.
THE PROPERTY. 321 W. 44th Street is a 10-story Class B office building located
on the north side of W. 44th Street between 8th and 9th Avenues in midtown
Manhattan, New York, New York, immediately west of Times Square. The building is
situated on a 0.55-acre parcel and contains 212,364 sq. ft. of net rentable area
including 16,742 sq. ft. of ground floor retail space, 192,580 sq. ft. of office
and production space, and 2,797 sq. ft. of basement/storage space. The property
has a long history of tenants in the music, art and entertainment industries and
currently features over 63,000 sq. ft. of studio/production space.
The property was built in 1929 and has been renovated in recent years. A $5.1
million renovation that occurred between 1999 and 2003 included roof, lobby, and
fire alarm upgrades, window replacement, facade repairs, a corridor upgrade and
replacement of passenger elevator cabs.
321 W. 44th Street was the original headquarters of Warner Brothers Pictures
before production was moved to Hollywood in the early 1930's. Record Plant
Recording Studios, whose space is now occupied by Streetlight Studios, played
host to almost every major artist and produced countless hit records from the
late 1960's through the early 1990's. Jimi Hendrix, John Lennon, Miles Davis and
AC/DC are some of the well-known artists to have used Record Plant Recording
Studios. Studio A (located on the 10th floor) was used exclusively by John
Lennon and was the last room he worked in the hours before his death in 1980.
Sound on Sound Recording studios were used in the creation of Alicia Keys' last
recording effort, and Woody Allen recently filmed a scene from his next movie
(known today as the Fall 2003 project) in one of the Sound on Sound studios. One
of the three ground floor tenants is the famous Birdland Jazz Club named for
music legend Charlie Parker.
SIGNIFICANT TENANTS. The property is 87.83% occupied by 34 tenants.
TECHNICOLOR EAST COAST, INC. ("Technicolor East Coast") occupies 37,110 sq.
ft. (17.47% of total space and 15.5% of GPR) at a rent of $20.66 psf.
Technicolor East Coast's lease expires July 31, 2013. Technicolor East Coast
is a subsidiary of Thomson (NYSE: TMS; rated BBB+ and A3 by S&P and Moody's,
respectively). Technicolor East Coast is a global leader in the processing
and distribution of motion picture films, a manufacturer of videocassettes,
CDs and DVDs, and a leading provider of post production, cinema distribution
and digital cinema services. The company's major Hollywood clients include
The Walt Disney Co., DreamWorks SKG, New Line Cinema, Universal, Paramount
and Warner Bros. Pictures. The company's software publishing clients include
Microsoft, Vivendi Universal Interactive and Hewlett-Packard. The Digital
Media Solutions division (DMH) of the Thomson Group, of which Technicolor is
the largest contributor, represents 26.4% of Thomson's 2002 consolidated net
sales and has the highest growth rate of Thomson's operating divisions. Sales
revenues for the Digital Media Solutions division grew by approximately 53%
in 2002 alone with the integration of Thomson's numerous acquisitions since
2001, which included Technicolor. For the year ended 2002, Thomson had net
sales of approximately 10.2 billion euros, to yield a net income of
approximately 373 million euros.
This information has been prepared solely for information purposes and is not an
offer to buy or sell or solicitation of an offer to buy or sell any security or
instrument or to participate in any trading strategy. No representation or
warranty can be given with respect to the accuracy or completeness of the
information, or that any future offer of securities will conform to the terms
hereof. If any such offer of securities is made, it will be made pursuant to a
definitive Prospectus and Prospectus Supplement, prepared by the Depositor,
which will contain material information not contained herein and to which
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded in its entirety by such Prospectus and
Prospectus Supplement. ANY DECISION TO INVEST IN SUCH SECURITIES SHOULD BE MADE
ONLY AFTER REVIEWING SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT. Deutsche Bank
Securities Inc., ABN AMRO Incorporated, Banc of America Securities LLC,
Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriters") disclaim any and all liability relating to
this information, including without limitation, any express or implied
representations or warranties for, statements contained in, and omissions from,
this information. This information should only be considered after reading the
Statement Regarding Assumptions as to Securities, Pricing Estimates, and Other
Information (the "Statement") which is attached. Do not use or rely on this
information if you have not received the Statement. You may obtain a copy of the
Statement from your sales representative.
B-44
$900,610,000 (APPROXIMATE)
COMM 2004-LNB2
- --------------------------------------------------------------------------------
COLLATERAL TERM SHEET BALANCE $30,000,000
321 WEST 44TH STREET DSCR: 1.32x
LTV: 74.63%
- --------------------------------------------------------------------------------
In a press release dated June 5, 2003, Thomson SA, the parent of the tenant,
indicated that the company leased other space in Manhattan and will be
relocating Technicolor's New York film laboratory to that space in 2004. The
tenant is currently in occupancy at the subject property. Pursuant to the
terms of the lease, Technicolor East Coast is obligated to make lease
payments through the lease expiration date.
HS SYSTEMS, INC. occupies 30,611 sf (14.41% of total space and 18.8% of GPR)
under three leases, all expiring September 30, 2008. HS Systems occupies
29,796 sf of office space under two leases, both at rents of $31.17 psf, and
815 sf of storage space at a rent of $19.13 psf. HS Systems is a private
company owned by financier William D. Witter (president of the Dean Witter
Foundation and son of investment banker Dean Witter); Ralph M. Richart, M.D.,
a Columbia University professor of pathology; and Noel de Cordova Jr., a
Poughkeepsie-based lawyer. A tenant at the subject since 1992, HS Systems,
Inc. is a private company contracted by The City of New York to perform
medical exams of New York City's disabled welfare recipients in order to
determine eligibility for disabled benefits. The company has worked for The
City of New York for more than 20 years. H.S. Systems currently uses the
entire seventh floor as a medical diagnostic and examination facility and a
portion of the sixth floor for general and executive offices.
THE MARKET. The property is located in midtown Manhattan's westside office
sub-market, which, according to the appraisal, includes 30 buildings containing
3.1 million sq. ft. of competitive, multi-tenant office space. According to the
appraisal, as of the second quarter 2003, this sub-market had a direct vacancy
rate of 5.8%. To determine market office rental rates for Class B space in this
market, the appraisal identified 26 comparable office properties located in
midtown west. Office rental rates at these properties range from $22.17 psf to
$35.00 psf, averaging $27.11psf. Office tenants at the subject pay rents range
from $10.19 psf to $35.53 psf, averaging $21.59 psf (20.4% below the appraisers
indication of market).
In determining market rent for retail space, the appraisal reviewed four retail
leases in buildings and locations similar to the subject. These four tenants
paid rents ranging from $36.93psf to $51.56psf, averaging $44.34psf. The
subject's retail tenants pay rents of $41.65psf, $45.46 psf and $65.64 psf,
averaging $50.31 psf.
RESERVES. At loan closing, $3,500,000 was deposited to the TI/LC reserve to
mitigate lease expirations/tenant rollover, and $1,259,000 was deposited to a
replacements reserve for elective capital improvements the borrower intends to
make to the property. Ongoing monthly payments of $20,833 into the TI/LC reserve
will be suspended as long as the balance in the TI/LC Reserve is $1.5 million or
more, which amount will be reduced to $1.25 million when (i) at least 75% of the
Technicolor East space has been re-leased, (ii) occupancy is at least 90%, and
(iii) DSCR is at least 1.25x. In addition, any termination payment made by
Technicolor East Coast must be deposited with the lender to be utilized pursuant
to the terms of the loan documents.
CASH MANAGEMENT. The loan has been structured with a hard, pass-through lockbox.
A 100% cash flow sweep will be instituted should there be an event of default
under the loan documents. Separately, if Technicolor East Coast, Inc. has not
satisfactorily extended its lease on or before February 1, 2012, and the balance
in the Rollover Reserve on that date is less than the $1.5 million, then 75% of
all excess cash flow will be swept until the balance of the Rollover Reserve
equals $1.5 million.
PROPERTY MANAGEMENT. 321 West 44th Street will be managed by Williams USA Realty
Services Inc., an affiliate of the Borrower. Williams USA Realty Services
presently manages over 15 million square feet of office space, the vast majority
of which is in New York City.
CURRENT MEZZANINE OR SUBORDINATE INDEBTEDNESS. None.
FUTURE MEZZANINE OR SUBORDINATE INDEBTEDNESS. None permitted.
This information has been prepared solely for information purposes and is not an
offer to buy or sell or solicitation of an offer to buy or sell any security or
instrument or to participate in any trading strategy. No representation or
warranty can be given with respect to the accuracy or completeness of the
information, or that any future offer of securities will conform to the terms
hereof. If any such offer of securities is made, it will be made pursuant to a
definitive Prospectus and Prospectus Supplement, prepared by the Depositor,
which will contain material information not contained herein and to which
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded in its entirety by such Prospectus and
Prospectus Supplement. ANY DECISION TO INVEST IN SUCH SECURITIES SHOULD BE MADE
ONLY AFTER REVIEWING SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT. Deutsche Bank
Securities Inc., ABN AMRO Incorporated, Banc of America Securities LLC,
Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriters") disclaim any and all liability relating to
this information, including without limitation, any express or implied
representations or warranties for, statements contained in, and omissions from,
this information. This information should only be considered after reading the
Statement Regarding Assumptions as to Securities, Pricing Estimates, and Other
Information (the "Statement") which is attached. Do not use or rely on this
information if you have not received the Statement. You may obtain a copy of the
Statement from your sales representative.
B-45
$900,610,000 (APPROXIMATE)
COMM 2004-LNB2
- --------------------------------------------------------------------------------
COLLATERAL TERM SHEET BALANCE $30,000,000
321 WEST 44TH STREET DSCR: 1.32x
LTV: 74.63%
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
This information has been prepared solely for information purposes and is not an
offer to buy or sell or solicitation of an offer to buy or sell any security or
instrument or to participate in any trading strategy. No representation or
warranty can be given with respect to the accuracy or completeness of the
information, or that any future offer of securities will conform to the terms
hereof. If any such offer of securities is made, it will be made pursuant to a
definitive Prospectus and Prospectus Supplement, prepared by the Depositor,
which will contain material information not contained herein and to which
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded in its entirety by such Prospectus and
Prospectus Supplement. ANY DECISION TO INVEST IN SUCH SECURITIES SHOULD BE MADE
ONLY AFTER REVIEWING SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT. Deutsche Bank
Securities Inc., ABN AMRO Incorporated, Banc of America Securities LLC,
Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriters") disclaim any and all liability relating to
this information, including without limitation, any express or implied
representations or warranties for, statements contained in, and omissions from,
this information. This information should only be considered after reading the
Statement Regarding Assumptions as to Securities, Pricing Estimates, and Other
Information (the "Statement") which is attached. Do not use or rely on this
information if you have not received the Statement. You may obtain a copy of the
Statement from your sales representative.
B-46
[THIS PAGE INTENTIONALLY LEFT BLANK]
B-47
$900,610,000 (APPROXIMATE)
COMM 2004-LNB2
- --------------------------------------------------------------------------------
COLLATERAL TERM SHEET BALANCE $26,000,000
WENATCHEE VALLEY MALL DSCR: 1.49x
LTV: 68.42%
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
This information has been prepared solely for information purposes and is not an
offer to buy or sell or solicitation of an offer to buy or sell any security or
instrument or to participate in any trading strategy. No representation or
warranty can be given with respect to the accuracy or completeness of the
information, or that any future offer of securities will conform to the terms
hereof. If any such offer of securities is made, it will be made pursuant to a
definitive Prospectus and Prospectus Supplement, prepared by the Depositor,
which will contain material information not contained herein and to which
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded in its entirety by such Prospectus and
Prospectus Supplement. ANY DECISION TO INVEST IN SUCH SECURITIES SHOULD BE MADE
ONLY AFTER REVIEWING SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT. Deutsche Bank
Securities Inc., ABN AMRO Incorporated, Banc of America Securities LLC,
Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriters") disclaim any and all liability relating to
this information, including without limitation, any express or implied
representations or warranties for, statements contained in, and omissions from,
this information. This information should only be considered after reading the
Statement Regarding Assumptions as to Securities, Pricing Estimates, and Other
Information (the "Statement") which is attached. Do not use or rely on this
information if you have not received the Statement. You may obtain a copy of the
Statement from your sales representative.
B-48
$900,610,000 (APPROXIMATE)
COMM 2004-LNB2
- --------------------------------------------------------------------------------
COLLATERAL TERM SHEET BALANCE $26,000,000
WENATCHEE VALLEY MALL DSCR: 1.49x
LTV: 68.42%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MORTGAGE LOAN INFORMATION
- --------------------------------------------------------------------------------
LOAN SELLER: GACC
LOAN PURPOSE: Acquisition
ORIGINAL PRINCIPAL BALANCE: $26,000,000
CUT-OFF PRINCIPAL BALANCE: $26,000,000
% BY INITIAL UPB: 2.68%
INTEREST RATE: 5.5400%
PAYMENT DATE: 1st of each month
FIRST PAYMENT DATE: December 1, 2003
MATURITY DATE: November 1, 2010
AMORTIZATION: Interest only until the payment date occurring on
November 1, 2004. Thereafter amortization on a 30
year schedule.
CALL PROTECTION: Lockout for 24 months from securitization date,
then defeasance is permitted. On and after August
1, 2010, prepayment can be made without penalty.
SPONSOR: Passco Real Estate Enterprises, Inc. and William O.
Passo
BORROWER: Passco WVM, LLC, Passco Diversified WVM, LLC, as
tenants-in-common, together with an additional 26
tenants-in-common.
ADDITIONAL FINANCING: None
LOCKBOX: Hard
INITIAL RESERVES: Tax: $55,758
Insurance: $16,675
Engineering: 36,588
TI/LC(1): $2,228,945
Other(1): $468,361
MONTHLY RESERVES: Tax: $27,853
Insurance: $5,558
TI/LC: $14,468
Replacement: $4,224
- --------------------------------------------------------------------------------
1. See "Reserves" section herein.
- --------------------------------------------------------------------------------
FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
LOAN BALANCE/SF: $76.38
BALLOON BALANCE/SF: $69.72
LTV: 68.42%
BALLOON LTV: 62.46%
DSCR: 1.49x
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
SINGLE ASSET/PORTFOLIO: Single Asset
PROPERTY TYPE: Regional Mall
COLLATERAL: Fee simple interest in a regional mall and
leasehold interest in 2 parking lots
LOCATION: East Wenatchee, WA
YEAR BUILT/RENOVATED: 1954/2003
COLLATERAL AREA/TOTAL AREA: 340,406 sq.ft.
PROPERTY MANAGEMENT: Passco Property Management, Inc., an affiliate of
the borrower
OCCUPANCY (9/01/03): 96.12%
UNDERWRITTEN
NET CASH FLOW: $2,652,539
APPRAISED VALUE: $38,000,000
APPRAISAL DATE: June 18, 2003
This information has been prepared solely for information purposes and is not an
offer to buy or sell or solicitation of an offer to buy or sell any security or
instrument or to participate in any trading strategy. No representation or
warranty can be given with respect to the accuracy or completeness of the
information, or that any future offer of securities will conform to the terms
hereof. If any such offer of securities is made, it will be made pursuant to a
definitive Prospectus and Prospectus Supplement, prepared by the Depositor,
which will contain material information not contained herein and to which
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded in its entirety by such Prospectus and
Prospectus Supplement. ANY DECISION TO INVEST IN SUCH SECURITIES SHOULD BE MADE
ONLY AFTER REVIEWING SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT. Deutsche Bank
Securities Inc., ABN AMRO Incorporated, Banc of America Securities LLC,
Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriters") disclaim any and all liability relating to
this information, including without limitation, any express or implied
representations or warranties for, statements contained in, and omissions from,
this information. This information should only be considered after reading the
Statement Regarding Assumptions as to Securities, Pricing Estimates, and Other
Information (the "Statement") which is attached. Do not use or rely on this
information if you have not received the Statement. You may obtain a copy of the
Statement from your sales representative.
B-49
$900,610,000 (APPROXIMATE)
COMM 2004-LNB2
- --------------------------------------------------------------------------------
COLLATERAL TERM SHEET BALANCE $26,000,000
WENATCHEE VALLEY MALL DSCR: 1.49x
LTV: 68.42%
- --------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
ANCHOR /MAJOR TENANTS
- -----------------------------------------------------------------------------------------------------------------------------
OCCUPANCY COST EXPIRATION
TENANTS RATINGS (S/M/F) LEASE AREA (SF) % OF TOTAL SALES PSF AS A % OF SALES DATES
- -----------------------------------------------------------------------------------------------------------------------------
Bon Marche1 BBB+/Baa1/BBB+ 87,040 25.57% $151 ('03) 2.12% 9/30/26
- -----------------------------------------------------------------------------------------------------------------------------
Sears BBB/Baa1/BBB+ 48,216 14.16% $248 ('02) 1.61% 8/31/13
- -----------------------------------------------------------------------------------------------------------------------------
Food Pavilion -/-/- 47,920 14.08% $244 ('02) 6.25% 9/30/20
- -----------------------------------------------------------------------------------------------------------------------------
Ross Dress for Less BBB/-/- 30,335 8.91% New Lease 12/31/13
- -----------------------------------------------------------------------------------------------------------------------------
Bed Bath & Beyond BBB/-/- 20,694 6.08% New Lease 10/31/13
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL/WA 234,205 68.8% $201(2) 3.07%(2)
- -----------------------------------------------------------------------------------------------------------------------------
1. Now renamed Bon-Macy's and a wholly-owned subsidiary of Federated Department
Stores, Inc. for whom ratings are shown (Federated Department Stores, Inc.
has not guaranteed the lease).
2. Does not include the unavailable sales psf and occupancy cost figures for
Ross Dress for Less and Bed Bath & Beyond.
- ---------------------------------------------------------------------------------------------------------------------------
2002 SALES PSF OCC. COST AS % OF SALES
- ---------------------------------------------------------------------------------------------------------------------------
IN-LINE TENANTS $206 10.18%
- ---------------------------------------------------------------------------------------------------------------------------
THE WENATCHEE VALLEY MALL LOAN
THE LOAN. The Wenatchee Valley Mall Loan is secured by a first mortgage on the
Wenatchee Valley Mall, a 340,406 sq. ft. regional mall situated on a 29.1-acre
site which is located in East Wenatchee, Washington. The borrower's acquisition
cost was approximately $38.2 million (inclusive of closing and re-tenanting
costs) resulting in a loan to cost ratio of 68.1% and hard equity of
approximately $12.2 million.
THE BORROWER. The borrower, Passco Diversified WVM, LLC, Passco Diversified II
WVM, LLC and 26 other tenants-in-common (two of which are entities controlled by
Passco Real Estate Enterprises, Inc., which is controlled by William O. Passo).
Each of the tenants-in-common borrowers is a bankruptcy remote, special purpose
entity with an independent director for which a non-consolidation opinion was
obtained. The sponsor is Passco Real Estate Enterprises, Inc. whose key
principal is William O. Passo. Mr. Passo has directed the formation of over 86
private and public liability companies and limited partnerships and has been
involved with the acquisition, disposition, and management of over 140
properties since 1978. As of July 2003, Mr Passo had a stated net worth of
approximately $10.0 million including approximately $981,000 of liquid assets.
Passco Property Management Inc. manages the subject property. Based in Santa
Ana, California, Passco Property Management Inc. manages over 3.0 million sq.
ft. of commercial space.
Passco Real Estate Enterprises, Inc. is a repeat sponsor of a Deutsche Bank
borrower.
THE PROPERTY. Wenatchee Valley Mall is located in East Wenatchee, Douglas
County, Washington, approximately 110 miles east of Seattle and situated within
the Wenatchee Labor Market Area (LMA), encompassing Douglas and Chelan Counties.
East Wenatchee is located east of the Columbia River, and, according to the
appraisal, substantial residential growth is expected to occur in this area. The
subject property is the only enclosed regional mall within 50 miles and has no
direct competition within its extensive trade area. The property has excellent
visibility and access. The subject property is situated on a 29.1-acre site at
the intersection of U.S. Highway 2, State Route 28 and Stevens Street. U.S.
Highway 2 and State Route 28 are the primary arterials through the area.
Wenatchee Valley Mall is located at the foot of the Steven Street Bridge, where
daily traffic counts exceed 35,000. Steven Street Bridge is one of only two area
automotive bridges spanning the Columbia River. The subject property was
originally constructed in 1954 as a neighborhood retail center, expanded in the
1970's and substantially renovated and expanded in phases from 2000-2003 at an
approximate cost of $17 million. The renovation included various upgrades to
both the exterior (facade and parking lot) and interior (floors and common
areas). In 2001, Bon Marche (now renamed Bon-Macy's) built its own store at a
reported cost of approximately $10 million on land ground-leased from the
borrower. The subject property also includes the leasehold interest in two small
parcels (part of the parking area), with both ground leases expiring in December
2053. There is on-site parking for approximately 1,550 cars (4.55 spaces per
1,000 sq. ft.).
This information has been prepared solely for information purposes and is not an
offer to buy or sell or solicitation of an offer to buy or sell any security or
instrument or to participate in any trading strategy. No representation or
warranty can be given with respect to the accuracy or completeness of the
information, or that any future offer of securities will conform to the terms
hereof. If any such offer of securities is made, it will be made pursuant to a
definitive Prospectus and Prospectus Supplement, prepared by the Depositor,
which will contain material information not contained herein and to which
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded in its entirety by such Prospectus and
Prospectus Supplement. ANY DECISION TO INVEST IN SUCH SECURITIES SHOULD BE MADE
ONLY AFTER REVIEWING SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT. Deutsche Bank
Securities Inc., ABN AMRO Incorporated, Banc of America Securities LLC,
Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriters") disclaim any and all liability relating to
this information, including without limitation, any express or implied
representations or warranties for, statements contained in, and omissions from,
this information. This information should only be considered after reading the
Statement Regarding Assumptions as to Securities, Pricing Estimates, and Other
Information (the "Statement") which is attached. Do not use or rely on this
information if you have not received the Statement. You may obtain a copy of the
Statement from your sales representative.
B-50
$900,610,000 (APPROXIMATE)
COMM 2004-LNB2
- --------------------------------------------------------------------------------
COLLATERAL TERM SHEET BALANCE $26,000,000
WENATCHEE VALLEY MALL DSCR: 1.49x
LTV: 68.42%
- --------------------------------------------------------------------------------
Gottschalk's Department Store, formerly an anchor tenant, vacated its space in
March 2003 because of a national retrenchment program, and the borrower
successfully re-leased the space in less than six months to both Ross Dress for
Less and Bed, Bath and Beyond. Tenant sales for 2002 at Wanatchee averaged $202
psf, nearly twice the $111 psf average for regional centers in the western
United States as reported in "Dollars & Cents of Shopping Centers: 2002". In
addition, the subject property's 2002 sales were considerably higher than the
average $160 psf for enclosed malls between 250,000 sq. ft. and 499,999 sq. ft.
as reported by the ICSC.
THE MARKET. According to the appraisal, the Wenatchee LMA's population was
approximately 101,967 in 2002, up 23% from 1990 with continued rapid growth
projected. Primarily an agricultural area, the local economy has become more
diversified in recent years as hydroelectric power generation has become a
significant sector of the economy, and companies such as Verizon have opened
facilities to take advantage of relatively low business costs and a high quality
of life. According to the appraisal, within a 25 mile radius of the subject
property, the 2002 average household income was approximately $54,678.
The subject property is the only enclosed regional mall within a 50 mile radius,
the next-closest being the 640,000 sq. ft. Valley Mall in Yakima (anchored by
Bon Macy's, Sears and Gottschalk's) 50 miles to the south. According to the
appraisal, the subject property benefits, therefore, from the lack of any direct
competition for the approximately 200,000 people residing in its trade area,
half of whom live within 15 minutes of the property. The subject property has
attracted numerous other retail developments to the area, further enhancing the
neighborhood as a destination retail center. These include the 50,000 sq. ft.
Fifth Street Center, the 35,000 sq. ft. Katie-Did Mall and the 270,000 sq. ft.
Valley North power center as well as numerous free-standing big box retailers.
According to the appraisal, there is approximately 2.0 million sq. ft. of retail
space in the overall Wenatchee Valley market with a vacancy rate of
approximately 6%. A survey by the appraiser of several local retail centers
indicated a vacancy range from 0% to 5% and market rents that range from $16.00
psf to $32.00 psf for in-line space and from $10.00psf to $13.50 psf for anchor
space. Wanatchee Valley Mall has an average three-year historical occupancy of
92%. The appraisal identified four comparable mall properties with occupancy
rates ranging from 95% to 100%. Rental rates at the comparable properties ranged
from $14.00 psf to $32.00 psf for in-line space and from $5.00 psf to $16.50 psf
for anchor space. In-line tenants at the subject pay rents ranging from
approximately $15.00 psf to $22.00 psf, while anchor tenant rents range from
$1.94 psf (ground-leased space to Bon-Marche) to $13.21 psf.
SIGNIFICANT TENANTS. The property is 96.12% occupied by a total of five anchor
and 39 in-line tenants, 54.7% (by NRA) of which are investment-grade tenants.
The five anchor tenants, Bon Macy's, Sears, Food Pavilion, Ross Dress For Less
and Bed Bath & Beyond account for 68.3% of GLA and 40.5% of GPR. Other tenants
include a mix of national, regional and local tenants including Waldenbooks,
Payless Shoes, Radio Shack, Foot Locker, GNC and Pacific Sunwear.
BON MARCHE, now renamed Bon-Macy's, occupies 87,040 sq. ft. (25.57% of total
space and 3.0% of GPR) under a ground lease expiring September 30, 2026, with
six, five-year extension options at a rent of $1.15 psf. As of January 3,
2004 Bon-Macys operated 50 stores in the States of Idaho, Montana, Oregon,
Washington and Wyoming. Bon-Macys developed the subject store in 2000/2001 at
a reported cost of approximately $10 million. Bon-Macys is a wholly-owned
subsidiary of Federated Department Stores, Inc. (NYSE: FD; Rated
BBB+/Baa1/BBB+ by S/M/F) and was re-named as part of a re-branding effort to
align the chain with its parent company. For the 12 months ended February 1,
2003, the company's total reported revenues were approximately $15.435
billion with reported net income of approximately $818 million. The
Bon-Macy's store at the subject property had sales of approximately $151 psf
for the twelve months ended January 31, 2003 and an occupancy cost of
approximately 2.12%.
SEARS occupies 48,216 sq. ft. (14.16% of total space and 3.2% of GPR) under
two leases, both expiring August 31, 2013. Sears has been a tenant at the
property since 1973 and is in occupation of 46,488 sq. ft. of space. Sears'
original 30 year lease was renewed by exercising the first of five 10 year
renewal options at a rent of $1.94 psf. The remaining 1,728 sq. ft. of space
that Sears occupies is subject to a rent of $7.94 psf. As at January 3, 2003,
Sears, Roebuck & Co. (NYSE: S; BBB/Baa1/BBB+ by S/M/F) operated more than
2,300 stores across the United States and Canada including approximately
1,000 full-line stores and 1,300 specialty stores. For the year ended January
3, 2004, the company reported total revenues of approximately $41.124 billion
and net income of approximately $3.397 billion. The Sears store at the
subject property had 2002 sales of $248 psf and an occupancy cost of 1.61%.
FOOD PAVILION occupies 47,920 sq. ft. (14.08% of total space and 19.2% of
GPR) under a lease expiring September 30, 2020, at a rent of $13.21 psf. Food
Pavilion is owned by the privately held Brown & Coles Stores company, which
was founded in 1909. As of January 2002, the company operated 35 grocery
stores in Washington, Oregon and Montana. The Food Pavilion store at the
subject property had 2002 sales of $244 psf and an occupancy cost of 6.25%.
This information has been prepared solely for information purposes and is not an
offer to buy or sell or solicitation of an offer to buy or sell any security or
instrument or to participate in any trading strategy. No representation or
warranty can be given with respect to the accuracy or completeness of the
information, or that any future offer of securities will conform to the terms
hereof. If any such offer of securities is made, it will be made pursuant to a
definitive Prospectus and Prospectus Supplement, prepared by the Depositor,
which will contain material information not contained herein and to which
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded in its entirety by such Prospectus and
Prospectus Supplement. ANY DECISION TO INVEST IN SUCH SECURITIES SHOULD BE MADE
ONLY AFTER REVIEWING SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT. Deutsche Bank
Securities Inc., ABN AMRO Incorporated, Banc of America Securities LLC,
Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriters") disclaim any and all liability relating to
this information, including without limitation, any express or implied
representations or warranties for, statements contained in, and omissions from,
this information. This information should only be considered after reading the
Statement Regarding Assumptions as to Securities, Pricing Estimates, and Other
Information (the "Statement") which is attached. Do not use or rely on this
information if you have not received the Statement. You may obtain a copy of the
Statement from your sales representative.
B-51
$900,610,000 (APPROXIMATE)
COMM 2004-LNB2
- --------------------------------------------------------------------------------
COLLATERAL TERM SHEET BALANCE $26,000,000
WENATCHEE VALLEY MALL DSCR: 1.49x
LTV: 68.42%
- --------------------------------------------------------------------------------
RESERVES. Ross Dress For Less (30,335 sq. ft. or 8.91% of total space, 9.0% of
GPR) and Bed Bath & Beyond (20,694 sq. ft. or 6.08% of total space, 6.0% of GPR)
executed new leases in respect of space formerly leased to Gottschalk's
Department Store and recently renovated for them, with the new leases dated
August 26, 2003 and July 25, 2003 respectively. In connection with these two
tenants, the following reserves have been taken:
Ross Dress For Less: (i) $1,021,602 was reserved at closing to cover tenant
improvement obligations of the borrower. Funds from this reserve have been and
will continue to be released periodically as certain conditions are satisfied,
including presentation of invoices for work completed and leasing commissions
due (as of February 6, 2004, the remaining balance of the reserve was $257,594);
and (ii) $282,115 tenant rent reserve, which will be released after satisfactory
evidence that Ross Dress For Less has accepted its space and that a rent
commencement date has been set, subject to retainage of any free rent which will
be released on a pro rata basis monthly during the applicable free rent period.
Bed Bath & Beyond: (i) $1,207,343 was reserved at closing to cover tenant
improvement obligations of the borrower. Funds from this reserve have been and
will continue to be released periodically as certain conditions are satisfied,
including presentation of invoices for work completed and leasing commissions
due (as of February 6, 2004, the remaining balance of the reserve was $140,776);
and (ii) $186,246 tenant rent reserve, which will be released after satisfactory
evidence that Bed Bath & Beyond has accepted its space and that a rent
commencement date has been set, subject to retainage of any free rent which will
be released on a pro rata basis monthly during the applicable free rent period.
Bed Bath & Beyond recently opened for business, and it is anticipated that this
reserve will therefore be released.
PROPERTY MANAGEMENT. A borrower affiliate, Passco Property Management, Inc.,
manages the subject property. Based in Santa Ana, CA, Passco Property Management
Inc. manages over 3.0 million sq. ft. of commercial space.
CURRENT MEZZANINE OR SUBORDINATE INDEBTEDNESS. None.
FUTURE MEZZANINE OR SUBORDINATE INDEBTEDNESS. None permitted.
This information has been prepared solely for information purposes and is not an
offer to buy or sell or solicitation of an offer to buy or sell any security or
instrument or to participate in any trading strategy. No representation or
warranty can be given with respect to the accuracy or completeness of the
information, or that any future offer of securities will conform to the terms
hereof. If any such offer of securities is made, it will be made pursuant to a
definitive Prospectus and Prospectus Supplement, prepared by the Depositor,
which will contain material information not contained herein and to which
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded in its entirety by such Prospectus and
Prospectus Supplement. ANY DECISION TO INVEST IN SUCH SECURITIES SHOULD BE MADE
ONLY AFTER REVIEWING SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT. Deutsche Bank
Securities Inc., ABN AMRO Incorporated, Banc of America Securities LLC,
Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriters") disclaim any and all liability relating to
this information, including without limitation, any express or implied
representations or warranties for, statements contained in, and omissions from,
this information. This information should only be considered after reading the
Statement Regarding Assumptions as to Securities, Pricing Estimates, and Other
Information (the "Statement") which is attached. Do not use or rely on this
information if you have not received the Statement. You may obtain a copy of the
Statement from your sales representative.
B-52
$900,610,000 (APPROXIMATE)
COMM 2004-LNB2
- --------------------------------------------------------------------------------
COLLATERAL TERM SHEET BALANCE $26,000,000
WENATCHEE VALLEY MALL DSCR: 1.49x
LTV: 68.42%
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
This information has been prepared solely for information purposes and is not an
offer to buy or sell or solicitation of an offer to buy or sell any security or
instrument or to participate in any trading strategy. No representation or
warranty can be given with respect to the accuracy or completeness of the
information, or that any future offer of securities will conform to the terms
hereof. If any such offer of securities is made, it will be made pursuant to a
definitive Prospectus and Prospectus Supplement, prepared by the Depositor,
which will contain material information not contained herein and to which
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded in its entirety by such Prospectus and
Prospectus Supplement. ANY DECISION TO INVEST IN SUCH SECURITIES SHOULD BE MADE
ONLY AFTER REVIEWING SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT. Deutsche Bank
Securities Inc., ABN AMRO Incorporated, Banc of America Securities LLC,
Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriters") disclaim any and all liability relating to
this information, including without limitation, any express or implied
representations or warranties for, statements contained in, and omissions from,
this information. This information should only be considered after reading the
Statement Regarding Assumptions as to Securities, Pricing Estimates, and Other
Information (the "Statement") which is attached. Do not use or rely on this
information if you have not received the Statement. You may obtain a copy of the
Statement from your sales representative.
B-53
$900,610,000 (APPROXIMATE)
COMM 2004-LNB2
- --------------------------------------------------------------------------------
COLLATERAL TERM SHEET BALANCE $25,974,625
SHOPPES AT GRAND PRAIRIE DSCR: 1.28x
LTV: 73.71%
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
This information has been prepared solely for information purposes and is not an
offer to buy or sell or solicitation of an offer to buy or sell any security or
instrument or to participate in any trading strategy. No representation or
warranty can be given with respect to the accuracy or completeness of the
information, or that any future offer of securities will conform to the terms
hereof. If any such offer of securities is made, it will be made pursuant to a
definitive Prospectus and Prospectus Supplement, prepared by the Depositor,
which will contain material information not contained herein and to which
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded in its entirety by such Prospectus and
Prospectus Supplement. ANY DECISION TO INVEST IN SUCH SECURITIES SHOULD BE MADE
ONLY AFTER REVIEWING SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT. Deutsche Bank
Securities Inc., ABN AMRO Incorporated, Banc of America Securities LLC,
Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriters") disclaim any and all liability relating to
this information, including without limitation, any express or implied
representations or warranties for, statements contained in, and omissions from,
this information. This information should only be considered after reading the
Statement Regarding Assumptions as to Securities, Pricing Estimates, and Other
Information (the "Statement") which is attached. Do not use or rely on this
information if you have not received the Statement. You may obtain a copy of the
Statement from your sales representative.
B-54
$900,610,000 (APPROXIMATE)
COMM 2004-LNB2
- --------------------------------------------------------------------------------
COLLATERAL TERM SHEET BALANCE $25,974,625
SHOPPES AT GRAND PRAIRIE DSCR: 1.28x
LTV: 73.71%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MORTGAGE LOAN INFORMATION
- --------------------------------------------------------------------------------
LOAN SELLER: GACC
LOAN PURPOSE: Refinance
ORIGINAL PRINCIPAL BALANCE: $26,090,000
CUT-OFF PRINCIPAL BALANCE: $25,974,625
% BY INITIAL UPB: 2.68%
INTEREST RATE: 5.3050%
PAYMENT DATE: 1st of each month
FIRST PAYMENT DATE: December 1, 2003
MATURITY DATE: November 1, 2008
AMORTIZATION: 360 Months
CALL PROTECTION: Lockout for 24 months from securitization date,
then prepayment premitted with yield maintenance.
On and after August 1, 2008, prepayment can be made
without penalty.
SPONSOR: Diane A. Oberhelman
BORROWER: North Shoppes, L.P.
ADDITIONAL FINANCING: None
LOCKBOX: Hard
INITIAL RESERVES: Tax: $121,876
Insurance: $19,584
TI/LC: $225,000
Performance(1): $1,650,000
MONTHLY RESERVES: Tax: $30,469
Insurance: $2,176
TI/LC: $8,242
Replacement: $1,932
- --------------------------------------------------------------------------------
1. See "Reserves" section herein.
- --------------------------------------------------------------------------------
FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
LOAN BALANCE/SQ. FT.: $168.08
BALLOON BALANCE/SQ. FT.: $156.43
LTV: 73.71%(2)
BALLOON LTV: 73.25%
DSCR: 1.28x(2)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
SINGLE ASSET/PORTFOLIO: Single Asset
PROPERTY TYPE: Anchored Retail
COLLATERAL: Fee simple interest in an anchored retail center
LOCATION: Peoria, IL
YEAR BUILT/RENOVATED: 2003/NAP
MORTGAGED COLLATERAL SF: 154,539 sq. ft.
OVERALL CENTER SF: 488,349 sq. ft.
PROPERTY MANAGEMENT: An affiliate of the Borrower, Cullinan Properties,
Ltd.
OCCUPANCY (AS OF 02/10/04): 85.15%
UNDERWRITTEN
NET CASH FLOW: $2,082,889
APPRAISED VALUE: $33,000,000
APPRAISAL DATE: October 1, 2003
- --------------------------------------------------------------------------------
2. Calculated net of holdback amounts of $1.65 million.
- -----------------------------------------------------------------------------------------------------------------------------
SIGNIFICANT TENANTS
- -----------------------------------------------------------------------------------------------------------------------------
TENANT SF % NRSF RENT PSF LEASE EXPIRATION
- -----------------------------------------------------------------------------------------------------------------------------
Galyan's 65,000 42.06% $6.50 3/31/2018
- -----------------------------------------------------------------------------------------------------------------------------
Bombay Company 8,500 5.50% $22.00 3/31/2013
- -----------------------------------------------------------------------------------------------------------------------------
Johnny's Italian Steakhouse 7,888 5.10% $23.60 4/30/2013
- -----------------------------------------------------------------------------------------------------------------------------
Hobby Town USA 7,545 4.88% $26.00 4/01/2013
- -----------------------------------------------------------------------------------------------------------------------------
This information has been prepared solely for information purposes and is not an
offer to buy or sell or solicitation of an offer to buy or sell any security or
instrument or to participate in any trading strategy. No representation or
warranty can be given with respect to the accuracy or completeness of the
information, or that any future offer of securities will conform to the terms
hereof. If any such offer of securities is made, it will be made pursuant to a
definitive Prospectus and Prospectus Supplement, prepared by the Depositor,
which will contain material information not contained herein and to which
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded in its entirety by such Prospectus and
Prospectus Supplement. ANY DECISION TO INVEST IN SUCH SECURITIES SHOULD BE MADE
ONLY AFTER REVIEWING SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT. Deutsche Bank
Securities Inc., ABN AMRO Incorporated, Banc of America Securities LLC,
Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriters") disclaim any and all liability relating to
this information, including without limitation, any express or implied
representations or warranties for, statements contained in, and omissions from,
this information. This information should only be considered after reading the
Statement Regarding Assumptions as to Securities, Pricing Estimates, and Other
Information (the "Statement") which is attached. Do not use or rely on this
information if you have not received the Statement. You may obtain a copy of the
Statement from your sales representative.
B-55
$900,610,000 (APPROXIMATE)
COMM 2004-LNB2
- --------------------------------------------------------------------------------
COLLATERAL TERM SHEET BALANCE $25,974,625
SHOPPES AT GRAND PRAIRIE DSCR: 1.28x
LTV: 73.71%
- --------------------------------------------------------------------------------
SHOPPES AT GRAND PRAIRIE LOAN
THE LOAN. The Shoppes at Grand Prairie Loan is secured by a first mortgage on
The Shoppes at Grand Prairie, a 154,539 sq. ft. portion of a larger, newly built
488,349 sq. ft. open-air lifestyle center located in Peoria, Illinois. The
development cost of the property was approximately $31,257,660 million,
resulting in cash equity of approximately $5,167,660 million on gross loan
proceeds.
THE BORROWER. The borrower, North Shoppes, L.P., is a single-purpose entity for
which a non-consolidation opinion was obtained. The loan sponsor is Cullinan
Properties, Ltd. ("Cullinan"), founded in 1988. Cullinan has extensive
experience in developing, acquiring, and managing retail, multifamily and office
properties. The Peoria Association of Realtors has recognized the sponsor's
founder and majority shareholder, Diane Cullinan-Oberhelman, as one of the top
10 business leaders in Central Illinois. As of June 2003, Ms.
Cullinan-Oberhelman had a stated net worth of approximately $31.6 million.
Ms. Cullinan-Oberhelman is a repeat sponsor of a Deutsche Bank borrower.
THE PROPERTY. The Shoppes at Grand Prairie is a 154,539 sq. ft. portion of a
larger, newly built 488,349 sq. ft. open-air center located in Peoria, Illinois,
approximately 171 miles southwest of Chicago and 175 miles northeast of St.
Louis. The retail center is located in Peoria's rapidly growing northwest
corridor, and is part of a larger retail development totaling approximately 1.0
million sq. ft. located in immediate proximity to the subject. The subject has
been open for business since April 2003 and is anchored by Galyan's Trading Co.
and contains 19 upscale in-line tenants. The subject is shadow-anchored by
Bergner's, Linen's `N Things, Border's Books, Old Navy and an additional 35
in-line tenants that are part of the overall center, but not part of the
collateral. The center is located within several hundred yards of a 95,000 sq.
ft. Home Depot. Additionally, located approximately one-mile southeast of the
subject is Northwoods Mall, which, according to the appraisal, is the dominant
mall in Peoria. Northwoods Mall, a Simon Property Group mall, was built over
thirty years ago, targets a different market and is not a direct competitor of
Shoppes at Grand Prairie.
The Shoppes at Grand Prairie is located at the corner of two of Peoria's major
traffic arteries, U.S. Route 150 and Illinois Route 6. Route 150, also known as
War Memorial Drive, is the main east-west thoroughfare in central Peoria County;
Route 6 is a north-south extension of Interstate 474, the major beltway around
the Peoria metro area. The center has excellent access to these roadways and
good visibility. Opened for business in 2003, the center features an attractive
exterior finish with a decorative brick facade and ornamental accents. On-site
parking totals 2,590 cars of which the subject's pro rata share is 747 spaces
(4.83 spaces per 1,000 sq. ft.).
The Shoppes at Grand Prairie is the area's first new, large-scale retail
development in over 30 years and the focal point of what is commonly referred to
as the "Grand Prairie Development". When completed, this commercial hub is
projected to contain approximately 1.0 million sq. ft. of retail space comprised
of the subject and adjacent retail parcels in addition to restaurants, Class A
multifamily developments, a 90-room hotel and an 18-screen stadium seating movie
theatre, expected to open in the Spring 2004. Additional retail space in the
overall development includes the following: (1) The Plaza at Grand Prairie
(approximately 230,600 sq. ft.) is planned to be a power center (approximately
25% built-out) that when completed is projected to feature national big box
retailers; (2) Grand Prairie Commons (184,645 sq. ft.), located at the same
intersection as the subject, is currently open and contains an established mix
of national retail and restaurant tenants, including Home Depot, Pier 1 Imports,
Gander Mountain (an outdoor gear retailer), Java Jo's and Famous Dave's BBQ; and
(3) Prairie Place (60,000 sq. ft.), a strip center comprised of local and
regional retailers.
SIGNIFICANT TENANTS. The collateral is 85.15% occupied by one anchor and 19
in-line tenants. The anchor tenant is Galyan's Trading Co., a sporting goods and
outdoor products retailer. National and regional in-line tenants at the property
include: Bombay Company (8,500 sq. ft.; 5.5% NRA; 6.5% GPR), Hobby Town USA
(7,545 sq. ft.; 4.9% NRA; 6.8% GPR) Casual Corner (6,115 sq. ft.; 4.0% NRA; 5.9%
GPR) and Jos. A. Bank Clothiers (NASDAQ: JOSB; 4,000 sq. ft.; 2.6% NRA; 3.1%
GPR).
GALYAN'S TRADING CO. ("GALYAN'S") occupies 65,000 sq. ft. (42.06% of total
space and 14.7% of GPR) under a lease expiring in March 31, 2018 at a rent of
$6.50 psf . Galyan's is a sporting goods and outdoor products retailer that
currently operates 46 stores in 21 states. The Company sells outdoor and
athletic equipment, apparel, footwear and accessories, as well as casual
apparel and footwear. For the 2002 fiscal year, Galyan's (NASDAQ: GLYN)
reported net sales of $597.7 million and net income of $18.7 million.
This information has been prepared solely for information purposes and is not an
offer to buy or sell or solicitation of an offer to buy or sell any security or
instrument or to participate in any trading strategy. No representation or
warranty can be given with respect to the accuracy or completeness of the
information, or that any future offer of securities will conform to the terms
hereof. If any such offer of securities is made, it will be made pursuant to a
definitive Prospectus and Prospectus Supplement, prepared by the Depositor,
which will contain material information not contained herein and to which
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded in its entirety by such Prospectus and
Prospectus Supplement. ANY DECISION TO INVEST IN SUCH SECURITIES SHOULD BE MADE
ONLY AFTER REVIEWING SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT. Deutsche Bank
Securities Inc., ABN AMRO Incorporated, Banc of America Securities LLC,
Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriters") disclaim any and all liability relating to
this information, including without limitation, any express or implied
representations or warranties for, statements contained in, and omissions from,
this information. This information should only be considered after reading the
Statement Regarding Assumptions as to Securities, Pricing Estimates, and Other
Information (the "Statement") which is attached. Do not use or rely on this
information if you have not received the Statement. You may obtain a copy of the
Statement from your sales representative.
B-56
$900,610,000 (APPROXIMATE)
COMM 2004-LNB2
- --------------------------------------------------------------------------------
COLLATERAL TERM SHEET BALANCE $25,974,625
SHOPPES AT GRAND PRAIRIE DSCR: 1.28x
LTV: 73.71%
- --------------------------------------------------------------------------------
THE MARKET. According to the appraisal, the property draws shoppers from a
10-county market area representing approximately 620,000 people. The City of
Peoria, IL is situated within the Peoria-Pekin MSA, encompassing the three
counties of Peoria, Tazewell, and Woodford. A network of roadways and rail lines
(including Amtrak) serve the area. Additionally, the City of Peoria and the
State of Illinois Department of Transportation have and are continuing to
improve the road and accessibility infrastructure of the subject property at a
reported cost of approximately $14.7 million. According to the appraisal, a
major renovation and expansion project is reportedly planned for Interstate 74
through the downtown area over the next six years, which should increase the
traffic along Interstate 474 and Illinois Route 6, thereby increasing traffic
within the vicinity of Shoppes at Grand Prairie. Peoria is the largest city in
the MSA with a population of approximately 112,936, representing 32.5% of the
overall MSA population.
According to the appraisal, vacancy rates for most of the area's newer
stabilized centers typically range from 0% to 5%. According to the appraisal,
retail growth in the market is continuing, with residential growth moving in a
north and northwesterly direction from the city's central business district,
placing the subject directly in line with this growth. According to the
appraisal, occupancies at comparable mall properties in the market ranged from
82% to 98% and market rents ranged from $10 to $14 psf for anchor space, $24 to
$32 psf for spaces from 3,001 sq. ft. to 10,000 sq. ft., $28 to $40 psf for
spaces between 1,201 sq. ft. and 3,000 sq. ft., and $40 to $65 psf for spaces
less than 1,200 sq. ft. Rents at Shoppes at Grand Prairie fall within the market
range, with anchor space ranging from $6-$10 psf, $18-$32 psf for 3,000 sq. ft.
to 10,000 sq. ft., $25.50-$38.18 psf for spaces between 1,201 sq. ft. and 3,000
sq. ft. and $21-$59.70 psf for spaces less than 1,200 sq. ft.
RESERVES. $1.65 million was reserved at closing to be held as additional
collateral pending the continued satisfaction of certain performance criteria.
This reserve may be released, in whole or in part, up to four times per year
provided, among other things, the property maintains: (i) a minimum DSCR of
1.25x, (ii) a maximum LTV ratio of 80%, and (iii) minimum occupancy of 84.55%
for a three month period.
CASH MANAGEMENT. A hard lock-box was established at closing of the loan.
PROPERTY MANAGEMENT. Cullinan Properties, Ltd., an affiliate of the Borrower.
CURRENT MEZZANINE OR SUBORDINATE INDEBTEDNESS. None.
FUTURE MEZZANINE OR SUBORDINATE INDEBTEDNESS. None permitted.
This information has been prepared solely for information purposes and is not an
offer to buy or sell or solicitation of an offer to buy or sell any security or
instrument or to participate in any trading strategy. No representation or
warranty can be given with respect to the accuracy or completeness of the
information, or that any future offer of securities will conform to the terms
hereof. If any such offer of securities is made, it will be made pursuant to a
definitive Prospectus and Prospectus Supplement, prepared by the Depositor,
which will contain material information not contained herein and to which
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded in its entirety by such Prospectus and
Prospectus Supplement. ANY DECISION TO INVEST IN SUCH SECURITIES SHOULD BE MADE
ONLY AFTER REVIEWING SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT. Deutsche Bank
Securities Inc., ABN AMRO Incorporated, Banc of America Securities LLC,
Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriters") disclaim any and all liability relating to
this information, including without limitation, any express or implied
representations or warranties for, statements contained in, and omissions from,
this information. This information should only be considered after reading the
Statement Regarding Assumptions as to Securities, Pricing Estimates, and Other
Information (the "Statement") which is attached. Do not use or rely on this
information if you have not received the Statement. You may obtain a copy of the
Statement from your sales representative.
B-57
$900,610,000 (APPROXIMATE)
COMM 2004-LNB2
- --------------------------------------------------------------------------------
COLLATERAL TERM SHEET BALANCE $25,9740,625
SHOPPES AT GRAND PRAIRIE DSCR: 1.28x
LTV: 73.71%
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
This information has been prepared solely for information purposes and is not an
offer to buy or sell or solicitation of an offer to buy or sell any security or
instrument or to participate in any trading strategy. No representation or
warranty can be given with respect to the accuracy or completeness of the
information, or that any future offer of securities will conform to the terms
hereof. If any such offer of securities is made, it will be made pursuant to a
definitive Prospectus and Prospectus Supplement, prepared by the Depositor,
which will contain material information not contained herein and to which
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded in its entirety by such Prospectus and
Prospectus Supplement. ANY DECISION TO INVEST IN SUCH SECURITIES SHOULD BE MADE
ONLY AFTER REVIEWING SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT. Deutsche Bank
Securities Inc., ABN AMRO Incorporated, Banc of America Securities LLC,
Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriters") disclaim any and all liability relating to
this information, including without limitation, any express or implied
representations or warranties for, statements contained in, and omissions from,
this information. This information should only be considered after reading the
Statement Regarding Assumptions as to Securities, Pricing Estimates, and Other
Information (the "Statement") which is attached. Do not use or rely on this
information if you have not received the Statement. You may obtain a copy of the
Statement from your sales representative.
B-58
[THIS PAGE INTENTIONALLY LEFT BLANK]
B-59
$900,610,000 (APPROXIMATE)
COMM 2004-LNB2
- --------------------------------------------------------------------------------
COLLATERAL TERM SHEET BALANCE $23,911,302
WIENER PORTFOLIO III DSCR: 1.21x
LTV: 73.35%
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
This information has been prepared solely for information purposes and is not an
offer to buy or sell or solicitation of an offer to buy or sell any security or
instrument or to participate in any trading strategy. No representation or
warranty can be given with respect to the accuracy or completeness of the
information, or that any future offer of securities will conform to the terms
hereof. If any such offer of securities is made, it will be made pursuant to a
definitive Prospectus and Prospectus Supplement, prepared by the Depositor,
which will contain material information not contained herein and to which
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded in its entirety by such Prospectus and
Prospectus Supplement. ANY DECISION TO INVEST IN SUCH SECURITIES SHOULD BE MADE
ONLY AFTER REVIEWING SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT. Deutsche Bank
Securities Inc., ABN AMRO Incorporated, Banc of America Securities LLC,
Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriters") disclaim any and all liability relating to
this information, including without limitation, any express or implied
representations or warranties for, statements contained in, and omissions from,
this information. This information should only be considered after reading the
Statement Regarding Assumptions as to Securities, Pricing Estimates, and Other
Information (the "Statement") which is attached. Do not use or rely on this
information if you have not received the Statement. You may obtain a copy of the
Statement from your sales representative.
B-60
$900,610,000 (APPROXIMATE)
COMM 2004-LNB2
- --------------------------------------------------------------------------------
COLLATERAL TERM SHEET BALANCE $23,911,302
WIENER PORTFOLIO III DSCR: 1.21x
LTV: 73.35%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MORTGAGE LOAN INFORMATION
- --------------------------------------------------------------------------------
LOAN SELLER: GACC
LOAN PURPOSE: Refinance
ORIGINAL PRINCIPAL BALANCE: $24,025,000
CUT-OFF PRINCIPAL BALANCE: $23,911,302
% BY INITIAL UPB: 2.47%
INTEREST RATE: 4.9600%
PAYMENT DATE: 1st of each month
FIRST PAYMENT DATE: December 1, 2003
MATURITY DATE: November 1, 2008
AMORTIZATION: 360 Months
CALL PROTECTION: Lockout for 24 months from securitization date,
then defeasance is permitted. On and after August
1, 2008, prepayment can be made without penalty.
SPONSOR: Joel Wiener
BORROWER: Underhill Realty LLC
ADDITIONAL FINANCING: None
LOCKBOX: None
INITIAL RESERVES: Tax: $215,814
Insurance: $33,542
Engineering: $21,875
MONTHLY RESERVES: Tax: $34,202
Insurance: $10,742
Replacement: $9,563
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROPERTY DESCRIPTION - 910-930 THIERIOT AVENUE
- --------------------------------------------------------------------------------
SUBJECT COMPARABLE
AVERAGE RENT AVERAGE RENT
UNIT TYPE UNITS (PER MONTH) (PER MONTH)
- --------------------------------------------------------------------------------
Studio 4 $502 $674
- --------------------------------------------------------------------------------
One Bedroom 83 $640 $816
- --------------------------------------------------------------------------------
Two Bedroom 103 $681 $865
- --------------------------------------------------------------------------------
Three Bedroom 60 $779 $1,197
- --------------------------------------------------------------------------------
Super 1 N/A N/A
- --------------------------------------------------------------------------------
Office/
- --------------------------------------------------------------------------------
Management 1 N/A N/A
- --------------------------------------------------------------------------------
TOTAL/WTD. AVG 252 6881 $925(1)
- --------------------------------------------------------------------------------
1. Does not include rent for Superintendent and Office/Management units.
- --------------------------------------------------------------------------------
FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
LOAN BALANCE/UNIT: $52,094
BALLOON BALANCE/UNIT: $48,249
LTV: 73.35%
BALLOON LTV: 67.93%
DSCR: 1.21x
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
SINGLE ASSET/PORTFOLIO: Portfolio
PROPERTY TYPE: Multifamily
COLLATERAL: Blanket first mortgage secured by the fee simple
interest in two multifamily properties containing a
total of 459 units
LOCATION: Bronx, New York
YEARS BUILT/RENOVATED: 1965/NAP
TOTAL PORTFOLIO UNITS: 459
PROPERTY MANAGEMENT: Pinnacle Managing Co. LLC, an
affiliate of the Borrower
PORTFOLIO OCCUPANCY
(AS OF 10/09/03): 97.82%
UNDERWRITTEN
NET CASH FLOW: $1,865,679
PORTFOLIO APPRAISED VALUE: $32,600,000
APPRAISAL DATES: August 18, 2003
- --------------------------------------------------------------------------------
PROPERTY DESCRIPTION - 945-955 UNDERHILL AVENUE
- --------------------------------------------------------------------------------
SUBJECT COMPARABLE
AVERAGE RENT AVERAGE RENT
UNIT TYPE UNITS (PER MONTH) (PER MONTH)
- --------------------------------------------------------------------------------
Studio 22 $593 $674
- --------------------------------------------------------------------------------
One Bedroom 42 $690 $816
- --------------------------------------------------------------------------------
Two Bedroom 100 $702 $865
- --------------------------------------------------------------------------------
Three Bedroom 40 $784 $1,197
- --------------------------------------------------------------------------------
Super 1 N/A N/A
-------------------------------------------------------------------------------
Office/Management 2 N/A N/A
- --------------------------------------------------------------------------------
TOTAL/WTD. AVG 207 $7041 $899(1)
- --------------------------------------------------------------------------------
1. Does not include rent for Superintendent and Office/Management units.
This information has been prepared solely for information purposes and is not an
offer to buy or sell or solicitation of an offer to buy or sell any security or
instrument or to participate in any trading strategy. No representation or
warranty can be given with respect to the accuracy or completeness of the
information, or that any future offer of securities will conform to the terms
hereof. If any such offer of securities is made, it will be made pursuant to a
definitive Prospectus and Prospectus Supplement, prepared by the Depositor,
which will contain material information not contained herein and to which
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded in its entirety by such Prospectus and
Prospectus Supplement. ANY DECISION TO INVEST IN SUCH SECURITIES SHOULD BE MADE
ONLY AFTER REVIEWING SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT. Deutsche Bank
Securities Inc., ABN AMRO Incorporated, Banc of America Securities LLC,
Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriters") disclaim any and all liability relating to
this information, including without limitation, any express or implied
representations or warranties for, statements contained in, and omissions from,
this information. This information should only be considered after reading the
Statement Regarding Assumptions as to Securities, Pricing Estimates, and Other
Information (the "Statement") which is attached. Do not use or rely on this
information if you have not received the Statement. You may obtain a copy of the
Statement from your sales representative.
B-61
$900,610,000 (APPROXIMATE)
COMM 2004-LNB2
- --------------------------------------------------------------------------------
COLLATERAL TERM SHEET BALANCE $23,911,302
WIENER PORTFOLIO III DSCR: 1.21x
LTV: 73.35%
- --------------------------------------------------------------------------------
THE WIENER PORTFOLIO LOAN
THE LOAN. The Wiener Portfolio Loan is secured by a blanket first mortgage on
two high-rise multifamily properties containing a total of 459 units located in
the Borough of the Bronx, in New York City, New York. The total cost basis on
the property is approximately $25.0 million, leaving cash equity of
approximately $1.0 million on gross loan proceeds.
THE BORROWER. The borrower, Underhill Realty LLC, is a single-purpose,
bankruptcy-remote entity with an independent director and for which a
non-consolidation opinion was obtained. The loan sponsor is Joel Wiener, a
successful owner/manager of over 9,000 apartment units located primarily in four
of the five New York City Boroughs of Manhattan, Queens, Brooklyn and the Bronx.
Mr. Wiener has been in the real estate business for over 40 years. Mr. Wiener,
who purchased the subject properties in 2002, had a stated net worth of $124
million including cash and marketable securities of over $15.15 million as of
December 31, 2001(and as confirmed by a "No Material Change" letter dated April
2003).
Joel Wiener is a repeat sponsor of a Deutsche Bank borrower.
THE PROPERTIES. Collateral for the loan consists of two brick high-rise elevator
apartment buildings, each 21 stories in height and containing 207 and 252
residential units. Both of the properties are located in densely populated
residential areas with convenient retail establishments and high multifamily
occupancy rates, resulting in occupancy that exceeds 95%. In addition, both of
the properties have convenient access to major highways and various forms of
public transportation, allowing for an easy commute to local employment centers
as well as to Long Island, New Jersey and the other boroughs of New York City.
In addition to residential apartment units, the subject buildings feature an
office for the building superintendent and management/office units.
THE MARKET. All of the units are rent stabilized with the exception of 2
employee units and 3 office/management units. According to the appraisal, in New
York City, multifamily properties subject to rent control and rent stabilization
ordinances tend to have very high occupancies (95% to 100%), low turnover and
historically stable cash flow. According to the appraisal, rents at all of the
subject properties are, on average, approximately 24% below market, and the
market occupancies for multifamily properties are in excess of 95%. The below
market rents represent upside potential as the landlord is able to increase
rents (subject to rent control guidelines) as units are vacated. Average monthly
rents for studio units at the two subject properties range from $502 to $593,
average monthly rents for one-bedroom units range from $640 to $690, average
monthly rents for two-bedroom units range from $681 to $702 and average monthly
rents for subject three-bedroom units ranged from $779 to $784.
The subject properties are located in the neighborhood of Soundview, which is
the central portion of the Borough of the Bronx. Soundview, a middle income
community, contains a mix of one- to three-family homes and multifamily
apartment buildings. The neighborhood also contains various commercial uses
including neighborhood retail stores, restaurants, banks and other local
services.
The Borough of the Bronx accounts for 16.6% of New York City's population with a
2000 population of 1,332,650. The appraisal estimated Bronx County's overall
median household income at $32,754 in 2002, with average income levels projected
to increase by 14.6% by 2006. It is estimated that 80.4% of all occupied housing
units in Bronx County are renter-occupied, which is more than twice the national
average of 34%, making demand for rental housing very strong. Bronx County has
excellent highway and mass transportation access to Manhattan and surrounding
areas. The properties are in close proximity to I-278 (Bruckner Expressway), the
major thoroughfare running East-West through the Bronx and connecting with I-95
and I-87. According to the appraisal, a limited number of sites for development
inhibits the possibility of future oversupply of housing.
PROPERTY MANAGEMENT. Pinnacle Managing Co. LLC ("Pinnacle"), a company founded
by Joel Wiener, manages the properties. Pinnacle was founded in 1959 and
currently manages nearly 100 properties totaling over 9,000 residential units in
the New York City area (primarily in four of the five boroughs, excluding Staten
Island). Mr. Wiener has been involved in the real estate business for over 40
years and has built a strong organization that employs approximately 300 people
who manage and maintain his portfolio of properties. Pinnacle only manages
properties owned by Mr. Wiener.
CURRENT MEZZANINE OR SUBORDINATE INDEBTEDNESS. None.
FUTURE MEZZANINE OR SUBORDINATE INDEBTEDNESS. None permitted.
This information has been prepared solely for information purposes and is not an
offer to buy or sell or solicitation of an offer to buy or sell any security or
instrument or to participate in any trading strategy. No representation or
warranty can be given with respect to the accuracy or completeness of the
information, or that any future offer of securities will conform to the terms
hereof. If any such offer of securities is made, it will be made pursuant to a
definitive Prospectus and Prospectus Supplement, prepared by the Depositor,
which will contain material information not contained herein and to which
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded in its entirety by such Prospectus and
Prospectus Supplement. ANY DECISION TO INVEST IN SUCH SECURITIES SHOULD BE MADE
ONLY AFTER REVIEWING SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT. Deutsche Bank
Securities Inc., ABN AMRO Incorporated, Banc of America Securities LLC,
Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriters") disclaim any and all liability relating to
this information, including without limitation, any express or implied
representations or warranties for, statements contained in, and omissions from,
this information. This information should only be considered after reading the
Statement Regarding Assumptions as to Securities, Pricing Estimates, and Other
Information (the "Statement") which is attached. Do not use or rely on this
information if you have not received the Statement. You may obtain a copy of the
Statement from your sales representative.
B-62
$900,610,000 (APPROXIMATE)
COMM 2004-LNB2
- --------------------------------------------------------------------------------
COLLATERAL TERM SHEET BALANCE $23,911,302
WIENER PORTFOLIO III DSCR: 1.21x
LTV: 73.35%
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
This information has been prepared solely for information purposes and is not an
offer to buy or sell or solicitation of an offer to buy or sell any security or
instrument or to participate in any trading strategy. No representation or
warranty can be given with respect to the accuracy or completeness of the
information, or that any future offer of securities will conform to the terms
hereof. If any such offer of securities is made, it will be made pursuant to a
definitive Prospectus and Prospectus Supplement, prepared by the Depositor,
which will contain material information not contained herein and to which
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded in its entirety by such Prospectus and
Prospectus Supplement. ANY DECISION TO INVEST IN SUCH SECURITIES SHOULD BE MADE
ONLY AFTER REVIEWING SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT. Deutsche Bank
Securities Inc., ABN AMRO Incorporated, Banc of America Securities LLC,
Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriters") disclaim any and all liability relating to
this information, including without limitation, any express or implied
representations or warranties for, statements contained in, and omissions from,
this information. This information should only be considered after reading the
Statement Regarding Assumptions as to Securities, Pricing Estimates, and Other
Information (the "Statement") which is attached. Do not use or rely on this
information if you have not received the Statement. You may obtain a copy of the
Statement from your sales representative.
B-63
$900,610,000 (APPROXIMATE)
COMM 2004-LNB2
- --------------------------------------------------------------------------------
COLLATERAL TERM SHEET BALANCE $23,549,204
1401 ENCLAVE PARKWAY DSCR: 1.51x
LTV: 68.06%
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
This information has been prepared solely for information purposes and is not an
offer to buy or sell or solicitation of an offer to buy or sell any security or
instrument or to participate in any trading strategy. No representation or
warranty can be given with respect to the accuracy or completeness of the
information, or that any future offer of securities will conform to the terms
hereof. If any such offer of securities is made, it will be made pursuant to a
definitive Prospectus and Prospectus Supplement, prepared by the Depositor,
which will contain material information not contained herein and to which
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded in its entirety by such Prospectus and
Prospectus Supplement. ANY DECISION TO INVEST IN SUCH SECURITIES SHOULD BE MADE
ONLY AFTER REVIEWING SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT. Deutsche Bank
Securities Inc., ABN AMRO Incorporated, Banc of America Securities LLC,
Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriters") disclaim any and all liability relating to
this information, including without limitation, any express or implied
representations or warranties for, statements contained in, and omissions from,
this information. This information should only be considered after reading the
Statement Regarding Assumptions as to Securities, Pricing Estimates, and Other
Information (the "Statement") which is attached. Do not use or rely on this
information if you have not received the Statement. You may obtain a copy of the
Statement from your sales representative.
B-64
$900,610,000 (APPROXIMATE)
COMM 2004-LNB2
- --------------------------------------------------------------------------------
COLLATERAL TERM SHEET BALANCE $23,549,204
1401 ENCLAVE PARKWAY DSCR: 1.51x
LTV: 68.06%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MORTGAGE LOAN INFORMATION
- --------------------------------------------------------------------------------
LOAN SELLER: LaSalle Bank National Association
LOAN PURPOSE: Acquisition
ORIGINAL TMA BALANCE: $23,600,000
CUT-OFF TMA BALANCE: $23,549,204
% BY INITIAL UPB: 2.43%
INTEREST RATE: 5.6000%
PAYMENT DATE: 1st of each month
FIRST PAYMENT DATE: February 1, 2004
MATURITY DATE: January 1, 2009
AMORTIZATION: The loan amortizes on a 30 year schedule.
CALL PROTECTION: Lockout for 36 months from origination date of
December 22, 2003, then defeasance is permitted. On
and after November 1, 2008, prepayment can be made
without penalty.
SPONSOR: Anthony W. Thompson
BORROWERS: NNN Enclave Parkway, LLC1
ADDITIONAL FINANCING: None
LOCKBOX: Hard
INITIAL RESERVES: TI/LC(2): $300,000
Tax: $89,168.93
Insurance: $5,396.39
Debt Service(2): $800,000
MONTHLY RESERVES: Tax: $69,166.93
Insurance: $2,698.19
TI / LC: $25,927
Replacement
Reserves: $3,457
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
LOAN BALANCE/SQ.FT.: $113.53
BALLOON BALANCE/SQ.FT.: $105.86
LTV: 68.06%
BALLOON LTV: 63.47%
DSCR: 1.51x
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
SINGLE ASSET/PORTFOLIO: Single Asset
PROPERTY TYPE: Class "A" Office
COLLATERAL: Fee simple interest in a six-story office building
LOCATION: Houston, TX
YEAR BUILT/RENOVATED: 1998/NAP
TOTAL AREA: 207,435 sq. ft.
PROPERTY MANAGEMENT: Triple Net Properties Realty, Inc., an affiliate of
one of the Borrowers
OCCUPANCY (AS OF 8/31/03): 100.00%
UNDERWRITTEN
NET CASH FLOW: $2,446,894
APPRAISED VALUE: $34,600,000
APPRAISAL DATE: October 25, 2003
- --------------------------------------------------------------------------------
1. There are 22 other borrowers known as NNN Enclave Parkway 1, LLC through NNN
Enclave Parkway 22, LLC. All of the borrowers are tenants-in-common.
2. See "Reserves" herein.
This information has been prepared solely for information purposes and is not an
offer to buy or sell or solicitation of an offer to buy or sell any security or
instrument or to participate in any trading strategy. No representation or
warranty can be given with respect to the accuracy or completeness of the
information, or that any future offer of securities will conform to the terms
hereof. If any such offer of securities is made, it will be made pursuant to a
definitive Prospectus and Prospectus Supplement, prepared by the Depositor,
which will contain material information not contained herein and to which
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded in its entirety by such Prospectus and
Prospectus Supplement. ANY DECISION TO INVEST IN SUCH SECURITIES SHOULD BE MADE
ONLY AFTER REVIEWING SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT. Deutsche Bank
Securities Inc., ABN AMRO Incorporated, Banc of America Securities LLC,
Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriters") disclaim any and all liability relating to
this information, including without limitation, any express or implied
representations or warranties for, statements contained in, and omissions from,
this information. This information should only be considered after reading the
Statement Regarding Assumptions as to Securities, Pricing Estimates, and Other
Information (the "Statement") which is attached. Do not use or rely on this
information if you have not received the Statement. You may obtain a copy of the
Statement from your sales representative.
B-65
$900,610,000 (APPROXIMATE)
COMM 2004-LNB2
- --------------------------------------------------------------------------------
COLLATERAL TERM SHEET BALANCE $23,549,204
1401 ENCLAVE PARKWAY DSCR: 1.51x
LTV: 68.06%
- --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
MAJOR TENANTS
- -------------------------------------------------------------------------------------------------------------------------
TENANT NRSF % NRSF RENT PSF LEASE EXPIRATION RATINGS (S/M/F)
- -------------------------------------------------------------------------------------------------------------------------
The Meridian Resource Corporation 77,981 37.59% $18.50 9/30/2006 -/-/-
- -------------------------------------------------------------------------------------------------------------------------
Parker Drilling Company 53,591 25.84% $15.25 8/31/2009 -/-/-
- -------------------------------------------------------------------------------------------------------------------------
Sysco Corporation 50,597 24.39% $17.50 10/31/2006 AA-/-/-
- -------------------------------------------------------------------------------------------------------------------------
THE 1401 ENCLAVE PARKWAY LOAN
THE LOAN. The loan is secured by a first mortgage on 1401 Enclave Parkway, a
six-story, Class "A" office building located in Houston, Texas containing
207,435 sq. ft. of net rentable area. The purchase price of the property was
approximately $34.5 million resulting in a loan to cost ratio of 68.06% and cash
equity of $10.9 million (32%).
THE BORROWERS. The Borrowers, NNN Enclave Parkway, LLC and those tenants in
common from NNN Enclave Parkway 1, LLC through and including NNN Enclave Parkway
22, LLC ("NNN"), own the subject property jointly and severally as
tenants-in-common. Each of the tenants-in-common borrowers is a single-purpose,
bankruptcy-remote entity with an independent manager. Through a Management
Agreement, Triple Net Properties Realty, Inc., ("TNPRI"), an affiliate of NNN
and Anthony W. Thompson, the sponsor of the loan, will have responsibility for
all asset management decisions as to the loan and the property. Mr. Thompson has
a stated net worth of approximately $9.3 million as of September 30, 2002 and
more than 22 years of real estate experience.
THE PROPERTY. The subject property is located on Enclave Parkway, just off of
Eldridge Parkway, a busy thoroughfare. The property is located in West Houston
in an area known as The Energy Corridor, between Interstate 10 and an area known
as "The Enclave." The Enclave is a 100-acre controlled development consisting
primarily of Class "A" office buildings located approximately one-mile south of
the subject property. Companies that occupy space in the immediate Enclave area
include Sysco Foods, Stone & Webster, Cardinal Health, Cabot Oil & Gas and
Meridian Resource Corporation. Land uses along Enclave Parkway consist
exclusively of office development near the subject property. Recently completed
office developments include the Cabot Oil and Gas building as well as the
Enclave on the Lake building. Land uses along Eldridge Parkway include office
and retail in proximity to the subject property. There is multi-family
development along Eldridge south of the subject property. The majority of this
multi-family development represents recently constructed Class "A" properties.
The subject property is easily accessed via Interstate 10 (the Katy Freeway).
The Katy Freeway is a major east/west freeway traversing the Houston area and
providing direct access to the central business district to the east and to San
Antonio to the west. Other primary roadways which service the area are Highway 6
and Beltway 8, located a short distance from the subject property.
SIGNIFICANT TENANTS. The property is 100.00% occupied by five tenants. The four
major tenants are as follows:
The MERIDIAN RESOURCE CORPORATION (77,981 sf; 37.59% of NRA; 40.36% of GPR)
is an independent oil and natural gas company that explores for, acquires and
develops oil and natural gas properties utilizing 3-D seismic technology.
Meridian's operations are focused on the onshore oil and gas regions in south
Louisiana, the Texas Gulf Coast and offshore in the Gulf of Mexico. As of
December 31, 2002, Meridian had proved reserves of approximately 167 billion
cubic feet of natural gas equivalent. Approximately 64% of Meridian's proved
reserves were natural gas and approximately 76% were classified as proved
developed. Meridian has interests in leases and options to lease acreage in
approximately 299,000 gross acres in Louisiana, Texas and the Gulf of Mexico.
Meridian is traded on the NYSE under the symbol TMR. For the year-to-date
period ended June 30, 2003, Meridian reported revenues of $58.7 million and
net income of $6.6 million. Stockholder's equity as of June 30, 2003 was
$134.5 million.
PARKER DRILLING (53,591 sf; 25.84% of NRA; 23.04% of GPR) is a worldwide
provider of contract drilling and drilling-related services. Parker's primary
operating areas include the transition zones of the Gulf of Mexico, Nigeria
and the Caspian Sea; the offshore waters of the Gulf of Mexico, and on land
in international oil-and gas-producing regions. In addition to operating in
the Gulf of Mexico, Parker's rental tool business operates in the United
States land markets of Texas and the Rocky Mountain region. Parker's marketed
rig fleet of 74 rigs, consisting of 26 barge drilling and workover rigs, six
offshore jack-up rigs, four offshore platform rigs and 38 land rigs, enables
Parker to provide a variety of drilling services to oil and gas operators in
numerous locations worldwide.
This information has been prepared solely for information purposes and is not an
offer to buy or sell or solicitation of an offer to buy or sell any security or
instrument or to participate in any trading strategy. No representation or
warranty can be given with respect to the accuracy or completeness of the
information, or that any future offer of securities will conform to the terms
hereof. If any such offer of securities is made, it will be made pursuant to a
definitive Prospectus and Prospectus Supplement, prepared by the Depositor,
which will contain material information not contained herein and to which
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded in its entirety by such Prospectus and
Prospectus Supplement. ANY DECISION TO INVEST IN SUCH SECURITIES SHOULD BE MADE
ONLY AFTER REVIEWING SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT. Deutsche Bank
Securities Inc., ABN AMRO Incorporated, Banc of America Securities LLC,
Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriters") disclaim any and all liability relating to
this information, including without limitation, any express or implied
representations or warranties for, statements contained in, and omissions from,
this information. This information should only be considered after reading the
Statement Regarding Assumptions as to Securities, Pricing Estimates, and Other
Information (the "Statement") which is attached. Do not use or rely on this
information if you have not received the Statement. You may obtain a copy of the
Statement from your sales representative.
B-66
$900,610,000 (APPROXIMATE)
COMM 2004-LNB2
- --------------------------------------------------------------------------------
COLLATERAL TERM SHEET BALANCE $23,549,204
1401 ENCLAVE PARKWAY DSCR: 1.51x
LTV: 68.06%
- --------------------------------------------------------------------------------
Parker is traded on the NYSE under the symbol PKD. For the year-to-date
period ended June 30, 2003, Parker reported revenues of $157.8 million and a
net loss of $24.3 million (excluding an extraordinary loss associated with
discontinued operations). Stockholder's equity as of June 30, 2003 was $210.0
million.
SYSCO CORPORATION (50,597 sf; 24.39% of NRA; 24.85% of GPR) acts through its
subsidiaries and divisions as a North American distributor of food and
food-related products to the foodservice or food-prepared-away-from-home
industry. Sysco provides its products and services to approximately 400,000
customers, including restaurants, healthcare and educational facilities,
lodging establishments and other foodservice customers. Products distributed
by Sysco include frozen foods, such as meats, fully prepared entrees, fruits,
vegetables and desserts, as well as canned and dry goods, fresh meats,
imported specialties and fresh produce. Sysco also supplies a variety of
non-food items, including paper products such as disposable napkins, plates
and cups; tableware such as china and silverware; restaurant and kitchen
equipment and supplies; medical and surgical supplies, and cleaning supplies.
Sysco is headquartered at 1490 Enclave Parkway, across the road from the
subject property.
Sysco is traded on the NYSE under the symbol SYY and is rated AA- by Standard
and Poors. For the first fiscal quarter ended 9/27/03, Sysco's net earnings
climbed 14.4% to $208.8 million as compared to $182.6 million in last year's
first quarter. Sales increased 11.0% to $7.1 billion vs. $6.4 billion in last
year's first quarter. Operating expenses as a percent to sales improved to
14.36% compared to last year's 14.95%. Stockholder's equity was $2.2 billion
as of June 30, 2003.
Information with respect to tenants was derived from SEC filings or
information provided by the tenant.
THE MARKET. The City of Houston consists of three counties, Harris, Fort Bend
and Montgomery. Houston is the fourth most populous city in the nation and the
largest city in the south and southwest. According to the appraisal, the Houston
metropolitan statistical area grew by 25.8% between 1990 and 2000, from 3.3
million to 4.2 million people. The United States as a whole grew 14.2% for the
same time period. Harris County alone added 582,379 people, up 20.7%. Harris
County is ranked 14th in the nation in percentage population growth in the
1990s.
Based on the appraisal, average income levels in the Houston metropolitan
statistical area grew by 83.7% between 1990 and 2000, from $41,614 to $76,424,
compared to 61.0% growth for the United States as a whole. The 2002 per capita
income for this area is $26,815, compared to $23,622 for the United States as a
whole. Based on the appraisal, the one, three and five mile radius population as
of the 2003 estimate is 16,530 people, 105,205 people, and 241,762 people,
respectively. Median household income for the same distances was $62,531,
$59,390, and $53,451.
TNPRI is an affiliate of the borrower. According to Co-Star and CB Richard
Ellis, the average occupancy rate for the Houston market was 83.6%, with an
average rent per sq. ft. of $17.86 ($21.08 psf for Class "A") as of third
quarter, 2003. The subject's Energy Corridor sub-market average occupancy was
86.8% for the same period with average rent per sq. ft. of $17.02 ($20.11 psf
for Class "A").
There is increased diversification in the Houston economic base as illustrated
by the following list of the top Houston-area employers: 1) Wal-Mart Stores, 2)
Continental Airlines, 3) Administaff, 4) Exxon Mobile, 5) Halliburton, 6) Kroger
Co., 7) Memorial Hermann Healthcare System, 8) McDonald's Corporation, 9)
University of Texas M.D. Anderson Cancer Center, 10) University of Texas Medical
Branch at Galveston. The Houston economy is diversified with oil and gas being
the major business activities. Petrochemicals, manufacturing, shipping, inland
transportation, finance, insurance and scientific services also provide
significant impact to the local economy. The Johnson Space Center is located in
Clear Lake approximately 25 miles from the center of Houston. The Johnson Space
Center is one of the largest research and development facilities of NASA and is
the focal point for the US manned spaceflight program. Unemployment in the
Houston metropolitan statistical area was 6.5% as of January 2003.
This information has been prepared solely for information purposes and is not an
offer to buy or sell or solicitation of an offer to buy or sell any security or
instrument or to participate in any trading strategy. No representation or
warranty can be given with respect to the accuracy or completeness of the
information, or that any future offer of securities will conform to the terms
hereof. If any such offer of securities is made, it will be made pursuant to a
definitive Prospectus and Prospectus Supplement, prepared by the Depositor,
which will contain material information not contained herein and to which
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded in its entirety by such Prospectus and
Prospectus Supplement. ANY DECISION TO INVEST IN SUCH SECURITIES SHOULD BE MADE
ONLY AFTER REVIEWING SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT. Deutsche Bank
Securities Inc., ABN AMRO Incorporated, Banc of America Securities LLC,
Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriters") disclaim any and all liability relating to
this information, including without limitation, any express or implied
representations or warranties for, statements contained in, and omissions from,
this information. This information should only be considered after reading the
Statement Regarding Assumptions as to Securities, Pricing Estimates, and Other
Information (the "Statement") which is attached. Do not use or rely on this
information if you have not received the Statement. You may obtain a copy of the
Statement from your sales representative.
B-67
$900,610,000 (APPROXIMATE)
COMM 2004-LNB2
- --------------------------------------------------------------------------------
COLLATERAL TERM SHEET BALANCE $23,549,204
1401 ENCLAVE PARKWAY DSCR: 1.51x
LTV: 68.06%
- --------------------------------------------------------------------------------
RESERVES. The loan is structured with two upfront reserves. The first reserve is
for the purpose of funding debt service shortfalls and was initially equal to
six months debt service totaling approximately $800,000. In addition, if Sysco
exercises its early termination option, this reserve will be increased to cover
a second six months of debt service and will be funded from lease termination
payments, Borrower payments or a sweep of net cash flow, if any. The second
upfront reserve is for TI/LC shortfalls due to roll during the loan term and is
in the amount of $300,000.
CASH MANAGEMENT The loan has been structured with a hard, pass-through lockbox.
A cash flow sweep will be instituted should there be an event of default under
the loan documents.
PROPERTY MANAGEMENT. 1401 Enclave Parkway is managed and leased by TNPRI, a real
estate services and investment management firm. From TNPRI's home office in
Southern California and six regional offices, TNPRI manages a portfolio of over
eighty properties nationwide totaling over 13 million square feet of office,
industrial and retail properties with a market value of more than $1.5 billion.
TNPRI has an Accredited Management Organization designation from the Institute
of Real Estate Management. TNPRI is an affiliate of one of the borrowers.
CURRENT MEZZANINE OR SUBORDINATE INDEBTEDNESS None.
FUTURE MEZZANINE OR SUBORDINATE INDEBTEDNESS. None permitted.
This information has been prepared solely for information purposes and is not an
offer to buy or sell or solicitation of an offer to buy or sell any security or
instrument or to participate in any trading strategy. No representation or
warranty can be given with respect to the accuracy or completeness of the
information, or that any future offer of securities will conform to the terms
hereof. If any such offer of securities is made, it will be made pursuant to a
definitive Prospectus and Prospectus Supplement, prepared by the Depositor,
which will contain material information not contained herein and to which
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded in its entirety by such Prospectus and
Prospectus Supplement. ANY DECISION TO INVEST IN SUCH SECURITIES SHOULD BE MADE
ONLY AFTER REVIEWING SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT. Deutsche Bank
Securities Inc., ABN AMRO Incorporated, Banc of America Securities LLC,
Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriters") disclaim any and all liability relating to
this information, including without limitation, any express or implied
representations or warranties for, statements contained in, and omissions from,
this information. This information should only be considered after reading the
Statement Regarding Assumptions as to Securities, Pricing Estimates, and Other
Information (the "Statement") which is attached. Do not use or rely on this
information if you have not received the Statement. You may obtain a copy of the
Statement from your sales representative.
B-68
$900,610,000 (APPROXIMATE)
COMM 2004-LNB2
- --------------------------------------------------------------------------------
COLLATERAL TERM SHEET BALANCE $23,549,204
1401 ENCLAVE PARKWAY DSCR: 1.51x
LTV: 68.06%
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
This information has been prepared solely for information purposes and is not an
offer to buy or sell or solicitation of an offer to buy or sell any security or
instrument or to participate in any trading strategy. No representation or
warranty can be given with respect to the accuracy or completeness of the
information, or that any future offer of securities will conform to the terms
hereof. If any such offer of securities is made, it will be made pursuant to a
definitive Prospectus and Prospectus Supplement, prepared by the Depositor,
which will contain material information not contained herein and to which
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded in its entirety by such Prospectus and
Prospectus Supplement. ANY DECISION TO INVEST IN SUCH SECURITIES SHOULD BE MADE
ONLY AFTER REVIEWING SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT. Deutsche Bank
Securities Inc., ABN AMRO Incorporated, Banc of America Securities LLC,
Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriters") disclaim any and all liability relating to
this information, including without limitation, any express or implied
representations or warranties for, statements contained in, and omissions from,
this information. This information should only be considered after reading the
Statement Regarding Assumptions as to Securities, Pricing Estimates, and Other
Information (the "Statement") which is attached. Do not use or rely on this
information if you have not received the Statement. You may obtain a copy of the
Statement from your sales representative.
B-69
ANNEX C
GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES
Except in limited circumstances, the globally offered COMM 2004-LNB2,
Commercial Mortgage Pass-Through Certificates, Class A-1, Class A-2, Class A-3,
Class A-4, Class B, Class C, Class D and Class E will be available only in
book-entry form.
The book-entry certificates will be tradable as home market instruments in
both the European and U.S. domestic markets. Initial settlement and all
secondary trades will settle in same-day funds.
Secondary market trading between investors holding book-entry certificates
through Clearstream and Euroclear will be conducted in the ordinary way in
accordance with their normal rules and operating procedures and in accordance
with conventional Eurobond practice, which is seven calendar days' settlement.
Secondary market trading between investors holding book-entry certificates
through DTC will be conducted according to the rules and procedures applicable
to U.S. corporate debt obligations.
Secondary cross-market trading between member organizations of Clearstream
or Euroclear and Participants holding book-entry certificates will be
accomplished on a delivery against payment basis through the respective
depositaries of Clearstream and Euroclear, in that capacity, as Participants.
As described under "U.S. Federal Income Tax Documentation Requirements"
below, non-U.S. holders of book-entry certificates will be subject to U.S.
withholding taxes unless those holders meet specific requirements and deliver
appropriate U.S. tax documents to the securities clearing organizations of their
participants.
INITIAL SETTLEMENT
All Certificates of each Class of Offered Certificates will be held in
registered form by DTC in the name of Cede & Co. as nominee of DTC. Investors'
interests in the book-entry certificates will be represented through financial
institutions acting on their behalf as direct and indirect Participants. As a
result, Clearstream and Euroclear will hold positions on behalf of their member
organizations through their respective depositaries, which in turn will hold
positions in accounts as Participants.
Investors' securities custody accounts will be credited with their holdings
against payment in same-day funds on the settlement date.
Investors electing to hold their book-entry certificates through
Clearstream or Euroclear accounts will follow the settlement procedures
applicable to conventional Eurobonds, except that there will be no temporary
global security and no "lock up" or restricted period. Global securities will be
credited to the securities custody accounts on the settlement date against
payment in same-day funds.
SECONDARY MARKET TRADING
Since the purchaser determines the place of delivery, it is important to
establish at the time of the trade where both the purchaser's and seller's
accounts are located to ensure that settlement can be made on the desired value
date.
TRADING BETWEEN PARTICIPANTS. Secondary market trading between Participants
will be settled in same-day funds.
TRADING BETWEEN CLEARSTREAM AND/OR EUROCLEAR PARTICIPANTS. Secondary market
trading between member organizations of Clearstream or Euroclear will be settled
using the procedures applicable to conventional Eurobonds in same-day funds.
TRADING BETWEEN DTC SELLER AND CLEARSTREAM OR EUROCLEAR PURCHASER. When
book-entry certificates are to be transferred from the account of a Participant
to the account of a member organization of Clearstream or Euroclear, the
purchaser will send instructions to Clearstream or Euroclear through that member
organization at least one business day prior to settlement. Clearstream or
Euroclear, as the case may be, will instruct the respective depositary to
receive the book-entry certificates against pay-
C-1
ment. Payment will include interest accrued on the book-entry certificates from
and including the first day of the calendar month in which the last coupon
payment date occurs (or, if no coupon payment date has occurred, from and
including March 1, 2004) to and excluding the settlement date, calculated on the
basis of a year of 360 days consisting of twelve 30-day months. Payment will
then be made by the respective depositary to the Participant's account against
delivery of the book-entry certificates. After settlement has been completed,
the book-entry certificates will be credited to the respective clearing system
and by the clearing system, in accordance with its usual procedures, to the
account of the member organization of Clearstream or Euroclear, as the case may
be. The securities credit will appear the next day, European time, and the cash
debit will be back-valued to, and the interest on the book-entry certificates
will accrue from, the value date, which would be the preceding day when
settlement occurred in New York. If settlement is not completed on the intended
value date, which means the trade fails, the Clearstream or Euroclear cash debit
will be valued instead as of the actual settlement date.
Member organizations of Clearstream and Euroclear will need to make
available to the respective clearing systems the funds necessary to process
same-day funds settlement. The most direct means of doing so is to pre-position
funds for settlement, either from cash on hand or existing lines of credit, as
they would for any settlement occurring within Clearstream or Euroclear. Under
this approach, they may take on credit exposure to Clearstream or Euroclear
until the book-entry certificates are credited to their accounts one day later.
As an alternative, if Clearstream or Euroclear has extended a line of
credit to them, member organizations of Clearstream or Euroclear can elect not
to pre-position funds and allow that credit line to be drawn upon to finance
settlement. Under this procedure, the member organizations purchasing book-entry
certificates would incur overdraft charges for one day, assuming they cleared
the overdraft when the book-entry certificates were credited to their accounts.
However, interest on the book-entry certificates would accrue from the value
date. Therefore, in many cases the investment income on the book-entry
certificates earned during that one-day period may substantially reduce or
offset the amount of those overdraft charges, although this result will depend
on the cost of funds of the respective member organization of Clearstream or
Euroclear.
Since the settlement is taking place during New York business hours,
Participants can employ their usual procedures for sending book-entry
certificates to the respective depositary for the benefit of member
organizations of Clearstream or Euroclear. The sale proceeds will be available
to the DTC seller on the settlement date. Thus, to the Participant a
cross-market transaction will settle no differently than a trade between two
Participants.
TRADING BETWEEN CLEARSTREAM OR EUROCLEAR SELLER AND DTC PURCHASER. Due to
time zone differences in their favor, member organizations of Clearstream or
Euroclear may employ their customary procedures for transactions in which
book-entry certificates are to be transferred by the respective clearing system,
through the respective depositary, to a Participant. The seller will send
instructions to Clearstream or Euroclear through a member organization of
Clearstream or Euroclear at least one business day prior to settlement. In these
cases, Clearstream or Euroclear, as appropriate, will instruct the respective
depositary to deliver the book-entry certificates to the Participant's account
against payment. Payment will include interest accrued on the book-entry
certificates from and including the first day of the calendar month in which the
last coupon payment date occurs (or, if no coupon payment date has occurred,
from and including March 1, 2004) to and excluding the settlement date,
calculated on the basis of a year of 360 days consisting of twelve 30-day
months. The payment will then be reflected in the account of the member
organization of Clearstream or Euroclear the following day, and receipt of the
cash proceeds in the account of that member organization of Clearstream or
Euroclear would be back-valued to the value date, which would be the preceding
day, when settlement occurred in New York. Should the member organization of
Clearstream or Euroclear have a line of credit with its respective clearing
system and elect to be in debit in anticipation of receipt of the sale proceeds
in its account, the back-valuation will extinguish any overdraft charges
incurred over the one-day period. If settlement is not completed on the intended
value date, which means the trade fails, receipt of the cash proceeds in the
account of the member organization of Clearstream or Euroclear would be valued
instead as of the actual settlement date.
C-2
Finally, day traders that use Clearstream or Euroclear and that purchase
book-entry certificates from Participants for delivery to member organizations
of Clearstream or Euroclear should note that these trades would automatically
fail on the sale side unless affirmative action were taken. At least three
techniques should be readily available to eliminate this potential problem:
o borrowing through Clearstream or Euroclear for one day, until the
purchase side of the day trade is reflected in their Clearstream or
Euroclear accounts, in accordance with the clearing system's customary
procedures;
o borrowing the book-entry certificates in the United States from a
Participant no later than one day prior to settlement, which would
allow sufficient time for the book-entry certificates to be reflected
in their Clearstream or Euroclear accounts in order to settle the sale
side of the trade; or
o staggering the value dates for the buy and sell sides of the trade so
that the value date for the purchase from the Participant is at least
one day prior to the value date for the sale to the member organization
of Clearstream or Euroclear.
CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
A holder that is not a "United States person" (a "U.S. person") within the
meaning of Section 7701(a)(30) of the Internal Revenue Code (a "non-U.S.
holder") holding a book-entry certificate through Clearstream, Euroclear or DTC
may be subject to U.S. withholding tax unless such holder provides certain
documentation to the issuer of such holder's book-entry certificate, the paying
agent or any other entity required to withhold tax (any of the foregoing, a
"U.S. withholding agent") establishing an exemption from withholding. A non-U.S.
holder may be subject to withholding unless each U.S. withholding agent
receives:
1. from a non-U.S. holder that is classified as a corporation for U.S.
federal income tax purposes or is an individual, and is eligible for
the benefits of the portfolio interest exemption or an exemption (or
reduced rate) based on a treaty, a duly completed and executed IRS Form
W-8BEN (or any successor form);
2. from a non-U.S. holder that is eligible for an exemption on the basis
that the holder's income from the Certificate is effectively connected
to its U.S. trade or business, a duly completed and executed IRS Form
W-8ECI (or any successor form);
3. from a non-U.S. holder that is classified as a partnership for U.S.
federal income tax purposes, a duly completed and executed IRS Form
W-8IMY (or any successor form) with all supporting documentation (as
specified in the U.S. Treasury Regulations) required to substantiate
exemptions from withholding on behalf of its partners; certain
partnerships may enter into agreements with the IRS providing for
different documentation requirements and it is recommended that such
partnerships consult their tax advisors with respect to these
certification rules;
4. from a non-U.S. holder that is an intermediary (I.E., a person acting
as a custodian, a broker, nominee or otherwise as an agent for the
beneficial owner of a Certificate):
(a) if the intermediary is a "qualified intermediary" within the
meaning of section 1.1441-1(e)(5)(ii) of the U.S. Treasury
Regulations (a "qualified intermediary"), a duly completed and
executed IRS Form W-8IMY (or any successor or substitute form)--
(i) stating the name, permanent residence address and qualified
intermediary employer identification number of the qualified
intermediary and the country under the laws of which the
qualified intermediary is created, incorporated or governed,
(ii) certifying that the qualified intermediary has provided, or
will provide, a withholding statement as required under
section 1.1441-1(e)(5)(v) of the U.S. Treasury Regulations,
(iii) certifying that, with respect to accounts it identifies on
its withholding statement, the qualified intermediary is not
acting for its own account but is acting as a qualified
intermediary, and
C-3
(iv) providing any other information, certifications, or
statements that may be required by the IRS Form W-8IMY or
accompanying instructions in addition to, or in lieu of, the
information and certifications described in section
1.1441-1(e)(3)(ii) or 1.1441-1(e)(5)(v) of the U.S. Treasury
Regulations; or
(b) if the intermediary is not a qualified intermediary (a
"nonqualified intermediary"), a duly completed and executed IRS
Form W-8IMY (or any successor or substitute form)--
(i) stating the name and permanent residence address of the
nonqualified intermediary and the country under the laws of
which the nonqualified intermediary is created, incorporated
or governed,
(ii) certifying that the nonqualified intermediary is not acting
for its own account,
(iii) certifying that the nonqualified intermediary has provided,
or will provide, a withholding statement that is associated
with the appropriate IRS Forms W-8 and W-9 required to
substantiate exemptions from withholding on behalf of such
nonqualified intermediary's beneficial owners, and
(iv) providing any other information, certifications or statements
that may be required by the IRS Form W-8IMY or accompanying
instructions in addition to, or in lieu of, the information,
certifications, and statements described in section
1.1441-1(e)(3)(iii) or (iv) of the U.S. Treasury Regulations;
or
5. from a non-U.S. holder that is a trust, depending on whether the trust
is classified for U.S. federal income tax purposes as the beneficial
owner of the Certificate, either an IRS Form W-8BEN or W-8IMY; any
non-U.S. holder that is a trust should consult its tax advisors to
determine which of these forms it should provide.
All non-U.S. holders will be required to update the above-listed forms and
any supporting documentation in accordance with the requirements under the U.S.
Treasury Regulations. These forms generally remain in effect for a period
starting on the date the form is signed and ending on the last day of the third
succeeding calendar year, unless a change in circumstances makes any information
on the form incorrect. Under certain circumstances, an IRS Form W-8BEN, if
furnished with a taxpayer identification number, remains in effect until the
status of the beneficial owner changes, or a change in circumstances makes any
information on the form incorrect.
In addition, all holders, including holders that are U.S. persons, holding
book-entry certificates through Clearstream, Euroclear or DTC may be subject to
backup withholding unless the holder--
o provides the appropriate IRS Form W-8 (or any successor or substitute
form), duly completed and executed, if the holder is a non-U.S. holder;
o provides a duly completed and executed IRS Form W-9, if the holder is a
U.S. person; or
o can be treated as a "exempt recipient" within the meaning of section
1.6049-4(c)(1)(ii) of the U.S. Treasury Regulations (e.g., a
corporation or a financial institution such as a bank).
This summary does not deal with all of the aspects of U.S. federal income
tax withholding or backup withholding that may be relevant to investors that are
non-U.S. holders. Such holders are advised to consult their own tax advisors for
specific tax advice concerning their holding and disposing of book-entry
certificates.
C-4
DEUTSCHE MORTGAGE & ASSET RECEIVING CORPORATION
MORTGAGE PASS-THROUGH CERTIFICATES, ISSUABLE IN SERIES
The mortgage pass-through certificates offered hereby (the "Offered
Certificates") and by the supplements hereto (each, a "Prospectus Supplement")
will be offered from time to time in series. The Offered Certificates of any
series, together with any other mortgage pass-through certificates of such
series, are collectively referred to herein as the "Certificates."
Each series of Certificates will represent in the aggregate the entire
beneficial ownership interest in a trust fund (with respect to any series, the
"Trust Fund") to be formed by Deutsche Mortgage & Asset Receiving Corporation
(the "Depositor") and including a segregated pool (a "Mortgage Asset Pool") of
various types of multifamily and commercial mortgage loans ("Mortgage Loans"),
mortgage-backed securities ("MBS") that evidence interests in, or that are
secured by pledges of, one or more of various types of multifamily or commercial
mortgage loans, or a combination of Mortgage Loans and MBS (collectively,
"Mortgage Assets"). The Mortgage Loans in (and the mortgage loans underlying the
MBS in) any Trust Fund will be secured by first or junior liens on, or security
interests in, one or more of the following types of real property: (i)
Multifamily Properties (as defined herein) units and mobile home parks; and (ii)
commercial properties consisting of office buildings, Retail Properties (as
defined herein), hotels and motels, health care-related facilities, recreational
vehicle parks, warehouse facilities, mini-warehouse facilities, self-storage
facilities, industrial facilities, parking lots, restaurants, mixed use
properties (that is, any combination of the foregoing), and unimproved land. To
the extent described in the Prospectus Supplement, Retail Properties and
Multifamily Properties will represent security for a material concentration of
the Mortgage Loans in (or the mortgage loans underlying the MBS in) any Trust
Fund, based on principal balance at the time such Trust Fund is formed. If so
specified in the related Prospectus Supplement, the Trust Fund for a series of
Certificates may also include letters of credit, surety bonds, insurance
policies, guarantees, reserve funds, guaranteed investment contracts, interest
rate exchange agreements or interest rate cap or floor agreements designed to
reduce the effects of interest rate fluctuations on the Mortgage Assets. See
"Description of the Trust Funds," "Description of the Certificates" and
"Description of Credit Support."
The yield on each class of Certificates of a series will be affected by,
among other things, the rate of payment of principal (including prepayments) on
the Mortgage Assets in the related Trust Fund and the timing of receipt of such
payments as described herein and in the related Prospectus Supplement. See
"Yield and Maturity Considerations." A Trust Fund may be subject to early
termination under the circumstances described herein and in the related
Prospectus Supplement. See "Description of the Certificates--Termination;
Retirement of the Certificates."
(COVER CONTINUED ON NEXT PAGE)
----------
PROCEEDS OF THE ASSETS IN THE RELATED TRUST FUND WILL BE THE SOLE SOURCE OF
PAYMENTS ON THE OFFERED CERTIFICATES. THE OFFERED CERTIFICATES WILL NOT
REPRESENT AN INTEREST IN OR OBLIGATION OF THE DEPOSITOR, DEUTSCHE BANK AG OR ANY
OF THEIR AFFILIATES. NEITHER THE OFFERED CERTIFICATES NOR THE MORTGAGE ASSETS
WILL BE GUARANTEED OR INSURED BY THE DEPOSITOR OR ANY OF ITS AFFILIATES OR,
UNLESS OTHERWISE SPECIFIED IN THE RELATED PROSPECTUS SUPPLEMENT, BY ANY
GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
----------
PROSPECTIVE INVESTORS SHOULD REVIEW THE INFORMATION APPEARING ON PAGE 8
HEREIN UNDER THE CAPTION "RISK FACTORS" AND SUCH INFORMATION AS MAY BE SET FORTH
UNDER THE CAPTION "RISK FACTORS" IN THE RELATED PROSPECTUS SUPPLEMENT BEFORE
PURCHASING ANY OFFERED CERTIFICATE.
The Offered Certificates of any series may be offered through one or more
different methods, including offerings through underwriters, as described under
"Method of Distribution" and in the related Prospectus Supplement.
There will be no secondary market for the Offered Certificates of any
series prior to the offering thereof. There can be no assurance that a secondary
market for any Offered Certificates will develop or, if it does develop, that it
will continue. Unless otherwise provided in the related Prospectus Supplement,
the Certificates will not be listed on any securities exchange.
Retain this Prospectus for future reference. This Prospectus may not be
used to consummate sales of the Offered Certificates of any series unless
accompanied by the Prospectus Supplement for such series.
----------
The date of this Prospectus is February 18, 2004
(cover continued)
As described in the related Prospectus Supplement, the Certificates of each
series, including the Offered Certificates of such series, may consist of one or
more classes of Certificates that: (i) provide for the accrual of interest
thereon based on a fixed, variable or adjustable interest rate; (ii) are senior
or subordinate to one or more other classes of Certificates in entitlement to
certain distributions on the Certificates; (iii) are entitled to distributions
of principal, with disproportionate, nominal or no distributions of interest;
(iv) are entitled to distributions of interest, with disproportionate, nominal
or no distributions of principal; (v) provide for distributions of interest
thereon or principal thereof that commence only following the occurrence of
certain events, such as the retirement of one or more other classes of
Certificates of such series; (vi) provide for distributions of principal thereof
to be made, from time to time or for designated periods, at a rate that is
faster (and, in some cases, substantially faster) or slower (and, in some cases,
substantially slower) than the rate at which payments or other collections of
principal are received on the Mortgage Assets in the related Trust Fund; or
(vii) provide for distributions of principal thereof to be made, subject to
available funds, based on a specified principal payment schedule or other
methodology. Distributions in respect of the Certificates of each series will be
made on a monthly, quarterly, semi-annual, annual or other periodic basis as
specified in the related Prospectus Supplement. See "Description of the
Certificates."
If so provided in the related Prospectus Supplement, one or more elections
may be made to treat the related Trust Fund and/or the assets thereof or a
designated portion thereof as a "real estate mortgage investment conduit" (each,
a "REMIC") for federal income tax purposes. If applicable, the Prospectus
Supplement for a series of Certificates will specify which class or classes of
such series of Certificates will be considered to be regular interests in the
related REMIC and which class of Certificates or other interests will be
designated as the residual interest in the related REMIC. See "Certain Federal
Income Tax Consequences."
An Index of Principal Definitions is included at the end of this Prospectus
specifying the location of definitions of important or frequently used defined
terms.
ii
PROSPECTUS SUPPLEMENT
As more particularly described herein, the Prospectus Supplement relating
to each series of Offered Certificates will, among other things, set forth, as
and to the extent appropriate: (i) a description of the class or classes of such
Offered Certificates, including the payment provisions with respect to each such
class, the aggregate principal amount, if any, of each such class, the rate at
which interest accrues from time to time, if at all, with respect to each such
class or the method of determining such rate, and whether interest with respect
to each such class will accrue from time to time on its aggregate principal
amount, if any, or on a specified notional amount, if at all; (ii) information
with respect to any other classes of Certificates of the same series; (iii) the
respective dates on which distributions are to be made; (iv) information as to
the assets, including the Mortgage Assets, constituting the related Trust Fund
(all such assets, with respect to the Certificates of any series, the "Trust
Assets"); (v) the circumstances, if any, under which the related Trust Fund may
be subject to early termination; (vi) additional information with respect to the
method of distribution of such Offered Certificates; (vii) whether one or more
REMIC elections will be made and the designation of the "regular interests" and
"residual interests" in each REMIC to be created and the identity of the person
(the "REMIC Administrator") responsible for the various tax-related duties in
respect of each REMIC to be created; (viii) the initial percentage ownership
interest in the related Trust Fund to be evidenced by each class of Certificates
of such series; (ix) information concerning the Trustee (as defined herein) of
the related Trust Fund; (x) if the related Trust Fund includes Mortgage Loans,
information concerning the Master Servicer and any Special Servicer (each as
defined herein) of such Mortgage Loans and the circumstances under which all or
a portion, as specified, of the servicing of a Mortgage Loan would transfer from
the Master Servicer to the Special Servicer; (xi) information as to the nature
and extent of subordination of any class of Certificates of such series,
including a class of Offered Certificates; and (xii) whether such Offered
Certificates will be initially issued in definitive or book-entry form.
AVAILABLE INFORMATION
The Depositor has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement (of which this Prospectus forms a part)
under the Securities Act of 1933, as amended, with respect to the Offered
Certificates. This Prospectus and the Prospectus Supplement relating to each
series of Offered Certificates contain summaries of the material terms of the
documents referred to herein and therein, but do not contain all of the
information set forth in the Registration Statement pursuant to the rules and
regulations of the Commission. For further information, reference is made to
such Registration Statement and the exhibits thereto. Such Registration
Statement and exhibits can be inspected and copied at prescribed rates at the
public reference facilities maintained by the Commission at its Public Reference
Section, 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of such material
can also be obtained electronically through the Commission's Electronic Data
Gathering, Analysis and Retrieval system at the Commission's Web site
(http://www.sec.gov).
No dealer, salesman, or other person has been authorized to give any
information, or to make any representations, other than those contained in this
Prospectus or any related Prospectus Supplement, and, if given or made, such
information or representations must not be relied upon as having been authorized
by the Depositor or any other person. Neither the delivery of this Prospectus or
any related Prospectus Supplement nor any sale made hereunder or thereunder
shall under any circumstances create an implication that there has been no
change in the information herein since the date hereof or therein since the date
thereof. This Prospectus and any related Prospectus Supplement are not an offer
to sell or a solicitation of an offer to buy any security in any jurisdiction in
which it is unlawful to make such offer or solicitation.
The Master Servicer, the Trustee or another specified person will cause to
be provided to registered holders of the Offered Certificates of each series
periodic unaudited reports concerning the related Trust Fund. If beneficial
interests in a class or series of Offered Certificates are being held and
transferred in book-entry format through the facilities of The Depository Trust
Company ("DTC") as described herein, then unless otherwise provided in the
related Prospectus Supplement, such reports
iii
will be sent on behalf of the related Trust Fund to a nominee of DTC as the
registered holder of the Offered Certificates. Conveyance of notices and other
communications by DTC to its participating organizations, and directly or
indirectly through such participating organizations to the beneficial owners of
the applicable Offered Certificates, will be governed by arrangements among
them, subject to any statutory or regulatory requirements as may be in effect
from time to time. See "Description of the Certificates--Reports to
Certificateholders" and "--Book-Entry Registration and Definitive Certificates."
The Depositor will file or cause to be filed with the Commission such
periodic reports with respect to each Trust Fund as are required under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
and regulations of the Commission thereunder. In addition, because of the
limited number of Certificateholders expected for each series, the Depositor
anticipates that a significant portion of such reporting requirements will be
permanently suspended following the first fiscal year for the related Trust
Fund.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
There are incorporated herein by reference all documents and reports filed
or caused to be filed by the Depositor with respect to a Trust Fund pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act of 1934, as amended, prior
to the termination of an offering of Offered Certificates evidencing interests
therein. The Depositor will provide or cause to be provided without charge to
each person to whom this Prospectus is delivered in connection with the offering
of one or more classes of Offered Certificates, upon written or oral request of
such person, a copy of any or all documents or reports incorporated herein by
reference, in each case to the extent such documents or reports relate to one or
more of such classes of such Offered Certificates, other than the exhibits to
such documents (unless such exhibits are specifically incorporated by reference
in such documents). Such requests to the Depositor should be directed in writing
to the Depositor at 60 Wall Street, New York, New York 10005, Attention:
Secretary, or by telephone at (212) 250-2500.
iv
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT ...................................................... iii
AVAILABLE INFORMATION ...................................................... iii
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE .......................... iv
SUMMARY OF PROSPECTUS ...................................................... 1
RISK FACTORS ............................................................... 8
Limited Liquidity of Offered Certificates ............................... 8
Limited Assets .......................................................... 9
Credit Support Limitations .............................................. 9
Effect of Prepayments on Average Life of Certificates ................... 10
Effect of Prepayments on Yield of Certificates .......................... 11
Limited Nature of Ratings ............................................... 11
Certain Factors Affecting Delinquency,
Foreclosure and Loss of the Mortgage Loans ............................ 11
Some Certificates may not be Appropriate for Erisa Plans ................ 16
Certain Federal Tax Considerations Regarding Residual Certificates ...... 16
Certain Federal Tax Considerations Regarding Original Issue Discount .... 17
Bankruptcy Proceedings Entail Certain Risks ............................. 17
Book-Entry System for Certain Classes may
Decrease Liquidity and Delay Payment .................................. 17
Inclusion of Delinquent and Nonperforming Mortgage Loans
in a Mortgage Asset Pool .............................................. 18
Termination ............................................................. 18
Risks Associated With Multifamily Properties ............................ 19
Risks Associated With Retail Properties ................................. 18
DESCRIPTION OF THE TRUST FUNDS ............................................. 20
General ................................................................. 20
Mortgage Loans .......................................................... 20
MBS ..................................................................... 25
Certificate Accounts .................................................... 26
Credit Support .......................................................... 26
Cash Flow Agreements .................................................... 26
YIELD AND MATURITY CONSIDERATIONS .......................................... 26
General ................................................................. 26
Pass-Through Rate ....................................................... 27
Payment Delays .......................................................... 27
Certain Shortfalls in Collections of Interest ........................... 27
Yield and Prepayment Considerations ..................................... 27
Weighted Average Life and Maturity ...................................... 29
Other Factors Affecting Yield, Weighted Average Life and Maturity ....... 30
THE DEPOSITOR .............................................................. 31
DEUTSCHE BANK AG ........................................................... 32
DESCRIPTION OF THE CERTIFICATES ............................................ 32
General ................................................................. 32
Distributions ........................................................... 33
Distributions of Interest on the Certificates ........................... 33
Distributions of Principal of the Certificates .......................... 34
Distributions on the Certificates in Respect of Prepayment Premiums
or in Respect of Equity Participations ................................ 35
Allocation of Losses and Shortfalls ..................................... 35
Advances in Respect of Delinquencies .................................... 35
Reports to Certificateholders ........................................... 36
Voting Rights ........................................................... 38
Termination ............................................................. 38
Book-Entry Registration and Definitive Certificates ..................... 38
DESCRIPTION OF THE POOLING AGREEMENTS ...................................... 40
General ................................................................. 40
Assignment of Mortgage Loans; Repurchases ............................... 40
Representations and Warranties; Repurchases ............................. 42
Collection and Other Servicing Procedures ............................... 43
Sub-Servicers ........................................................... 45
Certificate Account ..................................................... 45
Modifications, Waivers and Amendments of Mortgage Loans ................. 47
Realization Upon Defaulted Mortgage Loans ............................... 48
Hazard Insurance Policies ............................................... 49
Due-on-Sale and Due-on-Encumbrance Provisions ........................... 50
Servicing Compensation and Payment of Expenses .......................... 50
Evidence as to Compliance ............................................... 51
Certain Matters Regarding the Master Servicer, the Special
Servicer, the REMIC Administrator and the Depositor ................... 52
Events of Default ....................................................... 53
Rights Upon Event of Default ............................................ 53
Amendment ............................................................... 54
List of Certificateholders .............................................. 55
The Trustee ............................................................. 55
v
Duties of the Trustee ................................................... 55
Certain Matters Regarding the Trustee ................................... 56
Resignation and Removal of the Trustee .................................. 56
DESCRIPTION OF CREDIT SUPPORT .............................................. 57
General ................................................................. 57
Subordinate Certificates ................................................ 57
Insurance or Guarantees with Respect to Mortgage Loans .................. 57
Letter of Credit ........................................................ 58
Certificate Insurance and Surety Bonds .................................. 58
Reserve Funds ........................................................... 58
Credit Support with Respect to MBS ...................................... 58
Interest Rate Exchange, Cap and Floor Agreements ........................ 59
CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS .................................... 59
General ................................................................. 59
Types of Mortgage Instruments ........................................... 59
Leases and Rents ........................................................ 60
Personalty .............................................................. 60
Foreclosure ............................................................. 60
Bankruptcy Laws ......................................................... 64
Environmental Considerations ............................................ 66
Due-on-Sale and Due-on-Encumbrance Provisions ........................... 68
Junior Liens; Rights of Holders of Senior Liens ......................... 69
Subordinate Financing ................................................... 69
Default Interest and Limitations on Prepayments ......................... 69
Applicability of Usury Laws ............................................. 70
Certain Laws and Regulations ............................................ 70
Americans with Disabilities Act ......................................... 70
Servicemembers Civil Relief Act ......................................... 71
Forfeitures in Drug and RICO Proceedings ................................ 71
CERTAIN FEDERAL INCOME TAX CONSEQUENCES .................................... 72
FEDERAL INCOME TAX CONSEQUENCES FOR REMIC CERTIFICATES ..................... 72
General ................................................................. 72
Status of REMIC Certificates ............................................ 72
Qualification as a REMIC ................................................ 73
Taxation of Regular Certificates ........................................ 75
Taxation of Residual Certificates ....................................... 82
Taxes That May Be Imposed on the REMIC Pool ............................. 88
Liquidation of the REMIC Pool ........................................... 89
Administrative Matters .................................................. 89
Limitations on Deduction of Certain Expenses ............................ 90
Taxation of Certain Foreign Investors ................................... 90
Backup Withholding ...................................................... 91
Reporting Requirements .................................................. 92
FEDERAL INCOME TAX CONSEQUENCES FOR CERTIFICATES AS TO WHICH NO REMIC
ELECTION IS MADE ........................................................ 92
Standard Certificates ................................................... 92
Stripped Certificates ................................................... 95
Reporting Requirements and Backup Withholding ........................... 98
Taxation of Certain Foreign Investors ................................... 98
STATE AND OTHER TAX CONSEQUENCES ........................................... 98
CERTAIN ERISA CONSIDERATIONS ............................................... 99
General ................................................................. 99
Plan Asset Regulations .................................................. 99
Prohibited Transaction Exemptions ....................................... 100
Tax Exempt Investors .................................................... 103
LEGAL INVESTMENT ........................................................... 103
USE OF PROCEEDS ............................................................ 105
METHOD OF DISTRIBUTION ..................................................... 105
LEGAL MATTERS .............................................................. 106
FINANCIAL INFORMATION ...................................................... 106
RATING ..................................................................... 107
INDEX OF PRINCIPAL TERMS ................................................... 108
vi
SUMMARY OF PROSPECTUS
The following summary of certain pertinent information is qualified in its
entirety by reference to the more detailed information appearing elsewhere in
this Prospectus and by reference to the information with respect to each series
of Certificates contained in the Prospectus Supplement to be prepared and
delivered in connection with the offering of Offered Certificates of such
series. An Index of Principal Definitions is included at the end of this
Prospectus.
SECURITIES OFFERED ......... Mortgage pass-through certificates, issuable in
series.
DEPOSITOR .................. Deutsche Mortgage & Asset Receiving Corporation, a
Delaware corporation. See "The Depositor."
TRUSTEE .................... The trustee (the "Trustee") for each series of
Certificates will be named in the related
Prospectus Supplement. See "Description of the
Pooling Agreements--The Trustee."
MASTER SERVICER ............ If a Trust Fund includes Mortgage Loans, then the
master servicer (the "Master Servicer") for the
corresponding series of Certificates will be named
in the related Prospectus Supplement. See
"Description of the Pooling Agreements--Certain
Matters Regarding the Master Servicer, the Special
Servicer, the REMIC Administrator and the
Depositor."
SPECIAL SERVICER ........... If a Trust Fund includes Mortgage Loans, then the
special servicer (the "Special Servicer") for the
corresponding series of Certificates will be named,
or the circumstances under which a Special Servicer
may be appointed will be described, in the related
Prospectus Supplement. See "Description of the
Pooling Agreements--Collection and Other Servicing
Procedures."
MBS ADMINISTRATOR .......... If a Trust Fund includes MBS, then the entity
responsible for administering such MBS (the "MBS
Administrator") will be named in the related
Prospectus Supplement. If an entity other than the
Trustee and the Master Servicer is the MBS
Administrator, such entity will be herein referred
to as the "Manager."
REMIC ADMINISTRATOR ........ The person (the "REMIC Administrator") responsible
for the various tax-related administration duties
for a series of Certificates as to which one or
more REMIC elections have been made, will be named
in the related Prospectus Supplement. See
"Description of the Pooling Agreements--Certain
Matters Regarding the Master Servicer, the Special
Servicer, the REMIC Administrator and the
Depositor."
THE MORTGAGE ASSETS ........ The Mortgage Assets will be the primary assets of
any Trust Fund. The Mortgage Assets with respect to
each series of Certificates will, in general,
consist of a pool of mortgage loans ("Mortgage
Loans") secured by first or junior liens on, or
security interests in, one or more of the following
types of real property: (i) residential properties
(each, a "Multifamily Property") consisting of five
or more rental or cooperatively-owned dwelling
units in high-rise, mid-rise or garden apartment
buildings or other residential structures, and
mobile home parks; and (ii) commercial properties
("Commercial Properties") consisting of office
buildings, retail shopping facilities, such as
shopping centers, malls and individual
1
stores (each, a "Retail Property"), hotels and
motels, health care-related facilities (such as
hospitals, skilled nursing facilities, nursing
homes, congregate care facilities and senior
housing), recreational vehicle parks, warehouse
facilities, mini-warehouse facilities, self-storage
facilities, industrial facilities, parking lots,
restaurants, mixed use properties (that is, any
combination of the foregoing), and unimproved land.
To the extent described in the Prospectus
Supplement, Retail Properties and Multifamily
Properties will represent security for a material
concentration of the Mortgage Loans in any Trust
Fund, based on principal balance at the time such
Trust Fund is formed. The Mortgage Loans will not
be guaranteed or insured by the Depositor or any of
its affiliates or, unless otherwise provided in the
related Prospectus Supplement, by any governmental
agency or instrumentality or by any other person.
If so specified in the related Prospectus
Supplement, some Mortgage Loans may be delinquent
or nonperforming as of the date the related Trust
Fund is formed.
As and to the extent described in the related
Prospectus Supplement, a Mortgage Loan (i) may
provide for no accrual of interest or for accrual
of interest thereon at an interest rate (a
"Mortgage Rate") that is fixed over its term or
that adjusts from time to time, or that may be
converted at the borrower's election from an
adjustable to a fixed Mortgage Rate, or from a
fixed to an adjustable Mortgage Rate, (ii) may
provide for level payments to maturity or for
payments that adjust from time to time to
accommodate changes in the Mortgage Rate or to
reflect the occurrence of certain events, and may
permit negative amortization, (iii) may be fully
amortizing or may be partially amortizing or
nonamortizing, with a balloon payment due on its
stated maturity date, (iv) may prohibit over its
term or for a certain period prepayments and/or
require payment of a premium or a yield maintenance
payment in connection with certain prepayments and
(v) may provide for payments of principal, interest
or both, on due dates that occur monthly,
quarterly, semi-annually or at such other interval
as is specified in the related Prospectus
Supplement. Each Mortgage Loan will have had an
original term to maturity of not more than 40
years. No Mortgage Loan will have been originated
by the Depositor. See "Description of the Trust
Funds--Mortgage Loans."
If any Mortgage Loan, or group of related Mortgage
Loans, constitutes a concentration of credit risk,
financial statements or other financial information
with respect to the related Mortgaged Property or
Mortgaged Properties will be included in the
related Prospectus Supplement. See "Description of
the Trust Funds--Mortgage Loans--Mortgage Loan
Information in Prospectus Supplements."
If and to the extent specified in the related
Prospectus Supplement, the Mortgage Assets with
respect to a series of Certificates may also
include, or consist of, mortgage participations,
mortgage pass-through certificates and/or other
mortgage-backed securities (collectively, "MBS"),
that evidence an
2
interest in, or are secured by a pledge of, one or
more mortgage loans that conform to the
descriptions of the Mortgage Loans contained herein
and which may or may not be issued, insured or
guaranteed by the United States or an agency or
instrumentality thereof. See "Description of the
Trust Funds--MBS."
THE CERTIFICATES ........... Each series of Certificates will be issued in one
or more classes pursuant to a pooling and servicing
agreement or other agreement specified in the
related Prospectus Supplement (in any case, a
"Pooling Agreement") and will represent in the
aggregate the entire beneficial ownership interest
in the related Trust Fund.
As described in the related Prospectus Supplement,
the Certificates of each series, including the
Offered Certificates of such series, may consist of
one or more classes of Certificates that, among
other things: (i) are senior (collectively, "Senior
Certificates") or subordinate (collectively,
"Subordinate Certificates") to one or more other
classes of Certificates in entitlement to certain
distributions on the Certificates; (ii) are
entitled to distributions of principal, with
disproportionate, nominal or no distributions of
interest (collectively, "Stripped Principal
Certificates"); (iii) are entitled to distributions
of interest, with disproportionate, nominal or no
distributions of principal (collectively, "Stripped
Interest Certificates"); (iv) provide for
distributions of interest thereon or principal
thereof that commence only after the occurrence of
certain events, such as the retirement of one or
more other classes of Certificates of such series;
(v) provide for distributions of principal thereof
to be made, from time to time or for designated
periods, at a rate that is faster (and, in some
cases, substantially faster) or slower (and, in
some cases, substantially slower) than the rate at
which payments or other collections of principal
are received on the Mortgage Assets in the related
Trust Fund; (vi) provide for distribu- tions of
principal thereof to be made, subject to available
funds, based on a specified principal payment
schedule or other methodology; or (vii) provide for
distribution based on collections on the Mortgage
Assets in the related Trust Fund attributable to
prepayment premiums, yield maintenance payments or
equity participations.
If so specified in the related Prospectus
Supplement, a series of Certificates may include
one or more "Controlled Amortization Classes,"
which will entitle the holders thereof to receive
principal distributions according to a specified
principal payment schedule. Although prepayment
risk cannot be eliminated entirely for any class of
Certificates, a Controlled Amortization Class will
generally provide a relatively stable cash flow so
long as the actual rate of prepayment on the
Mortgage Loans in the related Trust Fund remains
relatively constant at the rate, or within the
range of rates, of prepayment used to establish the
specific principal payment schedule for such
Certificates. Prepayment risk with respect to a
given Mortgage Asset Pool does not disappear,
however, and the stability afforded to a Controlled
Amortization Class comes at the expense of one or
more other classes of the same series, any of which
other classes
3
may also be a class of Offered Certificates. See
"Risk Factors--Effect of Prepayments on Average
Life of Certificates" and "--Effect of Prepayments
on Yield of Certificates."
Each class of Certificates, other than certain
classes of Stripped Interest Certificates and
certain classes of Residual Certificates (as
defined herein), will have an initial stated
principal amount (a "Certificate Balance"); and
each class of Certificates, other than certain
classes of Stripped Principal Certificates and
certain classes of Residual Certificates, will
accrue interest on its Certificate Balance or, in
the case of certain classes of Stripped Interest
Certificates, on a notional amount (a "Notional
Amount"), based on a fixed, variable or adjustable
interest rate (a "Pass-Through Rate"). The related
Prospectus Supplement will specify the Certificate
Balance, Notional Amount and/or Pass-Through Rate
(or, in the case of a variable or adjustable
Pass-Through Rate, the method for determining such
rate), as applicable, for each class of Offered
Certificates.
If so specified in the related Prospectus
Supplement, a class of Certificates may have two or
more component parts, each having characteristics
that are otherwise described herein as being
attributable to separate and distinct classes.
The Certificates will not be guaranteed or insured
by the Depositor or any of its affiliates, by any
governmental agency or instrumentality or by any
other person or entity, unless otherwise provided
in the related Prospectus Supplement. See "Risk
Factors--Limited Assets."
DISTRIBUTIONS OF INTEREST
ON THE CERTIFICATES ........ Interest on each class of Offered Certificates
(other than certain classes of Stripped Principal
Certificates and certain classes of Residual
Certificates) of each series will accrue at the
applicable Pass-Through Rate on the Certificate
Balance or, in the case of certain classes of
Stripped Interest Certificates, the Notional Amount
thereof outstanding from time to time and will be
distributed to Certificateholders as provided in
the related Prospectus Supplement (each of the
specified dates on which distributions are to be
made, a "Distribution Date"). Distributions of
interest with respect to one or more classes of
Certificates (collectively, "Accrual Certificates")
may not commence until the occurrence of certain
events, such as the retirement of one or more other
classes of Certificates, and interest accrued with
respect to a class of Accrual Certificates prior to
the occurrence of such an event will either be
added to the Certificate Balance thereof or
otherwise deferred as described in the related
Prospectus Supplement. Distributions of interest
with respect to one or more classes of Certificates
may be reduced to the extent of certain
delinquencies, losses and other contingencies
described herein and in the related Prospectus
Supplement. See "Risk Factors--Effect of
Prepayments on Average Life of Certificates" and
"--Effect of Prepayments on Yield of Certificates,"
"Yield and Maturity Considerations--Certain
Shortfalls in Collections of Interest" and
"Description of the Certificates--Distributions of
Interest on the Certificates."
4
DISTRIBUTIONS OF PRINCIPAL
OF THE CERTIFICATES ........ Each class of Certificates of each series (other
than certain classes of Stripped Interest
Certificates and certain classes of Residual
Certificates) will have a Certificate Balance. The
Certificate Balance of a class of Certificates
outstanding from time to time will represent the
maximum amount that the holders thereof are then
entitled to receive in respect of principal from
future cash flow on the assets in the related Trust
Fund. The initial aggregate Certificate Balance of
all classes of a series of Certificates will not be
greater than the outstanding principal balance of
the related Mortgage Assets as of a specified date
(the "Cut-off Date"), after application of
scheduled payments due on or before such date,
whether or not received. As and to the extent
described in each Prospectus Supplement,
distributions of principal with respect to the
related series of Certificates will be made on each
Distribution Date to the holders of the class or
classes of Certificates of such series then
entitled thereto until the Certificate Balances of
such Certificates have been reduced to zero.
Distributions of principal with respect to one or
more classes of Certificates: (i) may be made at a
rate that is faster (and, in some cases,
substantially faster) or slower (and, in some
cases, substantially slower) than the rate at which
payments or other collections of principal are
received on the Mortgage Assets in the related
Trust Fund; (ii) may not commence until the
occurrence of certain events, such as the
retirement of one or more other classes of
Certificates of the same series; (iii) may be made,
subject to certain limitations, based on a
specified principal payment schedule; or (iv) may
be contingent on the specified principal payment
schedule for another class of the same series and
the rate at which payments and other collections of
principal on the Mortgage Assets in the related
Trust Fund are received. Unless otherwise specified
in the related Prospectus Supplement, distributions
of principal of any class of Offered Certificates
will be made on a pro rata basis among all of the
Certificates of such class. See "Description of the
Certificates--Distributions of Principal of the
Certificates."
CREDIT SUPPORT AND
CASH FLOW AGREEMENTS ....... If so provided in the related Prospectus
Supplement, partial or full protection against
certain defaults and losses on the Mortgage Assets
in the related Trust Fund may be provided to one or
more classes of Certificates of the related series
in the form of subordination of one or more other
classes of Certificates of such series, which other
classes may include one or more classes of Offered
Certificates, or by one or more other types of
credit support, which may include a letter of
credit, a surety bond, an insurance policy, a
guarantee, a reserve fund, or a combination thereof
(any such coverage with respect to the Certificates
of any series, "Credit Support"). If so provided in
the related Prospectus Supplement, a Trust Fund may
include: (i) guaranteed investment contracts
pursuant to which moneys held in the funds and
accounts established for the related series will be
invested at a specified rate; or (ii) interest rate
exchange agreements, interest
5
rate cap or floor agreements, or other agreements
designed to reduce the effects of interest rate
fluctuations on the Mortgage Assets or on one or
more classes of Certificates (any such agreement,
in the case of clause (i) or (ii), a "Cash Flow
Agreement"). Certain relevant information regarding
any applicable Credit Support or Cash Flow
Agreement will be set forth in the Prospectus
Supplement for a series of Offered Certificates.
See "Risk Factors--Credit Support Limitations,"
"Description of the Trust Funds--Credit Support"
and "--Cash Flow Agreements" and "Description of
Credit Support."
ADVANCES ................... If and to the extent provided in the related
Prospectus Supplement, if a Trust Fund includes
Mortgage Loans, the Master Servicer, the Special
Servicer, the Trustee, any provider of Credit
Support and/or any other specified person may be
obligated to make, or have the option of making,
certain advances with respect to delinquent
scheduled payments of principal and/or interest on
such Mortgage Loans. Any such advances made with
respect to a particular Mortgage Loan will be
reimbursable from subsequent recoveries in respect
of such Mortgage Loan and otherwise to the extent
described herein and in the related Prospectus
Supplement. See "Description of the
Certificates--Advances in Respect of
Delinquencies." If and to the extent provided in
the Prospectus Supplement for a series of
Certificates, any entity making such advances may
be entitled to receive interest thereon for a
specified period during which certain or all of
such advances are outstanding, payable from amounts
in the related Trust Fund. See "Description of the
Certificates--Advances in Respect of
Delinquencies." If a Trust Fund includes MBS, any
comparable advancing obligation of a party to the
related Pooling Agreement, or of a party to the
related MBS Agreement, will be described in the
related Prospectus Supplement.
OPTIONAL TERMINATION ....... If so specified in the related Prospectus
Supplement, a series of Certificates may be subject
to optional early termination through the
repurchase of the Mortgage Assets in the related
Trust Fund by the party or parties specified
therein, under the circumstances and in the manner
set forth therein. If so provided in the related
Prospectus Supplement, upon the reduction of the
Certificate Balance of a specified class or classes
of Certificates by a specified percentage or amount
or upon a specified date, a party specified therein
may be authorized or required to solicit bids for
the purchase of all of the Mortgage Assets of the
related Trust Fund, or of a sufficient portion of
such Mortgage Assets to retire such class or
classes, under the circumstances and in the manner
set forth therein. See "Description of the
Certificates--Termination."
REGISTRATION OF BOOK-ENTRY
CERTIFICATES ............... If so provided in the related Prospectus
Supplement, one or more classes of the Offered
Certificates of such series will be offered in
book-entry form through the facilities of the
Depository Trust Company. Each class of book-entry
Certificates will be initially represented by one
or more global Certificates registered in the
6
name of a nominee of the Depository Trust Company.
No person acquiring an interest in a class of
book-entry Certificates will be entitled to receive
definitive Certificates of that class in fully
registered form, except under the limited
circumstances described in this prospectus. See
"Risk Factors--Book-Entry System for Certain
Classes May Decrease Liquidity and Delay Payment"
and "Description of the Certificates--Book-Entry
Registration and Definitive Certificates."
CERTAIN FEDERAL INCOME TAX
CONSEQUENCES ............... The Certificates of each series will constitute or
evidence ownership of either (i) "regular
interests" ("Regular Certificates") and "residual
interests" ("Residual Certificates") in a Trust
Fund, or a designated portion thereof, treated as a
REMIC under Sections 860A through 860G of the
Internal Revenue Code of 1986 (the "Code"), or (ii)
interests ("Grantor Trust Certificates") in a Trust
Fund treated as a grantor trust under applicable
provisions of the Code. Investors are advised to
consult their tax advisors concerning the specific
tax consequences to them of the purchase, ownership
and disposition of the Offered Certificates and to
review "Certain Federal Income Tax Consequences"
herein and in the related Prospectus Supplement.
ERISA CONSIDERATIONS ....... Fiduciaries of employee benefit plans and certain
other retirement plans and arrangements, including
individual retirement accounts, annuities, Keogh
plans, and collective investment funds and separate
accounts in which such plans, accounts, annuities
or arrangements are invested, that are subject to
the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or Section 4975 of the
Code, should review with their legal advisors
whether the purchase or holding of Offered
Certificates could give rise to a transaction that
is prohibited or is not otherwise permissible under
ERISA or Section 4975 of the Code. See "Certain
ERISA Considerations" herein and "ERISA
Considerations" in the related Prospectus
Supplement.
LEGAL INVESTMENT ........... The Offered Certificates will constitute "mortgage
related securities" for purposes of the Secondary
Mortgage Market Enhancement Act of 1984, as amended
("SMMEA"), only if so specified in the related
Prospectus Supplement. Investors whose investment
activities are subject to legal investment laws and
regulations, regulatory capital requirements, or
review by regulatory authorities may be subject to
restrictions on investment in the Offered
Certificates and should consult their legal
advisors to determine the suitability and
consequences of the purchase, ownership, and sale
of the Offered Certificates. See "Legal Investment"
herein and in the related Prospectus Supplement.
RATING ..................... At their respective dates of issuance, each class
of Offered Certificates will be rated not lower
than investment grade by one or more nationally
recognized statistical rating agencies (each, a
"Rating Agency"). See "Rating" herein and in the
related Prospectus Supplement.
7
RISK FACTORS
In considering an investment in the Offered Certificates of any series,
investors should consider, among other things, the following risk factors and
any other factors set forth under the heading "Risk Factors" in the related
Prospectus Supplement. In general, to the extent that the factors discussed
below pertain to or are influenced by the characteristics or behavior of
Mortgage Loans included in a particular Trust Fund, they would similarly pertain
to and be influenced by the characteristics or behavior of the mortgage loans
underlying any MBS included in such Trust Fund.
LIMITED LIQUIDITY OF OFFERED CERTIFICATES
GENERAL. The Offered Certificates of any series may have limited or no
liquidity. Accordingly, an investor may be forced to bear the risk of its
investment in any Offered Certificates for an indefinite period of time. Lack of
liquidity could result in a substantial decrease in the market value of the
Offered Certificates. Furthermore, except to the extent described herein and in
the related Prospectus Supplement, Certificateholders will have no redemption
rights, and the Offered Certificates of each series are subject to early
retirement only under certain specified circumstances described herein and in
the related Prospectus Supplement. See "Description of the
Certificates--Termination."
LACK OF A SECONDARY MARKET. There can be no assurance that a secondary
market for the Offered Certificates of any series will develop or, if it does
develop, that it will provide holders with liquidity of investment or that it
will continue for as long as such Certificates remain outstanding. The
Prospectus Supplement for any series of Offered Certificates may indicate that
an underwriter specified therein intends to establish a secondary market in such
Offered Certificates; however, no underwriter will be obligated to do so. Any
such secondary market may provide less liquidity to investors than any
comparable market for securities that evidence interests in single-family
mortgage loans. Unless otherwise provided in the related Prospectus Supplement,
the Certificates will not be listed on any securities exchange.
LIMITED NATURE OF ONGOING INFORMATION. The primary source of ongoing
information regarding the Offered Certificates of any series, including
information regarding the status of the related Mortgage Assets and any Credit
Support for such Certificates, will be the periodic reports to
Certificateholders to be delivered pursuant to the related Pooling Agreement as
described herein under the heading "Description of the Certificates--Reports to
Certificateholders." There can be no assurance that any additional ongoing
information regarding the Offered Certificates of any series will be available
through any other source. The limited nature of such information in respect of a
series of Offered Certificates may adversely affect the liquidity thereof, even
if a secondary market for such Certificates does develop.
SENSITIVITY TO FLUCTUATIONS IN PREVAILING INTEREST RATES. Insofar as a
secondary market does develop with respect to any series of Offered Certificates
or class thereof, the market value of such Certificates will be affected by
several factors, including the perceived liquidity thereof, the anticipated cash
flow thereon (which may vary widely depending upon the prepayment and default
assumptions applied in respect of the underlying Mortgage Loans) and prevailing
interest rates. The price payable at any given time in respect of certain
classes of Offered Certificates (in particular, a class with a relatively long
average life, a Companion Class (as defined herein) or a class of Stripped
Interest Certificates or Stripped Principal Certificates) may be extremely
sensitive to small fluctuations in prevailing interest rates; and the relative
change in price for an Offered Certificate in response to an upward or downward
movement in prevailing interest rates may not necessarily equal the relative
change in price for such Offered Certificate in response to an equal but
opposite movement in such rates. Accordingly, the sale of Offered Certificates
by a holder in any secondary market that may develop may be at a discount from
the price paid by such holder. The Depositor is not aware of any source through
which price information about the Offered Certificates will be generally
available on an ongoing basis.
8
LIMITED ASSETS
Unless otherwise specified in the related Prospectus Supplement, neither
the Offered Certificates of any series nor the Mortgage Assets in the related
Trust Fund will be guaranteed or insured by the Depositor or any of its
affiliates, by any governmental agency or instrumentality or by any other person
or entity; and no Offered Certificate of any series will represent a claim
against or security interest in the Trust Funds for any other series.
Accordingly, if the related Trust Fund has insufficient assets to make payments
on a series of Offered Certificates, no other assets will be available for
payment of the deficiency, and the holders of one or more classes of such
Offered Certificates will be required to bear the consequent loss. Furthermore,
certain amounts on deposit from time to time in certain funds or accounts
constituting part of a Trust Fund, including the Certificate Account and any
accounts maintained as Credit Support, may be withdrawn under certain
conditions, if and to the extent described in the related Prospectus Supplement,
for purposes other than the payment of principal of or interest on the related
series of Certificates. If and to the extent so provided in the Prospectus
Supplement for a series of Certificates consisting of one or more classes of
Subordinate Certificates, on any Distribution Date in respect of which losses or
shortfalls in collections on the Mortgage Assets have been incurred, all or a
portion of the amount of such losses or shortfalls will be borne first by one or
more classes of the Subordinate Certificates, and, thereafter, by the remaining
classes of Certificates in the priority and manner and subject to the
limitations specified in such Prospectus Supplement.
CREDIT SUPPORT LIMITATIONS
LIMITATIONS REGARDING TYPES OF LOSSES COVERED. The Prospectus Supplement
for a series of Certificates will describe any Credit Support provided with
respect thereto. Use of Credit Support will be subject to the conditions and
limitations described herein and in the related Prospectus Supplement. Moreover,
such Credit Support may not cover all potential losses or risks; for example,
Credit Support may or may not cover loss by reason of fraud or negligence by a
mortgage loan originator or other parties. Any such losses not covered by Credit
Support may, at least in part, be allocated to one or more classes of Offered
Certificates.
DISPROPORTIONATE BENEFITS TO CERTAIN CLASSES AND SERIES. A series of
Certificates may include one or more classes of Subordinate Certificates (which
may include Offered Certificates), if so provided in the related Prospectus
Supplement. Although subordination is intended to reduce the likelihood of
temporary shortfalls and ultimate losses to holders of Senior Certificates, the
amount of subordination will be limited and may decline under certain
circumstances. In addition, if principal payments on one or more classes of
Offered Certificates of a series are made in a specified order of priority, any
related Credit Support may be exhausted before the principal of the later paid
classes of Offered Certificates of such series has been repaid in full. As a
result, the impact of losses and shortfalls experienced with respect to the
Mortgage Assets may fall primarily upon those classes of Subordinate
Certificates. Moreover, if a form of Credit Support covers the Offered
Certificates of more than one series and losses on the related Mortgage Assets
exceed the amount of such Credit Support, it is possible that the holders of
Offered Certificates of one (or more) such series will be disproportionately
benefited by such Credit Support to the detriment of the holders of Offered
Certificates of one (or more) other such series.
LIMITATIONS REGARDING THE AMOUNT OF CREDIT SUPPORT. The amount of any
applicable Credit Support supporting one or more classes of Offered
Certificates, including the subordination of one or more other classes of
Certificates, will be determined on the basis of criteria established by each
Rating Agency rating such classes of Certificates based on an assumed level of
defaults, delinquencies and losses on the underlying Mortgage Assets and certain
other factors. There can, however, be no assurance that the loss experience on
the related Mortgage Assets will not exceed such assumed levels. See
"Description of the Certificates--Allocation of Losses and Shortfalls" and
"Description of Credit Support." If the losses on the related Mortgage Assets do
exceed such assumed levels, the holders of one or more classes of Offered
Certificates will be required to bear such additional losses.
9
EFFECT OF PREPAYMENTS ON AVERAGE LIFE OF CERTIFICATES
As a result of prepayments on the Mortgage Loans in any Trust Fund, the
amount and timing of distributions of principal and/or interest on the Offered
Certificates of the related series may be highly unpredictable. Prepayments on
the Mortgage Loans in any Trust Fund will result in a faster rate of principal
payments on one or more classes of the related series of Certificates than if
payments on such Mortgage Loans were made as scheduled. Thus, the prepayment
experience on the Mortgage Loans in a Trust Fund may affect the average life of
one or more classes of Certificates of the related series, including a class of
Offered Certificates. The rate of principal payments on pools of mortgage loans
varies among pools and from time to time is influenced by a variety of economic,
demographic, geographic, social, tax and legal factors. For example, if
prevailing interest rates fall significantly below the Mortgage Rates borne by
the Mortgage Loans included in a Trust Fund, then, subject to the particular
terms of the Mortgage Loans (e.g., provisions that prohibit voluntary
prepayments during specified periods or impose penalties in connection
therewith) and the ability of borrowers to obtain new financing, principal
prepayments on such Mortgage Loans are likely to be higher than if prevailing
interest rates remain at or above the rates borne by those Mortgage Loans.
Conversely, if prevailing interest rates rise significantly above the Mortgage
Rates borne by the Mortgage Loans included in a Trust Fund, then principal
prepayments on such Mortgage Loans are likely to be lower than if prevailing
interest rates remain at or below the mortgage rates borne by those Mortgage
Loans. There can be no assurance as to the actual rate of prepayment on the
Mortgage Loans in any Trust Fund or that such rate of prepayment will conform to
any model described herein or in any Prospectus Supplement. As a result,
depending on the anticipated rate of prepayment for the Mortgage Loans in any
Trust Fund, the retirement of any class of Certificates of the related series
could occur significantly earlier or later, and the average life thereof could
be significantly shorter or longer, than expected.
The extent to which prepayments on the Mortgage Loans in any Trust Fund
ultimately affect the average life of any class of Certificates of the related
series will depend on the terms and provisions of such Certificates. A class of
Certificates, including a class of Offered Certificates, may provide that on any
Distribution Date the holders of such Certificates are entitled to a pro rata
share of the prepayments on the Mortgage Loans in the related Trust Fund that
are distributable on such date, to a disproportionately large share (which, in
some cases, may be all) of such prepayments, or to a disproportionately small
share (which, in some cases, may be none) of such prepayments. A class of
Certificates that entitles the holders thereof to a disproportionately large
share of the prepayments on the Mortgage Loans in the related Trust Fund
increases the likelihood of early retirement of such class ("Call Risk") if the
rate of prepayment is relatively fast; while a class of Certificates that
entitles the holders thereof to a disproportionately small share of the
prepayments on the Mortgage Loans in the related Trust Fund increases the
likelihood of an extended average life of such class ("Extension Risk") if the
rate of prepayment is relatively slow. As and to the extent described in the
related Prospectus Supplement, the respective entitlements of the various
classes of Certificateholders of any series to receive payments (and, in
particular, prepayments) of principal of the Mortgage Loans in the related Trust
Fund may vary based on the occurrence of certain events (e.g., the retirement of
one or more classes of Certificates of such series) or subject to certain
contingencies (e.g., prepayment and default rates with respect to such Mortgage
Loans).
A series of Certificates may include one or more Controlled Amortization
Classes, which will entitle the holders thereof to receive principal
distributions according to a specified principal payment schedule. Although
prepayment risk cannot be eliminated entirely for any class of Certificates, a
Controlled Amortization Class will generally provide a relatively stable cash
flow so long as the actual rate of prepayment on the Mortgage Loans in the
related Trust Fund remains relatively constant at the rate, or within the range
of rates, of prepayment used to establish the specific principal payment
schedule for such Certificates. Prepayment risk with respect to a given Mortgage
Asset Pool does not disappear, however, and the stability afforded to a
Controlled Amortization Class comes at the expense of one or more Companion
Classes of the same series, any of which Companion Classes may also be a class
of Offered Certificates. In general, and as more specifically described in the
related Prospectus Supplement, a Companion Class may entitle the holders thereof
to a disproportionately large share of prepayments on the Mortgage Loans in the
related Trust Fund when the rate of prepayment is relatively
10
fast, and/or may entitle the holders thereof to a disproportionately small share
of prepayments on the Mortgage Loans in the related Trust Fund when the rate of
prepayment is relatively slow. As and to the extent described in the related
Prospectus Supplement, a Companion Class absorbs some (but not all) of the Call
Risk and/or Extension Risk that would otherwise belong to the related Controlled
Amortization Class if all payments of principal of the Mortgage Loans in the
related Trust Fund were allocated on a pro rata basis.
EFFECT OF PREPAYMENTS ON YIELD OF CERTIFICATES
A series of Certificates may include one or more classes of Offered
Certificates offered at a premium or discount. Yields on such classes of
Certificates will be sensitive, and in some cases extremely sensitive, to
prepayments on the Mortgage Loans in the related Trust Fund and, where the
amount of interest payable with respect to a class is disproportionately large,
as compared to the amount of principal, as with certain classes of Stripped
Interest Certificates, a holder might fail to recover its original investment
under some prepayment scenarios. The extent to which the yield to maturity of
any class of Offered Certificates may vary from the anticipated yield will
depend upon the degree to which such Certificates are purchased at a discount or
premium and the amount and timing of distributions thereon. An investor should
consider, in the case of any Offered Certificate purchased at a discount, the
risk that a slower than anticipated rate of principal payments on the Mortgage
Loans could result in an actual yield to such investor that is lower than the
anticipated yield and, in the case of any Offered Certificate purchased at a
premium, the risk that a faster than anticipated rate of principal payments
could result in an actual yield to such investor that is lower than the
anticipated yield. See "Yield and Maturity Considerations."
LIMITED NATURE OF RATINGS
Any rating assigned by a Rating Agency to a class of Offered Certificates
will reflect only its assessment of the likelihood that holders of such Offered
Certificates will receive payments to which such Certificateholders are entitled
under the related Pooling Agreement. Such rating will not constitute an
assessment of the likelihood that principal prepayments on the related Mortgage
Loans will be made, the degree to which the rate of such prepayments might
differ from that originally anticipated or the likelihood of early optional
termination of the related Trust Fund. Furthermore, such rating will not address
the possibility that prepayment of the related Mortgage Loans at a higher or
lower rate than anticipated by an investor may cause such investor to experience
a lower than anticipated yield or that an investor that purchases an Offered
Certificate at a significant premium might fail to recover its initial
investment under certain prepayment scenarios. Hence, a rating assigned by a
Rating Agency does not guarantee or ensure the realization of any anticipated
yield on a class of Offered Certificates.
The amount, type and nature of Credit Support, if any, provided with
respect to a series of Certificates will be determined on the basis of criteria
established by each Rating Agency rating classes of the Certificates of such
series. Those criteria are sometimes based upon an actuarial analysis of the
behavior of mortgage loans in a larger group. However, there can be no assurance
that the historical data supporting any such actuarial analysis will accurately
reflect future experience, or that the data derived from a large pool of
mortgage loans will accurately predict the delinquency, foreclosure or loss
experience of any particular pool of Mortgage Loans. In other cases, such
criteria may be based upon determinations of the values of the Mortgaged
Properties that provide security for the Mortgage Loans. However, no assurance
can be given that those values will not decline in the future. As a result, the
Credit Support required in respect of the Offered Certificates of any series may
be insufficient to fully protect the holders thereof from losses on the related
Mortgage Asset Pool. See "Description of Credit Support" and "Rating."
CERTAIN FACTORS AFFECTING DELINQUENCY, FORECLOSURE AND LOSS
OF THE MORTGAGE LOANS
GENERAL. The payment performance of the Offered Certificates of any series
will be directly related to the payment performance of the underlying Mortgage
Loans. Set forth below is a discussion of certain factors that will affect the
full and timely payment of the Mortgage Loans in any Trust Fund. In
11
addition, a description of certain material considerations associated with
investments in mortgage loans is included herein under "Certain Legal Aspects of
Mortgage Loans."
The Offered Certificates will be directly or indirectly backed by mortgage
loans secured by multifamily and/or commercial properties. Mortgage loans made
on the security of multifamily or commercial property may have a greater
likelihood of delinquency and foreclosure, and a greater likelihood of loss in
the event thereof, than loans made on the security of an owner-occupied
single-family property. See "Description of the Trust Funds--Mortgage
Loans--Default and Loss Considerations with Respect to the Mortgage Loans."
Commercial and multifamily lending typically involved larger loans to single
borrowers or groups of related borrowers than single-family loans. The ability
of a borrower to repay a loan secured by an income-producing property typically
is dependent primarily upon the successful operation of such property rather
than upon the existence of independent income or assets of the borrower; thus,
the value of an income-producing property is directly related to the net
operating income derived from such property. If the net operating income of the
property is reduced (for example, if rental or occupancy rates decline or real
estate tax rates or other operating expenses increase), the borrower's ability
to repay the loan may be impaired. Commercial and multifamily real estate can be
affected significantly by the supply and demand in the market for the type of
property securing the loan and, therefore, may be subject to adverse economic
conditions. Market values may vary as a result of economic events or
governmental regulations outside the control of the borrower or lender that
impact the cash flow of the property. For example, some laws, such as the
Americans with Disabilities Act, may require modifications to properties, and
rent control laws may limit rent collections in the case of multifamily
properties. A number of the Mortgage Loans may be secured by liens on
owner-occupied Mortgaged Properties or on Mortgaged Properties leased to a
single tenant or a small number of significant tenants. Accordingly, a decline
in the financial condition of the borrower or a significant tenant, as
applicable, may have a disproportionately greater effect on the net operating
income from such Mortgaged Properties than would be the case with respect to
Mortgaged Properties with multiple tenants. Furthermore, the value of any
Mortgaged Property may be adversely affected by risks generally incident to
interests in real property, including changes in general or local economic
conditions and/or specific industry segments; declines in real estate values;
declines in rental or occupancy rates; increases in interest rates, real estate
tax rates and other operating expenses; changes in governmental rules,
regulations and fiscal policies, including environmental legislation; natural
disasters and civil disturbances such as earthquakes, hurricanes, floods,
eruptions, riots or other acts of God; and other circumstances, conditions or
events beyond the control of a Master Servicer or a Special Servicer. Additional
considerations may be presented by the type and use of a particular Mortgaged
Property. For instance, Mortgaged Properties that operate as hospitals and
nursing homes are subject to significant governmental regulation of the
ownership, operation, maintenance and financing of health care institutions.
Hotel and motel properties are often operated pursuant to franchise, management
or operating agreements that may be terminable by the franchisor or operator,
and the transferability of a hotel's operating, liquor and other licenses upon a
transfer of the hotel, whether through purchase or foreclosure, is subject to
local law requirements. The ability of a borrower to repay a Mortgage Loan
secured by shares allocable to one or more Cooperative dwelling units may depend
on the ability of the dwelling units to generate sufficient rental income, which
may be subject to rent control or stabilization laws, to cover both debt service
on the loan as well as maintenance charges to the Cooperative. Further, a
Mortgage Loan secured by Cooperative shares is subordinate to the mortgage, if
any, on the Cooperative apartment building.
The economic performance of Mortgage Loans that are secured by full service
hotels, limited service hotels, hotels associated with national franchise
chains, hotels associated with regional franchise chains and hotels that are not
affiliated with any franchise chain but may have their own brand identity, are
affected by various factors, including adverse economic and social conditions,
either local, regional or national (which may limit the amount that can be
charged for a room and reduce occupancy levels), construction of competing
hotels or resorts, continuing expenditures for modernizing, refurbishing, and
maintaining existing facilities prior to the expiration of their anticipated
useful lives, deterioration in the financial strength or managerial capabilities
of the owner and operator of a hotel, and changes in travel patterns caused by
changes in access, energy prices, strikes, relocation of highways, the
construction of additional highways or other factors. Additionally, the hotel
and lodging
12
industry is generally seasonal in nature and this seasonality can be expected to
cause periodic fluctuations in room and other revenues, occupancy levels, room
rates and operating expenses. The demand for particular accommodations may also
be affected by changes in travel patterns caused by changes in energy prices,
strikes, relocation of highways, the construction of additional highways and
other factors.
The viability of any hotel property that is the franchisee of a national or
regional chain depends in part on the continued existence and financial strength
of the franchisor, the public perception of the franchise service mark and the
duration of the franchise licensing agreements. The transferability of franchise
license agreements may be restricted and, in the event of a foreclosure on that
hotel property, the property would not have the right to use the franchise
license without the franchisor's consent. Conversely, a lender may be unable to
remove a franchisor that it desires to replace following a foreclosure. Further,
in the event of a foreclosure on a hotel property, it is unlikely that the
Trustee (or Master Servicer or Special Servicer) or purchaser of that hotel
property would be entitled to the rights under any existing liquor license for
that hotel property. It is more likely that those persons would have to apply
for new licenses. We cannot assure you that a new license could be obtained or
that it could be obtained promptly.
Other multifamily properties, hotels, retail properties, office buildings,
manufactured housing properties, nursing homes and self-storage facilities
located in the areas of the Mortgaged Properties compete with the Mortgaged
Properties to attract residents and customers. The leasing of real estate is
highly competitive. The principal means of competition are price, location and
the nature and condition of the facility to be leased. A borrower under a
Mortgage Loan competes with all lessors and developers of comparable types of
real estate in the area in which the Mortgaged Property is located. Those
lessors or developers could have lower rentals, lower operating costs, more
favorable locations or better facilities. While a borrower under a Mortgage Loan
may renovate, refurbish or expand the Mortgaged Property to maintain it and
remain competitive, that renovation, refurbishment or expansion may itself
entail significant risk. Increased competition could adversely affect income
from and market value of the Mortgaged Properties. In addition, the business
conducted at each Mortgaged Property may face competition from other industries
and industry segments.
In addition, the concentration of default, foreclosure and loss risks in
individual Mortgage Loans in a particular Trust Fund will generally be greater
than for pools of single-family loans because Mortgage Loans in a Trust Fund
will generally consist of a smaller number of higher balance loans than would a
pool of single-family loans of comparable aggregate unpaid principal balance.
LIMITED RECOURSE NATURE OF THE MORTGAGE LOANS. It is anticipated that some
or all of the Mortgage Loans included in any Trust Fund will be nonrecourse
loans or loans for which recourse may be restricted or unenforceable. As to any
such Mortgage Loan, recourse in the event of borrower default will be limited to
the specific real property and other assets, if any, that were pledged to secure
the Mortgage Loan. However, even with respect to those Mortgage Loans that
provide for recourse against the borrower and its assets generally, there can be
no assurance that enforcement of such recourse provisions will be practicable,
or that the assets of the borrower will be sufficient to permit a recovery in
respect of a defaulted Mortgage Loan in excess of the liquidation value of the
related Mortgaged Property. See "Certain Legal Aspects of Mortgage
Loans--Foreclosure--Anti-Deficiency Legislation."
LIMITATIONS ON ENFORCEABILITY OF CROSS-COLLATERALIZATION. A Mortgage Pool
may include groups of Mortgage Loans which are cross-collateralized and
cross-defaulted. These arrangements are designed primarily to ensure that all of
the collateral pledged to secure the respective Mortgage Loans in a
cross-collateralized group, and the cash flows generated thereby, are available
to support debt service on, and ultimate repayment of, the aggregate
indebtedness evidenced by those Mortgage Loans. These arrangements thus seek to
reduce the risk that the inability of one or more of the Mortgaged Properties
securing any such group of Mortgage Loans to generate net operating income
sufficient to pay debt service will result in defaults and ultimate losses.
There may not be complete identity of ownership of the Mortgaged Properties
securing a group of cross-collateralized Mortgage Loans. In such an instance,
creditors of one or more of the related borrowers could challenge the
cross-collateralization arrangement as a fraudulent conveyance.
13
Generally, under federal and most state fraudulent conveyance statutes, the
incurring of an obligation or the transfer of property by a person will be
subject to avoidance under certain circumstances if the person did not receive
fair consideration or reasonably equivalent value in exchange for such
obligation or transfer and (i) was insolvent or was rendered insolvent by such
obligation or transfer, (ii) was engaged in business or a transaction, or was
about to engage in business or a transaction, for which any property remaining
with the person was an unreasonably small capital or (iii) intended to, or
believed that it would, incur debts that would be beyond the person's ability to
pay as such debts matured. Accordingly, a lien granted by a borrower to secure
repayment of another borrower's mortgage loan could be avoided if a court were
to determine that (i) such borrower was insolvent at the time of granting the
lien, was rendered insolvent by the granting of the lien, or was left with
inadequate capital, or was not able to pay its debts as they matured and (ii)
the borrower did not, when it allowed its mortgaged property to be encumbered by
a lien securing the entire indebtedness represented by the other mortgage loan,
receive fair consideration or reasonably equivalent value for pledging such
mortgaged property for the equal benefit of the other borrower. If the lien is
avoided, the lender would lose the benefits afforded by such lien.
The cross-collateralized Mortgage Loans constituting any group thereof may
be secured by mortgage liens on Mortgaged Properties located in different
states. Because of various state laws governing foreclosure or the exercise of a
power of sale and because, in general, foreclosure actions are brought in state
court, and the courts of one state cannot exercise jurisdiction over property in
another state, it may be necessary upon a default under any such Mortgage Loan
to foreclose on the related Mortgaged Properties in a particular order rather
than simultaneously in order to ensure that the lien of the related Mortgages is
not impaired or released.
INCREASED RISK OF DEFAULT ASSOCIATED WITH BALLOON PAYMENTS. Certain of the
Mortgage Loans included in a Trust Fund may be non-amortizing or only partially
amortizing over their terms to maturity and, thus, will require substantial
payments of principal (that is, balloon payments) at their stated maturity.
Mortgage Loans of this type involve a greater likelihood of default than
self-amortizing loans because the ability of a borrower to make a balloon
payment typically will depend upon its ability either to refinance the loan or
to sell the related Mortgaged Property. The ability of a borrower to accomplish
either of these goals will be affected by a number of factors, including the
value of the related Mortgaged Property, the level of available Mortgage Rates
at the time of sale or refinancing, the borrower's equity in the related
Mortgaged Property, the financial condition and operating history of the
borrower and the related Mortgaged Property, tax laws, rent control laws (with
respect to certain residential properties), Medicaid and Medicare reimbursement
rates (with respect to hospitals and nursing homes), prevailing general economic
conditions and the availability of credit for loans secured by multifamily or
commercial, as the case may be, real properties generally. Neither the Depositor
nor any of its affiliates will be required to refinance any Mortgage Loan.
If and to the extent described herein and in the related Prospectus
Supplement, in order to maximize recoveries on defaulted Mortgage Loans, the
Master Servicer or the Special Servicer will be permitted (within prescribed
limits) to extend and modify Mortgage Loans that are in default or as to which a
payment default is imminent. See "Description of the Pooling
Agreements--Realization Upon Defaulted Mortgage Loans." While the Master
Servicer or the Special Servicer generally will be required to determine that
any such extension or modification is reasonably likely to produce a greater
recovery than liquidation, taking into account the time value of money, there
can be no assurance that any such extension or modification will in fact
increase the present value of receipts from or proceeds of the affected Mortgage
Loans.
LENDER DIFFICULTY IN COLLECTING RENTS UPON THE DEFAULT AND/OR BANKRUPTCY OF
BORROWER. Each Mortgage Loan included in any Trust Fund secured by Mortgaged
Property that is subject to leases typically will be secured by an assignment of
leases and rents pursuant to which the borrower assigns to the lender its right,
title and interest as landlord under the leases of the related Mortgaged
Property, and the income derived therefrom, as further security for the related
Mortgage Loan, while retaining a license to collect rents for so long as there
is no default. If the borrower defaults, the license terminates and the lender
is entitled to collect rents. Some state laws may require that the lender take
possession of the Mortgaged Property and obtain a judicial appointment of a
receiver before becoming entitled to
14
collect the rents. In addition, if bankruptcy or similar proceedings are
commenced by or in respect of the borrower, the lender's ability to collect the
rents may be adversely affected. See "Certain Legal Aspects of Mortgage
Loans--Leases and Rents."
LIMITATIONS ON ENFORCEABILITY OF DUE-ON-SALE AND DEBT-ACCELERATION CLAUSES.
Mortgages may contain a due-on-sale clause, which permits the lender to
accelerate the maturity of the Mortgage Loan if the borrower sells, transfers or
conveys the related Mortgaged Property or its interest in the Mortgaged
Property. Mortgages also may include a debt-acceleration clause, which permits
the lender to accelerate the debt upon a monetary or nonmonetary default of the
mortgagor. Such clauses are generally enforceable subject to certain exceptions.
The courts of all states will enforce clauses providing for acceleration in the
event of a material payment default. The equity courts of any state, however,
may refuse the foreclosure of a mortgage or deed of trust when an acceleration
of the indebtedness would be inequitable or unjust or the circumstances would
render the acceleration unconscionable.
RISK OF LIABILITY ARISING FROM ENVIRONMENTAL CONDITIONS. Under federal law
and the laws of certain states, contamination of real property may give rise to
a lien on the property to assure or reimburse the costs of cleanup. In several
states, that lien has priority over an existing mortgage lien on that property.
In addition, under various federal, state and local laws, ordinances and
regulations, an owner or operator of real estate may be liable for the costs of
removal or remediation of hazardous substances or toxic substances on, in or
beneath the property. This liability may be imposed without regard to whether
the owner knew of, or was responsible for, the presence of those hazardous or
toxic substances. The costs of any required remediation and the owner or
operator's liability for them as to any property are generally not limited under
these laws, ordinances and regulations and could exceed the value of the
Mortgaged Property and the aggregate assets of the owner or operator. In
addition, as to the owners or operators of Mortgaged Properties that generate
hazardous substances that are disposed of at "off-site" locations, the owners or
operators may be held strictly, jointly and severally liable if there are
releases or threatened releases of hazardous substances at the off-site
locations where that person's hazardous substances were disposed. Two methods to
attempt to reduce the trust's potential exposure to cleanup costs are to
establish reserves for cleanup costs when they can be anticipated and estimated,
or to designate the trust as the named insured in specialized environmental
insurance that is designed for secured lenders. However, there can be no
assurance that reserves or environmental insurance will in fact be applicable or
adequate to cover all costs and any other liabilities that may eventually be
incurred.
Under some environmental laws, such as the federal Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended, as
well as some state laws, a secured lender (such as the trust) may be liable as
an "owner" or "operator" for the costs of dealing with hazardous substances
affecting a borrower's property, if agents or employees of the lender have
participated in the management or operations of the borrower's property. This
liability could exist even if a previous owner caused the environmental damage.
The trust's potential exposure to liability for cleanup costs may increase if
the trust actually takes possession of a borrower's property, or control of its
day-to-day operations, as for example through the appointment of a receiver. See
"Certain Legal Aspects of Mortgage Loans--Environmental Considerations."
LACK OF INSURANCE COVERAGE FOR CERTAIN SPECIAL HAZARD LOSSES. Unless
otherwise specified in a Prospectus Supplement, the Master Servicer and Special
Servicer for the related Trust Fund will be required to cause the borrower on
each Mortgage Loan in such Trust Fund to maintain such insurance coverage in
respect of the related Mortgaged Property as is required under the related
Mortgage, including hazard insurance; provided that, as and to the extent
described herein and in the related Prospectus Supplement, each of the Master
Servicer and the Special Servicer may satisfy its obligation to cause hazard
insurance to be maintained with respect to any Mortgaged Property through
acquisition of a blanket policy. In general, the standard form of fire and
extended coverage policy covers physical damage to or destruction of the
improvements of the property by fire, lightning, explosion, smoke, windstorm and
hail, and riot, strike and civil commotion, subject to the conditions and
exclusions specified in each policy. Although the policies covering the
Mortgaged Properties will be underwritten by different insurers under different
state laws in accordance with different applicable state forms, and
15
therefore will not contain identical terms and conditions, most such policies
typically do not cover any physical damage resulting from war, revolution,
governmental actions, floods and other water-related causes, earth movement
(including earthquakes, landslides and mudflows), wet or dry rot, vermin,
domestic animals and certain other kinds of risks. Unless the related Mortgage
specifically requires the mortgagor to insure against physical damage arising
from such causes, then, to the extent any consequent losses are not covered by
Credit Support, such losses may be borne, at least in part, by the holders of
one or more classes of Offered Certificates of the related series. See
"Description of the Pooling Agreements--Hazard Insurance Policies."
RISKS OF GEOGRAPHIC CONCENTRATION. Certain geographic regions of the United
States from time to time will experience weaker regional economic conditions and
housing markets, and, consequently, will experience higher rates of loss and
delinquency than will be experienced on mortgage loans generally. For example, a
region's economic condition and housing market may be directly, or indirectly,
adversely affected by natural disasters or civil disturbances such as
earthquakes, hurricanes, floods, eruptions or riots. The economic impact of any
of these types of events may also be felt in areas beyond the region immediately
affected by the disaster or disturbance. The Mortgage Loans securing certain
series of Certificates may be concentrated in these regions, and such
concentration may present risk considerations in addition to those generally
present for similar mortgage-backed securities without such concentration.
SOME CERTIFICATES MAY NOT BE APPROPRIATE FOR ERISA PLANS
Generally, ERISA applies to investments made by employee benefit plans and
transactions involving the assets of those plans. Due to the complexity of
regulations that govern those plans, if you are subject to ERISA you are urged
to consult your own counsel regarding consequences under ERISA of acquisition,
ownership and disposition of the Offered Certificates of any series. See
"Certain ERISA Considerations."
CERTAIN FEDERAL TAX CONSIDERATIONS REGARDING RESIDUAL CERTIFICATES
If you hold certain classes of Certificates that constitute a residual
interest in a "real estate mortgage investment conduit" for federal income tax
purposes, you will be required to report on your federal income tax returns as
ordinary income your pro rata share of the taxable income of the REMIC,
regardless of the amount or timing of your receipt of cash payments, as
described in "Certain Federal Income Tax Consequences--Federal Income Tax
Consequences for REMIC Certificates." Accordingly, under certain circumstances,
if you hold Residual Certificates you may have taxable income and tax
liabilities arising from your investment during a taxable year in excess of the
cash received during that period. The requirement to report your pro rata share
of the taxable income and net loss of the REMIC will continue until the
principal balances of all classes of Certificates of the related series have
been reduced to zero, even though you have received full payment of your stated
interest and principal, if any. A portion, or, in certain circumstances, all, of
your share of the REMIC taxable income may be treated as "excess inclusion"
income to you, which generally, will not be subject to offset by losses from
other activities, if you are a tax-exempt holder, will be treated as unrelated
business taxable income, and if you are a foreign holder, will not qualify for
exemption from withholding tax.
If you are an individual and you hold a class of Residual Certificates, you
may be limited in your ability to deduct servicing fees and other expenses of
the REMIC. In addition, classes of Residual Certificates are subject to certain
restrictions on transfer. Because of the special tax treatment of classes of
Residual Certificates, the taxable income arising in a given year on a class of
Residual Certificates will not be equal to the taxable income associated with
investment in a corporate bond or stripped instrument having similar cash flow
characteristics and pre-tax yield. As a result, the after-tax yield on the
classes of Residual Certificates may be significantly less than that of a
corporate bond or stripped instrument having similar cash flow characteristics
or may be negative.
16
CERTAIN FEDERAL TAX CONSIDERATIONS REGARDING ORIGINAL ISSUE DISCOUNT
Certain classes of Certificates of a series may be issued with "original
issue discount" for federal income tax purposes, which generally will result in
recognition of some taxable income in advance of the receipt of cash
attributable to that income. See "Certain Federal Income Tax
Consequences--Taxation of Regular Certificates."
BANKRUPTCY PROCEEDINGS ENTAIL CERTAIN RISKS
Under the Bankruptcy Code, the filing of a petition in bankruptcy by or
against a borrower will stay the sale of the Mortgaged Property owned by that
borrower, as well as the commencement or continuation of a foreclosure action.
In addition, even if a court determines that the value of the Mortgaged Property
is less than the principal balance of the Mortgage Loan it secures, the court
may prevent a lender from foreclosing on the Mortgaged Property, subject to
certain protections available to the lender. As part of a restructuring plan, a
court also may reduce the amount of secured indebtedness to the then-current
value of the Mortgaged Property. This action would make the lender a general
unsecured creditor for the difference between the then-current value and the
amount of its outstanding mortgage indebtedness.
A bankruptcy court also may grant a debtor a reasonable time to cure a
payment default on a Mortgage Loan, reduce monthly payments due under a Mortgage
Loan, change the Mortgage Rate, or otherwise alter the Mortgage Loan's repayment
schedule.
Moreover, the filing of a petition in bankruptcy by, or on behalf of, a
junior lienholder may stay the senior lienholder from taking action to foreclose
on the junior lien. Additionally, the borrower's trustee or the borrower, as
debtor-in-possession, has certain special powers to avoid, subordinate or
disallow debts. In certain circumstances, the claims of the Trustee may be
subordinated to financing obtained by a debtor-in-possession subsequent to its
bankruptcy.
Under the Bankruptcy Code, the lender will be stayed from enforcing a
borrower's assignment of rents and leases. The Bankruptcy Code also may
interfere with the Trustee's ability to enforce lockbox requirements. The legal
proceedings necessary to resolve these issues can be time consuming and costly
and may significantly delay or diminish the receipt of rents. Rents also may
escape an assignment to the extent they are used by the borrower to maintain the
Mortgaged Property or for other court authorized expenses.
As a result of the foregoing, the Trustee's recovery with respect to
borrowers in bankruptcy proceedings may be significantly delayed, and the
aggregate amount ultimately collected may be substantially less than the amount
owed.
BOOK-ENTRY SYSTEM FOR CERTAIN CLASSES MAY DECREASE LIQUIDITY AND DELAY PAYMENT
If so provided in the related prospectus supplement, one or more classes of
the Offered Certificates of any series will be issued as Book-Entry
Certificates. Each class of Book-Entry Certificates will be initially
represented by one or more Certificates registered in the name of a nominee for
The Depository Trust Company, or DTC. Since transactions in the classes of
Book-Entry Certificates of any series generally can be effected only through The
Depository Trust Company, and its participating organizations the liquidity of
Book-Entry Certificates in secondary trading market that may develop may be
limited because investors may be unwilling to purchase Certificates for which
they cannot obtain physical Certificates, your ability to pledge Certificates to
persons or entities that do not participate in the DTC system, or otherwise to
take action in respect of the Certificates, may be limited due to lack of a
physical security representing the Certificates, your access to information
regarding the Certificates may be limited since conveyance of notices and other
communications by The Depository Trust Company to its participating
organizations, and directly and indirectly through those participating
organizations to you, will be governed by arrangements among them, subject to
any statutory or regulatory requirements as may be in effect at that time, and
you may experience some delay in receiving distributions of interest and
principal on your Certificates because distributions will be made by the Trustee
to DTC and DTC will then be required to credit those distributions to the
accounts of its
17
participating organizations and only then will they be credited to your account
either directly or indirectly through DTC's participating organizations. See
"Description of the Certificates--Book-Entry Registration and Definitive
Certificates."
INCLUSION OF DELINQUENT AND NONPERFORMING MORTGAGE LOANS
IN A MORTGAGE ASSET POOL
If so provided in the related Prospectus Supplement, the Trust Fund for a
particular series of Certificates may include Mortgage Loans that are past due
or are nonperforming. However, Mortgage Loans which are seriously delinquent
loans (that is, loans more than 60 days delinquent or as to which foreclosure
has been commenced) will not constitute a material concentration of the Mortgage
Loans in any Trust Fund, based on principal balance at the time such Trust Fund
is formed. If so specified in the related Prospectus Supplement, the servicing
of such Mortgage Loans will be performed by the Special Servicer; however, the
same entity may act as both Master Servicer and Special Servicer. Credit Support
provided with respect to a particular series of Certificates may not cover all
losses related to such delinquent or nonperforming Mortgage Loans, and investors
should consider the risk that the inclusion of such Mortgage Loans in the Trust
Fund may adversely affect the rate of defaults and prepayments in respect of the
subject Mortgage Asset Pool and the yield on the Offered Certificates of such
series. See "Description of the Trust Funds--Mortgage Loans--General."
TERMINATION
If so provided in the related Prospectus Supplement, upon the reduction of
the Certificate Balance of a specified class or classes of Certificates by a
specified percentage or amount or upon a specified date, a party designated
therein may be authorized or required to solicit bids for the purchase of all
the Mortgage Assets of the related Trust Fund, or of a sufficient portion of
such Mortgage Assets to retire such class or classes, under the circumstances
and in the manner set forth therein. The solicitation of bids will be conducted
in a commercially reasonable manner and, generally, assets will be sold at their
fair market value. In addition, if so specified in the related Prospectus
Supplement, upon the reduction of the aggregate principal balance of some or all
of the Mortgage Assets by a specified percentage, a party or parties designated
therein may be authorized to purchase such Mortgage Assets, generally at a price
equal to, in the case of any Mortgage Asset, the unpaid principal balance
thereof plus accrued interest (or, in some cases, at fair market value).
However, circumstances may arise in which such fair market value may be less
than the unpaid balance of the related Mortgage Assets, together with interest
thereon, sold and therefore, as a result of such a sale or purchase, the
Certificateholders of one or more Classes of Certificates may receive an amount
less than the Certificate Balance of, and accrued unpaid interest on, their
Certificates. See "Description of the Certificates--Termination."
RISKS ASSOCIATED WITH MULTIFAMILY PROPERTIES
Certain states regulate the relationship of an owner and its tenants.
Commonly, these laws require a written lease, good cause for eviction,
disclosure of fees, and notification to residents of changed land use, while
prohibiting unreasonable rules, retaliatory evictions, and restrictions on a
resident's choice of unit vendors. A few states offer more significant
protection. For example, there are provisions that limit the basis on which a
landlord may terminate a tenancy or increase its rent or prohibit a landlord
from terminating a tenancy solely by reason of the sale of the owner's building.
In addition to state regulation of the landlord-tenant relationship,
numerous counties and municipalities impose rent control on apartment buildings.
These ordinances may limit rent increases to fixed percentages, to percentages
of increases in the consumer price index, to increases set or approved by a
governmental agency, or in increases determined through mediation or binding
arbitration. In many cases, the rent control laws do not permit vacancy
decontrol. Local authority to impose rent control is pre-empted by state law in
certain states, and rent control is not imposed at the state level in those
states. In some states, however, local rent control ordinances are not
pre-empted for tenants having short-term or month-to-month leases, and
properties there may be subject to various forms of rent control with respect to
those tenants. Any limitations on a borrower's ability to raise
18
property rents may impair such borrower's ability to repay its Mortgage Loan
from its net operating income or the proceeds of a sale or refinancing of the
related Mortgaged Property.
RISKS ASSOCIATED WITH RETAIL PROPERTIES
The correlation between the success of tenant businesses and property value
is more direct with respect to Retail Properties than other types of commercial
property because a significant component of the total rent paid by retail
tenants is often tied to a percentage of gross sales. Retail Properties that are
not "anchored" have traditionally been perceived to be more risky than
"anchored" Retail Properties. See "Mortgage Loans -- Mortgage Loans Secured by
Retail Properties" herein. Furthermore, there is a greater correlation between
the success of tenant businesses and property value when the property is a
single tenant Retail Property.
Unlike office or hotel properties, Retail Properties also face competition
from sources outside a given real estate market. Catalogue retailers, home
shopping networks, shopping through Internet websites, telemarketing and outlet
centers all compete with more traditional Retail Properties for consumer
dollars. Continued growth of these alternative retail outlets (which are often
characterized by lower operating costs) could adversely affect the rents
collectible at the Retail Properties included in the Mortgage Pool.
19
DESCRIPTION OF THE TRUST FUNDS
GENERAL
The primary assets of each Trust Fund will consist of (i) various types of
multifamily or commercial mortgage loans ("Mortgage Loans"), (ii) mortgage
participations, pass-through certificates or other mortgage-backed securities
("MBS") that evidence interests in, or that are secured by pledges of, one or
more of various types of multifamily or commercial mortgage loans or (iii) a
combination of Mortgage Loans and MBS (collectively, "Mortgage Assets"). Each
Trust Fund will be established by the Depositor. Each Mortgage Asset will be
selected by the Depositor for inclusion in a Trust Fund from among those
purchased, either directly or indirectly, from a prior holder thereof (a
"Mortgage Asset Seller"), which prior holder may or may not be the originator of
such Mortgage Loan or the issuer of such MBS. The Mortgage Assets will not be
guaranteed or insured by the Depositor or any of its affiliates or, unless
otherwise provided in the related Prospectus Supplement, by any governmental
agency or instrumentality or by any other person. The discussion below under the
heading "--Mortgage Loans," unless otherwise noted, applies equally to mortgage
loans underlying any MBS included in a particular Trust Fund.
MORTGAGE LOANS
GENERAL. The Mortgage Loans will be evidenced by promissory notes (the
"Mortgage Notes") secured by mortgages, deeds of trust or similar security
instruments (the "Mortgages") that create first or junior liens on fee or
leasehold estates in properties (each, a "Mortgaged Property") consisting of one
or more of the following types of real property: (i) residential properties
("Multifamily Properties") consisting of five or more rental or
cooperatively-owned dwelling units in high-rise, mid-rise or garden apartment
buildings or other residential structures, and mobile home parks; and (ii)
commercial properties ("Commercial Properties") consisting of office buildings,
retail shopping facilities, such as shopping centers, malls and individual
stores (each, a "Retail Property"), hotels or motels, health care-related
facilities (such as hospitals, skilled nursing facilities, nursing homes,
congregate care facilities and senior housing), recreational vehicle parks,
warehouse facilities, mini-warehouse facilities, self-storage facilities,
industrial facilities, parking lots, restaurants, mixed use properties (that is,
any combination of the foregoing), and unimproved land. However, neither
restaurants nor health care-related facilities will represent security for a
material concentration of the Mortgage Loans in any Trust Fund, based on
principal balance at the time such Trust Fund is formed. The Multifamily
Properties may include mixed commercial and residential structures and apartment
buildings owned by private cooperative housing corporations ("Cooperatives").
Unless otherwise specified in the related Prospectus Supplement, each Mortgage
will create a first priority mortgage lien on a fee estate in a Mortgaged
Property. If a Mortgage creates a lien on a borrower's leasehold estate in a
property, then, unless otherwise specified in the related Prospectus Supplement,
the term of any such leasehold will exceed the term of the Mortgage Note by at
least ten years. Each Mortgage Loan will have been originated by a person (the
"Originator") other than the Depositor.
If so provided in the related Prospectus Supplement, Mortgage Assets for a
series of Certificates may include Mortgage Loans secured by junior liens, and
the loans secured by the related senior liens ("Senior Liens") may not be
included in the Mortgage Pool. The primary risk to holders of Mortgage Loans
secured by junior liens is the possibility that adequate funds will not be
received in connection with a foreclosure of the related Senior Liens to satisfy
fully both the Senior Liens and the Mortgage Loan. In the event that a holder of
a Senior Lien forecloses on a Mortgaged Property, the proceeds of the
foreclosure or similar sale will be applied first to the payment of court costs
and fees in connection with the foreclosure, second to real estate taxes, third
in satisfaction of all principal, interest, prepayment or acceleration
penalties, if any, and any other sums due and owing to the holder of the Senior
Liens. The claims of the holders of the Senior Liens will be satisfied in full
out of proceeds of the liquidation of the related Mortgage Property, if such
proceeds are sufficient, before the Trust Fund as holder of the junior lien
receives any payments in respect of the Mortgage Loan. If the Master Servicer
were to foreclose on any Mortgage Loan, it would do so subject to any related
Senior Liens. In order for the debt related to such Mortgage Loan to be paid in
full at such sale, a bidder at the foreclosure sale of
20
such Mortgage Loan would have to bid an amount sufficient to pay off all sums
due under the Mortgage Loan and any Senior Liens or purchase the Mortgaged
Property subject to such Senior Liens. In the event that such proceeds from a
foreclosure or similar sale of the related Mortgaged Property are insufficient
to satisfy all Senior Liens and the Mortgage Loan in the aggregate, the Trust
Fund, as the holder of the junior lien, and, accordingly, holders of one or more
classes of the Certificates of the related series bear (i) the risk of delay in
distributions while a deficiency judgment against the borrower is obtained and
(ii) the risk of loss if the deficiency judgment is not obtained and satisfied.
Moreover, deficiency judgments may not be available in certain jurisdic- tions,
or the particular Mortgage Loan may be a nonrecourse loan, which means that,
absent special facts, recourse in the case of default will be limited to the
Mortgaged Property and such other assets, if any, that were pledged to secure
repayment of the Mortgage Loan.
If so specified in the related Prospectus Supplement, the Mortgage Assets
for a particular series of Certificates may include Mortgage Loans that are
delinquent or nonperforming as of the date such Certificates are issued. In that
case, the related Prospectus Supplement will set forth, as to each such Mortgage
Loan, available information as to the period of such delinquency or
nonperformance, any forbearance arrangement then in effect, the condition of the
related Mortgaged Property and the ability of the Mortgaged Property to generate
income to service the mortgage debt. However, Mortgage Loans which are seriously
delinquent loans (that is, loans more than 60 days delinquent or as to which
foreclosure has been commenced) will not constitute a material concentration of
the Mortgage Loans in any Trust Fund, based on principal balance at the time
such Trust Fund is formed.
DEFAULT AND LOSS CONSIDERATIONS WITH RESPECT TO THE MORTGAGE LOANS.
Mortgage loans secured by liens on income-producing properties are substantially
different from loans made on the security of owner-occupied single-family homes.
The repayment of a loan secured by a lien on an income-producing property is
typically dependent upon the successful operation of such property (that is, its
ability to generate income). Moreover, as noted above, some or all of the
Mortgage Loans included in a particular Trust Fund may be nonrecourse loans.
Lenders typically look to the Debt Service Coverage Ratio of a loan secured
by income-producing property as an important factor in evaluating the likelihood
of default on such a loan. Unless otherwise defined in the related Prospectus
Supplement, the "Debt Service Coverage Ratio" of a Mortgage Loan at any given
time is the ratio of (i) the Net Operating Income derived from the related
Mortgaged Property for a twelve-month period to (ii) the annualized scheduled
payments of principal and/or interest on the Mortgage Loan and any other loans
senior thereto that are secured by the related Mortgaged Property. Unless
otherwise defined in the related Prospectus Supplement, "Net Operating Income"
means, for any given period, the total operating revenues derived from a
Mortgaged Property during such period, minus the total operating expenses
incurred in respect of such Mortgaged Property during such period other than (i)
noncash items such as depreciation and amortization, (ii) capital expenditures
and (iii) debt service on the related Mortgage Loan or on any other loans that
are secured by such Mortgaged Property. The Net Operating Income of a Mortgaged
Property will generally fluctuate over time and may or may not be sufficient to
cover debt service on the related Mortgage Loan at any given time. As the
primary source of the operating revenues of a nonowner occupied,
income-producing property, rental income (and, with respect to a Mortgage Loan
secured by a Cooperative apartment building, maintenance payments from
tenant-stockholders of a Cooperative) may be affected by the condition of the
applicable real estate market and/or area economy. In addition, properties
typically leased, occupied or used on a short-term basis, such as certain health
care-related facilities, hotels and motels, and mini-warehouse and self-storage
facilities, tend to be affected more rapidly by changes in market or business
conditions than do properties typically leased for longer periods, such as
warehouses, retail stores, office buildings and industrial facilities.
Commercial Properties may be owner-occupied or leased to a small number of
tenants. Thus, the Net Operating Income of such a Mortgaged Property may depend
substantially on the financial condition of the borrower or a tenant, and
Mortgage Loans secured by liens on such properties may pose a greater likelihood
of default and loss than loans secured by liens on Multifamily Properties or on
multi-tenant Commercial Properties.
Increases in operating expenses due to the general economic climate or
economic conditions in a locality or industry segment, such as increases in
interest rates, real estate tax rates, energy costs,
21
labor costs and other operating expenses, and/or to changes in governmental
rules, regulations and fiscal policies, may also affect the likelihood of
default on a Mortgage Loan. As may be further described in the related
Prospectus Supplement, in some cases leases of Mortgaged Properties may provide
that the lessee, rather than the borrower/landlord, is responsible for payment
of operating expenses ("Net Leases"). However, the existence of such "net of
expense" provisions will result in stable Net Operating Income to the
borrower/landlord only to the extent that the lessee is able to absorb operating
expense increases while continuing to make rent payments.
Lenders also look to the Loan-to-Value Ratio of a mortgage loan as a factor
in evaluating the likelihood of loss if a property must be liquidated following
a default. Unless otherwise defined in the related Prospectus Supplement, the
"Loan-to-Value Ratio" of a Mortgage Loan at any given time is the ratio
(expressed as a percentage) of (i) the then outstanding principal balance of the
Mortgage Loan and any other loans senior thereto that are secured by the related
Mortgaged Property to (ii) the Value of the related Mortgaged Property. Unless
otherwise specified in the related Prospectus Supplement, the "Value" of a
Mortgaged Property will be its fair market value as determined by an appraisal
of such property conducted by or on behalf of the Originator in connection with
the origination of such loan. The lower the Loan-to-Value Ratio, the greater the
percentage of the borrower's equity in a Mortgaged Property, and thus (a) the
greater the incentive of the borrower to perform under the terms of the related
Mortgage Loan (in order to protect such equity) and (b) the greater the cushion
provided to the lender against loss on liquidation following a default.
Loan-to-Value Ratios will not necessarily constitute an accurate measure of
the likelihood of liquidation loss in a pool of Mortgage Loans. For example, the
value of a Mortgaged Property as of the date of initial issuance of the related
series of Certificates may be less than the Value determined at loan
origination, and will likely continue to fluctuate from time to time based upon
certain factors including changes in economic conditions and the real estate
market. Moreover, even when current, an appraisal is not necessarily a reliable
estimate of value. Appraised values of income-producing properties are generally
based on the market comparison method (recent resale value of comparable
properties at the date of the appraisal), the cost replacement method (the cost
of replacing the property at such date), the income capitalization method (a
projection of value based upon the property's projected net cash flow), or upon
a selection from or interpolation of the values derived from such methods. Each
of these appraisal methods can present analytical difficulties. It is often
difficult to find truly comparable properties that have recently been sold; the
replacement cost of a property may have little to do with its current market
value; and income capitalization is inherently based on inexact projections of
income and expense and the selection of an appropriate capitalization rate and
discount rate. Where more than one of these appraisal methods are used and
provide significantly different results, an accurate determination of value and,
correspondingly, a reliable analysis of the likelihood of default and loss, is
even more difficult.
Although there may be multiple methods for determining the value of a
Mortgaged Property, value will in all cases be affected by property performance.
As a result, if a Mortgage Loan defaults because the income generated by the
related Mortgaged Property is insufficient to cover operating costs and expenses
and pay debt service, then the value of the Mortgaged Property will reflect such
and a liquidation loss may occur.
While the Depositor believes that the foregoing considerations are
important factors that generally distinguish loans secured by liens on
income-producing real estate from single-family mortgage loans, there can be no
assurance that all of such factors will in fact have been prudently considered
by the Originators of the Mortgage Loans, or that, for a particular Mortgage
Loan, they are complete or relevant. See "Risk Factors--Certain Factors
Affecting Delinquency, Foreclosure and Loss of the Mortgage Loans--General" and
"--Certain Factors Affecting Delinquency, Foreclosure and Loss of the Mortgage
Loans--Increased Risk of Default Associated With Balloon Payments."
PAYMENT PROVISIONS OF THE MORTGAGE LOANS. All of the Mortgage Loans will
(i) have had original terms to maturity of not more than 40 years and (ii)
provide for scheduled payments of principal, interest or both, to be made on
specified dates ("Due Dates") that occur monthly, quarterly, semi-annually or
annually. A Mortgage Loan (i) may provide for no accrual of interest or for
accrual of interest
22
thereon at a Mortgage Rate that is fixed over its term or that adjusts from time
to time, or that may be converted at the borrower's election from an adjustable
to a fixed Mortgage Rate, or from a fixed to an adjustable Mortgage Rate, (ii)
may provide for level payments to maturity or for payments that adjust from time
to time to accommodate changes in the Mortgage Rate or to reflect the occurrence
of certain events, and may permit negative amortization, (iii) may be fully
amortizing or may be partially amortizing or nonamortizing, with a balloon
payment due on its stated maturity date, and (iv) may prohibit over its term or
for a certain period prepayments (the period of such prohibition, a "Lock-out
Period" and its date of expiration, a "Lock-out Date") and/or require payment of
a premium or a yield maintenance payment (a "Prepayment Premium") in connection
with certain prepayments, in each case as described in the related Prospectus
Supplement. A Mortgage Loan may also contain a provision that entitles the
lender to a share of appreciation of the related Mortgaged Property, or profits
realized from the operation or disposition of such Mortgaged Property or the
benefit, if any, resulting from the refinancing of the Mortgage Loan (any such
provision, an "Equity Participation"), as described in the related Prospectus
Supplement.
MORTGAGE LOAN INFORMATION IN PROSPECTUS SUPPLEMENTS. Each Prospectus
Supplement will contain certain information pertaining to the Mortgage Loans in
the related Trust Fund, which, to the extent then applicable, will generally
include the following: (i) the aggregate outstanding principal balance and the
largest, smallest and average outstanding principal balance of the Mortgage
Loans, (ii) the type or types of property that provide security for repayment of
the Mortgage Loans, (iii) the earliest and latest origination date and maturity
date of the Mortgage Loans, (iv) the original and remaining terms to maturity of
the Mortgage Loans, or the respective ranges thereof, and the weighted average
original and remaining terms to maturity of the Mortgage Loans, (v) the
Loan-to-Value Ratios of the Mortgage Loans (either at origination or as of a
more recent date), or the range thereof, and the weighted average of such
Loan-to-Value Ratios, (vi) the Mortgage Rates borne by the Mortgage Loans, or
the range thereof, and the weighted average Mortgage Rate borne by the Mortgage
Loans, (vii) with respect to Mortgage Loans with adjustable Mortgage Rates ("ARM
Loans"), the index or indices upon which such adjustments are based, the
adjustment dates, the range of gross margins and the weighted average gross
margin, and any limits on Mortgage Rate adjustments at the time of any
adjustment and over the life of the ARM Loan, (viii) information regarding the
payment characteristics of the Mortgage Loans, including, without limitation,
balloon payment and other amortization provisions, Lock-out Periods and
Prepayment Premiums, (ix) the Debt Service Coverage Ratios of the Mortgage Loans
(either at origination or as of a more recent date), or the range thereof, and
the weighted average of such Debt Service Coverage Ratios, and (x) the
geographic distribution of the Mortgaged Properties on a state-by-state basis.
In appropriate cases, the related Prospectus Supplement will also contain
certain information available to the Depositor that pertains to the provisions
of leases and the nature of tenants of the Mortgaged Properties. If the
Depositor is unable to provide the specific information described above at the
time Offered Certificates of a series are initially offered, more general
information of the nature described above will be provided in the related
Prospectus Supplement, and specific information will be set forth in a report
which will be available to purchasers of those Certificates at or before the
initial issuance thereof and will be filed as part of a Current Report on Form
8-K with the Commission within fifteen days following such issuance.
If any Mortgage Loan, or group of related Mortgage Loans, constitutes a
concentration of credit risk, financial statements or other financial
information with respect to the related Mortgaged Property or Mortgaged
Properties will be included in the related Prospectus Supplement.
If and to the extent available and relevant to an investment decision in
the Offered Certificates of the related series, information regarding the
prepayment experience of a Master Servicer's multifamily and/or commercial
mortgage loan servicing portfolio will be included in the related Prospectus
Supplement. However, many servicers do not maintain records regarding such
matters or, at least, not in a format that can be readily aggregated. In
addition, the relevant characteristics of a Master Servicer's servicing
portfolio may be so materially different from those of the related Mortgage
Asset Pool that such prepayment experience would not be meaningful to an
investor. For example, differences in geographic dispersion, property type
and/or loan terms (e.g., mortgage rates, terms to maturity and/or prepayment
restrictions) between the two pools of loans could render the Master Servicer's
23
prepayment experience irrelevant. Because of the nature of the assets to be
serviced and administered by a Special Servicer, no comparable prepayment
information will be presented with respect to the Special Servicer's multifamily
and/or commercial mortgage loan servicing portfolio.
MORTGAGE LOANS SECURED BY MULTIFAMILY PROPERTIES. Significant factors
determining the value and successful operation of a multifamily property are the
location of the property, the number of competing residential developments in
the local market (such as apartment buildings, manufactured housing communities
and site-built single family homes), the physical attributes of the multifamily
apartment building (such as its age and appearance) and state and local
regulations affecting such property. In addition, the successful operation of an
apartment building will depend upon other factors, such as its reputation, the
ability of management to provide adequate maintenance and insurance, and the
types of services it provides.
Certain states regulate the relationship of an owner and its tenants.
Commonly, these laws require a written lease, good cause for eviction,
disclosures of fees, and notification to residents of changed land use, while
prohibiting unreasonable rules, retaliatory evictions, and restrictions on a
resident's choice of unit vendors. Apartment building owners have been the
subject of suits under state "Unfair and Deceptive Practices Acts" and other
general consumer protection statues for coercive, abusive or unconscionable
leasing and sales practices. A few states offer more significant protection. For
example, there are provisions that limit the basis on which a landlord may
terminate a tenancy or increase its rent or prohibit a landlord from terminating
a tenancy solely by reason of the sale of the owner's building.
In addition to state regulation of the landlord-tenant relationship,
numerous counties and municipalities impose rent control on apartment buildings.
These ordinances may limit rent increases to fixed percentages, to percentages
of increases in the consumer price index, to increases set or approved by a
governmental agency, or to increases determined through mediation or binding
arbitration. In many cases, the rent control laws do not permit vacancy
decontrol. Local authority to impose rent control is pre-empted by state law in
certain states, and rent control is not imposed at the state level in those
states. In some states, however, local rent control ordinances are not
pre-empted for tenants having short-term or month-to-month leases, and
properties there may be subject to various forms of rent control with respect to
those tenants. Any limitations on a borrower's ability to raise property rents
may impair such borrower's ability to repay its Mortgage Loan from its net
operating income or the proceeds of a sale or refinancing of the related
Mortgaged Property.
Adverse economic conditions, either local or national, may limit the amount
of rent that can be charged and may result in a reduction in timely rent
payments or a reduction in occupancy levels. Occupancy and rent levels may also
be affected by construction of additional housing units, local military base or
factory closings and national and local politics, including current or future
rent stabilization and rent control laws and agreements. In addition, the level
of mortgage interest rates may encourage tenants to purchase single-family
housing. The location and construction quality of a particular building may
affect the occupancy level as well as the rents that may be charged for
individual units. The characteristics of a neighborhood may change over time or
in relation to newer developments.
MORTGAGE LOANS SECURED BY RETAIL PROPERTIES. Significant factors
determining the value of Retail Properties are the quality of the tenants as
well as fundamental aspects of real estate such as location and market
demographics. The correlation between the success of tenant businesses and
property value is more direct with respect to Retail Properties than other types
of commercial property because a significant component of the total rent paid by
retail tenants is often tied to a percentage of gross sales. Whether a Retail
Property is "anchored" or "unanchored" is also an important distinction. Retail
Properties that are anchored have traditionally been perceived to be less risky.
While there is no strict definition of an anchor, it is generally understood
that a retail anchor tenant is proportionately large in size and is vital in
attracting customers to the property. Furthermore, there is a greater
correlation between the success of tenant businesses and property value when the
property is a single tenant Retail Property.
Unlike office or hotel Properties, Retail Properties also face competition
from sources outside a given real estate market. Catalogue retailers, home
shopping networks, shopping through electronic
24
media, telemarketing and outlet centers all compete with more traditional Retail
Properties for consumer dollars. Continued growth of these alternative retail
outlets (which are often characterized by lower operating costs) could adversely
affect the rents collectible at the Retail Properties included in the Mortgage
Pool.
MBS
MBS may include (i) private-label (that is, not issued, insured or
guaranteed by the United States or any agency or instrumentality thereof)
mortgage participations, mortgage pass-through certificates or other
mortgage-backed securities or (ii) certificates issued and/or insured or
guaranteed by the Federal Home Loan Mortgage Corporation ("FHLMC"), the Federal
National Mortgage Association ("FNMA"), the Governmental National Mortgage
Association ("GNMA") or the Federal Agricultural Mortgage Corporation ("FAMC"),
provided that, unless otherwise specified in the related Prospectus Supplement,
each MBS will evidence an interest in, or will be secured by a pledge of,
mortgage loans that conform to the descriptions of the Mortgage Loans contained
herein.
Except in the case of a pro rata mortgage participation in a single
mortgage loan or a pool of mortgage loans, each MBS included in a Mortgage Asset
Pool: (a) either will (i) have been previously registered under the Securities
Act of 1933, as amended, (ii) be exempt from such registration requirements or
(iii) have been held for at least the holding period specified in Rule 144(k)
under the Securities Act of 1933, as amended; and (b) either (i) will have been
acquired (other than from the Depositor or an affiliate thereof) in bona fide
secondary market transactions or (ii) if so specified in the related Prospectus
Supplement, may be derived from the Depositor's (or an affiliate's) unsold
allotments from the Depositor (or an affiliate's) previous offerings.
Any MBS will have been issued pursuant to a participation and servicing
agreement, a pooling and servicing agreement, an indenture or similar agreement
(an "MBS Agreement"). The issuer of the MBS (the "MBS Issuer") and/or the
servicer of the underlying mortgage loans (the "MBS Servicer") will be parties
to the MBS Agreement, generally together with a trustee (the "MBS Trustee") or,
in the alternative, with the original purchaser or purchasers of the MBS.
The MBS may have been issued in one or more classes with characteristics
similar to the classes of Certificates described herein. Distributions in
respect of the MBS will be made by the MBS Issuer, the MBS Servicer or the MBS
Trustee on the dates specified in the related Prospectus Supplement. The MBS
Issuer or the MBS Servicer or another person specified in the related Prospectus
Supplement may have the right or obligation to repurchase or substitute assets
underlying the MBS after a certain date or under other circumstances specified
in the related Prospectus Supplement.
Reserve funds, subordination or other credit support similar to that
described for the Certificates under "Description of Credit Support" may have
been provided with respect to the MBS. The type, characteristics and amount of
such credit support, if any, will be a function of the characteristics of the
underlying mortgage loans and other factors and generally will have been
established on the basis of the requirements of any rating agency that may have
assigned a rating to the MBS, or by the initial purchasers of the MBS.
The Prospectus Supplement for a series of Certificates that evidence
interests in MBS will specify: (i) the aggregate approximate initial and
outstanding principal amount(s) and type of the MBS to be included in the Trust
Fund, (ii) the original and remaining term(s) to stated maturity of the MBS, if
applicable, (iii) the pass-through or bond rate(s) of the MBS or the formula for
determining such rate(s), (iv) the payment characteristics of the MBS, (v) the
MBS Issuer, MBS Servicer and MBS Trustee, as applicable, of each of the MBS,
(vi) a description of the related credit support, if any, (vii) the
circumstances under which the related underlying mortgage loans, or the MBS
themselves, may be purchased prior to their maturity, (viii) the terms on which
mortgage loans may be substituted for those originally underlying the MBS, (ix)
the type of mortgage loans underlying the MBS and, to the extent appropriate
under the circumstances, such other information in respect of the underlying
mortgage loans described under "--Mortgage Loans--Mortgage Loan Information in
Prospectus Supplements," and (x) the characteristics of any cash flow agreements
that relate to the MBS.
25
If specified in the Prospectus Supplement for a series of Certificates, a
Trust Fund may contain one or more MBS issued by the Depositor that each
represent an interest in one or more mortgage loans. The Prospectus Supplement
for a series will contain the disclosure concerning the MBS described in the
preceding paragraph and, in particular, will disclose such mortgage loans
appropriately in light of the percentage of the aggregate principal balance of
all assets represented by the principal balance of the MBS.
The Depositor will provide the same information regarding the MBS in any
Trust Fund in its reports filed under the Exchange Act with respect to such
Trust Fund as was provided by the related MBS Issuer in its own such reports if
such MBS was publicly offered or the reports the related MBS Issuer provides the
related MBS Trustee if such MBS was privately issued.
CERTIFICATE ACCOUNTS
Each Trust Fund will include one or more accounts (collectively, the
"Certificate Account") established and maintained on behalf of the
Certificateholders into which all payments and collections received or advanced
with respect to the Mortgage Assets and other assets in the Trust Fund will be
deposited to the extent described herein and in the related Prospectus
Supplement. See "Description of the Pooling Agreements--Certificate Account."
CREDIT SUPPORT
If so provided in the Prospectus Supplement for a series of Certificates,
partial or full protection against certain defaults and losses on the Mortgage
Assets in the related Trust Fund may be provided to one or more classes of
Certificates of such series in the form of subordination of one or more other
classes of Certificates of such series or by one or more other types of Credit
Support, which may include a letter of credit, a surety bond, an insurance
policy, a guarantee, a reserve fund, or any combination thereof. The amount and
types of such Credit Support, the identity of the entity providing it (if
applicable) and related information with respect to each type of Credit Support,
if any, will be set forth in the Prospectus Supplement for a series of
Certificates. See "Risk Factors--Credit Support Limitations" and "Description of
Credit Support."
CASH FLOW AGREEMENTS
If so provided in the Prospectus Supplement for a series of Certificates,
the related Trust Fund may include guaranteed investment contracts pursuant to
which moneys held in the funds and accounts established for such series will be
invested at a specified rate. The Trust Fund may also include interest rate
exchange agreements, interest rate cap or floor agreements, or other agreements
designed to reduce the effects of interest rate fluctuations on the Mortgage
Assets on one or more classes of Certificates. The principal terms of any such
Cash Flow Agreement, including, without limitation, provisions relating to the
timing, manner and amount of payments thereunder and provisions relating to the
termination thereof, will be described in the related Prospectus Supplement. The
related Prospectus Supplement will also identify the obligor under the Cash Flow
Agreement.
YIELD AND MATURITY CONSIDERATIONS
GENERAL
The yield on any Offered Certificate will depend on the price paid by the
Certificateholder, the Pass-Through Rate of the Certificate and the amount and
timing of distributions on the Certificate. See "Risk Factors--Effect of
Prepayments on Average Life of Certificates." The following discussion
contemplates a Trust Fund that consists solely of Mortgage Loans. While the
characteristics and behavior of mortgage loans underlying an MBS can generally
be expected to have the same effect on the yield to maturity and/or weighted
average life of a class of Certificates as will the characteristics and behavior
of comparable Mortgage Loans, the effect may differ due to the payment
characteristics of the MBS. If a Trust Fund includes MBS, the related Prospectus
Supplement will discuss the effect,
26
if any, that the payment characteristics of the MBS may have on the yield to
maturity and weighted average lives of the Offered Certificates of the related
series.
PASS-THROUGH RATE
The Certificates of any class within a series may have a fixed, variable or
adjustable Pass-Through Rate, which may or may not be based upon the interest
rates borne by the Mortgage Loans in the related Trust Fund. The Prospectus
Supplement with respect to any series of Certificates will specify the
Pass-Through Rate for each class of Offered Certificates of such series or, in
the case of a class of Offered Certificates with a variable or adjustable
Pass-Through Rate, the method of determining the Pass-Through Rate; the effect,
if any, of the prepayment of any Mortgage Loan on the Pass-Through Rate of one
or more classes of Offered Certificates; and whether the distributions of
interest on the Offered Certificates of any class will be dependent, in whole or
in part, on the performance of any obligor under a Cash Flow Agreement.
PAYMENT DELAYS
With respect to any series of Certificates, a period of time will elapse
between the date upon which payments on the Mortgage Loans in the related Trust
Fund are due and the Distribution Date on which such payments are passed through
to Certificateholders. That delay will effectively reduce the yield that would
otherwise be produced if payments on such Mortgage Loans were distributed to
Certificateholders on the date they were due.
CERTAIN SHORTFALLS IN COLLECTIONS OF INTEREST
When a principal prepayment in full or in part is made on a Mortgage Loan,
the borrower is generally charged interest on the amount of such prepayment only
through the date of such prepayment, instead of through the Due Date for the
next succeeding scheduled payment. However, interest accrued on any series of
Certificates and distributable thereon on any Distribution Date will generally
correspond to interest accrued on the Mortgage Loans to their respective Due
Dates during the related Due Period. A "Due Period" will be a specified time
period (generally corresponding in length to the period between Distribution
Dates) and all scheduled payments on the Mortgage Loans in the related Trust
Fund that are due during a given Due Period will, to the extent received by a
specified date (the "Determination Date") or otherwise advanced by the related
Master Servicer, Special Servicer or other specified person, be distributed to
the holders of the Certificates of such series on the next succeeding
Distribution Date. Consequently, if a prepayment on any Mortgage Loan is
distributable to Certificateholders on a particular Distribution Date, but such
prepayment is not accompanied by interest thereon to the Due Date for such
Mortgage Loan in the related Due Period, then the interest charged to the
borrower (net of servicing and administrative fees) may be less (such shortfall,
a "Prepayment Interest Shortfall") than the corresponding amount of interest
accrued and otherwise payable on the Certificates of the related series. If and
to the extent that any such shortfall is allocated to a class of Offered
Certificates, the yield thereon will be adversely affected. The Prospectus
Supplement for each series of Certificates will describe the manner in which any
such shortfalls will be allocated among the classes of such Certificates. The
related Prospectus Supplement will also describe any amounts available to offset
such shortfalls.
YIELD AND PREPAYMENT CONSIDERATIONS
A Certificate's yield to maturity will be affected by the rate of principal
payments on the Mortgage Loans in the related Trust Fund and the allocation
thereof to reduce the principal balance (or notional amount, if applicable) of
such Certificate. The rate of principal payments on the Mortgage Loans in any
Trust Fund will in turn be affected by the amortization schedules thereof
(which, in the case of ARM Loans, may change periodically to accommodate
adjustments to the Mortgage Rates thereon), the dates on which any balloon
payments are due, and the rate of principal prepayments thereon (including for
this purpose, voluntary prepayments by borrowers and also prepayments resulting
from liquidations of Mortgage Loans due to defaults, casualties or condemnations
affecting the related Mortgaged
27
Properties, or purchases of Mortgage Loans out of the related Trust Fund).
Because the rate of principal prepayments on the Mortgage Loans in any Trust
Fund will depend on future events and a variety of factors (as described below),
no assurance can be given as to such rate.
The extent to which the yield to maturity of a class of Offered
Certificates of any series may vary from the anticipated yield will depend upon
the degree to which they are purchased at a discount or premium and when, and to
what degree, payments of principal on the Mortgage Loans in the related Trust
Fund are in turn distributed on such Certificates (or, in the case of a class of
Stripped Interest Certificates, result in the reduction of the Notional Amount
thereof). An investor should consider, in the case of any Offered Certificate
purchased at a discount, the risk that a slower than anticipated rate of
principal payments on the Mortgage Loans in the related Trust Fund could result
in an actual yield to such investor that is lower than the anticipated yield
and, in the case of any Offered Certificate purchased at a premium, the risk
that a faster than anticipated rate of principal payments on such Mortgage Loans
could result in an actual yield to such investor that is lower than the
anticipated yield. In addition, if an investor purchases an Offered Certificate
at a discount (or premium), and principal payments are made in reduction of the
principal balance or notional amount of such investor's Offered Certificates at
a rate slower (or faster) than the rate anticipated by the investor during any
particular period, any consequent adverse effects on such investor's yield would
not be fully offset by a subsequent like increase (or decrease) in the rate of
principal payments.
In general, the Notional Amount of a class of Stripped Interest
Certificates will either (i) be based on the principal balances of some or all
of the Mortgage Assets in the related Trust Fund or (ii) equal the Certificate
Balances of one or more of the other classes of Certificates of the same series.
Accordingly, the yield on such Stripped Interest Certificates will be inversely
related to the rate at which payments and other collections of principal are
received on such Mortgage Assets or distributions are made in reduction of the
Certificate Balances of such classes of Certificates, as the case may be.
Consistent with the foregoing, if a class of Certificates of any series
consists of Stripped Interest Certificates or Stripped Principal Certificates, a
lower than anticipated rate of principal prepayments on the Mortgage Loans in
the related Trust Fund will negatively affect the yield to investors in Stripped
Principal Certificates, and a higher than anticipated rate of principal
prepayments on such Mortgage Loans will negatively affect the yield to investors
in Stripped Interest Certificates. If the Offered Certificates of a series
include any such Certificates, the related Prospectus Supplement will include a
table showing the effect of various constant assumed levels of prepayment on
yields on such Certificates. Such tables will be intended to illustrate the
sensitivity of yields to various constant assumed prepayment rates and will not
be intended to predict, or to provide information that will enable investors to
predict, yields or prepayment rates.
The extent of prepayments of principal of the Mortgage Loans in any Trust
Fund may be affected by a number of factors, including, without limitation, the
availability of mortgage credit, the relative economic vitality of the area in
which the Mortgaged Properties are located, the quality of management of the
Mortgaged Properties, the servicing of the Mortgage Loans, possible changes in
tax laws and other opportunities for investment. In general, those factors which
increase the attractiveness of selling a Mortgaged Property or refinancing a
Mortgage Loan or which enhance a borrower's ability to do so, as well as those
factors which increase the likelihood of default under a Mortgage Loan, would be
expected to cause the rate of prepayment in respect of any Mortgage Asset Pool
to accelerate. In contrast, those factors having an opposite effect would be
expected to cause the rate of prepayment of any Mortgage Asset Pool to slow.
The rate of principal payments on the Mortgage Loans in any Trust Fund may
also be affected by the existence of Lock-out Periods and requirements that
principal prepayments be accompanied by Prepayment Premiums, and by the extent
to which such provisions may be practicably enforced. To the extent enforceable,
such provisions could constitute either an absolute prohibition (in the case of
a Lock-out Period) or a disincentive (in the case of a Prepayment Premium) to a
borrower's voluntarily prepaying its Mortgage Loan, thereby slowing the rate of
prepayments.
The rate of prepayment on a pool of mortgage loans is likely to be affected
by prevailing market interest rates for mortgage loans of a comparable type,
term and risk level. When the prevailing market
28
interest rate is below a mortgage coupon, a borrower may have an increased
incentive to refinance its mortgage loan. Even in the case of ARM Loans, as
prevailing market interest rates decline, and without regard to whether the
Mortgage Rates on such ARM Loans decline in a manner consistent therewith, the
related borrowers may have an increased incentive to refinance for purposes of
either (i) converting to a fixed rate loan and thereby "locking in" such rate or
(ii) taking advantage of a different index, margin or rate cap or floor on
another adjustable rate mortgage loan. Therefore, as prevailing market interest
rates decline, prepayment speeds would be expected to accelerate.
Depending on prevailing market interest rates, the outlook for market
interest rates and economic conditions generally, some borrowers may sell
Mortgaged Properties in order to realize their equity therein, to meet cash flow
needs or to make other investments. In addition, some borrowers may be motivated
by federal and state tax laws (which are subject to change) to sell Mortgaged
Properties prior to the exhaustion of tax depreciation benefits. The Depositor
makes no representation as to the particular factors that will affect the
prepayment of the Mortgage Loans in any Trust Fund, as to the relative
importance of such factors, as to the percentage of the principal balance of
such Mortgage Loans that will be paid as of any date or as to the overall rate
of prepayment on such Mortgage Loans.
WEIGHTED AVERAGE LIFE AND MATURITY
The rate at which principal payments are received on the Mortgage Loans in
any Trust Fund will affect the ultimate maturity and the weighted average life
of one or more classes of the Certificates of such series. Unless otherwise
specified in the related Prospectus Supplement, weighted average life refers to
the average amount of time that will elapse from the date of issuance of an
instrument until each dollar allocable as principal of such instrument is repaid
to the investor.
The weighted average life and maturity of a class of Certificates of any
series will be influenced by the rate at which principal on the related Mortgage
Loans, whether in the form of scheduled amortization or prepayments (for this
purpose, the term "prepayment" includes voluntary prepayments by borrowers and
also prepayments resulting from liquidations of Mortgage Loans due to default,
casualties or condemnations affecting the related Mortgaged Properties and
purchases of Mortgage Loans out of the related Trust Fund), is paid to such
class. Prepayment rates on loans are commonly measured relative to a prepayment
standard or model, such as the Constant Prepayment Rate ("CPR") prepayment model
or the Standard Prepayment Assumption ("SPA") prepayment model. CPR represents
an assumed constant rate of prepayment each month (expressed as an annual
percentage) relative to the then outstanding principal balance of a pool of
mortgage loans for the life of such loans. SPA represents an assumed variable
rate of prepayment each month (expressed as an annual percentage) relative to
the then outstanding principal balance of a pool of mortgage loans, with
different prepayment assumptions often expressed as percentages of SPA. For
example, a prepayment assumption of 100% of SPA assumes prepayment rates of 0.2%
per annum of the then outstanding principal balance of such loans in the first
month of the life of the loans and an additional 0.2% per annum in each month
thereafter until the thirtieth month. Beginning in the thirtieth month, and in
each month thereafter during the life of the loans, 100% of SPA assumes a
constant prepayment rate of 6% per annum each month.
Neither CPR nor SPA nor any other prepayment model or assumption purports
to be a historical description of prepayment experience or a prediction of the
anticipated rate of prepayment of any particular pool of mortgage loans.
Moreover, the CPR and SPA models were developed based upon historical prepayment
experience for single-family mortgage loans. Thus, it is unlikely that the
prepayment experience of the Mortgage Loans included in any Trust Fund will
conform to any particular level of CPR or SPA.
The Prospectus Supplement with respect to each series of Certificates will
contain tables, if applicable, setting forth the projected weighted average life
of each class of Offered Certificates of such series with a Certificate Balance,
and the percentage of the initial Certificate Balance of each such class that
would be outstanding on specified Distribution Dates, based on the assumptions
stated in such Prospectus Supplement, including assumptions that prepayments on
the related Mortgage Loans are made at rates corresponding to various
percentages of CPR or SPA, or at such other rates specified
29
in such Prospectus Supplement. Such tables and assumptions will illustrate the
sensitivity of the weighted average lives of the Certificates to various assumed
prepayment rates and will not be intended to predict, or to provide information
that will enable investors to predict, the actual weighted average lives of the
Certificates.
OTHER FACTORS AFFECTING YIELD, WEIGHTED AVERAGE LIFE AND MATURITY
BALLOON PAYMENTS; EXTENSIONS OF MATURITY. Some or all of the Mortgage Loans
included in a particular Trust Fund may require that balloon payments be made at
maturity. Because the ability of a borrower to make a balloon payment typically
will depend upon its ability either to refinance the loan or to sell the related
Mortgaged Property, there is a possibility that Mortgage Loans that require
balloon payments may default at maturity, or that the maturity of such a
Mortgage Loan may be extended in connection with a workout. In the case of
defaults, recovery of proceeds may be delayed by, among other things, bankruptcy
of the borrower or adverse conditions in the market where the property is
located. In order to minimize losses on defaulted Mortgage Loans, the Master
Servicer or the Special Servicer, to the extent and under the circumstances set
forth herein and in the related Prospectus Supplement, may be authorized to
modify Mortgage Loans that are in default or as to which a payment default is
imminent. Any defaulted balloon payment or modification that extends the
maturity of a Mortgage Loan may delay distributions of principal on a class of
Offered Certificates and thereby extend the weighted average life of such
Certificates and, if such Certificates were purchased at a discount, reduce the
yield thereon.
NEGATIVE AMORTIZATION. The weighted average life of a class of Certificates
can be affected by Mortgage Loans that permit negative amortization to occur
(that is, Mortgage Loans that provide for the current payment of interest
calculated at a rate lower than the rate at which interest accrues thereon, with
the unpaid portion of such interest being added to the related principal
balance). Negative amortization on one or more Mortgage Loans in any Trust Fund
may result in negative amortization on the Offered Certificates of the related
series. The related Prospectus Supplement will describe, if applicable, the
manner in which negative amortization in respect of the Mortgage Loans in any
Trust Fund is allocated among the respective classes of Certificates of the
related series. The portion of any Mortgage Loan negative amortization allocated
to a class of Certificates may result in a deferral of some or all of the
interest payable thereon, which deferred interest may be added to the
Certificate Balance thereof. In addition, an ARM Loan that permits negative
amortization would be expected during a period of increasing interest rates to
amortize at a slower rate (and perhaps not at all) than if interest rates were
declining or were remaining constant. Such slower rate of Mortgage Loan
amortization would correspondingly be reflected in a slower rate of amortization
for one or more classes of Certificates of the related series. Accordingly, the
weighted average lives of Mortgage Loans that permit negative amortization (and
that of the classes of Certificates to which any such negative amortization
would be allocated or that would bear the effects of a slower rate of
amortization on such Mortgage Loans) may increase as a result of such feature.
Negative amortization may occur in respect of an ARM Loan that (i) limits
the amount by which its scheduled payment may adjust in response to a change in
its Mortgage Rate, (ii) provides that its scheduled payment will adjust less
frequently than its Mortgage Rate or (iii) provides for constant scheduled
payments notwithstanding adjustments to its Mortgage Rate. Accordingly, during a
period of declining interest rates, the scheduled payment on such a Mortgage
Loan may exceed the amount necessary to amortize the loan fully over its
remaining amortization schedule and pay interest at the then applicable Mortgage
Rate, thereby resulting in the accelerated amortization of such Mortgage Loan.
Any such acceleration in amortization of its principal balance will shorten the
weighted average life of such Mortgage Loan and, correspondingly, the weighted
average lives of those classes of Certificates entitled to a portion of the
principal payments on such Mortgage Loan.
The extent to which the yield on any Offered Certificate will be affected
by the inclusion in the related Trust Fund of Mortgage Loans that permit
negative amortization, will depend upon (i) whether such Offered Certificate was
purchased at a premium or a discount and (ii) the extent to which the payment
characteristics of such Mortgage Loans delay or accelerate the distributions of
principal on
30
such Certificate (or, in the case of a Stripped Interest Certificate, delay or
accelerate the reduction of the notional amount thereof). See "--Yield and
Prepayment Considerations" above.
FORECLOSURES AND PAYMENT PLANS. The number of foreclosures and the
principal amount of the Mortgage Loans that are foreclosed in relation to the
number and principal amount of Mortgage Loans that are repaid in accordance with
their terms will affect the weighted average lives of those Mortgage Loans and,
accordingly, the weighted average lives of and yields on the Certificates of the
related series. Servicing decisions made with respect to the Mortgage Loans,
including the use of payment plans prior to a demand for acceleration and the
restructuring of Mortgage Loans in bankruptcy proceedings or otherwise, may also
have an effect upon the payment patterns of particular Mortgage Loans and thus
the weighted average lives of and yields on the Certificates of the related
series.
LOSSES AND SHORTFALLS ON THE MORTGAGE ASSETS. The yield to holders of the
Offered Certificates of any series will directly depend on the extent to which
such holders are required to bear the effects of any losses or shortfalls in
collections arising out of defaults on the Mortgage Loans in the related Trust
Fund and the timing of such losses and shortfalls. In general, the earlier that
any such loss or shortfall occurs, the greater will be the negative effect on
yield for any class of Certificates that is required to bear the effects
thereof.
The amount of any losses or shortfalls in collections on the Mortgage
Assets in any Trust Fund (to the extent not covered or offset by draws on any
reserve fund or under any instrument of Credit Support) will be allocated among
the respective classes of Certificates of the related series in the priority and
manner, and subject to the limitations, specified in the related Prospectus
Supplement. As described in the related Prospectus Supplement, such allocations
may be effected by (i) a reduction in the entitlements to interest and/or the
Certificate Balances of one or more such classes of Certificates and/or (ii)
establishing a priority of payments among such classes of Certificates.
The yield to maturity on a class of Subordinate Certificates may be
extremely sensitive to losses and shortfalls in collections on the Mortgage
Loans in the related Trust Fund.
ADDITIONAL CERTIFICATE AMORTIZATION. In addition to entitling the holders
thereof to a specified portion (which may during specified periods range from
none to all) of the principal payments received on the Mortgage Assets in the
related Trust Fund, one or more classes of Certificates of any series, including
one or more classes of Offered Certificates of such series, may provide for
distributions of principal thereof from (i) amounts attributable to interest
accrued but not currently distributable on one or more classes of Accrual
Certificates, (ii) Excess Funds or (iii) any other amounts described in the
related Prospectus Supplement. Unless otherwise specified in the related
Prospectus Supplement, "Excess Funds" will, in general, represent that portion
of the amounts distributable in respect of the Certificates of any series on any
Distribution Date that represent (i) interest received or advanced on the
Mortgage Assets in the related Trust Fund that is in excess of the interest
currently accrued on the Certificates of such series, or (ii) Prepayment
Premiums, payments from Equity Participations or any other amounts received on
the Mortgage Assets in the related Trust Fund that do not constitute interest
thereon or principal thereof.
The amortization of any class of Certificates out of the sources described
in the preceding paragraph would shorten the weighted average life of such
Certificates and, if such Certificates were purchased at a premium, reduce the
yield thereon. The related Prospectus Supplement will discuss the relevant
factors to be considered in determining whether distributions of principal of
any class of Certificates out of such sources is likely to have any material
effect on the rate at which such Certificates are amortized and the consequent
yield with respect thereto.
THE DEPOSITOR
The Depositor is a special purpose corporation incorporated in the State of
Delaware on March 22, 1996, for the purpose of engaging in the business, among
other things, of acquiring and depositing mortgage assets in trust in exchange
for certificates evidencing interest in such trusts and selling or otherwise
distributing such certificates. The principal executive offices of the Depositor
are located at 60 Wall Street, New York, New York 10005. The telephone number is
(212) 250-2500. The Depositor's
31
capitalization is nominal. All of the shares of capital stock of the Depositor
are held by DB U.S. Financial Markets Holding Corporation, an affiliate of
Deutsche Bank AG.
None of the Depositor, Deutsche Bank AG or any of their respective
affiliates will insure or guarantee distributions on the certificates of any
series.
DEUTSCHE BANK AG
It is anticipated that the assets conveyed to the Trust Fund by the
Depositor will have been acquired by the Depositor from Deutsche Bank AG or an
affiliate thereof. Deutsche Bank AG is the largest banking institution in the
Federal Republic of Germany and one of the largest in the world. It is the
parent company of a group (the "Deutsche Bank Group") consisting of commercial
banks, capital market companies, fund management companies, a property finance
company, installment financing companies, research consultancy companies and
other domestic and foreign companies. The Deutsche Bank Group has approximately
69,000 employees worldwide and operates out of approximately 1,700 facilities
around the world.
DESCRIPTION OF THE CERTIFICATES
GENERAL
Each series of Certificates will represent the entire beneficial ownership
interest in the Trust Fund created pursuant to the related Pooling Agreement. As
described in the related Prospectus Supplement, the Certificates of each series,
including the Offered Certificates of such series, may consist of one or more
classes of Certificates that, among other things: (i) provide for the accrual of
interest on the Certificate Balance or Notional Amount thereof at a fixed,
variable or adjustable rate; (ii) constitute Senior Certificates or Subordinate
Certificates; (iii) constitute Stripped Interest Certificates or Stripped
Principal Certificates; (iv) provide for distributions of interest thereon or
principal thereof that commence only after the occurrence of certain events,
such as the retirement of one or more other classes of Certificates of such
series; (v) provide for distributions of principal thereof to be made, from time
to time or for designated periods, at a rate that is faster (and, in some cases,
substantially faster) or slower (and, in some cases, substantially slower) than
the rate at which payments or other collections of principal are received on the
Mortgage Assets in the related Trust Fund; (vi) provide for distributions of
principal thereof to be made, subject to available funds, based on a specified
principal payment schedule or other methodology; or (vii) provide for
distributions based on collections on the Mortgage Assets in the related Trust
Fund attributable to Prepayment Premiums and Equity Participations.
If so specified in the related Prospectus Supplement, a class of
Certificates may have two or more component parts, each having characteristics
that are otherwise described herein as being attributable to separate and
distinct classes. For example, a class of Certificates may have a Certificate
Balance on which it accrues interest at a fixed, variable or adjustable rate.
Such class of Certificates may also have certain characteristics attributable to
Stripped Interest Certificates insofar as it may also entitle the holders
thereof to distributions of interest accrued on a Notional Amount at a different
fixed, variable or adjustable rate. In addition, a class of Certificates may
accrue interest on one portion of its Certificate Balance at one fixed, variable
or adjustable rate and on another portion of its Certificate Balance at a
different fixed, variable or adjustable rate.
Each class of Offered Certificates of a series will be issued in minimum
denominations corresponding to the principal balances or, in case of certain
classes of Stripped Interest Certificates or Residual Certificates, notional
amounts or percentage interests, specified in the related Prospectus Supplement.
As provided in the related Prospectus Supplement, one or more classes of Offered
Certificates of any series may be issued in fully registered, definitive form
(such Certificates, "Definitive Certificates") or may be offered in book-entry
format (such Certificates, "Book-Entry Certificates") through the facilities of
DTC. The Offered Certificates of each series (if issued as Definitive
Certificates) may be transferred or exchanged, subject to any restrictions on
transfer described in the related
32
Prospectus Supplement, at the location specified in the related Prospectus
Supplement, without the payment of any service charges, other than any tax or
other governmental charge payable in connection therewith. Interests in a class
of Book-Entry Certificates will be transferred on the book-entry records of DTC
and its participating organizations. If so specified in the related Prospectus
Supplement, arrangements may be made for clearance and settlement through
Clearstream Banking, societe anonyme or the Euroclear System, if they are
participants in DTC.
DISTRIBUTIONS
Distributions on the Certificates of each series will be made on each
Distribution Date from the Available Distribution Amount for such series and
such Distribution Date. Unless otherwise provided in the related Prospectus
Supplement, the "Available Distribution Amount" for any series of Certificates
and any Distribution Date will refer to the total of all payments or other
collections (or advances in lieu thereof) on, under or in respect of the
Mortgage Assets and any other assets included in the related Trust Fund that are
available for distribution to the holders of Certificates of such series on such
date. The particular components of the Available Distribution Amount for any
series and Distribution Date will be more specifically described in the related
Prospectus Supplement. In general, the Distribution Date for a series of
Certificates will be the 25th day of each month (or, if any such 25th day is not
a business day, the next succeeding business day), commencing in the month
immediately following the month in which such series of Certificates is issued.
Except as otherwise specified in the related Prospectus Supplement,
distributions on the Certificates of each series (other than the final
distribution in retirement of any such Certificate) will be made to the persons
in whose names such Certificates are registered at the close of business on the
last business day of the month preceding the month in which the applicable
Distribution Date occurs (the "Record Date"), and the amount of each
distribution will be determined as of the close of business on the date (the
"Determination Date") specified in the related Prospectus Supplement. All
distributions with respect to each class of Certificates on each Distribution
Date will be allocated pro rata among the outstanding Certificates in such class
in proportion to the respective Percentage Interests evidenced thereby unless
otherwise specified in the related Prospectus Supplement. Payments will be made
either by wire transfer in immediately available funds to the account of a
Certificateholder at a bank or other entity having appropriate facilities
therefor, if such Certificateholder has provided the person required to make
such payments with wiring instructions no later than the related Record Date or
such other date specified in the related Prospectus Supplement (and, if so
provided in the related Prospectus Supplement, such Certificateholder holds
Certificates in the requisite amount or denomination specified therein), or by
check mailed to the address of such Certificateholder as it appears on the
Certificate Register; provided, however, that the final distribution in
retirement of any class of Certificates (whether Definitive Certificates or
Book-Entry Certificates) will be made only upon presentation and surrender of
such Certificates at the location specified in the notice to Certificateholders
of such final distribution. The undivided percentage interest (the "Percentage
Interest") represented by an Offered Certificate of a particular class will be
equal to the percentage obtained by dividing the initial principal balance or
notional amount of such Certificate by the initial Certificate Balance or
Notional Amount of such class.
DISTRIBUTIONS OF INTEREST ON THE CERTIFICATES
Each class of Certificates of each series (other than certain classes of
Stripped Principal Certificates and certain classes of Residual Certificates
that have no Pass-Through Rate) may have a different Pass-Through Rate, which in
each case may be fixed, variable or adjustable. The related Prospectus
Supplement will specify the Pass-Through Rate or, in the case of a variable or
adjustable Pass-Through Rate, the method for determining the Pass-Through Rate,
for each class of Offered Certificates. Unless otherwise specified in the
related Prospectus Supplement, interest on the Certificates of each series will
be calculated on the basis of a 360-day year consisting of twelve 30-day months.
Distributions of interest in respect of any class of Certificates (other
than a class of Accrual Certificates, which will be entitled to distributions of
accrued interest commencing only on the
33
Distribution Date, or under the circumstances, specified in the related
Prospectus Supplement, and other than any class of Stripped Principal
Certificates or Residual Certificates that is not entitled to any distributions
of interest) will be made on each Distribution Date based on the Accrued
Certificate Interest for such class and such Distribution Date, subject to the
sufficiency of that portion, if any, of the Available Distribution Amount
allocable to such class on such Distribution Date. Prior to the time interest is
distributable on any class of Accrual Certificates, the amount of Accrued
Certificate Interest otherwise distributable on such class will be added to the
Certificate Balance thereof on each Distribution Date or otherwise deferred as
described in the related Prospectus Supplement. With respect to each class of
Certificates (other than certain classes of Stripped Interest Certificates and
certain classes of Residual Certificates), the "Accrued Certificate Interest"
for each Distribution Date will be equal to interest at the applicable
Pass-Through Rate accrued for a specified period (generally the most recently
ended calendar month) on the outstanding Certificate Balance of such class of
Certificates immediately prior to such Distribution Date. Unless otherwise
provided in the related Prospectus Supplement, the Accrued Certificate Interest
for each Distribution Date on a class of Stripped Interest Certificates will be
similarly calculated except that it will accrue on a Notional Amount that is
either (i) based on the principal balances of some or all of the Mortgage Assets
in the related Trust Fund or (ii) equal to the Certificate Balances of one or
more other classes of Certificates of the same series. Reference to a Notional
Amount with respect to a class of Stripped Interest Certificates is solely for
convenience in making certain calculations and does not represent the right to
receive any distributions of principal. If so specified in the related
Prospectus Supplement, the amount of Accrued Certificate Interest that is
otherwise distributable on (or, in the case of Accrual Certificates, that may
otherwise be added to the Certificate Balance of) one or more classes of the
Certificates of a series may be reduced to the extent that any Prepayment
Interest Shortfalls, as described under "Yield and Maturity
Considerations--Certain Shortfalls in Collections of Interest," exceed the
amount of any sums that are applied to offset the amount of such shortfalls. The
particular manner in which such shortfalls will be allocated among some or all
of the classes of Certificates of that series will be specified in the related
Prospectus Supplement. The related Prospectus Supplement will also describe the
extent to which the amount of Accrued Certificate Interest that is otherwise
distributable on (or, in the case of Accrual Certificates, that may otherwise be
added to the Certificate Balance of) a class of Offered Certificates may be
reduced as a result of any other contingencies, including delinquencies, losses
and deferred interest on or in respect of the Mortgage Assets in the related
Trust Fund. Unless otherwise provided in the related Prospectus Supplement, any
reduction in the amount of Accrued Certificate Interest otherwise distributable
on a class of Certificates by reason of the allocation to such class of a
portion of any deferred interest on or in respect of the Mortgage Assets in the
related Trust Fund will result in a corresponding increase in the Certificate
Balance of such class. See "Risk Factors--Effect of Prepayments on Average Life
of Certificates" and "--Effect of Prepayments on Yield of Certificates" and
"Yield and Maturity Considerations--Certain Shortfalls in Collections of
Interest."
DISTRIBUTIONS OF PRINCIPAL OF THE CERTIFICATES
Each class of Certificates of each series (other than certain classes of
Stripped Interest Certificates and certain classes of Residual Certificates)
will have a Certificate Balance, which, at any time, will equal the then maximum
amount that the holders of Certificates of such class will be entitled to
receive as principal out of the future cash flow on the Mortgage Assets and
other assets included in the related Trust Fund. The outstanding Certificate
Balance of a class of Certificates will be reduced by distributions of principal
made thereon from time to time and, if and to the extent so provided in the
related Prospectus Supplement, further by any losses incurred in respect of the
related Mortgage Assets allocated thereto from time to time. In turn, the
outstanding Certificate Balance of a class of Certificates may be increased as a
result of any deferred interest on or in respect of the related Mortgage Assets
being allocated thereto from time to time, and will be increased, in the case of
a class of Accrual Certificates prior to the Distribution Date on which
distributions of interest thereon are required to commence, by the amount of any
Accrued Certificate Interest in respect thereof (reduced as described above).
The initial aggregate Certificate Balance of all classes of a series of
Certificates will not be greater than the aggregate outstanding principal
balance of the related Mortgage Assets as of a specified date (the "Cut-off
Date"), after application of scheduled payments due on or before such date,
34
whether or not received. The initial Certificate Balance of each class of a
series of Certificates will be specified in the related Prospectus Supplement.
As and to the extent described in the related Prospectus Supplement,
distributions of principal with respect to a series of Certificates will be made
on each Distribution Date to the holders of the class or classes of Certificates
of such series entitled thereto until the Certificate Balances of such
Certificates have been reduced to zero. Distributions of principal with respect
to one or more classes of Certificates may be made at a rate that is faster
(and, in some cases, substantially faster) than the rate at which payments or
other collections of principal are received on the Mortgage Assets in the
related Trust Fund. Distributions of principal with respect to one or more
classes of Certificates may not commence until the occurrence of certain events,
such as the retirement of one or more other classes of Certificates of the same
series, or may be made at a rate that is slower (and, in some cases,
substantially slower) than the rate at which payments or other collections of
principal are received on the Mortgage Assets in the related Trust Fund.
Distributions of principal with respect to one or more classes of Certificates
(each such class, a "Controlled Amortization Class") may be made, subject to
available funds, based on a specified principal payment schedule. Distributions
of principal with respect to one or more other classes of Certificates (each
such class, a "Companion Class") may be contingent on the specified principal
payment schedule for a Controlled Amortization Class of the same series and the
rate at which payments and other collections of principal on the Mortgage Assets
in the related Trust Fund are received. Unless otherwise specified in the
related Prospectus Supplement, distributions of principal of any class of
Offered Certificates will be made on a pro rata basis among all of the
Certificates of such class.
DISTRIBUTIONS ON THE CERTIFICATES IN RESPECT OF PREPAYMENT PREMIUMS
OR IN RESPECT OF EQUITY PARTICIPATIONS
If so provided in the related Prospectus Supplement, Prepayment Premiums or
payments in respect of Equity Participations received on or in connection with
the Mortgage Assets in any Trust Fund will be distributed on each Distribution
Date to the holders of the class of Certificates of the related series entitled
thereto in accordance with the provisions described in such Prospectus
Supplement. Alternatively, such items may be retained by the Depositor or any of
its affiliates or by any other specified person and/or may be excluded as Trust
Assets.
ALLOCATION OF LOSSES AND SHORTFALLS
The amount of any losses or shortfalls in collections on the Mortgage
Assets in any Trust Fund (to the extent not covered or offset by draws on any
reserve fund or under any instrument of Credit Support) will be allocated among
the respective classes of Certificates of the related series in the priority and
manner, and subject to the limitations, specified in the related Prospectus
Supplement. As described in the related Prospectus Supplement, such allocations
may be effected by (i) a reduction in the entitlements to interest and/or the
Certificate Balances of one or more such classes of Certificates and/or (ii)
establishing a priority of payments among such classes of Certificates. See
"Description of Credit Support."
ADVANCES IN RESPECT OF DELINQUENCIES
If and to the extent provided in the related Prospectus Supplement, if a
Trust Fund includes Mortgage Loans, the Master Servicer, the Special Servicer,
the Trustee, any provider of Credit Support and/or any other specified person
may be obligated to advance, or have the option of advancing, on or before each
Distribution Date, from its or their own funds or from excess funds held in the
related Certificate Account that are not part of the Available Distribution
Amount for the related series of Certificates for such Distribution Date, an
amount up to the aggregate of any payments of principal (other than the
principal portion of any balloon payments) and interest that were due on or in
respect of such Mortgage Loans during the related Due Period and were delinquent
on the related Determination Date.
Advances are intended to maintain a regular flow of scheduled interest and
principal payments to holders of the class or classes of Certificates entitled
thereto, rather than to guarantee or insure against losses. Accordingly, all
advances made out of a specific entity's own funds will be reimbursable out of
35
related recoveries on the Mortgage Loans (including amounts drawn under any fund
or instrument constituting Credit Support) respecting which such advances were
made (as to any Mortgage Loan, "Related Proceeds") and such other specific
sources as may be identified in the related Prospectus Supplement, including, in
the case of a series that includes one or more classes of Subordinate
Certificates, if so identified, collections on other Mortgage Assets in the
related Trust Fund that would otherwise be distributable to the holders of one
or more classes of such Subordinate Certificates. No advance will be required to
be made by a Master Servicer, Special Servicer or Trustee if, in the judgment of
the Master Servicer, Special Servicer or Trustee, as the case may be, such
advance would not be recoverable from Related Proceeds or another specifically
identified source (any such advance, a "Nonrecoverable Advance"); and, if
previously made by a Master Servicer, Special Servicer or Trustee, a
Nonrecoverable Advance will be reimbursable thereto from any amounts in the
related Certificate Account prior to any distributions being made to the related
series of Certificateholders.
If advances have been made by a Master Servicer, Special Servicer, Trustee
or other entity from excess funds in a Certificate Account, such Master
Servicer, Special Servicer, Trustee or other entity, as the case may be, will be
required to replace such funds in such Certificate Account on or prior to any
future Distribution Date to the extent that funds in such Certificate Account on
such Distribution Date are less than payments required to be made to the related
series of Certificateholders on such date. If so specified in the related
Prospectus Supplement, the obligation of a Master Servicer, Special Servicer,
Trustee or other entity to make advances may be secured by a cash advance
reserve fund or a surety bond. If applicable, information regarding the
characteristics of, and the identity of any obligor on, any such surety bond,
will be set forth in the related Prospectus Supplement.
If and to the extent so provided in the related Prospectus Supplement, any
entity making advances will be entitled to receive interest on certain or all of
such advances for a specified period during which such advances are outstanding
at the rate specified in such Prospectus Supplement, and such entity will be
entitled to payment of such interest periodically from general collections on
the Mortgage Loans in the related Trust Fund prior to any payment to the related
series of Certificateholders or as otherwise provided in the related Pooling
Agreement and described in such Prospectus Supplement. The Prospectus Supplement
for any series of Certificates evidencing an interest in a Trust Fund that
includes MBS will describe any comparable advancing obligation of a party to the
related Pooling Agreement or of a party to the related MBS Agreement.
REPORTS TO CERTIFICATEHOLDERS
On each Distribution Date, together with the distribution to the holders of
each class of the Offered Certificates of a series, a Master Servicer, Manager
or Trustee, as provided in the related Prospectus Supplement, will forward to
each such holder, a statement (a "Distribution Date Statement") that, unless
otherwise provided in the related Prospectus Supplement, will set forth, among
other things, in each case to the extent applicable:
(i) the amount of such distribution to holders of such class of Offered
Certificates that was applied to reduce the Certificate Balance thereof;
(ii) the amount of such distribution to holders of such class of Offered
Certificates that was applied to pay Accrued Certificate Interest;
(iii) THE AMOUNT, IF ANY, OF SUCH DISTRIBUTION TO HOLDERS OF SUCH CLASS OF
OFFERED CERTIFICATES THAT WAS ALLOCABLE TO (A) PREPAYMENT PREMIUMS AND (B)
PAYMENTS ON ACCOUNT OF EQUITY PARTICIPATIONS;
(iv) the amount, if any, by which such distribution is less than the
amounts to which holders of such class of Offered Certificates are entitled;
(v) if the related Trust Fund includes Mortgage Loans, the aggregate amount
of advances included in such distribution;
(vi) if the related Trust Fund includes Mortgage Loans, the amount of
servicing compensation received by the related Master Servicer (and, if payable
directly out of the related Trust Fund, by any
36
Special Servicer and any Sub-Servicer) and, if the related Trust Fund includes
MBS, the amount of administrative compensation received by the MBS
Administrator;
(vii) information regarding the aggregate principal balance of the related
Mortgage Assets on or about such Distribution Date;
(viii) if the related Trust Fund includes Mortgage Loans, information
regarding the number and aggregate principal balance of such Mortgage Loans that
are delinquent;
(ix) if the related Trust Fund includes Mortgage Loans, information
regarding the aggregate amount of losses incurred and principal prepayments made
with respect to such Mortgage Loans during the related Prepayment Period (that
is, the specified period, generally corresponding in length to the period
between Distribution Dates, during which prepayments and other unscheduled
collections on the Mortgage Loans in the related Trust Fund must be received in
order to be distributed on a particular Distribution Date);
(x) the Certificate Balance or Notional Amount, as the case may be, of such
class of Certificates at the close of business on such Distribution Date,
separately identifying any reduction in such Certificate Balance or Notional
Amount due to the allocation of any losses in respect of the related Mortgage
Assets, any increase in such Certificate Balance or Notional Amount due to the
allocation of any negative amortization in respect of the related Mortgage
Assets and any increase in the Certificate Balance of a class of Accrual
Certificates, if any, in the event that Accrued Certificate Interest has been
added to such balance;
(xi) if such class of Offered Certificates has a variable Pass-Through Rate
or an adjustable Pass-Through Rate, the Pass-Through Rate applicable thereto for
such Distribution Date and, if determinable, for the next succeeding
Distribution Date;
(xii) the amount deposited in or withdrawn from any reserve fund on such
Distribution Date, and the amount remaining on deposit in such reserve fund as
of the close of business on such Distribution Date;
(xiii) if the related Trust Fund includes one or more instruments of Credit
Support, such as a letter of credit, an insurance policy and/or a surety bond,
the amount of coverage under each such instrument as of the close of business on
such Distribution Date; and
(xiv) the amount of Credit Support being afforded by any classes of
Subordinate Certificates.
In the case of information furnished pursuant to subclauses (i)-(iii)
above, the amounts will be expressed as a dollar amount per specified
denomination of the relevant class of Offered Certificates or as a percentage.
The Prospectus Supplement for each series of Certificates may describe
additional information to be included in reports to the holders of the Offered
Certificates of such series.
Within a reasonable period of time after the end of each calendar year, the
Master Servicer, Manager or Trustee for a series of Certificates, as the case
may be, will be required to furnish to each person who at any time during the
calendar year was a holder of an Offered Certificate of such series a statement
containing the information set forth in subclauses (i)-(iii) above, aggregated
for such calendar year or the applicable portion thereof during which such
person was a Certificateholder. Such obligation will be deemed to have been
satisfied to the extent that substantially comparable information is provided
pursuant to any requirements of the Code as are from time to time in force. See,
however, "--Book-Entry Registration and Definitive Certificates" below.
If the Trust Fund for a series of Certificates includes MBS, the ability of
the related Master Servicer, Manager or Trustee, as the case may be, to include
in any Distribution Date Statement information regarding the mortgage loans
underlying such MBS will depend on the reports received with respect to such
MBS. In such cases, the related Prospectus Supplement will describe the
loan-specific information to be included in the Distribution Date Statements
that will be forwarded to the holders of the Offered Certificates of that series
in connection with distributions made to them. The Depositor will provide the
same information with respect to any MBSs in its own reports that were publicly
offered and the reports the related MBS Issuer provides to the Trustee if
privately issued.
37
VOTING RIGHTS
The voting rights evidenced by each series of Certificates (as to such
series, the "Voting Rights") will be allocated among the respective classes of
such series in the manner described in the related Prospectus Supplement.
Certificateholders will generally not have a right to vote, except with
respect to required consents to certain amendments to the related Pooling
Agreement and as otherwise specified in the related Prospectus Supplement. See
"Description of the Pooling Agreements--Amendment." The holders of specified
amounts of Certificates of a particular series will have the right to act as a
group to remove the related Trustee and also upon the occurrence of certain
events which if continuing would constitute an Event of Default on the part of
the related Master Servicer, Special Servicer or REMIC Administrator. See
"Description of the Pooling Agreements--Events of Default," "--Rights Upon Event
of Default" and "--Resignation and Removal of the Trustee."
TERMINATION
The obligations created by the Pooling Agreement for each series of
Certificates will terminate following (i) the final payment or other liquidation
of the last Mortgage Asset subject thereto or the disposition of all property
acquired upon foreclosure of any Mortgage Loan subject thereto and (ii) the
payment (or provision for payment) to the Certificateholders of that series of
all amounts required to be paid to them pursuant to such Pooling Agreement.
Written notice of termination of a Pooling Agreement will be given to each
Certificateholder of the related series, and the final distribution will be made
only upon presentation and surrender of the Certificates of such series at the
location to be specified in the notice of termination.
If so specified in the related Prospectus Supplement, a series of
Certificates may be subject to optional early termination through the repurchase
of the Mortgage Assets in the related Trust Fund by the party or parties
specified therein, under the circumstances and in the manner set forth therein.
In addition, if so provided in the related Prospectus Supplement upon the
reduction of the Certificate Balance of a specified class or classes of
Certificates by a specified percentage or amount or upon a specified date, a
party designated therein may be authorized or required to solicit bids for the
purchase of all the Mortgage Assets of the related Trust Fund, or of a
sufficient portion of such Mortgage Assets to retire such class or classes,
under the circumstances and in the manner set forth therein. The solicitation of
bids will be conducted in a commercially reasonable manner and, generally,
assets will be sold at their fair market value. Circumstances may arise in which
such fair market value may be less than the unpaid balance of the Mortgage Loans
sold and therefore, as a result of such a sale, the Certificateholders of one or
more Classes of Certificates may receive an amount less than the Certificate
Balance of, and accrued unpaid interest on, their Certificates.
BOOK-ENTRY REGISTRATION AND DEFINITIVE CERTIFICATES
If so provided in the Prospectus Supplement for a series of Certificates,
one or more classes of the Offered Certificates of such series will be offered
in book-entry format through the facilities of DTC, and each such class will be
represented by one or more global Certificates registered in the name of The
Depository Trust Company ("DTC") or its nominee. If so provided in the
Prospectus Supplement, arrangements may be made for clearance and settlement
through the Euroclear System or Clearstream Banking, societe anonyme, if they
are participants in DTC.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking corporation" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
was created to hold securities for its participating organizations ("DTC
Participants") and facilitate the clearance and settlement of securities
transactions between DTC Participants through electronic computerized book-entry
changes in their accounts, thereby eliminating the need for physical movement of
securities certificates. DTC Participants that maintain accounts with DTC
include
38
securities brokers and dealers, banks, trust companies and clearing corporations
and may include other organizations. DTC is owned by a number of DTC
Participants and by the New York Stock Exchange, Inc., the American Stock
Exchange, Inc. and the National Association of Securities Dealers, Inc. Access
to the DTC system is also available to others such as banks, brokers, dealers
and trust companies that directly or indirectly clear through or maintain a
custodial relationship with a DTC Participant that maintains as account with
DTC. The rules applicable to DTC and DTC Participants are on file with the
Commission.
Purchases of Book-Entry Certificates under the DTC system must be made by
or through, and will be recorded on the records of, the brokerage firm, bank,
thrift institution or other financial intermediary (each, a "Financial
Intermediary") that maintains the beneficial owner's account for such purpose.
In turn, the Financial Intermediary's ownership of such Certificates will be
recorded on the records of DTC (or of a participating firm that acts as agent
for the Financial Intermediary, whose interest will in turn be recorded on the
records of DTC, if the beneficial owner's Financial Intermediary is not a DTC
Participant). Therefore, the beneficial owner must rely on the foregoing
procedures to evidence its beneficial ownership of such Certificates. The
beneficial ownership interest of the owner of a Book-Entry Certificate (a
"Certificate Owner") may only be transferred by compliance with the rules,
regulations and procedures of such Financial Intermediaries and DTC
Participants.
DTC has no knowledge of the actual Certificate Owners; DTC's records
reflect only the identity of the DTC Participants to whose accounts such
Certificates are credited, which may or may not be the Certificate Owners. The
DTC Participants will remain responsible for keeping account of their holdings
on behalf of their customers.
Conveyance of notices and other communications by DTC to DTC Participants
and by DTC Participants to Financial Intermediaries and Certificate Owners will
be governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Distributions on the Book-Entry Certificates will be made to DTC. DTC's
practice is to credit DTC Participants' accounts on the related Distribution
Date in accordance with their respective holdings shown on DTC's records unless
DTC has reason to believe that it will not receive payment on such date.
Disbursement of such distributions by DTC Participants to Financial
Intermediaries and Certificate Owners will be governed by standing instructions
and customary practices, as is the case with securities held for the accounts of
customers in bearer form or registered in "street name," and will be the
responsibility of each such DTC Participant (and not of DTC, the Depositor or
any Trustee, Master Servicer, Special Servicer or Manager), subject to any
statutory or regulatory requirements as may be in effect from time to time.
Accordingly, under a book-entry system, Certificate Owners may receive payments
after the related Distribution Date.
Unless otherwise provided in the related Prospectus Supplement, the only
"Certificateholder" (as such term is used in the related Pooling Agreement) of
Book-Entry Certificates will be the nominee of DTC, and the Certificate Owners
will not be recognized as Certificateholders under the Pooling Agreement.
Certificate Owners will be permitted to exercise the rights of
Certificateholders under the related Pooling Agreement only indirectly through
the DTC Participants who in turn will exercise their rights through DTC. The
Depositor has been informed that DTC will take action permitted to be taken by a
Certificateholder under a Pooling Agreement only at the direction of one or more
DTC Participants to whose account with DTC interests in the Book-Entry
Certificates are credited. DTC may take conflicting actions with respect to the
Book-Entry Certificates to the extent that such actions are taken on behalf of
Financial Intermediaries whose holdings include such Certificates.
Because DTC can act only on behalf of DTC Participants, who in turn act on
behalf of Financial Intermediaries and certain Certificate Owners, the ability
of a Certificate Owner to pledge its interest in Book-Entry Certificates to
persons or entities that do not participate in the DTC system, or otherwise take
actions in respect of its interest in Book-Entry Certificates, may be limited
due to the lack of a physical certificate evidencing such interest.
Unless otherwise specified in the related Prospectus Supplement,
Certificates initially issued in book-entry form will be issued as Definitive
Certificates to Certificate Owners or their nominees, rather
39
than to DTC or its nominee, only if (i) the Depositor advises the Trustee in
writing that DTC is no longer willing or able to discharge properly its
responsibilities as depository with respect to such Certificates and the
Depositor is unable to locate a qualified successor or (ii) the Depositor, at
its option, elects to terminate the book-entry system through DTC with respect
to such Certificates. Upon the occurrence of either of the events described in
the preceding sentence, DTC will be required to notify all DTC Participants of
the availability through DTC of Definitive Certificates. Upon surrender by DTC
of the certificate or certificates representing a class of Book-Entry
Certificates, together with instructions for registration, the Trustee for the
related series or other designated party will be required to issue to the
Certificate Owners identified in such instructions the Definitive Certificates
to which they are entitled, and thereafter the holders of such Definitive
Certificates will be recognized as "Certificateholders" under and within the
meaning of the related Pooling Agreement.
DESCRIPTION OF THE POOLING AGREEMENTS
GENERAL
The Certificates of each series will be issued pursuant to a Pooling
Agreement. In general, the parties to a Pooling Agreement will include the
Depositor, the Trustee, the Master Servicer, the Special Servicer and, if one or
more REMIC elections have been made with respect to the Trust Fund, the REMIC
Administrator. However, a Pooling Agreement that relates to a Trust Fund that
includes MBS may include a Manager as a party, but may not include a Master
Servicer, Special Servicer or other servicer as a party. All parties to each
Pooling Agreement under which Certificates of a series are issued will be
identified in the related Prospectus Supplement. If so specified in the related
Prospectus Supplement, the Mortgage Asset Seller or an affiliate thereof may
perform the functions of Master Servicer, Special Servicer, Manager or REMIC
Administrator. If so specified in the related Prospectus Supplement, the Master
Servicer may also perform the duties of Special Servicer, and the Master
Servicer, the Special Servicer or the Trustee may also perform the duties of
REMIC Administrator. Any party to a Pooling Agreement or any affiliate thereof
may own Certificates issued thereunder; however, except in limited circumstances
(including with respect to required consents to certain amendments to a Pooling
Agreement), Certificates issued thereunder that are held by the Master Servicer
or Special Servicer for the related Series will not be allocated Voting Rights.
A form of a pooling and servicing agreement has been filed as an exhibit to
the Registration Statement of which this Prospectus is a part. However, the
provisions of each Pooling Agreement will vary depending upon the nature of the
Certificates to be issued thereunder and the nature of the related Trust Fund.
The following summaries describe certain provisions that may appear in a Pooling
Agreement under which Certificates that evidence interests in Mortgage Loans
will be issued. The Prospectus Supplement for a series of Certificates will
describe any provision of the related Pooling Agreement that materially differs
from the description thereof contained in this Prospectus and, if the related
Trust Fund includes MBS, will summarize all of the material provisions of the
related Pooling Agreement. The summaries herein do not purport to be complete
and are subject to, and are qualified in their entirety by reference to, all of
the provisions of the Pooling Agreement for each series of Certificates and the
description of such provisions in the related Prospectus Supplement. The
Depositor will provide a copy of the Pooling Agreement (without exhibits) that
relates to any series of Certificates without charge upon written request of a
holder of a Certificate of such series addressed to it at its principal
executive offices specified herein under "The Depositor."
ASSIGNMENT OF MORTGAGE LOANS; REPURCHASES
At the time of issuance of any series of Certificates, the Depositor will
assign (or cause to be assigned) to the designated Trustee the Mortgage Loans to
be included in the related Trust Fund, together with, unless otherwise specified
in the related Prospectus Supplement, all principal and interest to be received
on or with respect to such Mortgage Loans after the Cut-off Date, other than
principal and interest due on or before the Cut-off Date. The Trustee will,
concurrently with such assignment, deliver the Certificates to or at the
direction of the Depositor in exchange for the Mortgage
40
Loans and the other assets to be included in the Trust Fund for such series.
Each Mortgage Loan will be identified in a schedule appearing as an exhibit to
the related Pooling Agreement. Such schedule generally will include detailed
information that pertains to each Mortgage Loan included in the related Trust
Fund, which information will typically include the address of the related
Mortgaged Property and type of such property; the Mortgage Rate and, if
applicable, the applicable index, gross margin, adjustment date and any rate cap
information; the original and remaining term to maturity; the amortization term;
and the original and outstanding principal balance.
In addition, unless otherwise specified in the related Prospectus
Supplement, the Depositor will, as to each Mortgage Loan to be included in a
Trust Fund, deliver, or cause to be delivered, to the related Trustee (or to a
custodian appointed by the Trustee as described below) the Mortgage Note
endorsed, without recourse, either in blank or to the order of such Trustee (or
its nominee), the Mortgage with evidence of recording indicated thereon (except
for any Mortgage not returned from the public recording office), an assignment
of the Mortgage in blank or to the Trustee (or its nominee) in recordable form,
together with any intervening assignments of the Mortgage with evidence of
recording thereon (except for any such assignment not returned from the public
recording office), and, if applicable, any riders or modifications to such
Mortgage Note and Mortgage, together with certain other documents at such times
as set forth in the related Pooling Agreement. Such assignments may be blanket
assignments covering Mortgages on Mortgaged Properties located in the same
county, if permitted by law. Notwithstanding the foregoing, a Trust Fund may
include Mortgage Loans where the original Mortgage Note is not delivered to the
Trustee if the Depositor delivers, or causes to be delivered, to the related
Trustee (or such custodian) a copy or a duplicate original of the Mortgage Note,
together with an affidavit certifying that the original thereof has been lost or
destroyed. In addition, if the Depositor cannot deliver, with respect to any
Mortgage Loan, the Mortgage or any intervening assignment with evidence of
recording thereon concurrently with the execution and delivery of the related
Pooling Agreement because of a delay caused by the public recording office, the
Depositor will deliver, or cause to be delivered, to the related Trustee (or
such custodian) a true and correct photocopy of such Mortgage or assignment as
submitted for recording. The Depositor will deliver, or cause to be delivered,
to the related Trustee (or such custodian) such Mortgage or assignment with
evidence of recording indicated thereon after receipt thereof from the public
recording office. If the Depositor cannot deliver, with respect to any Mortgage
Loan, the Mortgage or any intervening assignment with evidence of recording
thereon concurrently with the execution and delivery of the related Pooling
Agreement because such Mortgage or assignment has been lost, the Depositor will
deliver, or cause to be delivered, to the related Trustee (or such custodian) a
true and correct photocopy of such Mortgage or assignment with evidence of
recording thereon. Unless otherwise specified in the related Prospectus
Supplement, assignments of Mortgage to the Trustee (or its nominee) will be
recorded in the appropriate public recording office, except in states where, in
the opinion of counsel acceptable to the Trustee, such recording is not required
to protect the Trustee's interests in the Mortgage Loan against the claim of any
subsequent transferee or any successor to or creditor of the Depositor or the
originator of such Mortgage Loan.
The Trustee (or a custodian appointed by the Trustee) for a series of
Certificates will be required to review the Mortgage Loan documents delivered to
it within a specified period of days after receipt thereof, and the Trustee (or
such custodian) will hold such documents in trust for the benefit of the
Certificateholders of such series. Unless otherwise specified in the related
Prospectus Supplement, if any such document is found to be missing or defective,
and such omission or defect, as the case may be, materially and adversely
affects the interests of the Certificateholders of the related series, the
Trustee (or such custodian) will be required to notify the Master Servicer, the
Special Servicer and the Depositor, and one of such persons will be required to
notify the relevant Mortgage Asset Seller. In that case, and if the Mortgage
Asset Seller cannot deliver the document or cure the defect within a specified
number of days after receipt of such notice, then, except as otherwise specified
below or in the related Prospectus Supplement, the Mortgage Asset Seller will be
obligated to repurchase the related Mortgage Loan from the Trustee at a price
generally equal to the unpaid principal balance thereof, together with accrued
but unpaid interest through a date on or about the date of purchase, or at such
other price as will be specified in the related Prospectus Supplement (in any
event, the "Purchase Price"). If so provided in the Prospectus Supplement for a
series of Certificates, a
41
Mortgage Asset Seller, in lieu of repurchasing a Mortgage Loan as to which there
is missing or defective loan documentation, will have the option, exercisable
upon certain conditions and/or within a specified period after initial issuance
of such series of Certificates, to replace such Mortgage Loan with one or more
other mortgage loans, in accordance with standards that will be described in the
Prospectus Supplement. Unless otherwise specified in the related Prospectus
Supplement, this repurchase or substitution obligation will constitute the sole
remedy to holders of the Certificates of any series or to the related Trustee on
their behalf for missing or defective Mortgage Loan documentation, and neither
the Depositor nor, unless it is the Mortgage Asset Seller, the Master Servicer
or the Special Servicer will be obligated to purchase or replace a Mortgage Loan
if a Mortgage Asset Seller defaults on its obligation to do so.
The Trustee will be authorized at any time to appoint one or more
custodians pursuant to a custodial agreement to hold title to the Mortgage Loans
in any Trust Fund and to maintain possession of and, if applicable, to review
the documents relating to such Mortgage Loans, in any case as the agent of the
Trustee. The identity of any such custodian to be appointed on the date of
initial issuance of the Certificates will be set forth in the related Prospectus
Supplement.
REPRESENTATIONS AND WARRANTIES; REPURCHASES
Unless otherwise provided in the Prospectus Supplement for a series of
Certificates, the Depositor will, with respect to each Mortgage Loan in the
related Trust Fund, make or assign, or cause to be made or assigned, certain
representations and warranties (the person making such representations and
warranties, the "Warranting Party") covering, by way of example: (i) the
accuracy of the information set forth for such Mortgage Loan on the schedule of
Mortgage Loans appearing as an exhibit to the related Pooling Agreement; (ii)
the enforceability of the related Mortgage Note and Mortgage and the existence
of title insurance insuring the lien priority of the related Mortgage; (iii) the
Warranting Party's title to the Mortgage Loan and the authority of the
Warranting Party to sell the Mortgage Loan; and (iv) the payment status of the
Mortgage Loan. It is expected that in most cases the Warranting Party will be
the Mortgage Asset Seller; however, the Warranting Party may also be an
affiliate of the Mortgage Asset Seller, the Depositor or an affiliate of the
Depositor, the Master Servicer, the Special Servicer or another person
acceptable to the Depositor. The Warranting Party, if other than the Mortgage
Asset Seller, will be identified in the related Prospectus Supplement.
Unless otherwise provided in the related Prospectus Supplement, each
Pooling Agreement will provide that the Master Servicer and/or Trustee will be
required to notify promptly any Warranting Party of any breach of any
representation or warranty made by it in respect of a Mortgage Loan that
materially and adversely affects the interests of the Certificateholders of the
related series. If such Warranting Party cannot cure such breach within a
specified period following the date on which it was notified of such breach,
then, unless otherwise provided in the related Prospectus Supplement, it will be
obligated to repurchase such Mortgage Loan from the Trustee at the applicable
Purchase Price. If so provided in the Prospectus Supplement for a series of
Certificates, a Warranting Party, in lieu of repurchasing a Mortgage Loan as to
which a breach has occurred, will have the option, exercisable upon certain
conditions and/or within a specified period after initial issuance of such
series of Certificates, to replace such Mortgage Loan with one or more other
mortgage loans, in accordance with standards that will be described in the
Prospectus Supplement. Unless otherwise specified in the related Prospectus
Supplement, this repurchase or substitution obligation will constitute the sole
remedy available to holders of the Certificates of any series or to the related
Trustee on their behalf for a breach of representation and warranty by a
Warranting Party, and neither the Depositor nor the Master Servicer, in either
case unless it is the Warranting Party, will be obligated to purchase or replace
a Mortgage Loan if a Warranting Party defaults on its obligation to do so.
In some cases, representations and warranties will have been made in
respect of a Mortgage Loan as of a date prior to the date upon which the related
series of Certificates is issued, and thus may not address events that may occur
following the date as of which they were made. However, the Depositor will not
include any Mortgage Loan in the Trust Fund for any series of Certificates if
anything has come to the Depositor's attention that would cause it to believe
that the representations and warranties made in respect of such Mortgage Loan
will not be accurate in all material respects as of the date of issuance.
42
The date as of which the representations and warranties regarding the Mortgage
Loans in any Trust Fund were made will be specified in the related Prospectus
Supplement.
COLLECTION AND OTHER SERVICING PROCEDURES
Unless otherwise specified in the related Prospectus Supplement, the Master
Servicer and the Special Servicer for any Mortgage Pool, directly or through
Sub-Servicers, will each be obligated under the related Pooling Agreement to
service and administer the Mortgage Loans in such Mortgage Pool for the benefit
of the related Certificateholders, in accordance with applicable law and further
in accordance with the terms of such Pooling Agreement, such Mortgage Loans and
any instrument of Credit Support included in the related Trust Fund. Subject to
the foregoing, the Master Servicer and the Special Servicer will each have full
power and authority to do any and all things in connection with such servicing
and administration that it may deem necessary and desirable.
As part of its servicing duties, each of the Master Servicer and the
Special Servicer will be required to make reasonable efforts to collect all
payments called for under the terms and provisions of the Mortgage Loans that it
services and will be obligated to follow such collection procedures as it would
follow with respect to mortgage loans that are comparable to such Mortgage Loans
and held for its own account, provided (i) such procedures are consistent with
the terms of the related Pooling Agreement and (ii) do not impair recovery under
any instrument of Credit Support included in the related Trust Fund. Consistent
with the foregoing, the Master Servicer and the Special Servicer will each be
permitted, in its discretion, unless otherwise specified in the related
Prospectus Supplement, to waive any Prepayment Premium, late payment charge or
other charge in connection with any Mortgage Loan.
The Master Servicer and the Special Servicer for any Trust Fund, either
separately or jointly, directly or through Sub-Servicers, will also be required
to perform as to the Mortgage Loans in such Trust Fund various other customary
functions of a servicer of comparable loans, including maintaining escrow or
impound accounts, if required under the related Pooling Agreement, for payment
of taxes, insurance premiums, ground rents and similar items, or otherwise
monitoring the timely payment of those items; attempting to collect delinquent
payments; supervising foreclosures; negotiating modifications; conducting
property inspections on a periodic or other basis; managing (or overseeing the
management of) Mortgaged Properties acquired on behalf of such Trust Fund
through foreclosure, deed-in-lieu of foreclosure or otherwise (each, an "REO
Property"); and maintaining servicing records relating to such Mortgage Loans.
The related Prospectus Supplement will specify when and the extent to which
servicing of a Mortgage Loan is to be transferred from the Master Servicer to
the Special Servicer. In general, and subject to the discussion in the related
Prospectus Supplement, a Special Servicer will be responsible for the servicing
and administration of: (i) Mortgage Loans that are delinquent in respect of a
specified number of scheduled payments; (ii) Mortgage Loans as to which the
related borrower has entered into or consented to bankruptcy, appointment of a
receiver or conservator or similar insolvency proceeding, or the related
borrower has become the subject of a decree or order for such a proceeding which
shall have remained in force undischarged or unstayed for a specified number of
days; and (iii) REO Properties. If so specified in the related Prospectus
Supplement, a Pooling Agreement also may provide that if a default on a Mortgage
Loan has occurred or, in the judgment of the related Master Servicer, a payment
default is reasonably foreseeable, the related Master Servicer may elect to
transfer the servicing thereof, in whole or in part, to the related Special
Servicer. Unless otherwise provided in the related Prospectus Supplement, when
the circumstances no longer warrant a Special Servicer's continuing to service a
particular Mortgage Loan (e.g., the related borrower is paying in accordance
with the forbearance arrangement entered into between the Special Servicer and
such borrower), the Master Servicer will resume the servicing duties with
respect thereto. If and to the extent provided in the related Pooling Agreement
and described in the related Prospectus Supplement, a Special Servicer may
perform certain limited duties in respect of Mortgage Loans for which the Master
Servicer is primarily responsible (including, if so specified, performing
property inspections and evaluating financial statements); and a Master Servicer
may perform certain limited duties in respect of any Mortgage Loan for which the
Special Servicer is primarily responsible (including, if so specified,
continuing to receive payments on such Mortgage Loan (including amounts
collected by the Special Servicer), making certain calculations with respect to
such Mortgage Loan and making remittances and preparing certain reports
43
to the Trustee and/or Certificateholders with respect to such Mortgage Loan.
Unless otherwise specified in the related Prospectus Supplement, the Master
Servicer will be responsible for filing and settling claims in respect of
particular Mortgage Loans under any applicable instrument of Credit Support. See
"Description of Credit Support."
A mortgagor's failure to make required Mortgage Loan payments may mean that
operating income is insufficient to service the mortgage debt, or may reflect
the diversion of that income from the servicing of the mortgage debt. In
addition, a mortgagor that is unable to make Mortgage Loan payments may also be
unable to make timely payment of taxes and otherwise to maintain and insure the
related Mortgaged Property. In general, the related Special Servicer will be
required to monitor any Mortgage Loan that is in default, evaluate whether the
causes of the default can be corrected over a reasonable period without
significant impairment of the value of the related Mortgaged Property, initiate
corrective action in cooperation with the Mortgagor if cure is likely, inspect
the related Mortgaged Property and take such other actions as it deems necessary
and appropriate. A significant period of time may elapse before the Special
Servicer is able to assess the success of any such corrective action or the need
for additional initiatives. The time within which the Special Servicer can make
the initial determination of appropriate action, evaluate the success of
corrective action, develop additional initiatives, institute foreclosure
proceedings and actually foreclose (or accept a deed to a Mortgaged Property in
lieu of foreclosure) on behalf of the Certificateholders of the related series
may vary considerably depending on the particular Mortgage Loan, the Mortgaged
Property, the mortgagor, the presence of an acceptable party to assume the
Mortgage Loan and the laws of the jurisdiction in which the Mortgaged Property
is located. If a mortgagor files a bankruptcy petition, the Special Servicer may
not be permitted to accelerate the maturity of the Mortgage Loan or to foreclose
on the related Mortgaged Property for a considerable period of time. See
"Certain Legal Aspects of Mortgage Loans--Bankruptcy Laws."
Mortgagors may, from time to time, request partial releases of the
Mortgaged Properties, easements, consents to alteration or demolition and other
similar matters. In general, the Master Servicer may approve such a request if
it has determined, exercising its business judgment in accordance with the
applicable servicing standard, that such approval will not adversely affect the
security for, or the timely and full collectability of, the related Mortgage
Loan. Any fee collected by the Master Servicer for processing such request will
be retained by the Master Servicer as additional servicing compensation.
In the case of Mortgage Loans secured by junior liens on the related
Mortgaged Properties, unless otherwise provided in the related Prospectus
Supplement, the Master Servicer will be required to file (or cause to be filed)
of record a request for notice of any action by a superior lienholder under the
Senior Lien for the protection of the related Trustee's interest, where
permitted by local law and whenever applicable state law does not require that a
junior lienholder be named as a party defendant in foreclosure proceedings in
order to foreclose such junior lienholder's equity of redemption. Unless
otherwise specified in the related Prospectus Supplement, the Master Servicer
also will be required to notify any superior lienholder in writing of the
existence of the Mortgage Loan and request notification of any action (as
described below) to be taken against the mortgagor or the Mortgaged Property by
the superior lienholder. If the Master Servicer is notified that any superior
lienholder has accelerated or intends to accelerate the obligations secured by
the related Senior Lien, or has declared or intends to declare a default under
the mortgage or the promissory note secured thereby, or has filed or intends to
file an election to have the related Mortgaged Property sold or foreclosed,
then, unless otherwise specified in the related Prospectus Supplement, the
Master Servicer and the Special Servicer will each be required to take, on
behalf of the related Trust Fund, whatever actions are necessary to protect the
interests of the related Certificateholders and/or to preserve the security of
the related Mortgage Loan, subject to the application of the REMIC Provisions.
Unless otherwise specified in the related Prospectus Supplement, the Master
Servicer or Special Servicer, as applicable, will be required to advance the
necessary funds to cure the default or reinstate the Senior Lien, if such
advance is in the best interests of the related Certificateholders and the
Master Servicer or Special Servicer, as applicable, determines such advances are
recoverable out of payments on or proceeds of the related Mortgage Loan.
44
SUB-SERVICERS
A Master Servicer or Special Servicer may delegate its servicing
obligations in respect of the Mortgage Loans serviced thereby to one or more
third-party servicers (each, a "Sub-Servicer"); provided that, unless otherwise
specified in the related Prospectus Supplement, such Master Servicer or Special
Servicer will remain obligated under the related Pooling Agreement. Unless
otherwise provided in the related Prospectus Supplement, each sub-servicing
agreement between a Master Servicer and a Sub-Servicer (a "Sub-Servicing
Agreement") must provide for servicing of the applicable Mortgage Loans
consistent with the related Pooling Agreement. The Master Servicer and Special
Servicer in respect of any Mortgage Asset Pool will each be required to monitor
the performance of Sub-Servicers retained by it and will have the right to
remove a Sub-Servicer retained by it at any time it considers such removal to be
in the best interests of Certificateholders.
Unless otherwise provided in the related Prospectus Supplement, a Master
Servicer or Special Servicer will be solely liable for all fees owed by it to
any Sub-Servicer, irrespective of whether the Master Servicer's or Special
Servicer's compensation pursuant to the related Pooling Agreement is sufficient
to pay such fees. Each Sub-Servicer will be reimbursed by the Master Servicer or
Special Servicer, as the case may be, that retained it for certain expenditures
which it makes, generally to the same extent such Master Servicer or Special
Servicer would be reimbursed under a Pooling Agreement. See "--Certificate
Account" and "--Servicing Compensation and Payment of Expenses."
CERTIFICATE ACCOUNT
GENERAL. The Master Servicer, the Trustee and/or the Special Servicer will,
as to each Trust Fund that includes Mortgage Loans, establish and maintain or
cause to be established and maintained the corresponding Certificate Account,
which will be established so as to comply with the standards of each Rating
Agency that has rated any one or more classes of Certificates of the related
series. A Certificate Account may be maintained as an interest-bearing or a
noninterest-bearing account and the funds held therein may be invested pending
each succeeding Distribution Date in United States government securities and
other investment grade obligations that are acceptable to each Rating Agency
that has rated any one or more classes of Certificates of the related series
("Permitted Investments"). Such Permitted Investments include federal funds,
uncertificated certificates of deposit, time deposits, bankers' acceptances and
repurchase agreements, certain United States dollar-denominated commercial
paper, units of money market funds that maintain a constant net asset value and
any other obligations or security acceptable to each Rating Agency. Unless
otherwise provided in the related Prospectus Supplement, any interest or other
income earned on funds in a Certificate Account will be paid to the related
Master Servicer, Trustee or Special Servicer as additional compensation. A
Certificate Account may be maintained with the related Master Servicer, Special
Servicer, Trustee or Mortgage Asset Seller or with a depository institution that
is an affiliate of any of the foregoing or of the Depositor, provided that it
complies with applicable Rating Agency standards. If permitted by the applicable
Rating Agency or Agencies, a Certificate Account may contain funds relating to
more than one series of mortgage pass-through certificates and may contain other
funds representing payments on mortgage loans owned by the related Master
Servicer or Special Servicer or serviced by either on behalf of others.
DEPOSITS. Unless otherwise provided in the related Pooling Agreement and
described in the related Prospectus Supplement, the following payments and
collections received or made by the Master Servicer, the Trustee or the Special
Servicer subsequent to the Cut-off Date (other than payments due on or before
the Cut-off Date) are to be deposited in the Certificate Account for each Trust
Fund that includes Mortgage Loans, within a certain period following receipt (in
the case of collections on or in respect of the Mortgage Loans) or otherwise as
provided in the related Pooling Agreement:
(i) all payments on account of principal, including principal prepayments,
on the Mortgage Loans;
(ii) all payments on account of interest on the Mortgage Loans, including
any default interest collected, in each case net of any portion thereof retained
by the Master Servicer or the Special Servicer as its servicing compensation or
as compensation to the Trustee;
45
(iii) all proceeds received under any hazard, title or other insurance
policy that provides coverage with respect to a Mortgaged Property or the
related Mortgage Loan or in connection with the full or partial condemnation of
a Mortgaged Property (other than proceeds applied to the restoration of the
property or released to the related borrower) ("Insurance Proceeds" and
"Condemnation Proceeds," respectively) and all other amounts received and
retained in connection with the liquidation of defaulted Mortgage Loans or
property acquired in respect thereof, by foreclosure or otherwise (such amounts,
together with those amounts listed in clause (vii) below, "Liquidation
Proceeds"), together with the net operating income (less reasonable reserves for
future expenses) derived from the operation of any Mortgaged Properties acquired
by the Trust Fund through foreclosure or otherwise;
(iv) any amounts paid under any instrument or drawn from any fund that
constitutes Credit Support for the related series of Certificates;
(v) any advances made with respect to delinquent scheduled payments of
principal and interest on the Mortgage Loans;
(vi) any amounts paid under any Cash Flow Agreement;
(vii) all proceeds of the purchase of any Mortgage Loan, or property
acquired in respect thereof, by the Depositor, any Mortgage Asset Seller or any
other specified person as described under "--Assignment of Mortgage Loans;
Repurchases" and "--Representations and Warranties; Repurchases," all proceeds
of the purchase of any defaulted Mortgage Loan as described under "--Realization
Upon Defaulted Mortgage Loans," and all proceeds of any Mortgage Asset purchased
as described under "Description of the Certificates--Termination; Retirement of
Certificates";
(viii) to the extent that any such item does not constitute additional
servicing compensation to the Master Servicer or the Special Servicer and is not
otherwise retained by the Depositor or another specified person, any payments on
account of modification or assumption fees, late payment charges, Prepayment
Premiums or Equity Participations with respect to the Mortgage Loans;
(ix) all payments required to be deposited in the Certificate Account with
respect to any deductible clause in any blanket insurance policy as described
under "--Hazard Insurance Policies";
(x) any amount required to be deposited by the Master Servicer, the Special
Servicer or the Trustee in connection with losses realized on investments for
the benefit of the Master Servicer, the Special Servicer or the Trustee, as the
case may be, of funds held in the Certificate Account; and
(xi) any other amounts received on or in respect of the Mortgage Loans
required to be deposited in the Certificate Account as provided in the related
Pooling Agreement and described in the related Prospectus Supplement.
WITHDRAWALS. Unless otherwise provided in the related Pooling Agreement and
described in the related Prospectus Supplement, a Master Servicer, Trustee or
Special Servicer may make withdrawals from the Certificate Account for each
Trust Fund that includes Mortgage Loans for any of the following purposes:
(i) to make distributions to the Certificateholders on each Distribution
Date;
(ii) to pay the Master Servicer or the Special Servicer any servicing fees
not previously retained thereby, such payment to be made out of payments and
other collections of interest on the particular Mortgage Loans as to which such
fees were earned;
(iii) to reimburse the Master Servicer, the Special Servicer or any other
specified person for unreimbursed advances of delinquent scheduled payments of
principal and interest made by it, and certain unreimbursed servicing expenses
incurred by it, with respect to Mortgage Loans in the Trust Fund and properties
acquired in respect thereof, such reimbursement to be made out of amounts that
represent late payments collected on the particular Mortgage Loans, Liquidation
Proceeds, Insurance Proceeds and Condemnation Proceeds collected on the
particular Mortgage Loans and properties, and net income collected on the
particular properties, with respect to which such advances were made or such
expenses were incurred or out of amounts drawn under any form of Credit Support
with respect to such Mortgage Loans and properties, or if in the judgment of the
Master Servicer, the Special
46
Servicer or such other person, as applicable, such advances and/or expenses will
not be recoverable from such amounts, such reimbursement to be made from amounts
collected on other Mortgage Loans in the same Trust Fund or, if and to the
extent so provided by the related Pooling Agreement and described in the related
Prospectus Supplement, only from that portion of amounts collected on such other
Mortgage Loans that is otherwise distributable on one or more classes of
Subordinate Certificates of the related series;
(iv) if and to the extent described in the related Prospectus Supplement,
to pay the Master Servicer, the Special Servicer or any other specified person
interest accrued on the advances and servicing expenses described in clause
(iii) above incurred by it while such remain outstanding and unreimbursed;
(v) to pay for costs and expenses incurred by the Trust Fund for
environmental site assessments performed with respect to Mortgaged Properties
that constitute security for defaulted Mortgage Loans, and for any containment,
clean-up or remediation of hazardous wastes and materials present on such
Mortgaged Properties, as described under "--Realization Upon Defaulted Mortgage
Loans";
(vi) to reimburse the Master Servicer, the Special Servicer, the REMIC
Administrator, the Depositor, the Trustee, or any of their respective directors,
officers, employees and agents, as the case may be, for certain expenses, costs
and liabilities incurred thereby, as and to the extent described under
"--Certain Matters Regarding the Master Servicer, the Special Servicer, the
REMIC Administrator and the Depositor" and "--Certain Matters Regarding the
Trustee";
(vii) if and to the extent described in the related Prospectus Supplement,
to pay the fees of the Trustee, the REMIC Administrator and any provider of
Credit Support;
(viii) if and to the extent described in the related Prospectus Supplement,
to reimburse prior draws on any form of Credit Support;
(ix) to pay the Master Servicer, the Special Servicer or the Trustee, as
appropriate, interest and investment income earned in respect of amounts held in
the Certificate Account as additional compensation;
(x) to pay any servicing expenses not otherwise required to be advanced by
the Master Servicer, the Special Servicer or any other specified person;
(xi) if one or more elections have been made to treat the Trust Fund or
designated portions thereof as a REMIC, to pay any federal, state or local taxes
imposed on the Trust Fund or its assets or transactions, as and to the extent
described under "Certain Federal Income Tax Consequences-- REMICs--Prohibited
Transactions Tax and Other Taxes";
(xii) to pay for the cost of various opinions of counsel obtained pursuant
to the related Pooling Agreement for the benefit of Certificateholders;
(xiii) to make any other withdrawals permitted by the related Pooling
Agreement and described in the related Prospectus Supplement; and
(xiv) to clear and terminate the Certificate Account upon the termination
of the Trust Fund.
MODIFICATIONS, WAIVERS AND AMENDMENTS OF MORTGAGE LOANS
The Master Servicer and the Special Servicer may each agree to modify,
waive or amend any term of any Mortgage Loan serviced by it in a manner
consistent with the applicable Servicing Standard; provided that, unless
otherwise set forth in the related Prospectus Supplement, the modification,
waiver or amendment (i) will not affect the amount or timing of any scheduled
payments of principal or interest on the Mortgage Loan, (ii) will not, in the
judgment of the Master Servicer or the Special Servicer, as the case may be,
materially impair the security for the Mortgage Loan or reduce the likelihood of
timely payment of amounts due thereon and (iii) will not adversely affect the
coverage under any applicable instrument of Credit Support. Unless otherwise
provided in the related Prospectus Supplement, the Special Servicer also may
agree to any other modification, waiver or amendment if, in its judgment, (i) a
material default on the Mortgage Loan has occurred or a payment default is
47
imminent, (ii) such modification, waiver or amendment is reasonably likely to
produce a greater recovery with respect to the Mortgage Loan, taking into
account the time value of money, than would liquidation and (iii) such
modification, waiver or amendment will not adversely affect the coverage under
any applicable instrument of Credit Support.
REALIZATION UPON DEFAULTED MORTGAGE LOANS
If a default on a Mortgage Loan has occurred or, in the Special Servicer's
judgment, a payment default is imminent, the Special Servicer, on behalf of the
Trustee, may at any time institute foreclosure proceedings, exercise any power
of sale contained in the related Mortgage, obtain a deed in lieu of foreclosure,
or otherwise acquire title to the related Mortgaged Property, by operation of
law or otherwise. Unless otherwise specified in the related Prospectus
Supplement, the Special Servicer may not, however, acquire title to any
Mortgaged Property, have a receiver of rents appointed with respect to any
Mortgaged Property or take any other action with respect to any Mortgaged
Property that would cause the Trustee, for the benefit of the related series of
Certificateholders, or any other specified person to be considered to hold title
to, to be a "mortgagee-in-possession" of, or to be an "owner" or an "operator"
of such Mortgaged Property within the meaning of certain federal environmental
laws, unless the Special Servicer has previously received a report prepared by a
person who regularly conducts environmental audits (which report will be an
expense of the Trust Fund) and either:
(i) such report indicates that (a) the Mortgaged Property is in compliance
with applicable environmental laws and regulations and (b) there are no
circumstances or conditions present at the Mortgaged Property that have resulted
in any contamination for which investigation, testing, monitoring, containment,
clean-up or remediation could be required under any applicable environmental
laws and regulations; or
(ii) the Special Servicer, based solely (as to environmental matters and
related costs) on the information set forth in such report, determines that
taking such actions as are necessary to bring the Mortgaged Property into
compliance with applicable environmental laws and regulations and/or taking the
actions contemplated by clause (i)(b) above, is reasonably likely to produce a
greater recovery, taking into account the time value of money, than not taking
such actions. See "Certain Legal Aspects of Mortgage Loans--Environmental
Considerations."
A Pooling Agreement may grant to the Master Servicer, the Special Servicer,
a provider of Credit Support and/or the holder or holders of certain classes of
the related series of Certificates a right of first refusal to purchase from the
Trust Fund, at a predetermined price (which, if less than the Purchase Price,
will be specified in the related Prospectus Supplement), any Mortgage Loan as to
which a specified number of scheduled payments are delinquent. In addition,
unless otherwise specified in the related Prospectus Supplement, the Special
Servicer may offer to sell any defaulted Mortgage Loan if and when the Special
Servicer determines, consistent with its normal servicing procedures, that such
a sale would produce a greater recovery, taking into account the time value of
money, than would liquidation of the related Mortgaged Property. In the absence
of any such sale, the Special Servicer will generally be required to proceed
against the related Mortgaged Property, subject to the discussion above.
Unless otherwise provided in the related Prospectus Supplement, if title to
any Mortgaged Property is acquired by a Trust Fund as to which a REMIC election
has been made, the Special Servicer, on behalf of the Trust Fund, will be
required to sell the Mortgaged Property prior to the close of the third calendar
year beginning after the year of acquisition, unless (i) the Internal Revenue
Service (the "IRS") grants an extension of time to sell such property or (ii)
the Trustee receives an opinion of independent counsel to the effect that the
holding of the property by the Trust Fund beyond such period will not result in
the imposition of a tax on the Trust Fund or cause the Trust Fund (or any
designated portion thereof) to fail to qualify as a REMIC under the Code at any
time that any Certificate is outstanding. Subject to the foregoing and any other
tax-related limitations, the Special Servicer will generally be required to
attempt to sell any Mortgaged Property so acquired on the same terms and
conditions it would if it were the owner. Unless otherwise provided in the
related Prospectus Supplement, if title to any Mortgaged Property is acquired by
a Trust Fund as to which a REMIC election has been made, the
48
Special Servicer will also be required to ensure that the Mortgaged Property is
administered so that it constitutes "foreclosure property" within the meaning of
Code Section 860G(a)(8) at all times, that the sale of such property does not
result in the receipt by the Trust Fund of any income from nonpermitted assets
as described in Code Section 860F(a)(2)(B), and that the Trust Fund does not
derive any "net income from foreclosure property" within the meaning of Code
Section 860G(c)(2), with respect to such property. If the Trust Fund acquires
title to any Mortgaged Property, the Special Servicer, on behalf of the Trust
Fund, may retain an independent contractor to manage and operate such property.
The retention of an independent contractor, however, will not relieve the
Special Servicer of its obligation to manage such Mortgaged Property as required
under the related Pooling Agreement.
If Liquidation Proceeds collected with respect to a defaulted Mortgage Loan
are less than the outstanding principal balance of the defaulted Mortgage Loan
plus interest accrued thereon plus the aggregate amount of reimbursable expenses
incurred by the Special Servicer and/or the Master Servicer in connection with
such Mortgage Loan, then, to the extent that such shortfall is not covered by
any instrument or fund constituting Credit Support, the Trust Fund will realize
a loss in the amount of such shortfall. The Special Servicer and/or the Master
Servicer will be entitled to reimbursement out of the Liquidation Proceeds
recovered on any defaulted Mortgage Loan, prior to the distribution of such
Liquidation Proceeds to Certificateholders, any and all amounts that represent
unpaid servicing compensation in respect of the Mortgage Loan, unreimbursed
servicing expenses incurred with respect to the Mortgage Loan and any
unreimbursed advances of delinquent payments made with respect to the Mortgage
Loan. In addition, if and to the extent set forth in the related Prospectus
Supplement, amounts otherwise distributable on the Certificates may be further
reduced by interest payable to the Master Servicer and/or Special Servicer on
such servicing expenses and advances.
If any Mortgaged Property suffers damage such that the proceeds, if any, of
the related hazard insurance policy are insufficient to restore fully the
damaged property, neither the Special Servicer nor the Master Servicer will be
required to expend its own funds to effect such restoration unless (and to the
extent not otherwise provided in the related Prospectus Supplement) it
determines (i) that such restoration will increase the proceeds to
Certificateholders on liquidation of the Mortgage Loan after reimbursement of
the Special Servicer or the Master Servicer, as the case may be, for its
expenses and (ii) that such expenses will be recoverable by it from related
Insurance Proceeds, Condemnation Proceeds, Liquidation Proceeds and/or amounts
drawn on any instrument or fund constituting Credit Support.
HAZARD INSURANCE POLICIES
Unless otherwise specified in the related Prospectus Supplement, each
Pooling Agreement will require the Master Servicer (or the Special Servicer with
respect to Mortgage Loans serviced thereby) to use reasonable efforts to cause
each Mortgage Loan borrower to maintain a hazard insurance policy that provides
for such coverage as is required under the related Mortgage or, if the Mortgage
permits the holder thereof to dictate to the borrower the insurance coverage to
be maintained on the related Mortgaged Property, such coverage as is consistent
with the Master Servicer's (or Special Servicer's) normal servicing procedures.
Unless otherwise specified in the related Prospectus Supplement, such coverage
generally will be in an amount equal to the lesser of the principal balance
owing on such Mortgage Loan and the replacement cost of the related Mortgaged
Property. The ability of a Master Servicer (or Special Servicer) to assure that
hazard insurance proceeds are appropriately applied may be dependent upon its
being named as an additional insured under any hazard insurance policy and under
any other insurance policy referred to below, or upon the extent to which
information concerning covered losses is furnished by borrowers. All amounts
collected by a Master Servicer (or Special Servicer) under any such policy
(except for amounts to be applied to the restoration or repair of the Mortgaged
Property or released to the borrower in accordance with the Master Servicer's
(or Special Servicer's) normal servicing procedures and/or to the terms and
conditions of the related Mortgage and Mortgage Note) will be deposited in the
related Certificate Account. The Pooling Agreement may provide that the Master
Servicer (or Special Servicer) may satisfy its obligation to cause each borrower
to maintain such a hazard insurance policy by maintaining a blanket policy
insuring against hazard losses on the Mortgage Loans in a Trust Fund. If such
blanket policy contains a deductible clause, the Master
49
Servicer (or Special Servicer) will be required, in the event of a casualty
covered by such blanket policy, to deposit in the related Certificate Account
all additional sums that would have been deposited therein under an individual
policy but were not because of such deductible clause.
In general, the standard form of fire and extended coverage policy covers
physical damage to or destruction of the improvements of the property by fire,
lightning, explosion, smoke, windstorm and hail, and riot, strike and civil
commotion, subject to the conditions and exclusions specified in each policy.
Although the policies covering the Mortgaged Properties will be underwritten by
different insurers under different state laws in accordance with different
applicable state forms, and therefore will not contain identical terms and
conditions, most such policies typically do not cover any physical damage
resulting from war, revolution, governmental actions, floods and other
water-related causes, earth movement (including earthquakes, landslides and
mudflows), wet or dry rot, vermin and domestic animals. Accordingly, a Mortgaged
Property may not be insured for losses arising from any such cause unless the
related Mortgage specifically requires, or permits the holder thereof to
require, such coverage.
The hazard insurance policies covering the Mortgaged Properties will
typically contain co-insurance clauses that in effect require an insured at all
times to carry insurance of a specified percentage (generally 80% to 90%) of the
full replacement value of the improvements on the property in order to recover
the full amount of any partial loss. If the insured's coverage falls below this
specified percentage, such clauses generally provide that the insurer's
liability in the event of partial loss does not exceed the lesser of (i) the
replacement cost of the improvements less physical depreciation and (ii) such
proportion of the loss as the amount of insurance carried bears to the specified
percentage of the full replacement cost of such improvements.
DUE-ON-SALE AND DUE-ON-ENCUMBRANCE PROVISIONS
Certain of the Mortgage Loans may contain a due-on-sale clause that
entitles the lender to accelerate payment of the Mortgage Loan upon any sale or
other transfer of the related Mortgaged Property made without the lender's
consent. Certain of the Mortgage Loans may also contain a due-on-encumbrance
clause that entitles the lender to accelerate the maturity of the Mortgage Loan
upon the creation of any other lien or encumbrance upon the Mortgaged Property.
Unless otherwise provided in the related Prospectus Supplement, the Master
Servicer (or Special Servicer) will determine whether to exercise any right the
Trustee may have under any such provision in a manner consistent with the Master
Servicer's (or Special Servicer's) normal servicing procedures. Unless otherwise
specified in the related Prospectus Supplement, the Master Servicer or Special
Servicer, as applicable, will be entitled to retain as additional servicing
compensation any fee collected in connection with the permitted transfer of a
Mortgaged Property. See "Certain Legal Aspects of Mortgage Loans--Due-on-Sale
and Due-on-Encumbrance."
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
Unless otherwise specified in the related Prospectus Supplement, a Master
Servicer's primary servicing compensation with respect to a series of
Certificates will come from the periodic payment to it of a specified portion of
the interest payments on each Mortgage Loan in the related Trust Fund, including
Mortgage Loans serviced by the related Special Servicer. If and to the extent
described in the related Prospectus Supplement, a Special Servicer's primary
compensation with respect to a series of Certificates may consist of any or all
of the following components: (i) a specified portion of the interest payments on
each Mortgage Loan in the related Trust Fund, whether or not serviced by it;
(ii) an additional specified portion of the interest payments on each Mortgage
Loan then currently serviced by it; and (iii) subject to any specified
limitations, a fixed percentage of some or all of the collections and proceeds
received with respect to each Mortgage Loan which was at any time serviced by
it, including Mortgage Loans for which servicing was returned to the Master
Servicer. Insofar as any portion of the Master Servicer's or Special Servicer's
compensation consists of a specified portion of the interest payments on a
Mortgage Loan, such compensation will generally be based on a percentage of the
principal balance of such Mortgage Loan outstanding from time to time and,
accordingly, will decrease
50
with the amortization of the Mortgage Loan. As additional compensation, a Master
Servicer or Special Servicer may be entitled to retain all or a portion of late
payment charges, Prepayment Premiums, modification fees and other fees collected
from borrowers and any interest or other income that may be earned on funds held
in the related Certificate Account. A more detailed description of each Master
Servicer's and Special Servicer's compensation will be provided in the related
Prospectus Supplement. Any Sub-Servicer will receive as its sub-servicing
compensation a portion of the servicing compensation to be paid to the Master
Servicer or Special Servicer that retained such Sub-Servicer.
In addition to amounts payable to any Sub-Servicer, a Master Servicer or
Special Servicer may be required, to the extent provided in the related
Prospectus Supplement, to pay from amounts that represent its servicing
compensation certain expenses incurred in connection with the administration of
the related Trust Fund, including, without limitation, payment of the fees and
disbursements of independent accountants, payment of fees and disbursements of
the Trustee and any custodians appointed thereby and payment of expenses
incurred in connection with distributions and reports to Certificateholders.
Certain other expenses, including certain expenses related to Mortgage Loan
defaults and liquidations and, to the extent so provided in the related
Prospectus Supplement, interest on such expenses at the rate specified therein,
may be required to be borne by the Trust Fund.
EVIDENCE AS TO COMPLIANCE
Unless otherwise specified in the related Prospectus Supplement, each
Pooling Agreement will provide that on or before a specified date in each year,
beginning the first such date that is at least a specified number of months
after the Cut-off Date, there will be furnished to the related Trustee a report
of a firm of independent certified public accountants stating that (i) it has
obtained a letter of representation regarding certain matters from the
management of the Master Servicer which includes an assertion that the Master
Servicer has complied with certain minimum mortgage loan servicing standards (to
the extent applicable to commercial and multifamily mortgage loans), identified
in the Uniform Single Attestation Program for Mortgage Bankers established by
the Mortgage Bankers Association of America, with respect to the Master
Servicer's servicing of commercial and multifamily mortgage loans during the
most recently completed calendar year and (ii) on the basis of an examination
conducted by such firm in accordance with standards established by the American
Institute of Certified Public Accountants, such representation is fairly stated
in all material respects, subject to such exceptions and other qualifications
that, in the opinion of such firm, such standards require it to report. In
rendering its report such firm may rely, as to the matters relating to the
direct servicing of commercial and multifamily mortgage loans by Sub-Servicers,
upon comparable reports of firms of independent public accountants rendered on
the basis of examinations conducted in accordance the same standards (rendered
within one year of such report) with respect to those Sub-Servicers. The
Prospectus Supplement may provide that additional reports of independent
certified public accountants relating to the servicing of mortgage loans may be
required to be delivered to the Trustee.
Each Pooling Agreement will also provide that, on or before a specified
date in each year, beginning the first such date that is at least a specified
number of months after the Cut-off Date, the Master Servicer and Special
Servicer shall each deliver to the related Trustee an annual statement signed by
one or more officers of the Master Servicer or the Special Servicer, as the case
may be, to the effect that, to the best knowledge of each such officer, the
Master Servicer or the Special Servicer, as the case may be, has fulfilled in
all material respects its obligations under the Pooling Agreement throughout the
preceding year or, if there has been a material default in the fulfillment of
any such obligation, such statement shall specify each such known default and
the nature and status thereof. Such statement may be provided as a single form
making the required statements as to more than one Pooling Agreement.
Unless otherwise specified in the related Prospectus Supplement, copies of
the annual accountants' statement and the annual statement of officers of a
Master Servicer or Special Servicer may be obtained by Certificateholders upon
written request to the Trustee.
51
CERTAIN MATTERS REGARDING THE MASTER SERVICER, THE SPECIAL SERVICER,
THE REMIC ADMINISTRATOR AND THE DEPOSITOR
Unless otherwise specified in the Prospectus Supplement for a series of
Certificates, the related Pooling Agreement will permit the Master Servicer, the
Special Servicer and any REMIC Administrator to resign from its obligations
thereunder only upon (a) the appointment of, and the acceptance of such
appointment by, a successor thereto and receipt by the Trustee of written
confirmation from each applicable Rating Agency that such resignation and
appointment will not have an adverse effect on the rating assigned by such
Rating Agency to any class of Certificates of such series or (b) a determination
that such obligations are no longer permissible under applicable law or are in
material conflict by reason of applicable law with any other activities carried
on by it. No such resignation will become effective until the Trustee or other
successor has assumed the obligations and duties of the resigning Master
Servicer, Special Servicer or REMIC Administrator, as the case may be, under the
Pooling Agreement. The Master Servicer and Special Servicer for each Trust Fund
will be required to maintain a fidelity bond and errors and omissions policy or
their equivalent that provides coverage against losses that may be sustained as
a result of an officer's or employee's misappropriation of funds or errors and
omissions, subject to certain limitations as to amount of coverage, deductible
amounts, conditions, exclusions and exceptions permitted by the related Pooling
Agreement.
Unless otherwise specified in the related Prospectus Supplement, each
Pooling Agreement will further provide that none of the Master Servicer, the
Special Servicer, the REMIC Administrator, the Depositor or any director,
officer, employee or agent of any of them will be under any liability to the
related Trust Fund or Certificateholders for any action taken, or not taken, in
good faith pursuant to the Pooling Agreement or for errors in judgment;
provided, however, that none of the Master Servicer, the Special Servicer, the
REMIC Administrator, the Depositor or any such person will be protected against
any liability that would otherwise be imposed by reason of willful misfeasance,
bad faith or gross negligence in the performance of obligations or duties
thereunder or by reason of reckless disregard of such obligations and duties.
Unless otherwise specified in the related Prospectus Supplement, each Pooling
Agreement will further provide that the Master Servicer, the Special Servicer,
the REMIC Administrator, the Depositor and any director, officer, employee or
agent of any of them will be entitled to indemnification by the related Trust
Fund against any loss, liability or expense incurred in connection with any
legal action that relates to such Pooling Agreement or the related series of
Certificates; provided, however, that such indemnification will not extend to
any loss, liability or expense incurred by reason of willful misfeasance, bad
faith or gross negligence in the performance of obligations or duties under such
Pooling Agreement, or by reason of reckless disregard of such obligations or
duties. In addition, each Pooling Agreement will provide that none of the Master
Servicer, the Special Servicer, the REMIC Administrator or the Depositor will be
under any obligation to appear in, prosecute or defend any legal action that is
not incidental to its respective responsibilities under the Pooling Agreement
and that in its opinion may involve it in any expense or liability. However,
each of the Master Servicer, the Special Servicer, the REMIC Administrator and
the Depositor will be permitted, in the exercise of its discretion, to undertake
any such action that it may deem necessary or desirable with respect to the
enforcement and/or protection of the rights and duties of the parties to the
Pooling Agreement and the interests of the related series of Certificateholders
thereunder. In such event, the legal expenses and costs of such action, and any
liability resulting therefrom, will be expenses, costs and liabilities of the
related series of Certificateholders, and the Master Servicer, the Special
Servicer, the REMIC Administrator or the Depositor, as the case may be, will be
entitled to charge the related Certificate Account therefor.
Any person into which the Master Servicer, the Special Servicer, the REMIC
Administrator or the Depositor may be merged or consolidated, or any person
resulting from any merger or consolidation to which the Master Servicer, the
Special Servicer, the REMIC Administrator or the Depositor is a party, or any
person succeeding to the business of the Master Servicer, the Special Servicer,
the REMIC Administrator or the Depositor, will be the successor of the Master
Servicer, the Special Servicer, the REMIC Administrator or the Depositor, as the
case may be, under the related Pooling Agreement.
52
Unless otherwise specified in the related Prospectus Supplement, a REMIC
Administrator will be entitled to perform any of its duties under the related
Pooling Agreement either directly or by or through agents or attorneys, and the
REMIC Administrator will not be responsible for any willful misconduct or gross
negligence on the part of any such agent or attorney appointed by it with due
care.
EVENTS OF DEFAULT
Unless otherwise provided in the Prospectus Supplement for a series of
Certificates, "Events of Default" under the related Pooling Agreement will
include, without limitation, (i) any failure by the Master Servicer to
distribute or cause to be distributed to the Certificateholders of such series,
or to remit to the Trustee for distribution to such Certificateholders, any
amount required to be so distributed or remitted, which failure continues
unremedied for five days after written notice thereof has been given to the
Master Servicer by any other party to the related Pooling Agreement, or to the
Master Servicer, with a copy to each other party to the related Pooling
Agreement, by Certificateholders entitled to not less than 25% (or such other
percentage specified in the related Prospectus Supplement) of the Voting Rights
for such series; (ii) any failure by the Special Servicer to remit to the Master
Servicer or the Trustee, as applicable, any amount required to be so remitted,
which failure continues unremedied for five days after written notice thereof
has been given to the Special Servicer by any other party to the related Pooling
Agreement, or to the Special Servicer, with a copy to each other party to the
related Pooling Agreement, by the Certificateholders entitled to not less than
25% (or such other percentage specified in the related Prospectus Supplement) of
the Voting Rights of such series; (iii) any failure by the Master Servicer or
the Special Servicer duly to observe or perform in any material respect any of
its other covenants or obligations under the related Pooling Agreement, which
failure continues unremedied for sixty days after written notice thereof has
been given to the Master Servicer or the Special Servicer, as the case may be,
by any other party to the related Pooling Agreement, or to the Master Servicer
or the Special Servicer, as the case may be, with a copy to each other party to
the related Pooling Agreement, by Certificateholders entitled to not less than
25% (or such other percentage specified in the related Prospectus Supplement) of
the Voting Rights for such series; (iv) any failure by a REMIC Administrator (if
other than the Trustee) duly to observe or perform in any material respect any
of its covenants or obligations under the related Pooling Agreement, which
failure continues unremedied for sixty days after written notice thereof has
been given to the REMIC Administrator by any other party to the related Pooling
Agreement, or to the REMIC Administrator, with a copy to each other party to the
related Pooling Agreement, by Certificateholders entitled to not less than 25%
(or such other percentage specified in the related Prospectus Supplement) of the
Voting Rights for such series; and (v) certain events of insolvency,
readjustment of debt, marshalling of assets and liabilities, or similar
proceedings in respect of or relating to the Master Servicer, the Special
Servicer or the REMIC Administrator (if other than the Trustee), and certain
actions by or on behalf of the Master Servicer, the Special Servicer or the
REMIC Administrator (if other than the Trustee) indicating its insolvency or
inability to pay its obligations. Material variations to the foregoing Events of
Default (other than to add thereto or shorten cure periods or eliminate notice
requirements) will be specified in the related Prospectus Supplement. Unless
otherwise specified in the related Prospectus Supplement, when a single entity
acts as Master Servicer, Special Servicer and REMIC Administrator, or in any two
of the foregoing capacities, for any Trust Fund, an Event of Default in one
capacity will constitute an Event of Default in each capacity.
RIGHTS UPON EVENT OF DEFAULT
If an Event of Default occurs with respect to the Master Servicer, the
Special Servicer or a REMIC Administrator under a Pooling Agreement, then, in
each and every such case, so long as the Event of Default remains unremedied,
the Depositor or the Trustee will be authorized, and at the direction of
Certificateholders of the related series entitled to not less than 51% (or such
other percentage specified in the related Prospectus Supplement) of the Voting
Rights for such series, the Trustee will be required, to terminate all of the
rights and obligations of the defaulting party as Master Servicer, Special
Servicer or REMIC Administrator, as applicable, under the Pooling Agreement,
whereupon the Trustee will succeed to all of the responsibilities, duties and
liabilities of the defaulting party as Master Servicer,
53
Special Servicer or REMIC Administrator, as applicable, under the Pooling
Agreement (except that if the defaulting party is required to make advances
thereunder regarding delinquent Mortgage Loans, but the Trustee is prohibited by
law from obligating itself to make such advances, or if the related Prospectus
Supplement so specifies, the Trustee will not be obligated to make such
advances) and will be entitled to similar compensation arrangements. Unless
otherwise specified in the related Prospectus Supplement, if the Trustee is
unwilling or unable so to act, it may (or, at the written request of
Certificateholders of the related series entitled to not less than 51% (or such
other percentage specified in the related Prospectus Supplement) of the Voting
Rights for such series, it will be required to) appoint, or petition a court of
competent jurisdiction to appoint, a loan servicing institution or other entity
that (unless otherwise provided in the related Prospectus Supplement) is
acceptable to each applicable Rating Agency to act as successor to the Master
Servicer, Special Servicer or REMIC Administrator, as the case may be, under the
Pooling Agreement. Pending such appointment, the Trustee will be obligated to
act in such capacity.
If the same entity is acting as both Trustee and REMIC Administrator, it
may be removed in both such capacities as described under "--Resignation and
Removal of the Trustee" below.
No Certificateholder will have any right under a Pooling Agreement to
institute any proceeding with respect to such Pooling Agreement unless such
holder previously has given to the Trustee written notice of default and the
continuance thereof and unless the holders of Certificates of any class
evidencing not less than 25% of the aggregate Percentage Interests constituting
such class have made written request upon the Trustee to institute such
proceeding in its own name as Trustee thereunder and have offered to the Trustee
reasonable indemnity and the Trustee for sixty days after receipt of such
request and indemnity has neglected or refused to institute any such proceeding.
However, the Trustee will be under no obligation to exercise any of the trusts
or powers vested in it by the Pooling Agreement or to institute, conduct or
defend any litigation thereunder or in relation thereto at the request, order or
direction of any of the holders of Certificates covered by such Pooling
Agreement, unless such Certificateholders have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities which may be
incurred therein or thereby.
AMENDMENT
Except as otherwise specified in the related Prospectus Supplement, each
Pooling Agreement may be amended by the parties thereto, without the consent of
any of the holders of Certificates covered by such Pooling Agreement, (i) to
cure any ambiguity, (ii) to correct or supplement any provision therein which
may be inconsistent with any other provision therein or to correct any error,
(iii) to change the timing and/or nature of deposits in the Certificate Account,
provided that (A) such change would not adversely affect in any material respect
the interests of any Certificateholder, as evidenced by an opinion of counsel,
and (B) such change would not adversely affect the then-current rating of any
rated classes of Certificates, as evidenced by a letter from each applicable
Rating Agency, (iv) if a REMIC election has been made with respect to the
related Trust Fund, to modify, eliminate or add to any of its provisions (A) to
such extent as shall be necessary to maintain the qualification of the Trust
Fund (or any designated portion thereof) as a REMIC or to avoid or minimize the
risk of imposition of any tax on the related Trust Fund, provided that the
Trustee has received an opinion of counsel to the effect that (1) such action is
necessary or desirable to maintain such qualification or to avoid or minimize
such risk, and (2) such action will not adversely affect in any material respect
the interests of any holder of Certificates covered by the Pooling Agreement, or
(B) to restrict the transfer of the Residual Certificates, provided that the
Depositor has determined that the then-current ratings of the classes of the
Certificates that have been rated will not be adversely affected, as evidenced
by a letter from each applicable Rating Agency, and that any such amendment will
not give rise to any tax with respect to the transfer of the Residual
Certificates to a non-permitted transferee (See "Certain Federal Income Tax
Consequences--REMICs--Tax and Restrictions on Transfers of Residual Certificates
to Certain Organizations" herein), (v) to make any other provisions with respect
to matters or questions arising under such Pooling Agreement or any other
change, provided that such action will not adversely affect in any material
respect the interests of any Certificateholder, or (vi) to amend specified
provisions that are not material to holders of any class of Certificates offered
hereunder.
54
The Pooling Agreement may also be amended by the parties thereto with the
consent of the holders of Certificates of each class affected thereby
evidencing, in each case, not less than 66-2/3% (or such other percentage
specified in the related Prospectus Supplement) of the aggregate Percentage
Interests constituting such class for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of such Pooling
Agreement or of modifying in any manner the rights of the holders of
Certificates covered by such Pooling Agreement, except that no such amendment
may (i) reduce in any manner the amount of, or delay the timing of, payments
received on Mortgage Loans which are required to be distributed on a Certificate
of any class without the consent of the holder of such Certificate or (ii)
reduce the aforesaid percentage of Certificates of any class the holders of
which are required to consent to any such amendment without the consent of the
holders of all Certificates of such class covered by such Pooling Agreement then
outstanding.
Notwithstanding the foregoing, if a REMIC election has been made with
respect to the related Trust Fund, the Trustee will not be required to consent
to any amendment to a Pooling Agreement without having first received an opinion
of counsel to the effect that such amendment or the exercise of any power
granted to the Master Servicer, the Special Servicer, the Depositor, the Trustee
or any other specified person in accordance with such amendment will not result
in the imposition of a tax on the related Trust Fund or cause such Trust Fund
(or any designated portion thereof) to fail to qualify as a REMIC.
LIST OF CERTIFICATEHOLDERS
Unless otherwise specified in the related Prospectus Supplement, upon
written request of three or more Certificateholders of record made for purposes
of communicating with other holders of Certificates of the same series with
respect to their rights under the related Pooling Agreement, the Trustee or
other specified person will afford such Certificateholders access during normal
business hours to the most recent list of Certificateholders of that series held
by such person. If such list is as of a date more than 90 days prior to the date
of receipt of such Certificateholders' request, then such person, if not the
registrar for such series of Certificates, will be required to request from such
registrar a current list and to afford such requesting Certificateholders access
thereto promptly upon receipt.
THE TRUSTEE
The Trustee under each Pooling Agreement will be named in the related
Prospectus Supplement. The commercial bank, national banking association,
banking corporation or trust company that serves as Trustee may have typical
banking relationships with the Depositor and its affiliates and with any Master
Servicer, Special Servicer or REMIC Administrator and its affiliates.
DUTIES OF THE TRUSTEE
The Trustee for each series of Certificates will make no representation as
to the validity or sufficiency of the related Pooling Agreement, such
Certificates or any underlying Mortgage Asset or related document and will not
be accountable for the use or application by or on behalf of any Master Servicer
or Special Servicer of any funds paid to the Master Servicer or Special Servicer
in respect of the Certificates or the underlying Mortgage Assets. If no Event of
Default has occurred and is continuing, the Trustee for each series of
Certificates will be required to perform only those duties specifically required
under the related Pooling Agreement. However, upon receipt of any of the various
certificates, reports or other instruments required to be furnished to it
pursuant to the related Pooling Agreement, a Trustee will be required to examine
such documents and to determine whether they conform to the requirements of such
agreement.
55
CERTAIN MATTERS REGARDING THE TRUSTEE
As and to the extent described in the related Prospectus Supplement, the
fees and normal disbursements of any Trustee may be the expense of the related
Master Servicer or other specified person or may be required to be borne by the
related Trust Fund.
Unless otherwise specified in the related Prospectus Supplement, the
Trustee for each series of Certificates will be entitled to indemnification,
from amounts held in the Certificate Account for such series, for any loss,
liability or expense incurred by the Trustee in connection with the Trustee's
acceptance or administration of its trusts under the related Pooling Agreement;
provided, however, that such indemnification will not extend to any loss
liability or expense incurred by reason of willful misfeasance, bad faith or
gross negligence on the part of the Trustee in the performance of its
obligations and duties thereunder, or by reason of its reckless disregard of
such obligations or duties.
Unless otherwise specified in the related Prospectus Supplement, the
Trustee for each series of Certificates will be entitled to execute any of its
trusts or powers under the related Pooling Agreement or perform any of this
duties thereunder either directly or by or through agents or attorneys, and the
Trustee will not be responsible for any willful misconduct or gross negligence
on the part of any such agent or attorney appointed by it with due care.
RESIGNATION AND REMOVAL OF THE TRUSTEE
The Trustee may resign at any time, in which event the Depositor will be
obligated to appoint a successor Trustee. The Depositor may also remove the
Trustee if the Trustee ceases to be eligible to continue as such under the
Pooling Agreement or if the Trustee becomes insolvent. Upon becoming aware of
such circumstances, the Depositor will be obligated to appoint a successor
Trustee. The Trustee may also be removed at any time by the holders of
Certificates of the applicable series evidencing not less than 51% (or such
other percentage specified in the related Prospectus Supplement) of the Voting
Rights for such series. Any resignation or removal of the Trustee and
appointment of a successor Trustee will not become effective until acceptance of
the appointment by the successor Trustee. Notwithstanding anything herein to the
contrary, if any entity is acting as both Trustee and REMIC Administrator, then
any resignation or removal of such entity as the Trustee will also constitute
the resignation or removal of such entity as REMIC Administrator, and the
successor trustee will serve as successor to the REMIC Administrator as well.
56
DESCRIPTION OF CREDIT SUPPORT
GENERAL
Credit Support may be provided with respect to one or more classes of the
Certificates of any series or with respect to the related Mortgage Assets.
Credit Support may be in the form of a letter of credit, the subordination of
one or more classes of Certificates, the use of a surety bond, an insurance
policy or a guarantee, the establishment of one or more reserve funds, or any
combination of the foregoing. If and to the extent so provided in the related
Prospectus Supplement, any of the foregoing forms of Credit Support may provide
credit enhancement for more than one series of Certificates.
The Credit Support may not provide protection against all risks of loss and
will not guarantee payment to Certificateholders of all amounts to which they
are entitled under the related Pooling Agreement. If losses or shortfalls occur
that exceed the amount covered by the related Credit Support or that are of a
type not covered by such Credit Support, Certificateholders will bear their
allocable share of deficiencies. Moreover, if a form of Credit Support covers
the Offered Certificates of more than one series and losses on the related
Mortgage Assets exceed the amount of such Credit Support, it is possible that
the holders of Offered Certificates of one (or more) such series will be
disproportionately benefited by such Credit Support to the detriment of the
holders of Offered Certificates of one (or more) other such series.
If Credit Support is provided with respect to one or more classes of
Certificates of a series, or with respect to the related Mortgage Assets, the
related Prospectus Supplement will include a description of (i) the nature and
amount of coverage under such Credit Support, (ii) any conditions to payment
thereunder not otherwise described herein, (iii) the conditions (if any) under
which the amount of coverage under such Credit Support may be reduced and under
which such Credit Support may be terminated or replaced and (iv) the material
provisions relating to such Credit Support. Additionally, the related Prospectus
Supplement will set forth certain information with respect to the obligor, if
any, under any instrument of Credit Support. See "Risk Factors--Credit Support
Limitations."
SUBORDINATE CERTIFICATES
If so specified in the related Prospectus Supplement, one or more classes
of Certificates of a series may be Subordinate Certificates. To the extent
specified in the related Prospectus Supplement, the rights of the holders of
Subordinate Certificates to receive distributions from the Certificate Account
on any Distribution Date will be subordinated to the corresponding rights of the
holders of Senior Certificates. If so provided in the related Prospectus
Supplement, the subordination of a class may apply only in the event of certain
types of losses or shortfalls. The related Prospectus Supplement will set forth
information concerning the method and amount of subordination provided by a
class or classes of Subordinate Certificates in a series and the circumstances
under which such subordination will be available.
If the Mortgage Assets in any Trust Fund are divided into separate groups,
each supporting a separate class or classes of Certificates of the related
series, Credit Support may be provided by cross-support provisions requiring
that distributions be made on Senior Certificates evidencing interests in one
group of Mortgage Assets prior to distributions on Subordinate Certificates
evidencing interests in a different group of Mortgage Assets within the Trust
Fund. The Prospectus Supplement for a series that includes a cross-support
provision will describe the manner and conditions for applying such provisions.
INSURANCE OR GUARANTEES WITH RESPECT TO MORTGAGE LOANS
If so provided in the Prospectus Supplement for a series of Certificates,
Mortgage Loans included in the related Trust Fund will be covered for certain
default risks by insurance policies or guarantees. The related Prospectus
Supplement will describe the nature of such default risks and the extent of such
coverage.
57
LETTER OF CREDIT
If so provided in the Prospectus Supplement for a series of Certificates,
deficiencies in amounts otherwise payable on such Certificates or certain
classes thereof will be covered by one or more letters of credit, issued by a
bank or other financial institution specified in such Prospectus Supplement (the
"Letter of Credit Bank"). Under a letter of credit, the Letter of Credit Bank
will be obligated to honor draws thereunder in an aggregate fixed dollar amount,
net of unreimbursed payments thereunder, generally equal to a percentage
specified in the related Prospectus Supplement of the aggregate principal
balance of some or all of the related Mortgage Assets on the related Cut-off
Date or of the initial aggregate Certificate Balance of one or more classes of
Certificates. If so specified in the related Prospectus Supplement, the letter
of credit may permit draws only in the event of certain types of losses and
shortfalls. The amount available under the letter of credit will, in all cases,
be reduced to the extent of the unreimbursed payments thereunder and may
otherwise be reduced as described in the related Prospectus Supplement. The
obligations of the Letter of Credit Bank under the letter of credit for each
series of Certificates will expire at the earlier of the date specified in the
related Prospectus Supplement or the termination of the Trust Fund.
CERTIFICATE INSURANCE AND SURETY BONDS
If so provided in the Prospectus Supplement for a series of Certificates,
deficiencies in amounts otherwise payable on such Certificates or certain
classes thereof will be covered by insurance policies or surety bonds provided
by one or more insurance companies or sureties. Such instruments may cover, with
respect to one or more classes of Certificates of the related series, timely
distributions of interest or distributions of principal on the basis of a
schedule of principal distributions set forth in or determined in the manner
specified in the related Prospectus Supplement. The related Prospectus
Supplement will describe any limitations on the draws that may be made under any
such instrument.
RESERVE FUNDS
If so provided in the Prospectus Supplement for a series of Certificates,
deficiencies in amounts otherwise payable on such Certificates or certain
classes thereof will be covered (to the extent of available funds) by one or
more reserve funds in which cash, a letter of credit, Permitted Investments, a
demand note or a combination thereof will be deposited, in the amounts specified
in such Prospectus Supplement. If so specified in the related Prospectus
Supplement, the reserve fund for a series may also be funded over time by a
specified amount of certain collections received on the related Mortgage Assets.
Amounts on deposit in any reserve fund for a series will be applied for the
purposes, in the manner, and to the extent specified in the related Prospectus
Supplement. If so specified in the related Prospectus Supplement, reserve funds
may be established to provide protection only against certain types of losses
and shortfalls. Following each Distribution Date, amounts in a reserve fund in
excess of any amount required to be maintained therein may be released from the
reserve fund under the conditions and to the extent specified in the related
Prospectus Supplement.
If so specified in the related Prospectus Supplement, amounts deposited in
any reserve fund will be invested in Permitted Investments. Unless otherwise
specified in the related Prospectus Supplement, any reinvestment income or other
gain from such investments will be credited to the related reserve fund for such
series, and any loss resulting from such investments will be charged to such
reserve fund. However, such income may be payable to any related Master Servicer
or another service provider as additional compensation for its services. The
reserve fund, if any, for a series will not be a part of the Trust Fund unless
otherwise specified in the related Prospectus Supplement.
CREDIT SUPPORT WITH RESPECT TO MBS
If so provided in the Prospectus Supplement for a series of Certificates,
any MBS included in the related Trust Fund and/or the related underlying
mortgage loans may be covered by one or more of the types of Credit Support
described herein. The related Prospectus Supplement will specify, as to each
58
such form of Credit Support, the information indicated above with respect
thereto, to the extent such information is material and available.
INTEREST RATE EXCHANGE, CAP AND FLOOR AGREEMENTS
If so specified in the Prospectus Supplement for a series of Certificates,
the related Trust Fund may include interest rate exchange agreements or interest
rate cap or floor agreements. These types of agreements may be used to limit the
exposure of the Trust Fund or investors in the Certificates to fluctuations in
interest rates and to situations where interest rates become higher or lower
than specified thresholds. Generally, an interest rate exchange agreement is a
contract between two parties to pay and receive, with a set frequency, interest
payments determined by applying the differential between two interest rates to
an agreed-upon notional principal. Generally, an interest rate cap agreement is
a contract pursuant to which one party agrees to reimburse another party for a
floating rate interest payment obligation, to the extent that the rate payable
at any time exceeds a specified cap. Generally, an interest rate floor agreement
is a contract pursuant to which one party agrees to reimburse another party in
the event that amounts owing to the latter party under a floating rate interest
payment obligation are payable at a rate which is less than a specified floor.
The specific provisions of these types of agreements will be described in the
related Prospectus Supplement.
CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS
The following discussion contains general summaries of certain legal
aspects of mortgage loans secured by commercial and multifamily residential
properties. Because such legal aspects are governed by applicable local law
(which laws may differ substantially), the summaries do not purport to be
complete, to reflect the laws of any particular jurisdiction, or to encompass
the laws of all jurisdictions in which the security for the Mortgage Loans (or
mortgage loans underlying any MBS) is situated. Accordingly, the summaries are
qualified in their entirety by reference to the applicable laws of those
jurisdictions. See "Description of the Trust Funds--Mortgage Loans." If a
significant percentage of Mortgage Loans (or mortgage loans underlying MBS), by
balance, are secured by properties in a particular jurisdiction, relevant local
laws, to the extent they vary materially from this discussion, will be discussed
in the Prospectus Supplement. For purposes of the following discussion,
"Mortgage Loan" includes a mortgage loan underlying an MBS.
GENERAL
Each Mortgage Loan will be evidenced by a note or bond and secured by an
instrument granting a security interest in real property, which may be a
mortgage, deed of trust or a deed to secure debt, depending upon the prevailing
practice and law in the state in which the related Mortgaged Property is
located. Mortgages, deeds of trust and deeds to secure debt are herein
collectively referred to as "mortgages." A mortgage creates a lien upon, or
grants a title interest in, the real property covered thereby, and represents
the security for the repayment of the indebtedness customarily evidenced by a
promissory note. The priority of the lien created or interest granted will
depend on the terms of the mortgage and, in some cases, on the terms of separate
subordination agreements or intercreditor agreements with others that hold
interests in the real property, the knowledge of the parties to the mortgage
and, generally, the order of recordation of the mortgage in the appropriate
public recording office. However, the lien of a recorded mortgage will generally
be subordinate to later-arising liens for real estate taxes and assessments and
other charges imposed under governmental police powers.
TYPES OF MORTGAGE INSTRUMENTS
There are two parties to a mortgage: a mortgagor (the borrower and usually
the owner of the subject property) and a mortgagee (the lender). In contrast, a
deed of trust is a three-party instrument, among a trustor (the equivalent of a
borrower), a trustee to whom the real property is conveyed, and a beneficiary
(the lender) for whose benefit the conveyance is made. Under a deed of trust,
the trustor grants the property, irrevocably until the debt is paid, in trust
and generally with a power of sale, to the trustee to secure repayment of the
indebtedness evidenced by the related note. A deed to secure debt
59
typically has two parties, pursuant to which the borrower, or grantor, conveys
title to the real property to the grantee, or lender, generally with a power of
sale, until such time as the debt is repaid. In a case where the borrower is a
land trust, there would be an additional party because legal title to the
property is held by a land trustee under a land trust agreement for the benefit
of the borrower. At origination of a mortgage loan involving a land trust, the
borrower may execute a separate undertaking to make payments on the mortgage
note. In no event is the land trustee personally liable for the mortgage note
obligation. The mortgagee's authority under a mortgage, the trustee's authority
under a deed of trust and the grantee's authority under a deed to secure debt
are governed by the express provisions of the related instrument, the law of the
state in which the real property is located, certain federal laws and, in some
deed of trust transactions, the directions of the beneficiary.
LEASES AND RENTS
Mortgages that encumber income-producing property often contain an
assignment of rents and leases and/or may be accompanied by a separate
assignment of rents and leases, pursuant to which the borrower assigns to the
lender the borrower's right, title and interest as landlord under each lease and
the income derived therefrom, while (unless rents are to be paid directly to the
lender) retaining a revocable license to collect the rents for so long as there
is no default. If the borrower defaults, the license terminates and the lender
is entitled to collect the rents. Local law may require that the lender take
possession of the property and/or obtain a court-appointed receiver before
becoming entitled to collect the rents.
In most states, hotel and motel room rates are considered accounts
receivable under the Uniform Commercial Code ("UCC"); in cases where hotels or
motels constitute loan security, the rates are generally pledged by the borrower
as additional security for the loan. In general, the lender must file financing
statements in order to perfect its security interest in the room rates and must
file continuation statements, generally every five years, to maintain perfection
of such security interest. In certain cases, Mortgage Loans secured by hotels or
motels may be included in a Trust Fund even if the security interest in the room
rates was not perfected or the requisite UCC filings were allowed to lapse. Even
if the lender's security interest in room rates is perfected under applicable
nonbankruptcy law, it will generally be required to commence a foreclosure
action or otherwise take possession of the property in order to enforce its
rights to collect the room rates following a default. In the bankruptcy setting,
however, the lender will be stayed from enforcing its rights to collect room
rates, but those room rates constitute "cash collateral" and therefore cannot be
used by the bankruptcy debtor without a hearing or lender's consent or unless
the lender's interest in the room rates is given adequate protection (e.g., cash
payment for otherwise encumbered funds or a replacement lien on unencumbered
property, in either case equal in value to the amount of room rates that the
debtor proposes to use, or other similar relief). See "--Bankruptcy Laws."
PERSONALTY
In the case of certain types of mortgaged properties, such as hotels,
motels and nursing homes, personal property (to the extent owned by the borrower
and not previously pledged) may constitute a significant portion of the
property's value as security. The creation and enforcement of liens on personal
property are governed by the UCC. Accordingly, if a borrower pledges personal
property as security for a mortgage loan, the lender generally must file UCC
financing statements in order to perfect its security interest therein, and must
file continuation statements, generally every five years, to maintain that
perfection. In certain cases, Mortgage Loans secured in part by personal
property may be included in a Trust Fund even if the security interest in such
personal property was not perfected or the requisite UCC filings were allowed to
lapse.
FORECLOSURE
GENERAL. Foreclosure is a legal procedure that allows the lender to recover
its mortgage debt by enforcing its rights and available legal remedies under the
mortgage. If the borrower defaults in
60
payment or performance of its obligations under the note or mortgage, the lender
has the right to institute foreclosure proceedings to sell the real property at
public auction to satisfy the indebtedness.
FORECLOSURE PROCEDURES VARY FROM STATE TO STATE. Two primary methods of
foreclosing a mortgage are judicial foreclosure, involving court proceedings,
and nonjudicial foreclosure pursuant to a power of sale granted in the mortgage
instrument. Other foreclosure procedures are available in some states, but they
are either infrequently used or available only in limited circumstances.
A foreclosure action is subject to most of the delays and expenses of other
lawsuits if defenses are raised or counterclaims are interposed, and sometimes
requires several years to complete.
JUDICIAL FORECLOSURE. A judicial foreclosure proceeding is conducted in a
court having jurisdiction over the mortgaged property. Generally, the action is
initiated by the service of legal pleadings upon all parties having a
subordinate interest of record in the real property and all parties in
possession of the property, under leases or otherwise, whose interests are
subordinate to the mortgage. Delays in completion of the foreclosure may
occasionally result from difficulties in locating defendants. When the lender's
right to foreclose is contested, the legal proceedings can be time-consuming.
Upon successful completion of a judicial foreclosure proceeding, the court
generally issues a judgment of foreclosure and appoints a referee or other
officer to conduct a public sale of the mortgaged property, the proceeds of
which are used to satisfy the judgment. Such sales are made in accordance with
procedures that vary from state to state.
EQUITABLE AND OTHER LIMITATIONS ON ENFORCEABILITY OF CERTAIN PROVISIONS.
United States courts have traditionally imposed general equitable principles to
limit the remedies available to lenders in foreclosure actions. These principles
are generally designed to relieve borrowers from the effects of mortgage
defaults perceived as harsh or unfair. Relying on such principles, a court may
alter the specific terms of a loan to the extent it considers necessary to
prevent or remedy an injustice, undue oppression or overreaching, or may require
the lender to undertake affirmative actions to determine the cause of the
borrower's default and the likelihood that the borrower will be able to
reinstate the loan. In some cases, courts have substituted their judgment for
the lender's and have required that lenders reinstate loans or recast payment
schedules in order to accommodate borrowers who are suffering from a temporary
financial disability. In other cases, courts have limited the right of the
lender to foreclose in the case of a nonmonetary default, such as a failure to
adequately maintain the mortgaged property or an impermissible further
encumbrance of the mortgaged property. Finally, some courts have addressed the
issue of whether federal or state constitutional provisions reflecting due
process concerns for adequate notice require that a borrower receive notice in
addition to statutorily-prescribed minimum notice. For the most part, these
cases have upheld the reasonableness of the notice provisions or have found that
a public sale under a mortgage providing for a power of sale does not involve
sufficient state action to trigger constitutional protections.
In addition, some states may have statutory protection such as the right of
the borrower to reinstate mortgage loans after commencement of foreclosure
proceedings but prior to a foreclosure sale.
NONJUDICIAL FORECLOSURE/POWER OF SALE. In states permitting nonjudicial
foreclosure proceedings, foreclosure of a deed of trust is generally
accomplished by a nonjudicial trustee's sale pursuant to a power of sale
typically granted in the deed of trust. A power of sale may also be contained in
any other type of mortgage instrument if applicable law so permits. A power of
sale under a deed of trust allows a nonjudicial public sale to be conducted
generally following a request from the beneficiary/lender to the trustee to sell
the property upon default by the borrower and after notice of sale is given in
accordance with the terms of the mortgage and applicable state law. In some
states, prior to such sale, the trustee under the deed of trust must record a
notice of default and notice of sale and send a copy to the borrower and to any
other party who has recorded a request for a copy of a notice of default and
notice of sale. In addition, in some states the trustee must provide notice to
any other party having an interest of record in the real property, including
junior lienholders. A notice of sale must be posted in a public place and, in
most states, published for a specified period of time in one or more newspapers.
The borrower or junior lienholder may then have the right, during a
reinstatement period required in some states, to cure the default by paying the
entire actual amount in arrears (without regard to the
61
acceleration of the indebtedness), plus the lender's expenses incurred in
enforcing the obligation. In other states, the borrower or the junior lienholder
is not provided a period to reinstate the loan, but has only the right to pay
off the entire debt to prevent the foreclosure sale. Generally, state law
governs the procedure for public sale, the parties entitled to notice, the
method of giving notice and the applicable time periods.
PUBLIC SALE. A third party may be unwilling to purchase a mortgaged
property at a public sale because of the difficulty in determining the exact
status of title to the property (due to, among other things, redemption rights
that may exist) and because of the possibility that physical deterioration of
the property may have occurred during the foreclosure proceedings. Therefore, it
is common for the lender to purchase the mortgaged property for an amount equal
to the secured indebtedness and accrued and unpaid interest plus the expenses of
foreclosure, in which event the borrower's debt will be extinguished, or for a
lesser amount in order to preserve its right to seek a deficiency judgment if
such is available under state law and under the terms of the Mortgage Loan
documents. (The Mortgage Loans, however, may be nonrecourse. See "Risk
Factors--Certain Factors Affecting Delinquency, Foreclosure and Loss of the
Mortgage Loans--Limited Recourse Nature of the Mortgage Loans.") Thereafter,
subject to the borrower's right in some states to remain in possession during a
redemption period, the lender will become the owner of the property and have
both the benefits and burdens of ownership, including the obligation to pay debt
service on any senior mortgages, to pay taxes, to obtain casualty insurance and
to make such repairs as are necessary to render the property suitable for sale.
The costs of operating and maintaining a commercial or multifamily residential
property may be significant and may be greater than the income derived from that
property. The lender also will commonly obtain the services of a real estate
broker and pay the broker's commission in connection with the sale or lease of
the property. Depending upon market conditions, the ultimate proceeds of the
sale of the property may not equal the lender's investment in the property.
Moreover, because of the expenses associated with acquiring, owning and selling
a mortgaged property, a lender could realize an overall loss on a mortgage loan
even if the mortgaged property is sold at foreclosure, or resold after it is
acquired through foreclosure, for an amount equal to the full outstanding
principal amount of the loan plus accrued interest.
The holder of a junior mortgage that forecloses on a mortgaged property
does so subject to senior mortgages and any other prior liens, and may be
obliged to keep senior mortgage loans current in order to avoid foreclosure of
its interest in the property. In addition, if the foreclosure of a junior
mortgage triggers the enforcement of a "due-on-sale" clause contained in a
senior mortgage, the junior mortgagee could be required to pay the full amount
of the senior mortgage indebtedness or face foreclosure.
RIGHTS OF REDEMPTION. The purposes of a foreclosure action are to enable
the lender to realize upon its security and to bar the borrower, and all persons
who have interests in the property that are subordinate to that of the
foreclosing lender, from exercise of their "equity of redemption." The doctrine
of equity of redemption provides that, until the property encumbered by a
mortgage has been sold in accordance with a properly conducted foreclosure and
foreclosure sale, those having interests that are subordinate to that of the
foreclosing lender have an equity of redemption and may redeem the property by
paying the entire debt with interest. Those having an equity of redemption must
generally be made parties and joined in the foreclosure proceeding in order for
their equity of redemption to be terminated.
The equity of redemption is a common-law (nonstatutory) right which should
be distinguished from post-sale statutory rights of redemption. In some states,
after sale pursuant to a deed of trust or foreclosure of a mortgage, the
borrower and foreclosed junior lienors are given a statutory period in which to
redeem the property. In some states, statutory redemption may occur only upon
payment of the foreclosure sale price. In other states, redemption may be
permitted if the former borrower pays only a portion of the sums due. The effect
of a statutory right of redemption is to diminish the ability of the lender to
sell the foreclosed property because the exercise of a right of redemption would
defeat the title of any purchaser through a foreclosure. Consequently, the
practical effect of the redemption right is to force the lender to maintain the
property and pay the expenses of ownership until the
62
redemption period has expired. In some states, a post-sale statutory right of
redemption may exist following a judicial foreclosure, but not following a
trustee's sale under a deed of trust.
ANTI-DEFICIENCY LEGISLATION. Some or all of the Mortgage Loans may be
nonrecourse loans, as to which recourse in the case of default will be limited
to the Mortgaged Property and such other assets, if any, that were pledged to
secure the Mortgage Loan. However, even if a mortgage loan by its terms provides
for recourse to the borrower's other assets, a lender's ability to realize upon
those assets may be limited by state law. For example, in some states a lender
cannot obtain a deficiency judgment against the borrower following foreclosure
or sale under a deed of trust. A deficiency judgment is a personal judgment
against the former borrower equal to the difference between the net amount
realized upon the public sale of the real property and the amount due to the
lender. Other statutes may require the lender to exhaust the security afforded
under a mortgage before bringing a personal action against the borrower. In
certain other states, the lender has the option of bringing a personal action
against the borrower on the debt without first exhausting such security;
however, in some of those states, the lender, following judgment on such
personal action, may be deemed to have elected a remedy and thus may be
precluded from foreclosing upon the security. Consequently, lenders in those
states where such an election of remedy provision exists will usually proceed
first against the security. Finally, other statutory provisions, designed to
protect borrowers from exposure to large deficiency judgments that might result
from bidding at below-market values at the foreclosure sale, limit any
deficiency judgment to the excess of the outstanding debt over the fair market
value of the property at the time of the sale.
LEASEHOLD CONSIDERATIONS. Mortgage Loans may be secured by a mortgage on
the borrower's leasehold interest in a ground lease. Leasehold mortgage loans
are subject to certain risks not associated with mortgage loans secured by a
lien on the fee estate of the borrower. The most significant of these risks is
that if the borrower's leasehold were to be terminated upon a lease default, the
leasehold mortgagee would lose its security. This risk may be lessened if the
ground lease requires the lessor to give the leasehold mortgagee notices of
lessee defaults and an opportunity to cure them, permits the leasehold estate to
be assigned to and by the leasehold mortgagee or the purchaser at a foreclosure
sale, and contains certain other protective provisions typically included in a
"mortgageable" ground lease. Certain Mortgage Loans, however, may be secured by
ground leases which do not contain these provisions.
In addition, where a lender has as its security both the fee and leasehold
interest in the same property, the grant of a mortgage lien on its fee interest
by the land owner/ground lessor to secure the debt of a borrower/ground lessee
may be subject to challenge as a fraudulent conveyance. Among other things, a
legal challenge to the granting of the liens may focus on the benefits realized
by the land owner/ground lessor from the loan. If a court concluded that the
granting of the mortgage lien was an avoidable fraudulent conveyance, it might
take actions detrimental to the holders of the offered certificates, including,
under certain circumstances, invalidating the mortgage lien on the fee interest
of the land owner/ground lessor.
COOPERATIVE SHARES. Mortgage Loans may be secured by a security interest on
the borrower's ownership interest in shares, and the proprietary leases
appurtenant thereto, allocable to cooperative dwelling units that may be vacant
or occupied by nonowner tenants. Such loans are subject to certain risks not
associated with mortgage loans secured by a lien on the fee estate of a borrower
in real property. Such a loan typically is subordinate to the mortgage, if any,
on the Cooperative's building which, if foreclosed, could extinguish the equity
in the building and the proprietary leases of the dwelling units derived from
ownership of the shares of the Cooperative. Further, transfer of shares in a
Cooperative are subject to various regulations as well as to restrictions under
the governing documents of the Cooperative, and the shares may be cancelled in
the event that associated maintenance charges due under the related proprietary
leases are not paid. Typically, a recognition agreement between the lender and
the Cooperative provides, among other things, the lender with an opportunity to
cure a default under a proprietary lease.
Under the laws applicable in many states, "foreclosure" on Cooperative
shares is accomplished by a sale in accordance with the provisions of Article 9
of the UCC and the security agreement relating to
63
the shares. Article 9 of the UCC requires that a sale be conducted in a
"commercially reasonable" manner, which may be dependent upon, among other
things, the notice given the debtor and the method, manner, time, place and
terms of the sale. Article 9 of the UCC provides that the proceeds of the sale
will be applied first to pay the costs and expenses of the sale and then to
satisfy the indebtedness secured by the lender's security interest. A
recognition agreement, however, generally provides that the lender's right to
reimbursement is subject to the right of the Cooperative to receive sums due
under the proprietary leases.
BANKRUPTCY LAWS
Operation of the federal bankruptcy code, as amended from time to time (11
U.S.C.) (the "Bankruptcy Code") and related state laws may interfere with or
affect the ability of a lender to realize upon collateral and/or to enforce a
deficiency judgment. For example, under the Bankruptcy Code, virtually all
actions (including foreclosure actions and deficiency judgment proceedings) are
automatically stayed upon the filing of the bankruptcy petition and, usually, no
interest or principal payments are made during the course of the bankruptcy
case. The delay and the consequences thereof caused by such automatic stay can
be significant. Also, under the Bankruptcy Code, the filing of a petition in
bankruptcy by or on behalf of a junior lienor may stay the senior lender from
taking action to foreclose out such junior lien.
Under the Bankruptcy Code, provided certain substantive and procedural
safeguards protective of the lender are met, the amount and terms of a mortgage
loan secured by a lien on property of the debtor may be modified under certain
circumstances. In many jurisdictions, the outstanding amount of the loan may be
reduced to the then-current value of the property (with a corresponding partial
reduction of the amount of lender's security interest) pursuant to a confirmed
plan or lien avoidance proceeding, thus leaving the lender a general unsecured
creditor for the difference between such value and the outstanding balance of
the loan. Other modifications may include the reduction in the amount of each
scheduled payment, by means of a reduction in the rate of interest and/or an
alteration of the repayment schedule (with or without affecting the unpaid
principal balance of the loan), and/or by an extension (or shortening) of the
term to maturity. Some courts with federal bankruptcy jurisdiction have approved
plans, based on the particular facts of the reorganization case, that effected
the cure of a mortgage loan default by paying arrearages over a number of years.
Also, under the Bankruptcy Code, a bankruptcy court may permit a debtor, through
its rehabilitative plan, to de-accelerate a secured loan and to reinstate the
loan even if the lender accelerated the mortgage loan and final judgment of
foreclosure has been entered in state court (provided no sale of the property
had yet occurred) prior to the filing of the debtor's petition. This may be done
even if the full amount due under the original loan is never repaid.
The Bankruptcy Code has been amended to provide that a lender's perfected
pre-petition security interest in leases, rents and hotel revenues continues in
the post-petition leases, rents and hotel revenues, unless a bankruptcy court
orders to the contrary "based on the equities of the case." Thus, unless a court
orders otherwise, revenues from a mortgaged property generated after the date
the bankruptcy petition is filed will constitute "cash collateral" under the
Bankruptcy Code. Debtors may only use cash collateral upon obtaining the
lender's consent or a prior court order finding that the lender's interest in
the mortgaged property and the cash collateral is "adequately protected" as the
term is defined and interpreted under the Bankruptcy Code. It should be noted,
however, that the court may find that the lender has no security interest in
either pre-petition or post-petition revenues if the court finds that the loan
documents do not contain language covering accounts, room rents, or other forms
of personalty necessary for a security interest to attach to hotel revenues.
The Bankruptcy Code provides generally that rights and obligation under an
unexpired lease of the debtor/lessee may not be terminated or modified at any
time after the commencement of a case under the Bankruptcy Code solely because
of a provision in the lease to that effect or because of certain other similar
events. This prohibition on so-called "ipso facto clauses" could limit the
ability of the trustee to exercise certain contractual remedies with respect to
the leases on any mortgaged property. In addition, Section 362 of the Bankruptcy
Code operates as an automatic stay of, among other things, any act to obtain
possession of property from a debtor's estate, which may delay a trustee's
exercise of those
64
remedies in the event that a lessee becomes the subject of a proceeding under
the Bankruptcy Code. For example, a mortgagee would be stayed from enforcing an
assignment of the lease by a borrower related to a mortgaged property if the
related borrower was in a bankruptcy proceeding. The legal proceedings necessary
to resolve the issues could be time-consuming and might result in significant
delays in the receipt of the assigned rents. Similarly, the filing of a petition
in bankruptcy by or on behalf of a lessee of a mortgaged property would result
in a stay against the commencement or continuation of any state court proceeding
for past due rent, for accelerated rent, for damages or for a summary eviction
order with respect to a default under the related lease that occurred prior to
the filing of the lessee's petition. Rents and other proceeds of a mortgage loan
may also escape an assignment if the assignment is not fully perfected under
state law prior to commencement of the bankruptcy proceeding.
In addition, the Bankruptcy Code generally provides that a trustee or
debtor-in-possession may, subject to approval of the court, (a) assume the lease
and retain it or assign it to a third party or (b) reject the lease. If the
lease is assumed, the trustee in bankruptcy on behalf of the lessee, or the
lessee as debtor-in-possession, or the assignee, if applicable, must cure any
defaults under the lease, compensate the lessor for its losses and provide the
lessor with "adequate assurance" of future performance. These remedies may be
insufficient, however, as the lessor may be forced to continue under the lease
with a lessee that is a poor credit risk or an unfamiliar tenant if the lease
was assigned, and any assurances provided to the lessor may, in fact, be
inadequate. If the lease is rejected, the rejection generally constitutes a
breach of the executory contract or unexpired lease immediately before the date
of filing the petition. As a consequence, the other party or parties to the
lease, such as the borrower, as lessor under a lease, would have only an
unsecured claim against the debtor for damages resulting from the breach, which
could adversely affect the security for the related mortgage loan. In addition,
pursuant to Section 502(b)(6) of the Bankruptcy Code, a lessor's damages for
lease rejection in respect of future rent installments are limited to the rent
reserved by the lease, without acceleration, for the greater of one year or 15
percent, not to exceed three years, of the remaining term of the lease.
If a trustee in bankruptcy on behalf of a lessor, or a lessor as
debtor-in-possession, rejects an unexpired lease of real property, the lessee
may treat the lease as terminated by the rejection or, in the alternative, the
lessee may remain in possession of the leasehold for the balance of the term and
for any renewal or extension of the term that is enforceable by the lessee under
applicable nonbankruptcy law. The Bankruptcy Code provides that if a lessee
elects to remain in possession after a rejection of a lease, the lessee may
offset against rents reserved under the lease for the balance of the term after
the date of rejection of the lease, and the related renewal or extension of the
lease, any damages occurring after that date caused by the nonperformance of any
obligation of the lessor under the lease after that date.
On the bankruptcy of a lessor or a lessee under a ground lease, the debtor
entity has the right to assume (continue) or reject (terminate) the ground
lease. Pursuant to Section 365(h) of the Bankruptcy Code, as it is presently in
effect, a ground lessee whose ground lease is rejected by a debtor ground lessor
has the right to remain in possession of its leased premises under the rent
reserved in the lease for the term (including renewals) of the ground lease, but
is not entitled to enforce the obligation of the ground lessor to provide any
services required under the ground lease. In the event a ground lessee/borrower
in bankruptcy rejects any/or all of its ground leases, the leasehold mortgagee
would have the right to succeed to the ground lessee/borrower's position under
the lease only if the ground lessor had specifically granted the mortgagee such
right. In the event of concurrent bankruptcy proceedings involving the ground
lessor and the ground lessee/borrower, the Trustee may be unable to enforce the
ground lessee/borrower's obligation to refuse to treat a ground lease rejected
by a bankrupt ground lessor as terminated. In such circumstances, a ground lease
could be terminated notwithstanding lender protection provisions contained
herein or in the mortgage. A lender could lose its security unless the borrower
holds a fee mortgage or the bankruptcy court, as a court of equity, allows the
lender to assume the ground lessee's obligations under the ground lease and
succeed to the position of a leasehold mortgagor. Although consistent with the
Bankruptcy Code, such position may not be adopted by a bankruptcy court.
65
In a bankruptcy or similar proceeding of a borrower, action may be taken
seeking the recovery, as a preferential transfer or on other grounds, of any
payments made by the borrower, or made directly by the related lessee, under the
related mortgage loan to the trust fund. Payments on long-term debt may be
protected from recovery as preferences if they are payments in the ordinary
course of business made on debts incurred in the ordinary course of business.
Whether any particular payment would be protected depends upon the facts
specific to a particular transaction.
A trustee in bankruptcy, in some cases, may be entitled to collect its
costs and expenses in preserving or selling the mortgaged property ahead of
payment to the lender. In certain circumstances, a debtor in bankruptcy may have
the power to grant liens senior to the lien of a mortgage, and analogous state
statutes and general principles of equity may also provide a borrower with means
to halt a foreclosure proceeding or sale and to force a restructuring of a
mortgage loan on terms a lender would not otherwise accept. Moreover, the laws
of certain states also give priority to certain tax liens over the lien of a
mortgage or deed of trust. Under the Bankruptcy Code, if the court finds that
actions of the mortgagee have been unreasonable, the lien of the related
mortgage may be subordinated to the claims of unsecured creditors.
Certain of the borrowers may be partnerships. The laws governing limited
partnerships in certain states provide that the commencement of a case under the
Bankruptcy Code with respect to a general partner will cause a person to cease
to be a general partner of the limited partnership, unless otherwise provided in
writing in the limited partnership agreement. This provision may be construed as
an "ipso facto" clause and, in the event of the general partner's bankruptcy,
may not be enforceable. Certain limited partnership agreements of the borrowers
may provide that the commencement of a case under the Bankruptcy Code with
respect to the related general partner constitutes an event of withdrawal
(assuming the enforceability of the clause is not challenged in bankruptcy
proceedings or, if challenged, is upheld) that might trigger the dissolution of
the limited partnership, the winding up of its affairs and the distribution of
its assets, unless (i) at the time there was at least one other general partner
and the written provisions of the limited partnership permit the business of the
limited partnership to be carried on by the remaining general partner and that
general partner does so or (ii) the written provisions of the limited
partnership agreement permit the limited partners to agree within a specified
time frame (often 60 days) after the withdrawal to continue the business of the
limited partnership and to the appointment of one or more general partners and
the limited partners do so. In addition, the laws governing general partnerships
in certain states provide that the commencement of a case under the Bankruptcy
Code or state bankruptcy laws with respect to a general partner of the
partnerships triggers the dissolution of the partnership, the winding up of its
affairs and the distribution of its assets. Those state laws, however, may not
be enforceable or effective in a bankruptcy case. The dissolution of a borrower,
the winding up of its affairs and the distribution of its assets could result in
an acceleration of its payment obligation under the borrower's mortgage loan,
which may reduce the yield on the notes in the same manner as a principal
prepayment.
In addition, the bankruptcy of the general or limited partner of a borrower
that is a partnership, or the bankruptcy of a member of a borrower that is a
limited liability company or the bankruptcy of a shareholder of a borrower that
is a corporation may provide the opportunity in the bankruptcy case of the
partner, member or shareholder to obtain an order from a court consolidating the
assets and liabilities of the partner, member or shareholder with those of the
mortgagor pursuant to the doctrines of substantive consolidation or piercing the
corporate veil. In such a case, the respective mortgaged property, for example,
would become property of the estate of the bankrupt partner, member or
shareholder. Not only would the mortgaged property be available to satisfy the
claims of creditors of the partner, member or shareholder, but an automatic stay
would apply to any attempt by the trustee to exercise remedies with respect to
the mortgaged property. However, such an occurrence should not affect the
trustee's status as a secured creditor with respect to the mortgagor or its
security interest in the mortgaged property.
ENVIRONMENTAL CONSIDERATIONS
GENERAL. A lender may be subject to environmental risks when taking a
security interest in real property. Of particular concern may be properties that
are or have been used for industrial,
66
manufacturing, military or disposal activity. Such environmental risks include
the possible diminution of the value of a contaminated property or, as discussed
below, potential liability for clean-up costs or other remedial actions that
could exceed the value of the property or the amount of the lender's loan. In
certain circumstances, a lender may decide to abandon a contaminated mortgaged
property as collateral for its loan rather than foreclose and risk liability for
clean-up costs.
SUPERLIEN LAWS. Under the laws of many states, contamination on a property
may give rise to a lien on the property for clean-up costs. In several states,
such a lien has priority over all existing liens, including those of existing
mortgages.
In these states, the lien of a mortgage may lose its priority to such a
"superlien."
CERCLA. The federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), imposes strict liability on
present and past "owners" and "operators" of contaminated real property for the
costs of clean-up. A secured lender may be liable as an "owner" or "operator" of
a contaminated mortgaged property if agents or employees of the lender have
participated in the management or operation of such mortgaged property. Such
liability may exist even if the lender did not cause or contribute to the
contamination and regardless of whether the lender has actually taken possession
of a mortgaged property through foreclosure, deed in lieu of foreclosure or
otherwise. Moreover, such liability is not limited to the original or
unamortized principal balance of a loan or to the value of the property securing
a loan. Excluded from CERCLA's definition of "owner" or "operator," however, is
a person "who, without participating in the management of the facility, holds
indicia of ownership primarily to protect his security interest." This is the so
called "secured creditor exemption."
The Asset Conservation, Lender Liability and Deposit Insurance Protection
Act of 1996 (the "Act") amended, among other things, the provisions of CERCLA
with respect to lender liability and the secured creditor exemption. The Act
offers protection to lenders by defining the activities in which a lender can
engage and still have the benefit of the secured creditor exemption. In order
for a lender to be deemed to have participated in the management of a mortgaged
property, the lender must actually participate in the operational affairs of the
property of the borrower. The Act provides that "merely having the capacity to
influence, or unexercised right to control" operations does not constitute
participation in management. A lender will lose the protection of the secured
creditor exemption if it exercises decision-making control over the borrower's
environmental compliance and hazardous substance handling or disposal practices,
or assumes day-to-day management of environmental or substantially all other
operational functions of the mortgaged property. The Act also provides that a
lender will continue to have the benefit of the secured creditor exemption even
if it forecloses on a mortgaged property, purchases it at a foreclosure sale or
accepts a deed-in-lieu of foreclosure provided that the lender seeks to sell the
mortgaged property at the earliest practicable commercially reasonable time on
commercially reasonable terms.
CERTAIN OTHER FEDERAL AND STATE LAWS. Many states have statutes similar to
CERCLA, and not all those statutes provide for a secured creditor exemption. In
addition, under federal law, there is potential liability relating to hazardous
wastes and underground storage tanks under the federal Resource Conservation and
Recovery Act.
Some federal, state and local laws, regulations and ordinances govern the
management, removal, encapsulation or disturbance of asbestos-containing
materials. These laws, as well as common law standards, may impose liability for
releases of or exposure to asbestos-containing materials, and provide for third
parties to seek recovery from owners or operators of real properties for
personal injuries associated with those releases.
Federal legislation requires owners of residential housing constructed
prior to 1978 to disclose to potential residents or purchasers any known
lead-based paint hazards and will impose treble damages for any failure to
disclose. In addition, the ingestion of lead-based paint chips or dust particles
by children can result in lead poisoning. If lead-based paint hazards exist at a
property, then the owner of that property may be held liable for injuries and
for the costs of removal or encapsulation of the lead-based paint.
67
In a few states, transfers of some types of properties are conditioned upon
cleanup of contamination prior to transfer. In these cases, a lender that
becomes the owner of a property through foreclosure, deed in lieu of foreclosure
or otherwise, may be required to clean up the contamination before selling or
otherwise transferring the property.
Beyond statute-based environmental liability, there exist common law causes
of action (for example, actions based on nuisance or on toxic tort resulting in
death, personal injury or damage to property) related to hazardous environmental
conditions on a property. While it may be more difficult to hold a lender liable
under common law causes of action, unanticipated or uninsured liabilities of the
borrower may jeopardize the borrower's ability to meet its loan obligations or
may decrease the re-sale value of the collateral.
Federal, state and local environmental laws and regulatory requirements
change often. It is possible that compliance with a new requirement could impose
significant compliance costs on a borrower. Such costs may jeopardize the
borrower's ability to meet its loan obligations or decrease the re-sale value of
the collateral.
ADDITIONAL CONSIDERATIONS. The cost of remediating hazardous substance
contamination at a property can be substantial. If a lender becomes liable, it
can bring an action for contribution against the owner or operator who created
the environmental hazard, but that individual or entity may be without
substantial assets. Accordingly, it is possible that such costs could become a
liability of the Trust Fund and occasion a loss to the Certificateholders.
To reduce the likelihood of such a loss, unless otherwise specified in the
related Prospectus Supplement, the Pooling Agreement will provide that neither
the Master Servicer nor the Special Servicer, acting on behalf of the Trustee,
may acquire title to a Mortgaged Property or take over its operation unless the
Special Servicer, based solely (as to environmental matters) on a report
prepared by a person who regularly conducts environmental audits, has made the
determination that it is appropriate to do so, as described under "Description
of the Pooling Agreements--Realization Upon Defaulted Mortgage Loans."
If a lender forecloses on a mortgage secured by a property, the operations
on which are subject to environmental laws and regulations, the lender will be
required to operate the property in accordance with those laws and regulations.
Such compliance may entail substantial expense, especially in the case of
industrial or manufacturing properties.
In addition, a lender may be obligated to disclose environmental conditions
on a property to government entities and/or to prospective buyers (including
prospective buyers at a foreclosure sale or following foreclosure). Such
disclosure may decrease the amount that prospective buyers are willing to pay
for the affected property, sometimes substantially, and thereby decrease the
ability of the lender to recoup its investment in a loan upon foreclosure.
ENVIRONMENTAL SITE ASSESSMENTS. In most cases, an environmental site
assessment of each Mortgaged Property will have been performed in connection
with the origination of the related Mortgage Loan or at some time prior to the
issuance of the related Certificates. Environmental site assessments, however,
vary considerably in their content, quality and cost. Even when adhering to good
professional practices, environmental consultants will sometimes not detect
significant environmental problems because to do an exhaustive environmental
assessment would be far too costly and time-consuming to be practical.
DUE-ON-SALE AND DUE-ON-ENCUMBRANCE PROVISIONS
Certain of the Mortgage Loans may contain "due-on-sale" and
"due-on-encumbrance" clauses that purport to permit the lender to accelerate the
maturity of the loan if the borrower transfers or encumbers the related
Mortgaged Property. In recent years, court decisions and legislative actions
placed substantial restrictions on the right of lenders to enforce such clauses
in many states. However, the Garn-St Germain Depository Institutions Act of 1982
(the "Garn Act") generally preempts state laws that prohibit the enforcement of
due-on-sale clauses and permits lenders to enforce these clauses in accordance
with their terms, subject to certain limitations as set forth in the Garn Act
and the
68
regulations promulgated thereunder. Accordingly, a Master Servicer may
nevertheless have the right to accelerate the maturity of a Mortgage Loan that
contains a "due-on-sale" provision upon transfer of an interest in the property,
without regard to the Master Servicer's ability to demonstrate that a sale
threatens its legitimate security interest.
JUNIOR LIENS; RIGHTS OF HOLDERS OF SENIOR LIENS
If so provided in the related Prospectus Supplement, Mortgage Assets for a
series of Certificates may include Mortgage Loans secured by junior liens, and
the loans secured by the related Senior Liens may not be included in the
Mortgage Pool. The primary risk to holders of Mortgage Loans secured by junior
liens is the possibility that adequate funds will not be received in connection
with a foreclosure of the related Senior Liens to satisfy fully both the Senior
Liens and the related Mortgage Loan. In the event that a holder of a Senior Lien
forecloses on a Mortgaged Property, the proceeds of the foreclosure or similar
sale will be applied first to the payment of court costs and fees in connection
with the foreclosure, second to real estate taxes, third in satisfaction of all
principal, interest, prepayment or acceleration penalties, if any, and any other
sums due and owing to the holder of the Senior Liens. The claims of the holders
of the Senior Liens will be satisfied in full out of proceeds of the liquidation
of the related Mortgage Property, if such proceeds are sufficient, before the
Trust Fund as holder of the junior lien receives any payments in respect of the
Mortgage Loan. In the event that such proceeds from a foreclosure or similar
sale of the related Mortgaged Property are insufficient to satisfy all Senior
Liens and the Mortgage Loan in the aggregate, the Trust Fund, as the holder of
the junior lien, and, accordingly, holders of one or more classes of the
Certificates of the related series bear (i) the risk of delay in distributions
while a deficiency judgment against the borrower is obtained and (ii) the risk
of loss if the deficiency judgment is not realized upon. Moreover, deficiency
judgments may not be available in certain jurisdictions or the Mortgage Loan may
be nonrecourse.
SUBORDINATE FINANCING
The terms of certain of the Mortgage Loans may not restrict the ability of
the borrower to use the Mortgaged Property as security for one or more
additional loans, or such restrictions may be unenforceable. Where a borrower
encumbers a mortgaged property with one or more junior liens, the senior lender
is subjected to additional risk. First, the borrower may have difficulty
servicing and repaying multiple loans. Moreover, if the subordinate financing
permits recourse to the borrower (as is frequently the case) and the senior loan
does not, a borrower may have more incentive to repay sums due on the
subordinate loan. Second, acts of the senior lender that prejudice the junior
lender or impair the junior lender's security may create a superior equity in
favor of the junior lender. For example, if the borrower and the senior lender
agree to an increase in the principal amount of or the interest rate payable on
the senior loan, the senior lender may lose its priority to the extent any
existing junior lender is harmed or the borrower is additionally burdened.
Third, if the borrower defaults on the senior loan and/or any junior loan or
loans, the existence of junior loans and actions taken by junior lenders can
impair the security available to the senior lender and can interfere with or
delay the taking of action by the senior lender. Moreover, the bankruptcy of a
junior lender may operate to stay foreclosure or similar proceedings by the
senior lender.
DEFAULT INTEREST AND LIMITATIONS ON PREPAYMENTS
Notes and mortgages may contain provisions that obligate the borrower to
pay a late charge or additional interest if payments are not timely made, and in
some circumstances, may prohibit prepayments for a specified period and/or
condition prepayments upon the borrower's payment of prepayment fees or yield
maintenance penalties. In certain states, there are or may be specific
limitations upon the late charges which a lender may collect from a borrower for
delinquent payments. Certain states also limit the amounts that a lender may
collect from a borrower as an additional charge if the loan is prepaid. In
addition, the enforceability of provisions that provide for prepayment fees or
penalties upon an involuntary prepayment is unclear under the laws of many
states.
69
APPLICABILITY OF USURY LAWS
Title V of the Depository Institutions Deregulation and Monetary Control
Act of 1980 ("Title V") provides that state usury limitations shall not apply to
certain types of residential (including multifamily) first mortgage loans
originated by certain lenders after March 31, 1980. Title V authorized any state
to reimpose interest rate limits by adopting, before April 1, 1983, a law or
constitutional provision that expressly rejects application of the federal law.
In addition, even where Title V is not so rejected, any state is authorized by
the law to adopt a provision limiting discount points or other charges on
mortgage loans covered by Title V. Certain states have taken action to reimpose
interest rate limits and/or to limit discount points or other charges.
No Mortgage Loan originated in any state in which application of Title V
has been expressly rejected or a provision limiting discount points or other
charges has been adopted, will (if originated after that rejection or adoption)
be eligible for inclusion in a Trust Fund unless (i) such Mortgage Loan provides
for such interest rate, discount points and charges as are permitted in such
state or (ii) such Mortgage Loan provides that the terms thereof are to be
construed in accordance with the laws of another state under which such interest
rate, discount points and charges would not be usurious and the borrower's
counsel has rendered an opinion that such choice of law provision would be given
effect.
Statutes differ in their provisions as to the consequences of a usurious
loan. One group of statutes requires the lender to forfeit the interest due
above the applicable limit or impose a specified penalty. Under this statutory
scheme, the borrower may cancel the recorded mortgage or deed of trust upon
paying its debt with lawful interest, and the lender may foreclose, but only for
the debt plus lawful interest. A second group of statutes is more severe. A
violation of this type of usury law results in the invalidation of the
transaction, thereby permitting the borrower to cancel the recorded mortgage or
deed of trust without any payment or prohibiting the lender from foreclosing.
CERTAIN LAWS AND REGULATIONS
The Mortgaged Properties will be subject to compliance with various
federal, state and local statutes and regulations. Failure to comply (together
with an inability to remedy any such failure) could result in material
diminution in the value of a Mortgaged Property which could, together with the
possibility of limited alternative uses for a particular Mortgaged Property
(i.e., a nursing or convalescent home or hospital), result in a failure to
realize the full principal amount of the related Mortgage Loan.
The lender may be subject to additional risk depending upon the type and
use of the Mortgaged Property in question. For instance, Mortgaged Properties
which are hospitals, nursing homes or convalescent homes may present special
risks to lenders in large part due to significant governmental regulation of the
operation, maintenance, control and financing of health care institutions.
Mortgages on Mortgaged Properties which are owned by the borrower under a
condominium form of ownership are subject to the declaration, by-laws and other
rules and regulations of the condominium association. Mortgaged Properties which
are hotels or motels may present additional risk to the lender in that hotels
and motels are typically operated pursuant to franchise, management and
operating agreements which may be terminable by the operator; and the
transferability of the hotel's operating, liquor and other licenses to the
entity acquiring the hotel either through purchase or foreclosure is subject to
the vagaries of local law requirements. In addition, Mortgaged Properties which
are multifamily properties of cooperatively owned multifamily properties may be
subject to rent control laws, which could impact the future cash flows of those
properties.
AMERICANS WITH DISABILITIES ACT
Under Title III of the Americans with Disabilities Act of 1990 and rules
promulgated thereunder (collectively, the "ADA"), in order to protect
individuals with disabilities, public accommodations (such as hotels,
restaurants, shopping centers, hospitals, schools and social service center
establishments) must remove architectural and communication barriers which are
structural in nature from existing places of public accommodation to the extent
"readily achievable." In addition, under the ADA,
70
alterations to a place of public accommodation or a commercial facility are to
be made so that, to the maximum extent feasible, such altered portions are
readily accessible to and usable by disabled individuals. The "readily
achievable" standard takes into account, among other factors, the financial
resources of the affected site, owner, landlord or other applicable person. In
addition to imposing a possible financial burden on the borrower in its capacity
as owner or landlord, the ADA may also impose such requirements on a foreclosing
lender who succeeds to the interest of the borrower as owner or landlord.
Furthermore, since the "readily achievable" standard may vary depending on the
financial condition of the owner or landlord, a foreclosing lender who is
financially more capable than the borrower of complying with the requirements of
the ADA may be subject to more stringent requirements than those to which the
borrower is subject.
SERVICEMEMBERS CIVIL RELIEF ACT
Under the terms of the Servicemembers Civil Relief Act (formerly the
Soldiers' and Sailors' Civil Relief Act of 1940), as amended (the "Relief Act"),
a borrower who enters military service after the origination of such borrower's
mortgage loan (including a borrower who was in reserve status and is called to
active duty after origination of the Mortgage Loan), upon notification by such
borrower, will not be charged interest, including fees and charges, in excess of
6% per annum during the period of such borrower's active duty status. In
addition to adusting the interest, the lender must forgive any such interest in
excess of 6% unless a court or administrative agency orders otherwise upon
application of the lender. The Relief Act applies to individuals who are members
of the Army, Navy, Air Force, Marines, National Guard, Reserves, Coast Guard and
officers of the U.S. Public Health Service or the National Oceanic and
Atmospheric Administration assigned to duty with the military. Because the
Relief Act applies to individuals who enter military service (including
reservists who are called to active duty) after origination of the related
mortgage loan, no information can be provided as to the number of loans with
individuals as borrowers that may be affected by the Relief Act. Application of
the Relief Act would adversely affect, for an indeterminate period of time, the
ability of a Master Servicer or Special Servicer to collect full amounts of
interest on certain of the Mortgage Loans. Any shortfalls in interest
collections resulting from the application of the Relief Act would result in a
reduction of the amounts distributable to the holders of the related series of
Certificates, and would not be covered by advances or, unless otherwise
specified in the related Prospectus Supplement, any form of Credit Support
provided in connection with such Certificates. In addition, the Relief Act
imposes limitations that would impair the ability of the Master Servicer or
Special Servicer to foreclose on an affected Mortgage Loan during the borrower's
period of active duty status, and, under certain circumstances, during an
additional three month period thereafter.
FORFEITURES IN DRUG AND RICO PROCEEDINGS
Federal law provides that property purchased or improved with assets
derived from criminal activity or otherwise tainted, or used in the commission
of certain offenses, can be seized and ordered forfeited to the United States of
America. The offenses which can trigger such a seizure and forfeiture include,
among others, violations of the Racketeer Influenced and Corrupt Organizations
Act, the Bank Secrecy Act, the anti-money laundering laws and regulations,
including the USA Patriot Act of 2001 and the regulations issued pursuant to
that Act, as well as the narcotic drug laws. In many instances, the United
States may seize the property even before a conviction occurs.
In the event of a forfeiture proceeding, a lender may be able to establish
its interest in the property by proving that (1) its mortgage was executed and
recorded before the commission of the illegal conduct from which the assets used
to purchase or improve the property were derived or before the commission of any
other crime upon which the forfeiture is based, or (2) the lender, at the time
of the execution of the mortgage, "did not know or was reasonably without cause
to believe that the property was subject to forfeiture." However, there is no
assurance that such a defense will be successful.
71
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a general discussion of the anticipated material federal
income tax consequences of the purchase, ownership and disposition of
Certificates. The discussion below does not purport to address all federal
income tax consequences that may be applicable to particular categories of
investors, some of which may be subject to special rules. The authorities on
which this discussion is based are subject to change or differing
interpretations, and any such change or interpretation could apply
retroactively. This discussion reflects the applicable provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), as well as regulations
(the "REMIC Regulations") promulgated by the U.S. Department of Treasury (the
"Treasury"). Investors should consult their own tax advisors in determining the
federal, state, local and other tax consequences to them of the purchase,
ownership and disposition of Certificates.
For purposes of this discussion, (i) references to the Mortgage Loans
include references to the mortgage loans underlying MBS included in the Mortgage
Assets and (ii) where the applicable Prospectus Supplement provides for a fixed
retained yield with respect to the Mortgage Loans underlying a series of
Certificates, references to the Mortgage Loans will be deemed to refer to that
portion of the Mortgage Loans held by the Trust Fund which does not include the
Retained Interest. References to a "holder" or "Certificateholder" in this
discussion generally mean the beneficial owner of a Certificate.
FEDERAL INCOME TAX CONSEQUENCES FOR REMIC CERTIFICATES
GENERAL
With respect to a particular series of Certificates, an election may be
made to treat the Trust Fund or one or more segregated pools of assets therein
as one or more REMICs within the meaning of Code Section 860D. A Trust Fund or a
portion thereof as to which a REMIC election will be made will be referred to as
a "REMIC Pool." For purposes of this discussion, Certificates of a series as to
which one or more REMIC elections are made are referred to as "REMIC
Certificates" and will consist of one or more Classes of "Regular Certificates"
and one Class of "Residual Certificates" in the case of each REMIC Pool.
Qualification as a REMIC requires ongoing compliance with certain conditions.
With respect to each series of REMIC Certificates, Cadwalader, Wickersham & Taft
LLP or Latham & Watkins LLP, counsel to the Depositor, has advised the Depositor
that in the firm's opinion, assuming (i) the making of such an election, (ii)
compliance with the Pooling Agreement and (iii) compliance with any changes in
the law, including any amendments to the Code or applicable Treasury regulations
thereunder, each REMIC Pool will qualify as a REMIC. In such case, the Regular
Certificates will be considered to be "regular interests" in the REMIC Pool and
generally will be treated for federal income tax purposes as if they were newly
originated debt instruments, and the Residual Certificates will be considered to
be "residual interests" in the REMIC Pool. The Prospectus Supplement for each
series of Certificates will indicate whether one or more REMIC elections with
respect to the related Trust Fund will be made, in which event references to
"REMIC" or "REMIC Pool" herein shall be deemed to refer to each such REMIC Pool.
If so specified in the applicable Prospectus Supplement, the portion of a Trust
Fund as to which a REMIC election is not made may be treated as a grantor trust
for federal income tax purposes. See "--Federal Income Tax Consequences for
Certificates as to Which No REMIC Election Is Made."
STATUS OF REMIC CERTIFICATES
REMIC Certificates held by a domestic building and loan association will
constitute "a regular or residual interest in a REMIC" within the meaning of
Code Section 7701(a)(19)(C)(xi), but only in the same proportion that the assets
of the REMIC Pool would be treated as "loans . . . secured by an interest in
real property which is . . . residential real property" (such as single family
or multifamily properties, but not commercial properties) within the meaning of
Code Section 7701(a)(19)(C)(v) or as other assets described in Code Section
7701(a)(19)(C), and otherwise will not qualify for such treatment. REMIC
Certificates held by a real estate investment trust will constitute "real estate
assets" within the
72
meaning of Code Section 856(c)(5)(B), and interest on the Regular Certificates
and income with respect to Residual Certificates will be considered "interest on
obligations secured by mortgages on real property or on interests in real
property" within the meaning of Code Section 856(c)(3)(B) in the same proportion
that, for both purposes, the assets of the REMIC Pool would be so treated. If at
all times 95% or more of the assets of the REMIC Pool qualify for each of the
foregoing respective treatments, the REMIC Certificates will qualify for the
corresponding status in their entirety. For purposes of Code Section
856(c)(5)(B), payments of principal and interest on the Mortgage Loans that are
reinvested pending distribution to holders of REMIC Certificates qualify for
such treatment. Where two REMIC Pools are a part of a tiered structure they will
be treated as one REMIC for purposes of the tests described above respecting
asset ownership of more or less than 95%. Mortgage Loans that have been defeased
with U.S. Treasury obligations or other government securities will not qualify
for the foregoing treatments. Except as provided in the related prospectus
supplement, Regular Certificates will be "qualified mortgages" for another REMIC
for purposes of Code Section 860G(a)(3) and "permitted assets" for a financial
asset securitization investment trust for purposes of Section 860L(c). REMIC
Certificates held by a regulated investment company will not constitute
"Government Securities" within the meaning of Code Section 851(b)(3)(A)(i).
REMIC Certificates held by certain financial institutions will constitute an
"evidence of indebtedness" within the meaning of Code Section 582(c)(1).
QUALIFICATION AS A REMIC
In order for the REMIC Pool to qualify as a REMIC, there must be ongoing
compliance on the part of the REMIC Pool with the requirements set forth in the
Code. The REMIC Pool must fulfill an asset test, which requires that no more
than a DE MINIMIS portion of the assets of the REMIC Pool, as of the close of
the third calendar month beginning after the "Startup Day" (which for purposes
of this discussion is the date of issuance of the REMIC Certificates) and at all
times thereafter, may consist of assets other than "qualified mortgages" and
"permitted investments." The REMIC Regulations provide a safe harbor pursuant to
which the DE MINIMIS requirement is met if at all times the aggregate adjusted
basis of the nonqualified assets is less than 1% of the aggregate adjusted basis
of all the REMIC Pool's assets. An entity that fails to meet the safe harbor may
nevertheless demonstrate that it holds no more than a DE MINIMIS amount of
nonqualified assets. A REMIC also must provide "reasonable arrangements" to
prevent its residual interest from being held by "disqualified organizations"
and must furnish applicable tax information to transferors or agents that
violate this requirement. The Pooling Agreement for each Series will contain a
provision designed to meet this requirement. See "Taxation of Residual
Certificates--Tax-Related Restrictions on Transfer of Residual
Certificates--Disqualified Organizations."
A qualified mortgage is any obligation that is principally secured by an
interest in real property and that is either transferred to the REMIC Pool on
the Startup Day or is purchased by the REMIC Pool within a three-month period
thereafter pursuant to a fixed price contract in effect on the Startup Day.
Qualified mortgages include whole mortgage loans, such as the Mortgage Loans,
certificates of beneficial interest in a grantor trust that holds mortgage
loans, including certain of the MBS, regular interests in another REMIC, such as
MBS in a trust as to which a REMIC election has been made, loans secured by
timeshare interests and loans secured by shares held by a tenant stockholder in
a cooperative housing corporation, provided, in general, (i) the fair market
value of the real property security (including buildings and structural
components thereof) is at least 80% of the principal balance of the related
Mortgage Loan or mortgage loan underlying the Mortgage Certificate either at
origination or as of the Startup Day (an original loan-to-value ratio of not
more than 125% with respect to the real property security) or (ii) substantially
all the proceeds of the Mortgage Loan or the underlying mortgage loan were used
to acquire, improve or protect an interest in real property that, at the
origination date, was the only security for the Mortgage Loan or underlying
mortgage loan. If the Mortgage Loan has been substantially modified other than
in connection with a default or reasonably foreseeable default, it must meet the
loan-to-value test in (i) of the preceding sentence as of the date of the last
such modification or at closing. A qualified mortgage includes a qualified
replacement mortgage, which is any property that would have been treated as a
qualified mortgage if it were transferred to the REMIC Pool on the Startup Day
and that is received either (i) in exchange for any qualified mortgage within a
three-month period thereafter or (ii) in exchange for a "defective obligation"
within a two-year period
73
thereafter. A "defective obligation" includes (i) a mortgage in default or as to
which default is reasonably foreseeable, (ii) a mortgage as to which a customary
representation or warranty made at the time of transfer to the REMIC Pool has
been breached, (iii) a mortgage that was fraudulently procured by the mortgagor,
and (iv) a mortgage that was not in fact principally secured by real property
(but only if such mortgage is disposed of within 90 days of discovery). A
Mortgage Loan that is "defective" as described in clause (iv) that is not sold
or, if within two years of the Startup Day, exchanged, within 90 days of
discovery, ceases to be a qualified mortgage after such 90-day period.
Permitted investments include cash flow investments, qualified reserve
assets, and foreclosure property. A cash flow investment is an investment,
earning a return in the nature of interest, of amounts received on or with
respect to qualified mortgages for a temporary period, not exceeding 13 months,
until the next scheduled distribution to holders of interests in the REMIC Pool.
A qualified reserve asset is any intangible property held for investment that is
part of any reasonably required reserve maintained by the REMIC Pool to provide
for payments of expenses of the REMIC Pool or amounts due on the regular or
residual interests in the event of defaults (including delinquencies) on the
qualified mortgages, lower than expected reinvestment returns, prepayment
interest shortfalls and certain other contingencies. The reserve fund will be
disqualified if more than 30% of the gross income from the assets in such fund
for the year is derived from the sale or other disposition of property held for
less than three months, unless required to prevent a default on the regular
interests caused by a default on one or more qualified mortgages. A reserve fund
must be reduced "promptly and appropriately" as payments on the Mortgage Loans
are received. Foreclosure property is real property acquired by the REMIC Pool
in connection with the default or imminent default of a qualified mortgage and
generally not held beyond the close of the third calendar year following the
acquisition of the property by the REMIC Pool, with an extension that may be
granted by the Internal Revenue Service (the "Service").
In addition to the foregoing requirements, the various interests in a REMIC
Pool also must meet certain requirements. All of the interests in a REMIC Pool
must be either of the following: (i) one or more classes of regular interests or
(ii) a single class of residual interests on which distributions, if any, are
made pro rata. A regular interest is an interest in a REMIC Pool that is issued
on the Startup Day with fixed terms, is designated as a regular interest, and
unconditionally entitles the holder to receive a specified principal amount (or
other similar amount), and provides that interest payments (or other similar
amounts), if any, at or before maturity either are payable based on a fixed rate
or a qualified variable rate, or consist of a specified, nonvarying portion of
the interest payments on qualified mortgages. Such a specified portion may
consist of a fixed number of basis points, a fixed percentage of the total
interest, or a fixed or qualified variable or inverse variable rate on some or
all of the qualified mortgages minus a different fixed or qualified variable
rate. The specified principal amount of a regular interest that provides for
interest payments consisting of a specified, nonvarying portion of interest
payments on qualified mortgages may be zero. A residual interest is an interest
in a REMIC Pool other than a regular interest that is issued on the Startup Day
and that is designated as a residual interest. An interest in a REMIC Pool may
be treated as a regular interest even if payments of principal with respect to
such interest are subordinated to payments on other regular interests or the
residual interest in the REMIC Pool, and are dependent on the absence of
defaults or delinquencies on qualified mortgages or permitted investments, lower
than reasonably expected returns on permitted investments, unanticipated
expenses incurred by the REMIC Pool or prepayment interest shortfalls.
Accordingly, the Regular Certificates of a series will constitute one or more
classes of regular interests, and the Residual Certificates with respect to that
series will constitute a single class of residual interests on which
distributions are made pro rata.
If an entity, such as the REMIC Pool, fails to comply with one or more of
the ongoing requirements of the Code for REMIC status during any taxable year,
the Code provides that the entity will not be treated as a REMIC for such year
and thereafter. In this event, an entity with multiple classes of ownership
interests may be treated as a separate association taxable as a corporation
under Treasury regulations, and the Regular Certificates may be treated as
equity interests therein. The Code, however, authorizes the Treasury Department
to issue regulations that address situations where failure to meet one or more
of the requirements for REMIC status occurs inadvertently and in good faith, and
disqualification of the REMIC Pool would occur absent regulatory relief.
Investors should be aware,
74
however, that the Conference Committee Report to the Tax Reform Act of 1986 (the
"1986 Act") indicates that the relief may be accompanied by sanctions, such as
the imposition of a corporate tax on all or a portion of the REMIC Pool's income
for the period of time in which the requirements for REMIC status are not
satisfied.
TAXATION OF REGULAR CERTIFICATES
GENERAL
In general, interest, original issue discount and market discount on a
Regular Certificate will be treated as ordinary income to a holder of the
Regular Certificate (the "Regular Certificateholder") as they accrue, and
principal payments on a Regular Certificate will be treated as a return of
capital to the extent of the Regular Certificateholder's basis in the Regular
Certificate allocable thereto. Regular Certificateholders must use the accrual
method of accounting with regard to Regular Certificates, regardless of the
method of accounting otherwise used by such Regular Certificateholders.
ORIGINAL ISSUE DISCOUNT
Accrual Certificates and principal-only Certificates will be, and other
Classes of Regular Certificates may be, issued with "original issue discount"
within the meaning of Code Section 1273(a). Holders of any Class of Regular
Certificates having original issue discount generally must include original
issue discount in ordinary income for federal income tax purposes as it accrues,
in accordance with the constant yield method that takes into account the
compounding of interest, in advance of receipt of the cash attributable to such
income. The following discussion is based in part on Treasury regulations (the
"OID Regulations") under Code Sections 1271 through 1273 and 1275 and in part on
the provisions of the 1986 Act. Regular Certificateholders should be aware,
however, that the OID Regulations do not adequately address certain issues
relevant to prepayable securities, such as the Regular Certificates. To the
extent such issues are not addressed in such regulations, the Depositor intends
to apply the methodology described in the Conference Committee Report to the
1986 Act. No assurance can be provided that the Service will not take a
different position as to those matters not currently addressed by the OID
Regulations. Moreover, the OID Regulations include an anti-abuse rule allowing
the Service to apply or depart from the OID Regulations where necessary or
appropriate to ensure a reasonable tax result in light of the applicable
statutory provisions. A tax result will not be considered unreasonable under the
anti-abuse rule in the absence of a substantial effect on the present value of a
taxpayer's tax liability. Investors are advised to consult their own tax
advisors as to the discussion herein and the appropriate method for reporting
interest and original issue discount with respect to the Regular Certificates.
Each Regular Certificate (except to the extent described below with respect
to a Regular Certificate on which principal is distributed by random lot
("Random Lot Certificates")) will be treated as a single installment obligation
for purposes of determining the original issue discount includible in a Regular
Certificateholder's income. The total amount of original issue discount on a
Regular Certificate is the excess of the "stated redemption price at maturity"
of the Regular Certificate over its "issue price." The issue price of a Class of
Regular Certificates offered pursuant to this Prospectus generally is the first
price at which a substantial amount of Regular Certificates of that Class is
sold to the public (excluding bond houses, brokers and underwriters). Although
unclear under the OID Regulations, the Depositor intends to treat the issue
price of a Class as to which there is no substantial sale as of the issue date
or that is retained by the Depositor as the fair market value of that Class as
of the issue date. The issue price of a Regular Certificate also includes the
amount paid by an initial Regular Certificateholder for accrued interest that
relates to a period prior to the issue date of the Regular Certificate, unless
the Regular Certificateholder elects on its federal income tax return to exclude
such amount from the issue price and to recover it on the first Distribution
Date. The stated redemption price at maturity of a Regular Certificate always
includes the original principal amount of the Regular Certificate, but generally
will not include distributions of stated interest if such interest distributions
constitute "qualified stated interest." Under the OID Regulations, qualified
stated interest generally means interest payable at a single fixed rate or a
qualified variable rate (as described below), provided that such interest
payments are unconditionally payable at intervals of one year or less during the
entire term of the Regular Certificate.
75
Because there is no penalty or default remedy in the case of nonpayment of
interest with respect to a Regular Certificate, it is possible that no interest
on any Class of Regular Certificates will be treated as qualified stated
interest. However, except as provided in the following three sentences or in the
applicable Prospectus Supplement, because the underlying Mortgage Loans provide
for remedies in the event of default, the Depositor intends to treat interest
with respect to the Regular Certificates as qualified stated interest.
Distributions of interest on an Accrual Certificate, or on other Regular
Certificates with respect to which deferred interest will accrue, will not
constitute qualified stated interest, in which case the stated redemption price
at maturity of such Regular Certificates includes all distributions of interest
as well as principal thereon. Likewise, the Depositor intends to treat an
"interest only" class, or a class on which interest is substantially
disproportionate to its principal amount (a so-called "super-premium" class) as
having no qualified stated interest. Where the interval between the issue date
and the first Distribution Date on a Regular Certificate is shorter than the
interval between subsequent Distribution Dates, the interest attributable to the
additional days will be included in the stated redemption price at maturity.
Under a DE MINIMIS rule, original issue discount on a Regular Certificate
will be considered to be zero if such original issue discount is less than 0.25%
of the stated redemption price at maturity of the Regular Certificate multiplied
by the weighted average maturity of the Regular Certificate. For this purpose,
the weighted average maturity of the Regular Certificate is computed as the sum
of the amounts determined by multiplying the number of full years (i.e.,
rounding down partial years) from the issue date until each distribution is
scheduled to be made by a fraction, the numerator of which is the amount of each
distribution included in the stated redemption price at maturity of the Regular
Certificate and the denominator of which is the stated redemption price at
maturity of the Regular Certificate. The Conference Committee Report to the 1986
Act provides that the schedule of such distributions should be determined in
accordance with the assumed rate of prepayment of the Mortgage Loans (the
"Prepayment Assumption") and the anticipated reinvestment rate, if any, relating
to the Regular Certificates. The Prepayment Assumption with respect to a Series
of Regular Certificates will be set forth in the related Prospectus Supplement.
Holders generally must report DE MINIMIS original issue discount pro rata as
principal payments are received, and such income will be capital gain if the
Regular Certificate is held as a capital asset. However, under the OID
Regulations, Regular Certificateholders may elect to accrue all DE MINIMIS
original issue discount as well as market discount and market premium under the
constant yield method. See "Election to Treat All Interest Under the Constant
Yield Method."
A Regular Certificateholder generally must include in gross income for any
taxable year the sum of the "daily portions," as defined below, of the original
issue discount on the Regular Certificate accrued during an accrual period for
each day on which it holds the Regular Certificate, including the date of
purchase but excluding the date of disposition. The Depositor will treat the
monthly period ending on the day before each Distribution Date as the accrual
period. With respect to each Regular Certificate, a calculation will be made of
the original issue discount that accrues during each successive full accrual
period (or shorter period from the date of original issue) that ends on the day
before the related Distribution Date on the Regular Certificate. The Conference
Committee Report to the 1986 Act states that the rate of accrual of original
issue discount is intended to be based on the Prepayment Assumption. Other than
as discussed below with respect to a Random Lot Certificate, the original issue
discount accruing in a full accrual period would be the excess, if any, of (i)
the sum of (a) the present value of all of the remaining distributions to be
made on the Regular Certificate as of the end of that accrual period that are
included in the Regular Certificate's stated redemption price at maturity and
(b) the distributions made on the Regular Certificate during the accrual period
that are included in the Regular Certificate's stated redemption price at
maturity, over (ii) the adjusted issue price of the Regular Certificate at the
beginning of the accrual period. The present value of the remaining
distributions referred to in the preceding sentence is calculated based on (i)
the yield to maturity of the Regular Certificate at the issue date, (ii) events
(including actual prepayments) that have occurred prior to the end of the
accrual period and (iii) the Prepayment Assumption. For these purposes, the
adjusted issue price of a Regular Certificate at the beginning of any accrual
period equals the issue price of the Regular Certificate, increased by the
aggregate amount of original issue discount with respect to the Regular
Certificate that accrued in all prior accrual periods and reduced by the amount
of distributions included
76
in the Regular Certificate's stated redemption price at maturity that were made
on the Regular Certificate in such prior periods. The original issue discount
accruing during any accrual period (as determined in this paragraph) will then
be divided by the number of days in the period to determine the daily portion of
original issue discount for each day in the period. With respect to an initial
accrual period shorter than a full accrual period, the daily portions of
original issue discount must be determined according to an appropriate
allocation under any reasonable method.
Under the method described above, the daily portions of original issue
discount required to be included in income by a Regular Certificateholder
generally will increase to take into account prepayments on the Regular
Certificates as a result of prepayments on the Mortgage Loans that exceed the
Prepayment Assumption, and generally will decrease (but not below zero for any
period) if the prepayments are slower than the Prepayment Assumption. An
increase in prepayments on the Mortgage Loans with respect to a Series of
Regular Certificates can result in both a change in the priority of principal
payments with respect to certain Classes of Regular Certificates and either an
increase or decrease in the daily portions of original issue discount with
respect to such Regular Certificates.
In the case of a Random Lot Certificate, the Depositor intends to determine
the yield to maturity of such Certificate based upon the anticipated payment
characteristics of the Class as a whole under the Prepayment Assumption. In
general, the original issue discount accruing on each Random Lot Certificate in
a full accrual period would be its allocable share of the original issue
discount with respect to the entire Class, as determined in accordance with the
preceding paragraph. However, in the case of a distribution in retirement of the
entire unpaid principal balance of any Random Lot Certificate (or portion of
such unpaid principal balance), (a) the remaining unaccrued original issue
discount allocable to such Certificate (or to such portion) will accrue at the
time of such distribution, and (b) the accrual of original issue discount
allocable to each remaining Certificate of such Class (or the remaining unpaid
principal balance of a partially redeemed Random Lot Certificate after a
distribution of principal has been received) will be adjusted by reducing the
present value of the remaining payments on such Class and the adjusted issue
price of such Class to the extent attributable to the portion of the unpaid
principal balance thereof that was distributed. The Depositor believes that the
foregoing treatment is consistent with the "pro rata prepayment" rules of the
OID Regulations, but with the rate of accrual of original issue discount
determined based on the Prepayment Assumption for the Class as a whole.
Investors are advised to consult their tax advisors as to this treatment.
ACQUISITION PREMIUM
A purchaser of a Regular Certificate at a price greater than its adjusted
issue price but less than its stated redemption price at maturity will be
required to include in gross income the daily portions of the original issue
discount on the Regular Certificate reduced pro rata by a fraction, the
numerator of which is the excess of its purchase price over such adjusted issue
price and the denominator of which is the excess of the remaining stated
redemption price at maturity over the adjusted issue price. Alternatively, such
a subsequent purchaser may elect to treat all such acquisition premium under the
constant yield method, as described below under the heading "Election to Treat
All Interest Under the Constant Yield Method."
VARIABLE RATE REGULAR CERTIFICATES
Regular Certificates may provide for interest based on a variable rate.
Under the OID Regulations, interest is treated as payable at a variable rate if,
generally, (i) the issue price does not exceed the original principal balance by
more than a specified amount and (ii) the interest compounds or is payable at
least annually at current values of (a) one or more "qualified floating rates,"
(b) a single fixed rate and one or more qualified floating rates, (c) a single
"objective rate," or (d) a single fixed rate and a single objective rate that is
a "qualified inverse floating rate." A floating rate is a qualified floating
rate if variations in the rate can reasonably be expected to measure
contemporaneous variations in the cost of newly borrowed funds, where such rate
is subject to a fixed multiple that is greater than 0.65, but not more than
1.35. Such rate may also be increased or decreased by a fixed spread or subject
to a fixed cap or floor, or a cap or floor that is not reasonably expected as of
the issue date to affect the yield of the instrument significantly. An objective
rate (other than a qualified floating rate) is a rate that is
77
determined using a single fixed formula and that is based on objective financial
or economic information, provided that such information is not (i) within the
control of the issuer or a related party or (ii) unique to the circumstances of
the issuer or a related party. A qualified inverse floating rate is a rate equal
to a fixed rate minus a qualified floating rate that inversely reflects
contemporaneous variations in the cost of newly borrowed funds; an inverse
floating rate that is not a qualified floating rate may nevertheless be an
objective rate. A Class of Regular Certificates may be issued under this
Prospectus that does not have a variable rate under the OID Regulations, for
example, a Class that bears different rates at different times during the period
it is outstanding such that it is considered significantly "front-loaded" or
"back-loaded" within the meaning of the OID Regulations. It is possible that
such a Class may be considered to bear "contingent interest" within the meaning
of the OID Regulations. The OID Regulations, as they relate to the treatment of
contingent interest, are by their terms not applicable to Regular Certificates.
However, if final regulations dealing with contingent interest with respect to
Regular Certificates apply the same principles as the OID Regulations, such
regulations may lead to different timing of income inclusion than would be the
case under the OID Regulations. Furthermore, application of such principles
could lead to the characterization of gain on the sale of contingent interest
Regular Certificates as ordinary income. Investors should consult their tax
advisors regarding the appropriate treatment of any Regular Certificate that
does not pay interest at a fixed rate or variable rate as described in this
paragraph.
Under the REMIC Regulations, a Regular Certificate (i) bearing a rate that
qualifies as a variable rate under the OID Regulations that is tied to current
values of a variable rate (or the highest, lowest or average of two or more
variable rates), including a rate based on the average cost of funds of one or
more financial institutions, or a positive or negative multiple of such a rate
(plus or minus a specified number of basis points), or that represents a
weighted average of rates on some or all of the Mortgage Loans, including such a
rate that is subject to one or more caps or floors, or (ii) bearing one or more
such variable rates for one or more periods or one or more fixed rates for one
or more periods, and a different variable rate or fixed rate for other periods
qualifies as a regular interest in a REMIC. Accordingly, unless otherwise
indicated in the applicable Prospectus Supplement, the Depositor intends to
treat Regular Certificates that qualify as regular interests under this rule in
the same manner as obligations bearing a variable rate for original issue
discount reporting purposes.
The amount of original issue discount with respect to a Regular Certificate
bearing a variable rate of interest will accrue in the manner described above
under "Original Issue Discount" with the yield to maturity and future payments
on such Regular Certificate generally to be determined by assuming that interest
will be payable for the life of the Regular Certificate based on the initial
rate (or, if different, the value of the applicable variable rate as of the
pricing date) for the relevant Class. Unless otherwise specified in the
applicable Prospectus Supplement, the Depositor intends to treat such variable
interest as qualified stated interest, other than variable interest on an
interest-only or super-premium Class, which will be treated as non-qualified
stated interest includible in the stated redemption price at maturity. Ordinary
income reportable for any period will be adjusted based on subsequent changes in
the applicable interest rate index.
Although unclear under the OID Regulations, unless required otherwise by
applicable final regulations, the Depositor intends to treat Regular
Certificates bearing an interest rate that is a weighted average of the net
interest rates on Mortgage Loans or Mortgage Certificates having fixed or
adjustable rates, as having qualified stated interest, except to the extent that
initial "teaser" rates cause sufficiently "back-loaded" interest to create more
than DE MINIMIS original issue discount. The yield on such Regular Certificates
for purposes of accruing original issue discount will be a hypothetical fixed
rate based on the fixed rates, in the case of fixed rate Mortgage Loans, and
initial "teaser rates" followed by fully indexed rates, in the case of
adjustable rate Mortgage Loans. In the case of adjustable rate Mortgage Loans,
the applicable index used to compute interest on the Mortgage Loans in effect on
the pricing date (or possibly the issue date) will be deemed to be in effect
beginning with the period in which the first weighted average adjustment date
occurring after the issue date occurs. Adjustments will be made in each accrual
period either increasing or decreasing the amount of ordinary income reportable
to reflect the actual Pass-Through Rate on the Regular Certificates.
78
DEFERRED INTEREST
Under the OID Regulations, all interest on a Regular Certificate as to
which there may be Deferred Interest is includible in the stated redemption
price at maturity thereof. Accordingly, any Deferred Interest that accrues with
respect to a Class of Regular Certificates may constitute income to the holders
of such Regular Certificates prior to the time distributions of cash with
respect to such Deferred Interest are made.
MARKET DISCOUNT
A purchaser of a Regular Certificate also may be subject to the market
discount rules of Code Section 1276 through 1278. Under these Code sections and
the principles applied by the OID Regulations in the context of original issue
discount, "market discount" is the amount by which the purchaser's original
basis in the Regular Certificate (i) is exceeded by the then-current principal
amount of the Regular Certificate or (ii) in the case of a Regular Certificate
having original issue discount, is exceeded by the adjusted issue price of such
Regular Certificate at the time of purchase. Such purchaser generally will be
required to recognize ordinary income to the extent of accrued market discount
on such Regular Certificate as distributions includible in the stated redemption
price at maturity thereof are received, in an amount not exceeding any such
distribution. Such market discount would accrue in a manner to be provided in
Treasury regulations and should take into account the Prepayment Assumption. The
Conference Committee Report to the 1986 Act provides that until such regulations
are issued, such market discount would accrue either (i) on the basis of a
constant interest rate or (ii) in the ratio of stated interest allocable to the
relevant period to the sum of the interest for such period plus the remaining
interest as of the end of such period, or in the case of a Regular Certificate
issued with original issue discount, in the ratio of original issue discount
accrued for the relevant period to the sum of the original issue discount
accrued for such period plus the remaining original issue discount as of the end
of such period. Such purchaser also generally will be required to treat a
portion of any gain on a sale or exchange of the Regular Certificate as ordinary
income to the extent of the market discount accrued to the date of disposition
under one of the foregoing methods, less any accrued market discount previously
reported as ordinary income as partial distributions in reduction of the stated
redemption price at maturity were received. Such purchaser will be required to
defer deduction of a portion of the excess of the interest paid or accrued on
indebtedness incurred to purchase or carry a Regular Certificate over the
interest distributable thereon. The deferred portion of such interest expense in
any taxable year generally will not exceed the accrued market discount on the
Regular Certificate for such year. Any such deferred interest expense is, in
general, allowed as a deduction not later than the year in which the related
market discount income is recognized or the Regular Certificate is disposed of.
As an alternative to the inclusion of market discount in income on the foregoing
basis, the Regular Certificateholder may elect to include market discount in
income currently as it accrues on all market discount instruments acquired by
such Regular Certificateholder in that taxable year or thereafter, in which case
the interest deferral rule will not apply. See "Election to Treat All Interest
Under the Constant Yield Method" below regarding an alternative manner in which
such election may be deemed to be made.
Market discount with respect to a Regular Certificate will be considered to
be zero if such market discount is less than 0.25% of the remaining stated
redemption price at maturity of such Regular Certificate multiplied by the
weighted average maturity of the Regular Certificate (determined as described
above in the third paragraph under "Original Issue Discount") remaining after
the date of purchase. It appears that DE MINIMIS market discount would be
reported in a manner similar to DE MINIMIS original issue discount. See
"Original Issue Discount" above. Treasury regulations implementing the market
discount rules have not yet been issued, and therefore investors should consult
their own tax advisors regarding the application of these rules. Investors
should also consult Revenue Procedure 92-67 concerning the elections to include
market discount in income currently and to accrue market discount on the basis
of the constant yield method.
PREMIUM
A Regular Certificate purchased at a cost greater than its remaining stated
redemption price at maturity generally is considered to be purchased at a
premium. If the Regular Certificateholder holds
79
such Regular Certificate as a "capital asset" within the meaning of Code Section
1221, the Regular Certificateholder may elect under Code Section 171 to amortize
such premium under the constant yield method. Treasury Regulations issued under
Code Section 171 do not, by their terms, apply to Regular Certificates, which
are prepayable based on prepayments on the underlying Mortgage Loans. However,
the Conference Committee Report to the 1986 Act indicates a Congressional intent
that the same rules that will apply to the accrual of market discount on
installment obligations will also apply to amortizing bond premium under Code
Section 171 on installment obligations such as the Regular Certificates,
although it is unclear whether the alternatives to the constant yield method
described above under "Market Discount" are available. Amortizable bond premium
will be treated as an offset to interest income on a Regular Certificate rather
than as a separate deduction item. See "Election to Treat All Interest Under the
Constant Yield Method" below regarding an alternative manner in which the Code
Section 171 election may be deemed to be made.
ELECTION TO TREAT ALL INTEREST UNDER THE CONSTANT YIELD METHOD
A holder of a debt instrument such as a Regular Certificate may elect to
treat all interest that accrues on the instrument using the constant yield
method, with none of the interest being treated as qualified stated interest.
For purposes of applying the constant yield method to a debt instrument subject
to such an election, (i) "interest" includes stated interest, original issue
discount, DE MINIMIS original issue discount, market discount and DE MINIMIS
market discount, as adjusted by any amortizable bond premium or acquisition
premium and (ii) the debt instrument is treated as if the instrument were issued
on the holder's acquisition date in the amount of the holder's adjusted basis
immediately after acquisition. It is unclear whether, for this purpose, the
initial Prepayment Assumption would continue to apply or if a new prepayment
assumption as of the date of the holder's acquisition would apply. A holder
generally may make such an election on an instrument by instrument basis or for
a class or group of debt instruments. However, if the holder makes such an
election with respect to a debt instrument with amortizable bond premium or with
market discount, the holder is deemed to have made elections to amortize bond
premium or to report market discount income currently as it accrues under the
constant yield method, respectively, for all debt instruments acquired by the
holder in the same taxable year or thereafter. The election is made on the
holder's federal income tax return for the year in which the debt instrument is
acquired and is irrevocable except with the approval of the Service. Investors
should consult their own tax advisors regarding the advisability of making such
an election.
SALE OR EXCHANGE OF REGULAR CERTIFICATES
If a Regular Certificateholder sells or exchanges a Regular Certificate,
the Regular Certificateholder will recognize gain or loss equal to the
difference, if any, between the amount received and its adjusted basis in the
Regular Certificate. The adjusted basis of a Regular Certificate generally will
equal the cost of the Regular Certificate to the seller, increased by any
original issue discount or market discount previously included in the seller's
gross income with respect to the Regular Certificate and reduced by amounts
included in the stated redemption price at maturity of the Regular Certificate
that were previously received by the seller, by any amortized premium and by
previously recognized losses.
Except as described above with respect to market discount, and except as
provided in this paragraph, any gain or loss on the sale or exchange of a
Regular Certificate realized by an investor who holds the Regular Certificate as
a capital asset will be capital gain or loss and will be long-term or short-term
depending on whether the Regular Certificate has been held for the long-term
capital gain holding period (currently more than one year). Such gain will be
treated as ordinary income (i) if a Regular Certificate is held as part of a
"conversion transaction" as defined in Code Section 1258(c), up to the amount of
interest that would have accrued on the Regular Certificateholder's net
investment in the conversion transaction at 120% of the appropriate applicable
Federal rate under Code Section 1274(d) in effect at the time the taxpayer
entered into the transaction minus any amount previously treated as ordinary
income with respect to any prior distribution of property that was held as a
part of such transaction, (ii) in the case of a non-corporate taxpayer, to the
extent such taxpayer has made an election under Code Section 163(d)(4) to have
net capital gains taxed as investment income at ordinary rates, or (iii) to the
extent that such gain does not exceed the excess, if any, of (a) the amount that
would have been includible in the gross income of the holder if its yield on
such Regular Certificate
80
were 110% of the applicable Federal rate as of the date of purchase, over (b)
the amount of income actually includible in the gross income of such holder with
respect to the Regular Certificate. In addition, gain or loss recognized from
the sale of a Regular Certificate by certain banks or thrift institutions will
be treated as ordinary income or loss pursuant to Code Section 582(c). Capital
gains of certain non-corporate taxpayers generally are subject to a lower
maximum tax rate than ordinary income of such taxpayers for property held for
more than one year. The maximum tax rate for corporations is the same with
respect to both ordinary income and capital gains.
Holders that recognize a loss on a sale or exchange of a Regular
Certificate for federal income tax purposes in excess of certain threshold
amounts should consult their tax advisors as to the need to file IRS Form 8886
(disclosing certain potential tax shelters) on their federal income tax returns.
TREATMENT OF LOSSES
Holders of Regular Certificates will be required to report income with
respect to Regular Certificates on the accrual method of accounting, without
giving effect to delays or reductions in distributions attributable to defaults
or delinquencies on the Mortgage Loans allocable to a particular class of
Regular Certificates, except to the extent it can be established that such
losses are uncollectible. Accordingly, the holder of a Regular Certificate may
have income, or may incur a diminution in cash flow as a result of a default or
delinquency, but may not be able to take a deduction (subject to the discussion
below) for the corresponding loss until a subsequent taxable year. In this
regard, investors are cautioned that while they may generally cease to accrue
interest income if it reasonably appears that the interest will be
uncollectible, the Internal Revenue Service may take the position that original
issue discount must continue to be accrued in spite of its uncollectibility
until the debt instrument is disposed of in a taxable transaction or becomes
worthless in accordance with the rules of Code Section 166. To the extent the
rules of Code Section 166 regarding bad debts are applicable, it appears that
holders of Regular Certificates that are corporations or that otherwise hold the
Regular Certificates in connection with a trade or business should in general be
allowed to deduct as an ordinary loss any such loss sustained during the taxable
year on account of any such Regular Certificates becoming wholly or partially
worthless, and that, in general, holders of Regular Certificates that are not
corporations and do not hold the Regular Certificates in connection with a trade
or business will be allowed to deduct as a short-term capital loss any loss with
respect to principal sustained during the taxable year on account of a portion
of any class or subclass of such Regular Certificates becoming wholly worthless.
Although the matter is not free from doubt, non-corporate holders of Regular
Certificates should be allowed a bad debt deduction at such time as the
principal balance of any class or subclass of such Regular Certificates is
reduced to reflect losses resulting from any liquidated Mortgage Loans. The
Service, however, could take the position that non-corporate holders will be
allowed a bad debt deduction to reflect such losses only after all Mortgage
Loans remaining in the Trust Fund have been liquidated or such class of Regular
Certificates has been otherwise retired. The Service could also assert that
losses on the Regular Certificates are deductible based on some other method
that may defer such deductions for all holders, such as reducing future cash
flow for purposes of computing original issue discount. This may have the effect
of creating "negative" original issue discount which would be deductible only
against future positive original issue discount or otherwise upon termination of
the Class. Holders of Regular Certificates are urged to consult their own tax
advisors regarding the appropriate timing, amount and character of any loss
sustained with respect to such Regular Certificates. While losses attributable
to interest previously reported as income should be deductible as ordinary
losses by both corporate and non-corporate holders, the Internal Revenue Service
may take the position that losses attributable to accrued original issue
discount may only be deducted as short-term capital losses by non-corporate
holders not engaged in a trade or business. Special loss rules are applicable to
banks and thrift institutions, including rules regarding reserves for bad debts.
Such taxpayers are advised to consult their tax advisors regarding the treatment
of losses on Regular Certificates.
81
TAXATION OF RESIDUAL CERTIFICATES
TAXATION OF REMIC INCOME
Generally, the "daily portions" of REMIC taxable income or net loss will be
includible as ordinary income or loss in determining the federal taxable income
of holders of Residual Certificates ("Residual Certificateholders"), and will
not be taxed separately to the REMIC Pool. The daily portions of REMIC taxable
income or net loss of a Residual Certificateholder are determined by allocating
the REMIC Pool's taxable income or net loss for each calendar quarter ratably to
each day in such quarter and by allocating such daily portion among the Residual
Certificateholders in proportion to their respective holdings of Residual
Certificates in the REMIC Pool on such day. REMIC taxable income is generally
determined in the same manner as the taxable income of an individual using the
accrual method of accounting, except that (i) the limitations on deductibility
of investment interest expense and expenses for the production of income do not
apply, (ii) all bad loans will be deductible as business bad debts and (iii) the
limitation on the deductibility of interest and expenses related to tax-exempt
income will apply. The REMIC Pool's gross income includes interest, original
issue discount income and market discount income, if any, on the Mortgage Loans,
reduced by amortization of any premium on the Mortgage Loans, plus income from
amortization of issue premium, if any, on the Regular Certificates, plus income
on reinvestment of cash flows and reserve assets, plus any cancellation of
indebtedness income upon allocation of realized losses to the Regular
Certificates. The REMIC Pool's deductions include interest and original issue
discount expense on the Regular Certificates, servicing fees on the Mortgage
Loans, other administrative expenses of the REMIC Pool and realized losses on
the Mortgage Loans. The requirement that Residual Certificateholders report
their pro rata share of taxable income or net loss of the REMIC Pool will
continue until there are no Certificates of any class of the related series
outstanding.
The taxable income recognized by a Residual Certificateholder in any
taxable year will be affected by, among other factors, the relationship between
the timing of recognition of interest and original issue discount or market
discount income or amortization of premium with respect to the Mortgage Loans,
on the one hand, and the timing of deductions for interest (including original
issue discount) on the Regular Certificates or income from amortization of issue
premium on the Regular Certificates, on the other hand. In the event that an
interest in the Mortgage Loans is acquired by the REMIC Pool at a discount, and
one or more of such Mortgage Loans is prepaid, the Residual Certificateholder
may recognize taxable income without being entitled to receive a corresponding
amount of cash because (i) the prepayment may be used in whole or in part to
make distributions in reduction of principal on the Regular Certificates and
(ii) the discount on the Mortgage Loans which is includible in income may exceed
the deduction allowed upon such distributions on those Regular Certificates on
account of any unaccrued original issue discount relating to those Regular
Certificates. When there is more than one class of Regular Certificates that
distribute principal sequentially, this mismatching of income and deductions is
particularly likely to occur in the early years following issuance of the
Regular Certificates when distributions in reduction of principal are being made
in respect of earlier classes of Regular Certificates to the extent that such
classes are not issued with substantial discount. If taxable income attributable
to such a mismatching is realized, in general, losses would be allowed in later
years as distributions on the later classes of Regular Certificates are made.
Taxable income may also be greater in earlier years than in later years as a
result of the fact that interest expense deductions, expressed as a percentage
of the outstanding principal amount of such a series of Regular Certificates,
may increase over time as distributions in reduction of principal are made on
the lower yielding classes of Regular Certificates, whereas to the extent that
the REMIC Pool includes fixed rate Mortgage Loans, interest income with respect
to any given Mortgage Loan will remain constant over time as a percentage of the
outstanding principal amount of that loan. Consequently, Residual
Certificateholders must have sufficient other sources of cash to pay any
federal, state or local income taxes due as a result of such mismatching or
unrelated deductions against which to offset such income, subject to the
discussion of "excess inclusions" below under "Limitations on Offset or
Exemption of REMIC Income." The timing of such mismatching of income and
deductions described in this paragraph, if present with respect to a series of
Certificates, may have a significant adverse effect upon the Residual
Certificateholder's after-tax rate of return.
82
BASIS AND LOSSES
The amount of any net loss of the REMIC Pool that may be taken into account
by the Residual Certificateholder is limited to the adjusted basis of the
Residual Certificate as of the close of the quarter (or time of disposition of
the Residual Certificate if earlier), determined without taking into account the
net loss for the quarter. The initial adjusted basis of a purchaser of a
Residual Certificate is the amount paid for such Residual Certificate. Such
adjusted basis will be increased by the amount of taxable income of the REMIC
Pool reportable by the Residual Certificateholder and will be decreased (but not
below zero), first, by a cash distribution from the REMIC Pool and, second, by
the amount of loss of the REMIC Pool reportable by the Residual
Certificateholder. Any loss that is disallowed on account of this limitation may
be carried over indefinitely with respect to the Residual Certificateholder as
to whom such loss was disallowed and may be used by such Residual
Certificateholder only to offset any income generated by the same REMIC Pool.
A Residual Certificateholder will not be permitted to amortize directly the
cost of its Residual Certificate as an offset to its share of the taxable income
of the related REMIC Pool. However, that taxable income will not include cash
received by the REMIC Pool that represents a recovery of the REMIC Pool's basis
in its assets. Such recovery of basis by the REMIC Pool will have the effect of
amortization of the issue price of the Residual Certificates over their life.
However, in view of the possible acceleration of the income of Residual
Certificateholders described above under "Taxation of REMIC Income," the period
of time over which such issue price is effectively amortized may be longer than
the economic life of the Residual Certificates.
A Residual Certificate may have a negative value if the net present value
of anticipated tax liabilities exceeds the present value of anticipated cash
flows. The REMIC Regulations appear to treat the issue price of such a residual
interest as zero rather than such negative amount for purposes of determining
the REMIC Pool's basis in its assets. The preamble to the REMIC Regulations
states that the Service may provide future guidance on the proper tax treatment
of payments made by a transferor of such a residual interest to induce the
transferee to acquire the interest, and Residual Certificateholders should
consult their own tax advisors in this regard.
Further, to the extent that the initial adjusted basis of a Residual
Certificateholder (other than an original holder) in the Residual Certificate is
greater that the corresponding portion of the REMIC Pool's basis in the Mortgage
Loans, the Residual Certificateholder will not recover a portion of such basis
until termination of the REMIC Pool unless future Treasury regulations provide
for periodic adjustments to the REMIC income otherwise reportable by such
holder. The REMIC Regulations currently in effect do not so provide. See
"Treatment of Certain Items of REMIC Income and Expense--Market Discount" below
regarding the basis of Mortgage Loans to the REMIC Pool and "Sale or Exchange of
a Residual Certificate" below regarding possible treatment of a loss upon
termination of the REMIC Pool as a capital loss.
TREATMENT OF CERTAIN ITEMS OF REMIC INCOME AND EXPENSE
Although the Depositor intends to compute REMIC income and expense in
accordance with the Code and applicable regulations, the authorities regarding
the determination of specific items of income and expense are subject to
differing interpretations. The Depositor makes no representation as to the
specific method that it will use for reporting income with respect to the
Mortgage Loans and expenses with respect to the Regular Certificates, and
different methods could result in different timing of reporting of taxable
income or net loss to Residual Certificateholders or differences in capital gain
versus ordinary income.
Original Issue Discount and Premium. Generally, the REMIC Pool's deductions
for original issue discount and income from amortization of issue premium will
be determined in the same manner as original issue discount income on Regular
Certificates as described above under "Taxation of Regular
Certificates--Original Issue Discount" and "--Variable Rate Regular
Certificates," without regard to the DE MINIMIS rule described therein, and
"--Premium."
DEFERRED INTEREST. Any Deferred Interest that accrues with respect to any
adjustable rate Mortgage Loans held by the REMIC Pool will constitute income to
the REMIC Pool and will be treated in a manner
83
similar to the Deferred Interest that accrues with respect to Regular
Certificates as described above under "Taxation of Regular
Certificates--Deferred Interest."
MARKET DISCOUNT. The REMIC Pool will have market discount income in respect
of Mortgage Loans if, in general, the basis of the REMIC Pool allocable to such
Mortgage Loans is exceeded by their unpaid principal balances. The REMIC Pool's
basis in such Mortgage Loans is generally the fair market value of the Mortgage
Loans immediately after the transfer thereof to the REMIC Pool. The REMIC
Regulations provide that such basis is equal in the aggregate to the issue
prices of all regular and residual interests in the REMIC Pool (or the fair
market value thereof at the Closing Date, in the case of a retained Class). In
respect of Mortgage Loans that have market discount to which Code Section 1276
applies, the accrued portion of such market discount would be recognized
currently as an item of ordinary income in a manner similar to original issue
discount. Market discount income generally should accrue in the manner described
above under "Taxation of Regular Certificates--Market Discount."
PREMIUM. Generally, if the basis of the REMIC Pool in the Mortgage Loans
exceeds the unpaid principal balances thereof, the REMIC Pool will be considered
to have acquired such Mortgage Loans at a premium equal to the amount of such
excess. As stated above, the REMIC Pool's basis in Mortgage Loans is the fair
market value of the Mortgage Loans, based on the aggregate of the issue prices
(or the fair market value of retained Classes) of the regular and residual
interests in the REMIC Pool immediately after the transfer thereof to the REMIC
Pool. In a manner analogous to the discussion above under "Taxation of Regular
Certificates--Premium," a REMIC Pool that holds a Mortgage Loan as a capital
asset under Code Section 1221 may elect under Code Section 171 to amortize
premium on whole mortgage loans or mortgage loans underlying MBS that were
originated after September 27, 1985 or MBS that are REMIC regular interests
under the constant yield method. Amortizable bond premium will be treated as an
offset to interest income on the Mortgage Loans, rather than as a separate
deduction item. To the extent that the mortgagors with respect to the Mortgage
Loans are individuals, Code Section 171 will not be available for premium on
Mortgage Loans (including underlying mortgage loans) originated on or prior to
September 27, 1985. Premium with respect to such Mortgage Loans may be
deductible in accordance with a reasonable method regularly employed by the
holder thereof. The allocation of such premium pro rata among principal payments
should be considered a reasonable method; however, the Service may argue that
such premium should be allocated in a different manner, such as allocating such
premium entirely to the final payment of principal.
LIMITATIONS ON OFFSET OR EXEMPTION OF REMIC INCOME
A portion or all of the REMIC taxable income includible in determining the
federal income tax liability of a Residual Certificateholder will be subject to
special treatment. That portion, referred to as the "excess inclusion," is equal
to the excess of REMIC taxable income for the calendar quarter allocable to a
Residual Certificate over the daily accruals for such quarterly period of (i)
120% of the long-term applicable Federal rate that would have applied to the
Residual Certificate (if it were a debt instrument) on the Startup Day under
Code Section 1274(d), multiplied by (ii) the adjusted issue price of such
Residual Certificate at the beginning of such quarterly period. For this
purpose, the adjusted issue price of a Residual Certificate at the beginning of
a quarter is the issue price of the Residual Certificate, plus the amount of
such daily accruals of REMIC income described in this paragraph for all prior
quarters, decreased by any distributions made with respect to such Residual
Certificate prior to the beginning of such quarterly period. Accordingly, the
portion of the REMIC Pool's taxable income that will be treated as excess
inclusions will be a larger portion of such income as the adjusted issue price
of the Residual Certificates diminishes.
The portion of a Residual Certificateholder's REMIC taxable income
consisting of the excess inclusions generally may not be offset by other
deductions, including net operating loss carryforwards, on such Residual
Certificateholder's return. However, net operating loss carryovers are
determined without regard to excess inclusion income. Further, if the Residual
Certificateholder is an organization subject to the tax on unrelated business
income imposed by Code Section 511, the Residual Certificateholder's excess
inclusions will be treated as unrelated business taxable income of such Residual
Certificateholder for purposes of Code Section 511. In addition, REMIC taxable
income is subject to 30% withholding tax with respect to certain persons who are
not U.S. Persons (as defined
84
below under "Tax-Related Restrictions on Transfer of Residual
Certificates--Foreign Investors"), and the portion thereof attributable to
excess inclusions is not eligible for any reduction in the rate of withholding
tax (by treaty or otherwise). See "Taxation of Certain Foreign
Investors--Residual Certificates" below. Finally, if a real estate investment
trust or a regulated investment company owns a Residual Certificate, a portion
(allocated under Treasury regulations yet to be issued) of dividends paid by the
real estate investment trust or a regulated investment company could not be
offset by net operating losses of its shareholders, would constitute unrelated
business taxable income for tax-exempt shareholders, and would be ineligible for
reduction of withholding to certain persons who are not U.S. Persons.
The Code provides three rules for determining the effect of excess
inclusions on the alternative minimum taxable income of a Residual
Certificateholder. First, alternative minimum taxable income for a Residual
Certificateholder is determined without regard to the special rule, discussed
above, that taxable income cannot be less than excess inclusions. Second, a
Residual Certificateholder's alternative minimum taxable income for a taxable
year cannot be less than the excess inclusions for the year. Third, the amount
of any alternative minimum tax net operating loss deduction must be computed
without regard to any excess inclusions.
TAX-RELATED RESTRICTIONS ON TRANSFER OF RESIDUAL CERTIFICATES
DISQUALIFIED ORGANIZATIONS. If any legal or beneficial interest in a
Residual Certificate is transferred to a Disqualified Organization (as defined
below), a tax would be imposed in an amount equal to the product of (i) the
present value of the total anticipated excess inclusions with respect to such
Residual Certificate for periods after the transfer and (ii) the highest
marginal federal income tax rate applicable to corporations. The REMIC
Regulations provide that the anticipated excess inclusions are based on actual
prepayment experience to the date of the transfer and projected payments based
on the Prepayment Assumption. The present value rate equals the applicable
Federal rate under Code Section 1274(d) as of the date of the transfer for a
term ending with the last calendar quarter in which excess inclusions are
expected to accrue. Such a tax generally would be imposed on the transferor of
the Residual Certificate, except that where such transfer is through an agent
(including a broker, nominee or other middleman) for a Disqualified
Organization, the tax would instead be imposed on such agent. However, a
transferor of a Residual Certificate would in no event be liable for such tax
with respect to a transfer if the transferee furnishes to the transferor an
affidavit that the transferee is not a Disqualified Organization and, as of the
time of the transfer, the transferor does not have actual knowledge that such
affidavit is false. The tax also may be waived by the Treasury Department if the
Disqualified Organization promptly disposes of the residual interest and the
transferor pays income tax at the highest corporate rate on the excess
inclusions for the period the Residual Certificate is actually held by the
Disqualified Organization.
In addition, if a "Pass-Through Entity" (as defined below) has excess
inclusion income with respect to a Residual Certificate during a taxable year
and a Disqualified Organization is the record holder of an equity interest in
such entity, then a tax is imposed on such entity equal to the product of (i)
the amount of excess inclusions on the Residual Certificate that are allocable
to the interest in the Pass-Through Entity during the period such interest is
held by such Disqualified Organization, and (ii) the highest marginal federal
corporate income tax rate. Such tax would be deductible from the ordinary gross
income of the Pass-Through Entity for the taxable year. The Pass-Through Entity
would not be liable for such tax if it has received an affidavit from such
record holder that it is not a Disqualified Organization or stating such
holder's taxpayer identification number and, during the period such person is
the record holder of the Residual Certificate, the Pass-Through Entity does not
have actual knowledge that such affidavit is false.
If an "electing large partnership" holds a Residual Certificate, all
interests in the electing large partnership are treated as held by Disqualified
Organizations for purposes of the tax imposed upon a Pass-Through Entity by
section 860E(c) of the Code. An exception to this tax, otherwise available to a
Pass-Through Entity that is furnished certain affidavits by record holders of
interests in the entity and that does not know such affidavits are false, is not
available to an electing large partnership.
For these purposes, (i) "Disqualified Organization" means the United
States, any state or political subdivision thereof, any foreign government, any
international organization, any agency or
85
instrumentality of any of the foregoing (provided, that such term does not
include an instrumentality if all of its activities are subject to tax and a
majority of its board of directors is not selected by any such governmental
entity), any cooperative organization furnishing electric energy or providing
telephone service to persons in rural areas as described in Code Section
1381(a)(2)(C), and any organization (other than a farmers' cooperative described
in Code Section 521) that is exempt from taxation under the Code unless such
organization is subject to the tax on unrelated business income imposed by Code
Section 511, (ii) "Pass-Through Entity" means any regulated investment company,
real estate investment trust, common trust fund, partnership, trust or estate
and certain corporations operating on a cooperative basis (except as may be
provided in Treasury regulations, any person holding an interest in a
Pass-Through Entity as a nominee for another will, with respect to such
interest, be treated as a Pass-Through Entity) and (iii) an "electing large
partnership" means any partnership having more than 100 members during the
preceding tax year (other than certain service partnerships and commodity
pools), which elect to apply simplified reporting provisions under the Code.
The Pooling Agreement with respect to a series of Certificates will provide
that no legal or beneficial interest in a Residual Certificate may be
transferred unless (i) the proposed transferee provides to the transferor and
the Trustee an affidavit providing its taxpayer identification number and
stating that such transferee is the beneficial owner of the Residual
Certificate, is not a Disqualified Organization and is not purchasing such
Residual Certificates on behalf of a Disqualified Organization (i.e., as a
broker, nominee or middleman thereof), and (ii) the transferor provides a
statement in writing to the Depositor and the Trustee that it has no actual
knowledge that such affidavit is false. Moreover, the Pooling Agreement will
provide that any attempted or purported transfer in violation of these transfer
restrictions will be null and void and will vest no rights in any purported
transferee. Each Residual Certificate with respect to a series will bear a
legend referring to such restrictions on transfer, and each Residual
Certificateholder will be deemed to have agreed, as a condition of ownership
thereof, to any amendments to the related Pooling Agreement required under the
Code or applicable Treasury regulations to effectuate the foregoing
restrictions. Information necessary to compute an applicable excise tax must be
furnished to the Service and to the requesting party within 60 days of the
request, and the Depositor or the Trustee may charge a fee for computing and
providing such information.
NONECONOMIC RESIDUAL INTERESTS. The REMIC Regulations would disregard
certain transfers of Residual Certificates, in which case the transferor would
continue to be treated as the owner of the Residual Certificates and thus would
continue to be subject to tax on its allocable portion of the net income of the
REMIC Pool. Under the REMIC Regulations, a transfer of a "noneconomic residual
interest" (as defined below) to a Residual Certificateholder (other than a
Residual Certificateholder who is not a U.S. Person, as defined below under
"Foreign Investors") is disregarded for all federal income tax purposes if a
significant purpose of the transferor is to impede the assessment or collection
of tax. A residual interest in a REMIC (including a residual interest with a
positive value at issuance) is a "noneconomic residual interest" unless, at the
time of the transfer, (i) the present value of the expected future distributions
on the residual interest at least equals the product of the present value of the
anticipated excess inclusions and the highest corporate income tax rate in
effect for the year in which the transfer occurs, and (ii) the transferor
reasonably expects that the transferee will receive distributions from the REMIC
at or after the time at which taxes accrue on the anticipated excess inclusions
in an amount sufficient to satisfy the accrued taxes. The anticipated excess
inclusions and the present value rate are determined in the same manner as set
forth above under "Disqualified Organizations." The REMIC Regulations explain
that a significant purpose to impede the assessment or collection of tax exists
if the transferor, at the time of the transfer, either knew or should have known
that the transferee would be unwilling or unable to pay taxes due on its share
of the taxable income of the REMIC. A safe harbor is provided if: (i) the
transferor conducted, at the time of the transfer, a reasonable investigation of
the financial condition of the transferee and found that the transferee
historically had paid its debts as they came due and found no significant
evidence to indicate that the transferee would not continue to pay its debts as
they came due in the future, (ii) the transferee represents to the transferor
that it understands that, as the holder of the noneconomic residual interest,
the transferee may incur tax liabilities in excess of cash flows generated by
the interest and that the transferee intends to pay taxes associated with
holding the residual interest as they become due and (iii) transferee represents
that it will not cause income from the Residual Certificate to be attributable
to a foreign permanent establishment
86
or fixed base, within the meaning of an applicable income tax treaty, of the
transferee or any other U.S. Person. The transferor must have no actual
knowledge or reason to know that those statements are false. The Pooling
Agreement with respect to each series of Certificates will require the
transferee of a Residual Certificate to certify to the matters in clauses
(i)-(iii) above as part of the affidavit described above under the heading
"Disqualified Organizations." The transferor must have no actual knowledge or
reason to know that such statements are false.
In addition to the three conditions set forth above for the transferor of a
noneconomic residual interest to be presumed not to have knowledge that the
transferee would be unwilling or unable to pay taxes due on its share of the
taxable income of the REMIC, recently issued Treasury regulations require a
fourth condition for the transferor to be presumed to lack such knowledge. The
condition must be satisfied in one of the two alternative ways for the
transferor to have a "safe harbor" against ignoring the transfer: Either
(a) the present value of the anticipated tax liabilities associated with
holding the noneconomic residual interest must not exceed the sum of:
(i) the present value of any consideration given to the transferee
to acquire the interest;
(ii) the present value of the expected future distributions on the
interest;
(iii) the present value of the anticipated tax savings associated
with holding the interest as the REMIC generates losses.
For purposes of the computations under this "minimum transfer price"
alternative, the transferee is assumed to pay tax at the highest rate of tax
specified in Section 11(b)(1) of the Code (currently 35%) or, in certain
circumstances the alternative minimum tax rate. Further, present values
generally are computed using a discount rate equal to the short-term Federal
rate set forth in Section 1274(d) of the Code for the month of such transfer and
the compounding period used by the transferee; or
(b) (i) the transferee must be a domestic "C" corporation (other than a
corporation exempt from taxation of a regulated investment
company or real estate investment trust) that meets certain
gross and net assets tests (generally, $100 million of gross
assets and $10 million of net assets for the current year and
the two preceding fiscal years);
(ii) the transferee must agree in writing that it will transfer the
Residual Certificate only to a subsequent transferee that is an
eligible corporation and meets the requirements for a safe
harbor transfer; and
(iii) the facts and circumstances known to the transferor on or
before the date of the transfer must not reasonably indicate
that the taxes associated with ownership of the Residual
Certificate will not be paid by the transferee.
FOREIGN INVESTORS. The REMIC Regulations provide that the transfer of a
Residual Certificate that has "tax avoidance potential" to a "foreign person"
will be disregarded for all federal tax purposes. This rule appears intended to
apply to a transferee who is not a "U.S. Person" (as defined below), unless such
transferee's income is effectively connected with the conduct of a trade or
business within the United States. A Residual Certificate is deemed to have tax
avoidance potential unless, at the time of the transfer, (i) the future value of
expected distributions equals at least 30% of the anticipated excess inclusions
after the transfer, and (ii) the transferor reasonably expects that the
transferee will receive sufficient distributions from the REMIC Pool at or after
the time at which the excess inclusions accrue and prior to the end of the next
succeeding taxable year for the accumulated withholding tax liability to be
paid. If the non-U.S. Person transfers the Residual Certificate back to a U.S.
Person, the transfer will be disregarded and the foreign transferor will
continue to be treated as the owner unless arrangements are made so that the
transfer does not have the effect of allowing the transferor to avoid tax on
accrued excess inclusions.
The Prospectus Supplement relating to a series of Certificates may provide
that a Residual Certificate may not be purchased by or transferred to any person
that is not a U.S. Person or may describe the circumstances and restrictions
pursuant to which such a transfer may be made. The term
87
"U.S. Person" means a citizen or resident of the United States, a corporation,
partnership (except to the extent provided in applicable Treasury regulations)
or other entity created or organized in or under the laws of the United States,
any state thereof or the District of Columbia, an estate that is subject to
United States federal income tax regardless of the source of its income or a
trust if a court within the United States is able to exercise primary
supervision over the administration of such trust, and one or more United States
persons have the authority to control all substantial decisions of such trust
(or, to the extent provided in applicable Treasury regulations, certain trusts
in existence on August 20, 1996 which are eligible to elect to be treated as
U.S. Persons if such election has been made).
SALE OR EXCHANGE OF A RESIDUAL CERTIFICATE
Upon the sale or exchange of a Residual Certificate, the Residual
Certificateholder will recognize gain or loss equal to the excess, if any, of
the amount realized over the adjusted basis (as described above under "Taxation
of Residual Certificates--Basis and Losses") of such Residual Certificateholder
in such Residual Certificate at the time of the sale or exchange. In addition to
reporting the taxable income of the REMIC Pool, a Residual Certificateholder
will have taxable income to the extent that any cash distribution to it from the
REMIC Pool exceeds such adjusted basis on that Distribution Date. Such income
will be treated as gain from the sale or exchange of the Residual Certificate.
It is possible that the termination of the REMIC Pool may be treated as a sale
or exchange of a Residual Certificateholder's Residual Certificate, in which
case, if the Residual Certificateholder has an adjusted basis in such Residual
Certificateholder's Residual Certificate remaining when its interest in the
REMIC Pool terminates, and if such Residual Certificateholder holds such
Residual Certificate as a capital asset under Code Section 1221, then such
Residual Certificateholder will recognize a capital loss at that time in the
amount of such remaining adjusted basis.
Any gain on the sale of a Residual Certificate will be treated as ordinary
income (i) if a Residual Certificate is held as part of a "conversion
transaction" as defined in Code Section 1258(c), up to the amount of interest
that would have accrued on the Residual Certificateholder's net investment in
the conversion transaction at 120% of the appropriate applicable Federal rate in
effect at the time the taxpayer entered into the transaction minus any amount
previously treated as ordinary income with respect to any prior disposition of
property that was held as a part of such transaction or (ii) in the case of a
non-corporate taxpayer, to the extent such taxpayer has made an election under
Code Section 163(d)(4) to have net capital gains taxed as investment income at
ordinary income rates. In addition, gain or loss recognized from the sale of a
Residual Certificate by certain banks or thrift institutions will be treated as
ordinary income or loss pursuant to Code Section 582(c).
The Conference Committee Report to the 1986 Act provides that, except as
provided in Treasury regulations yet to be issued, the wash sale rules of Code
Section 1091 will apply to dispositions of Residual Certificates where the
seller of the Residual Certificate, during the period beginning six months
before the sale or disposition of the Residual Certificate and ending six months
after such sale or disposition, acquires (or enters into any other transaction
that results in the application of Section 1091) any residual interest in any
REMIC or any interest in a "taxable mortgage pool" (such as a non-REMIC owner
trust) that is economically comparable to a Residual Certificate.
MARK TO MARKET REGULATIONS
The Service has issued regulations under Code Section 475 relating to the
requirement that a securities dealer mark to market securities held for sale to
customers. These regulations provide that, for purposes of this mark-to-market
requirement, a Residual Certificate is not treated as a security and thus may
not be marked to market.
TAXES THAT MAY BE IMPOSED ON THE REMIC POOL
PROHIBITED TRANSACTIONS
Income from certain transactions by the REMIC Pool, called prohibited
transactions, will not be part of the calculation of income or loss includible
in the federal income tax returns of Residual Certificateholders, but rather
will be taxed directly to the REMIC Pool at a 100% rate. Prohibited transactions
generally include (i) the disposition of a qualified mortgage other than for
(a) substitution
88
within two years of the Startup Day for a defective (including a defaulted)
obligation (or repurchase in lieu of substitution of a defective (including a
defaulted) obligation at any time) or for any qualified mortgage within three
months of the Startup Day, (b) foreclosure, default or imminent default of a
qualified mortgage, (c) bankruptcy or insolvency of the REMIC Pool or (d) a
qualified (complete) liquidation, (ii) the receipt of income from assets that
are not the type of mortgages or investments that the REMIC Pool is permitted to
hold, (iii) the receipt of compensation for services or (iv) the receipt of gain
from disposition of cash flow investments other than pursuant to a qualified
liquidation. Notwithstanding (i) and (iv), it is not a prohibited transaction to
sell REMIC Pool property to prevent a default on Regular Certificates as a
result of a default on qualified mortgages or to facilitate a clean-up call
(generally, an optional termination to save administrative costs when no more
than a small percentage of the Certificates is outstanding). The REMIC
Regulations indicate that the modification of a Mortgage Loan generally will not
be treated as a disposition if it is occasioned by a default or reasonably
foreseeable default, an assumption of the Mortgage Loan, the waiver of a
due-on-sale or due-on-encumbrance clause or the conversion of an interest rate
by a mortgagor pursuant to the terms of a convertible adjustable rate Mortgage
Loan.
CONTRIBUTIONS TO THE REMIC POOL AFTER THE STARTUP DAY
In general, the REMIC Pool will be subject to a tax at a 100% rate on the
value of any property contributed to the REMIC Pool after the Startup Day.
Exceptions are provided for cash contributions to the REMIC Pool (i) during the
three months following the Startup Day, (ii) made to a qualified reserve fund by
a Residual Certificateholder, (iii) in the nature of a guarantee, (iv) made to
facilitate a qualified liquidation or clean-up call and (v) as otherwise
permitted in Treasury regulations yet to be issued.
NET INCOME FROM FORECLOSURE PROPERTY
The REMIC Pool will be subject to federal income tax at the highest
corporate rate on "net income from foreclosure property," determined by
reference to the rules applicable to real estate investment trusts. Generally,
property acquired by deed in lieu of foreclosure would be treated as
"foreclosure property" for a period ending with the third calendar year
following the year of acquisition of such property, with a possible extension.
Net income from foreclosure property generally means gain from the sale of a
foreclosure property that is inventory property and gross income from
foreclosure property other than qualifying rents and other qualifying income for
a real estate investment trust.
It is not anticipated that the REMIC Pool will receive income or
contributions subject to tax under the preceding three paragraphs, except as
described in the applicable Prospectus Supplement with respect to net income
from foreclosure property on a commercial or multifamily residential property
that secured a Mortgage Loan.
LIQUIDATION OF THE REMIC POOL
If a REMIC Pool adopts a plan of complete liquidation, within the meaning
of Code Section 860F(a)(4)(A)(i), which may be accomplished by designating in
the REMIC Pool's final tax return a date on which such adoption is deemed to
occur, and sells all of its assets (other than cash) within a 90-day period
beginning on the date of the adoption of the plan of liquidation, the REMIC Pool
will not be subject to the prohibited transaction rules on the sale of its
assets, provided that the REMIC Pool credits or distributes in liquidation all
of the sale proceeds plus its cash (other than amounts retained to meet claims)
to holders of Regular Certificates and Residual Certificateholders within the
90-day period.
ADMINISTRATIVE MATTERS
The REMIC Pool will be required to maintain its books on a calendar year
basis and to file federal income tax returns for federal income tax purposes in
a manner similar to a partnership. The form for such income tax return is Form
1066, U.S. Real Estate Mortgage Investment Conduit (REMIC) Income Tax Return.
The Trustee will be required to sign the REMIC Pool's returns. Treasury
regulations provide that, except where there is a single Residual
Certificateholder for an entire taxable year, the REMIC Pool will be subject to
the procedural and administrative rules of the Code applicable to partnerships,
including the determination by the Service of any adjustments to, among other
things, items of REMIC
89
income, gain, loss, deduction or credit in a unified administrative proceeding.
The Residual Certificateholder owning the largest percentage interest in the
Residual Certificates will be obligated to act as "tax matters person," as
defined in applicable Treasury regulations, with respect to the REMIC Pool. Each
Residual Certificateholder will be deemed, by acceptance of such Residual
Certificates, to have agreed (i) to the appointment of the tax matters person as
provided in the preceding sentence and (ii) to the irrevocable designation of
the Master Servicer as agent for performing the functions of the tax matters
person.
LIMITATIONS ON DEDUCTION OF CERTAIN EXPENSES
An investor who is an individual, estate or trust will be subject to
limitation with respect to certain itemized deductions described in Code Section
67, to the extent that such itemized deductions, in the aggregate, do not exceed
2% of the investor's adjusted gross income. In addition, Code Section 68
provides that itemized deductions otherwise allowable for a taxable year of an
individual taxpayer will be reduced by the lesser of (i) 3% of the excess, if
any, of adjusted gross income over a threshold amount or (ii) 80% of the amount
of itemized deductions otherwise allowable for such year. These limitations will
be phased out over the period 2006-2010. In the case of a REMIC Pool, such
deductions may include deductions under Code Section 212 for the servicing fee
and all administrative and other expenses relating to the REMIC Pool, or any
similar expenses allocated to the REMIC Pool with respect to a regular interest
it holds in another REMIC. Such investors who hold REMIC Certificates either
directly or indirectly through certain pass-through entities may have their pro
rata share of such expenses allocated to them as additional gross income, but
may be subject to such limitation on deductions. In addition, such expenses are
not deductible at all for purposes of computing the alternative minimum tax, and
may cause such investors to be subject to significant additional tax liability.
Temporary Treasury regulations provide that the additional gross income and
corresponding amount of expenses generally are to be allocated entirely to the
holders of Residual Certificates in the case of a REMIC Pool that would not
qualify as a fixed investment trust in the absence of a REMIC election. However,
such additional gross income and limitation on deductions will apply to the
allocable portion of such expenses to holders of Regular Certificates, as well
as holders of Residual Certificates, where such Regular Certificates are issued
in a manner that is similar to pass-through certificates in a fixed investment
trust. In general, such allocable portion will be determined based on the ratio
that a REMIC Certificateholder's income, determined on a daily basis, bears to
the income of all holders of Regular Certificates and Residual Certificates with
respect to a REMIC Pool. As a result, individuals, estates or trusts holding
REMIC Certificates (either directly or indirectly through a grantor trust,
partnership, S corporation, REMIC, or certain other pass-through entities
described in the foregoing temporary Treasury regulations) may have taxable
income in excess of the interest income at the pass-through rate on Regular
Certificates that are issued in a single Class or otherwise consistently with
fixed investment trust status or in excess of cash distributions for the related
period on Residual Certificates. Unless otherwise indicated in the applicable
Prospectus Supplement, all such expenses will be allocable to the Residual
Certificates.
TAXATION OF CERTAIN FOREIGN INVESTORS
REGULAR CERTIFICATES
Interest, including original issue discount, distributable to Regular
Certificateholders who are non-resident aliens, foreign corporations, or other
Non-U.S. Persons (as defined below), will be considered "portfolio interest"
and, therefore, generally will not be subject to 30% United States withholding
tax, provided that such Non-U.S. Person (i) is not a "10-percent shareholder"
within the meaning of Code Section 871(h)(3)(B) or a controlled foreign
corporation described in Code Section 881(c)(3)(C) and (ii) provides the
Trustee, or the person who would otherwise be required to withhold tax from such
distributions under Code Section 1441 or 1442, with an appropriate statement,
signed under penalties of perjury, identifying the beneficial owner and stating,
among other things, that the beneficial owner of the Regular Certificate is a
Non-U.S. Person. If such statement, or any other required statement, is not
provided, 30% withholding will apply unless reduced or eliminated pursuant to an
applicable tax treaty or unless the interest on the Regular Certificate is
effectively connected with the conduct of a trade or business within the United
States by such Non-U.S. Person. In the latter case, such Non-U.S. Person will
90
be subject to United States federal income tax at regular rates. Prepayment
Premiums distributable to Regular Certificateholders who are Non-U.S. Persons
may be subject to 30% United States withholding tax. Investors who are Non-U.S.
Persons should consult their own tax advisors regarding the specific tax
consequences to them of owning a Regular Certificate. The term "Non-U.S. Person"
means any person who is not a U.S. Person.
The IRS issued final regulations which would provide alternative methods of
satisfying the beneficial ownership certification requirement described above.
For example, these regulations will require, in the case of Regular Certificates
held by a foreign partnership, that (x) the certification described above be
provided by the partners rather than by the foreign partnership and (y) the
partnership provide certain information, including a United States taxpayer
identification number. A look-through rule would apply in the case of tiered
partnerships. Non-U.S. Persons should consult their own tax advisors concerning
the application of the certification requirements in these regulations.
RESIDUAL CERTIFICATES
The Conference Committee Report to the 1986 Act indicates that amounts paid
to Residual Certificateholders who are Non-U.S. Persons are treated as interest
for purposes of the 30% (or lower treaty rate) United States withholding tax.
Treasury regulations provide that amounts distributed to Residual
Certificateholders may qualify as "portfolio interest," subject to the
conditions described in "Regular Certificates" above, but only to the extent
that (i) the Mortgage Loans (including mortgage loans underlying MBS) were
issued after July 18, 1984 and (ii) the Trust Fund or segregated pool of assets
therein (as to which a separate REMIC election will be made), to which the
Residual Certificate relates, consists of obligations issued in "registered
form" within the meaning of Code Section 163(f)(1). Generally, whole mortgage
loans will not be, but MBS and regular interests in another REMIC Pool will be,
considered obligations issued in registered form. Furthermore, a Residual
Certificateholder will not be entitled to any exemption from the 30% withholding
tax (or lower treaty rate) to the extent of that portion of REMIC taxable income
that constitutes an "excess inclusion." See "Taxation of Residual
Certificates--Limitations on Offset or Exemption of REMIC Income." If the
amounts paid to Residual Certificateholders who are Non-U.S. Persons are
effectively connected with the conduct of a trade or business within the United
States by such Non-U.S. Persons, 30% (or lower treaty rate) withholding will not
apply. Instead, the amounts paid to such Non-U.S. Persons will be subject to
United States federal income tax at regular rates. If 30% (or lower treaty rate)
withholding is applicable, such amounts generally will be taken into account for
purposes of withholding only when paid or otherwise distributed (or when the
Residual Certificate is disposed of) under rules similar to withholding upon
disposition of debt instruments that have original issue discount. See
"Tax-Related Restrictions on Transfer of Residual Certificates--Foreign
Investors" above concerning the disregard of certain transfers having "tax
avoidance potential." Investors who are Non-U.S. Persons should consult their
own tax advisors regarding the specific tax consequences to them of owning
Residual Certificates.
BACKUP WITHHOLDING
Distributions made on the Regular Certificates, and proceeds from the sale
of the Regular Certificates to or through certain brokers, may be subject to a
"backup" withholding tax under Code Section 3406 of 28% (which rate will
increase to 31% after 2010) on "reportable payments" (including interest
distributions, original issue discount, and, under certain circumstances,
principal distributions) unless the Regular Certificateholder complies with
certain reporting and/or certification procedures, including the provision of
its taxpayer identification number to the Trustee, its agent or the broker who
effected the sale of the Regular Certificate, or such Certificateholder is
otherwise an exempt recipient under applicable provisions of the Code. Any
amounts to be withheld from distribution on the Regular Certificates would be
refunded by the Service or allowed as a credit against the Regular
Certificateholder's federal income tax liability. Investors are urged to contact
their own tax advisors regarding the application to them of backup withholding
and information reporting.
91
REPORTING REQUIREMENTS
Reports of accrued interest, original issue discount and information
necessary to compute the accrual of any market discount on the Regular
Certificates will be made annually to the Service and to individuals, estates,
non-exempt and non-charitable trusts, and partnerships who are either holders of
record of Regular Certificates or beneficial owners who own Regular Certificates
through a broker or middleman as nominee. All brokers, nominees and all other
non-exempt holders of record of Regular Certificates (including corporations,
non-calendar year taxpayers, securities or commodities dealers, real estate
investment trusts, investment companies, common trust funds, thrift institutions
and charitable trusts) may request such information for any calendar quarter by
telephone or in writing by contacting the person designated in Service
Publication 938 with respect to a particular series of Regular Certificates.
Holders through nominees must request such information from the nominee.
The Service's Form 1066 has an accompanying Schedule Q, Quarterly Notice to
Residual Interest Holders of REMIC Taxable Income or Net Loss Allocation.
Treasury regulations require that Schedule Q be furnished by the REMIC Pool to
each Residual Certificateholder by the end of the month following the close of
each calendar quarter (41 days after the end of a quarter under proposed
Treasury regulations) in which the REMIC Pool is in existence.
Treasury regulations require that, in addition to the foregoing
requirements, information must be furnished quarterly to Residual
Certificateholders, furnished annually, if applicable, to holders of Regular
Certificates, and filed annually with the Service concerning Code Section 67
expenses (see "Limitations on Deduction of Certain Expenses" above) allocable to
such holders. Furthermore, under such regulations, information must be furnished
quarterly to Residual Certificateholders, furnished annually to holders of
Regular Certificates, and filed annually with the Service concerning the
percentage of the REMIC Pool's assets meeting the qualified asset tests
described above under "Status of REMIC Certificates."
FEDERAL INCOME TAX CONSEQUENCES FOR CERTIFICATES
AS TO WHICH NO REMIC ELECTION IS MADE
STANDARD CERTIFICATES
GENERAL
In the event that no election is made to treat a Trust Fund (or a
segregated pool of assets therein) with respect to a series of Certificates that
are not designated as "Stripped Certificates," as described below, as a REMIC
(Certificates of such a series hereinafter referred to as "Standard
Certificates"), in the opinion of Cadwalader, Wickersham & Taft LLP or Latham &
Watkins LLP, counsel to the Depositor, the Trust Fund will be classified as a
grantor trust under subpart E, Part 1 of subchapter J of the Code and not as an
association taxable as a corporation or a "taxable mortgage pool" within the
meaning of Code Section 7701(i). Where there is no fixed retained yield with
respect to the Mortgage Loans underlying the Standard Certificates, the holder
of each such Standard Certificate (a "Standard Certificateholder") in such
series will be treated as the owner of a pro rata undivided interest in the
ordinary income and corpus portions of the Trust Fund represented by its
Standard Certificate and will be considered the beneficial owner of a pro rata
undivided interest in each of the Mortgage Loans, subject to the discussion
below under "Recharacterization of Servicing Fees." Accordingly, the holder of a
Standard Certificate of a particular series will be required to report on its
federal income tax return its pro rata share of the entire income from the
Mortgage Loans represented by its Standard Certificate, including interest at
the coupon rate on such Mortgage Loans, original issue discount (if any),
prepayment fees, assumption fees, and late payment charges received by the
Master Servicer, in accordance with such Standard Certificateholder's method of
accounting. A Standard Certificateholder generally will be able to deduct its
share of the servicing fee and all administrative and other expenses of the
Trust Fund in accordance with its method of accounting, provided that such
amounts are reasonable compensation for services rendered to that Trust Fund.
However, investors who are individuals, estates or trusts who own Standard
Certificates, either directly or indirectly through certain
92
pass-through entities, will be subject to limitation with respect to certain
itemized deductions described in Code Section 67, including deductions under
Code Section 212 for the servicing fee and all such administrative and other
expenses of the Trust Fund, to the extent that such deductions, in the
aggregate, do not exceed two percent of an investor's adjusted gross income. In
addition, Code Section 68 provides that itemized deductions otherwise allowable
for a taxable year of an individual taxpayer will be reduced by the lesser of
(i) 3% of the excess, if any, of adjusted gross income over a threshold amount
or (ii) 80% of the amount of itemized deductions otherwise allowable for such
year. These limitations will be phased out over the period 2006-2010. As a
result, such investors holding Standard Certificates, directly or indirectly
through a pass-through entity, may have aggregate taxable income in excess of
the aggregate amount of cash received on such Standard Certificates with respect
to interest at the pass-through rate on such Standard Certificates. In addition,
such expenses are not deductible at all for purposes of computing the
alternative minimum tax, and may cause such investors to be subject to
significant additional tax liability. Moreover, where there is fixed retained
yield with respect to the Mortgage Loans underlying a series of Standard
Certificates or where the servicing fee is in excess of reasonable servicing
compensation, the transaction will be subject to the application of the
"stripped bond" and "stripped coupon" rules of the Code, as described below
under "Stripped Certificates" and "Recharacterization of Servicing Fees,"
respectively.
TAX STATUS
STANDARD CERTIFICATES WILL HAVE THE FOLLOWING STATUS FOR FEDERAL INCOME TAX
PURPOSES:
1. A Standard Certificate owned by a "domestic building and loan
association" within the meaning of Code Section 7701(a)(19) will be considered
to represent "loans . . . secured by an interest in real property which is . . .
residential real property" within the meaning of Code Section 7701(a)(19)(C)(v),
provided that the real property securing the Mortgage Loans represented by that
Standard Certificate is of the type described in such section of the Code.
2. A Standard Certificate owned by a real estate investment trust will be
considered to represent "real estate assets" within the meaning of Code Section
856(c)(5)(B) to the extent that the assets of the related Trust Fund consist of
qualified assets, and interest income on such assets will be considered
"interest on obligations secured by mortgages on real property" to such extent
within the meaning of Code Section 856(c)(3)(B).
3. A Standard Certificate owned by a REMIC will be considered to represent
an "obligation . . . which is principally secured by an interest in real
property" within the meaning of Code Section 860G(a)(3)(A) to the extent that
the assets of the related Trust Fund consist of "qualified mortgages" within the
meaning of Code Section 860G(a)(3).
PREMIUM AND DISCOUNT
Standard Certificateholders are advised to consult with their tax advisors
as to the federal income tax treatment of premium and discount arising either
upon initial acquisition of Standard Certificates or thereafter.
PREMIUM. The treatment of premium incurred upon the purchase of a Standard
Certificate will be determined generally as described above under "Certain
Federal Income Tax Consequences for REMIC Certificates--Taxation of Residual
Certificates--Treatment of Certain Items of REMIC Income and Expense--Premium."
ORIGINAL ISSUE DISCOUNT. The original issue discount rules will be
applicable to a Standard Certificateholder's interest in those Mortgage Loans as
to which the conditions for the application of those sections are met. Rules
regarding periodic inclusion of original issue discount income are applicable to
mortgages of corporations originated after May 27, 1969, mortgages of
noncorporate mortgagors (other than individuals) originated after July 1, 1982,
and mortgages of individuals originated after March 2, 1984. Under the OID
Regulations, such original issue discount could arise by the charging of points
by the originator of the mortgages in an amount greater than a statutory DE
MINIMIS exception, including a payment of points currently deductible by the
borrower under applicable Code provisions or, under certain circumstances, by
the presence of "teaser rates" on the Mortgage Loans.
93
Original issue discount must generally be reported as ordinary gross income
as it accrues under a constant interest method that takes into account the
compounding of interest, in advance of the cash attributable to such income.
Unless indicated otherwise in the applicable Prospectus Supplement, no
prepayment assumption will be assumed for purposes of such accrual. However,
Code Section 1272 provides for a reduction in the amount of original issue
discount includible in the income of a holder of an obligation that acquires the
obligation after its initial issuance at a price greater than the sum of the
original issue price and the previously accrued original issue discount, less
prior payments of principal. Accordingly, if such Mortgage Loans acquired by a
Standard Certificateholder are purchased at a price equal to the then unpaid
principal amount of such Mortgage Loans, no original issue discount attributable
to the difference between the issue price and the original principal amount of
such Mortgage Loans (i.e., points) will be includible by such holder.
MARKET DISCOUNT. Standard Certificateholders also will be subject to the
market discount rules to the extent that the conditions for application of those
sections are met. Market discount on the Mortgage Loans will be determined and
will be reported as ordinary income generally in the manner described above
under "Certain Federal Income Tax Consequences for REMIC Certificates--Taxation
of Regular Certificates--Market Discount," except that the ratable accrual
methods described therein will not apply and it is unclear whether a Prepayment
Assumption would apply. Rather, the holder will accrue market discount pro rata
over the life of the Mortgage Loans, unless the constant yield method is
elected. Unless indicated otherwise in the applicable Prospectus Supplement, no
prepayment assumption will be assumed for purposes of such accrual.
RECHARACTERIZATION OF SERVICING FEES
If the servicing fee paid to the Master Servicer were deemed to exceed
reasonable servicing compensation, the amount of such excess would represent
neither income nor a deduction to Certificateholders. In this regard, there are
no authoritative guidelines for federal income tax purposes as to either the
maximum amount of servicing compensation that may be considered reasonable in
the context of this or similar transactions or whether, in the case of the
Standard Certificate, the reasonableness of servicing compensation should be
determined on a weighted average or loan-by-loan basis. If a loan-by-loan basis
is appropriate, the likelihood that such amount would exceed reasonable
servicing compensation as to some of the Mortgage Loans would be increased.
Service guidance indicates that a servicing fee in excess of reasonable
compensation ("excess servicing") will cause the Mortgage Loans to be treated
under the "stripped bond" rules. Such guidance provides safe harbors for
servicing deemed to be reasonable and requires taxpayers to demonstrate that the
value of servicing fees in excess of such amounts is not greater than the value
of the services provided.
Accordingly, if the Service's approach is upheld, a servicer who receives a
servicing fee in excess of such amounts would be viewed as retaining an
ownership interest in a portion of the interest payments on the Mortgage Loans.
Under the rules of Code Section 1286, the separation of ownership of the right
to receive some or all of the interest payments on an obligation from the right
to receive some or all of the principal payments on the obligation would result
in treatment of such Mortgage Loans as "stripped coupons" and "stripped bonds."
Subject to the DE MINIMIS rule discussed below under "--Stripped Certificates,"
each stripped bond or stripped coupon could be considered for this purpose as a
non-interest bearing obligation issued on the date of issue of the Standard
Certificates, and the original issue discount rules of the Code would apply to
the holder thereof. While Standard Certificateholders would still be treated as
owners of beneficial interests in a grantor trust for federal income tax
purposes, the corpus of such trust could be viewed as excluding the portion of
the Mortgage Loans the ownership of which is attributed to the Master Servicer,
or as including such portion as a second class of equitable interest. Applicable
Treasury regulations treat such an arrangement as a fixed investment trust,
since the multiple classes of trust interests should be treated as merely
facilitating direct investments in the trust assets and the existence of
multiple classes of ownership interests is incidental to that purpose. In
general, such a recharacterization should not have any significant effect upon
the timing or amount of income reported by a Standard Certificateholder, except
that the income reported by a cash method holder may be slightly accelerated.
See "Stripped Certificates" below for a further description of the federal
income tax treatment of stripped bonds and stripped coupons.
94
SALE OR EXCHANGE OF STANDARD CERTIFICATES
Upon sale or exchange of a Standard Certificate, a Standard
Certificateholder will recognize gain or loss equal to the difference between
the amount realized on the sale and its aggregate adjusted basis in the Mortgage
Loans and the other assets represented by the Standard Certificate. In general,
the aggregate adjusted basis will equal the Standard Certificateholder's cost
for the Standard Certificate, increased by the amount of any income previously
reported with respect to the Standard Certificate and decreased by the amount of
any losses previously reported with respect to the Standard Certificate and the
amount of any distributions received thereon. Except as provided above with
respect to market discount on any Mortgage Loans, and except for certain
financial institutions subject to the provisions of Code Section 582(c), any
such gain or loss would be capital gain or loss if the Standard Certificate was
held as a capital asset. However, gain on the sale of a Standard Certificate
will be treated as ordinary income (i) if a Standard Certificate is held as part
of a "conversion transaction" as defined in Code Section 1258(c), up to the
amount of interest that would have accrued on the Standard Certificateholder's
net investment in the conversion transaction at 120% of the appropriate
applicable Federal rate in effect at the time the taxpayer entered into the
transaction minus any amount previously treated as ordinary income with respect
to any prior disposition of property that was held as a part of such transaction
or (ii) in the case of a non-corporate taxpayer, to the extent such taxpayer has
made an election under Code Section 163(d)(4) to have net capital gains taxed as
investment income at ordinary income rates. Capital gains of certain
non-corporate taxpayers generally are subject to a lower maximum tax rate than
ordinary income of such taxpayers for property held for more than one year. The
maximum tax rate for corporations is the same with respect to both ordinary
income and capital gains.
Holders that recognize a loss on a sale or exchange of a Standard
Certificate for federal income tax purposes in excess of certain threshold
amounts should consult their tax advisors as to the need to file IRS Form 8886
(disclosing certain potential tax shelters) on their federal income tax returns.
STRIPPED CERTIFICATES
GENERAL
Pursuant to Code Section 1286, the separation of ownership of the right to
receive some or all of the principal payments on an obligation from ownership of
the right to receive some or all of the interest payments results in the
creation of "stripped bonds" with respect to principal payments and "stripped
coupons" with respect to interest payments. For purposes of this discussion,
Certificates that are subject to those rules will be referred to as "Stripped
Certificates." Stripped Certificates include "Stripped Interest Certificates"
and "Stripped Principal Certificates" (as defined in this Prospectus) as to
which no REMIC election is made.
The Certificates will be subject to those rules if (i) the Depositor or any
of its affiliates retains (for its own account or for purposes of resale), in
the form of fixed retained yield or otherwise, an ownership interest in a
portion of the payments on the Mortgage Loans, (ii) the Master Servicer is
treated as having an ownership interest in the Mortgage Loans to the extent it
is paid (or retains) servicing compensation in an amount greater than reasonable
consideration for servicing the Mortgage Loans (see "Standard
Certificates--Recharacterization of Servicing Fees" above) and (iii)
Certificates are issued in two or more classes or subclasses representing the
right to non-pro-rata percentages of the interest and principal payments on the
Mortgage Loans.
In general, a holder of a Stripped Certificate will be considered to own
"stripped bonds" with respect to its pro rata share of all or a portion of the
principal payments on each Mortgage Loan and/or "stripped coupons" with respect
to its pro rata share of all or a portion of the interest payments on each
Mortgage Loan, including the Stripped Certificate's allocable share of the
servicing fees paid to the Master Servicer, to the extent that such fees
represent reasonable compensation for services rendered. See discussion above
under "Standard Certificates--Recharacterization of Servicing Fees." Although
not free from doubt, for purposes of reporting to Stripped Certificateholders,
the servicing fees will be allocated to the Stripped Certificates in proportion
to the respective entitlements to distributions of each class (or subclass) of
Stripped Certificates for the related period or periods. The holder of a
Stripped
95
Certificate generally will be entitled to a deduction each year in respect of
the servicing fees, as described above under "Standard Certificates--General,"
subject to the limitation described therein.
Code Section 1286 treats a stripped bond or a stripped coupon as an
obligation issued at an original issue discount on the date that such stripped
interest is purchased. Although the treatment of Stripped Certificates for
federal income tax purposes is not clear in certain respects at this time,
particularly where such Stripped Certificates are issued with respect to a
Mortgage Pool containing variable-rate Mortgage Loans, the Depositor has been
advised by counsel that (i) the Trust Fund will be treated as a grantor trust
under subpart E, Part 1 of subchapter J of the Code and not as an association
taxable as a corporation or a "taxable mortgage pool" within the meaning of Code
Section 7701(i), and (ii) each Stripped Certificate should be treated as a
single installment obligation for purposes of calculating original issue
discount and gain or loss on disposition. This treatment is based on the
interrelationship of Code Section 1286, Code Sections 1272 through 1275, and the
OID Regulations. While under Code Section 1286 computations with respect to
Stripped Certificates arguably should be made in one of the ways described below
under "Taxation of Stripped Certificates--Possible Alternative
Characterizations," the OID Regulations state, in general, that two or more debt
instruments issued by a single issuer to a single investor in a single
transaction should be treated as a single debt instrument for original issue
discount purposes. The Pooling Agreement requires that the Trustee make and
report all computations described below using this aggregate approach, unless
substantial legal authority requires otherwise.
Furthermore, Treasury regulations issued December 28, 1992 provide for the
treatment of a Stripped Certificate as a single debt instrument issued on the
date it is purchased for purposes of calculating any original issue discount. In
addition, under these regulations, a Stripped Certificate that represents a
right to payments of both interest and principal may be viewed either as issued
with original issue discount or market discount (as described below), at a DE
MINIMIS original issue discount, or, presumably, at a premium. This treatment
suggests that the interest component of such a Stripped Certificate would be
treated as qualified stated interest under the OID Regulations. Further, these
final regulations provide that the purchaser of such a Stripped Certificate will
be required to account for any discount as market discount rather than original
issue discount if either (i) the initial discount with respect to the Stripped
Certificate was treated as zero under the DE MINIMIS rule, or (ii) no more than
100 basis points in excess of reasonable servicing is stripped off the related
Mortgage Loans. Any such market discount would be reportable as described under
"Certain Federal Income Tax Consequences for REMIC Certificates--Taxation of
Regular Certificates--Market Discount," without regard to the DE MINIMIS rule
therein, assuming that a prepayment assumption is employed in such computation.
STATUS OF STRIPPED CERTIFICATES
No specific legal authority exists as to whether the character of the
Stripped Certificates, for federal income tax purposes, will be the same as that
of the Mortgage Loans. Although the issue is not free from doubt, counsel has
advised the Depositor that Stripped Certificates owned by applicable holders
should be considered to represent "real estate assets" within the meaning of
Code Section 856(c)(5)(B), "obligation[s] principally secured by an interest in
real property" within the meaning of Code Section 860G(a)(3)(A), and "loans . .
.. secured by an interest in real property which is . . . residential real
property" within the meaning of Code Section 7701(a)(19)(C)(v), and interest
(including original issue discount) income attributable to Stripped Certificates
should be considered to represent "interest on obligations secured by mortgages
on real property" within the meaning of Code Section 856(c)(3)(B), provided that
in each case the Mortgage Loans and interest on such Mortgage Loans qualify for
such treatment.
TAXATION OF STRIPPED CERTIFICATES
ORIGINAL ISSUE DISCOUNT. Except as described above under "General," each
Stripped Certificate will be considered to have been issued at an original issue
discount for federal income tax purposes. Original issue discount with respect
to a Stripped Certificate must be included in ordinary income as it accrues, in
accordance with a constant interest method that takes into account the
compounding of interest, which may be prior to the receipt of the cash
attributable to such income. Based in part on the OID Regulations and the
amendments to the original issue discount sections of the Code made by the 1986
Act, the amount of original issue discount required to be included in the income
of a holder of a
96
Stripped Certificate (referred to in this discussion as a "Stripped
Certificateholder") in any taxable year likely will be computed generally as
described above under "Federal Income Tax Consequences for REMIC
Certificates--Taxation of Regular Certificates--Original Issue Discount" and
"--Variable Rate Regular Certificates." However, with the apparent exception of
a Stripped Certificate qualifying as a market discount obligation, as described
above under "General," the issue price of a Stripped Certificate will be the
purchase price paid by each holder thereof, and the stated redemption price at
maturity will include the aggregate amount of the payments, other than qualified
stated interest to be made on the Stripped Certificate to such Stripped
Certificateholder, presumably under the Prepayment Assumption.
If the Mortgage Loans prepay at a rate either faster or slower than that
under the Prepayment Assumption, a Stripped Certificateholder's recognition of
original issue discount will be either accelerated or decelerated and the amount
of such original issue discount will be either increased or decreased depending
on the relative interests in principal and interest on each Mortgage Loan
represented by such Stripped Certificateholder's Stripped Certificate. While the
matter is not free from doubt, the holder of a Stripped Certificate should be
entitled in the year that it becomes certain (assuming no further prepayments)
that the holder will not recover a portion of its adjusted basis in such
Stripped Certificate to recognize an ordinary loss equal to such portion of
unrecoverable basis.
As an alternative to the method described above, the fact that some or all
of the interest payments with respect to the Stripped Certificates will not be
made if the Mortgage Loans are prepaid could lead to the interpretation that
such interest payments are "contingent" within the meaning of the OID
Regulations. The OID Regulations, as they relate to the treatment of contingent
interest, are by their terms not applicable to prepayable securities such as the
Stripped Certificates. However, if final regulations dealing with contingent
interest with respect to the Stripped Certificates apply the same principles as
the OID Regulations, such regulations may lead to different timing of income
inclusion that would be the case under the OID Regulations. Furthermore,
application of such principles could lead to the characterization of gain on the
sale of contingent interest Stripped Certificates as ordinary income. Investors
should consult their tax advisors regarding the appropriate tax treatment of
Stripped Certificates.
SALE OR EXCHANGE OF STRIPPED CERTIFICATES. Sale or exchange of a Stripped
Certificate prior to its maturity will result in gain or loss equal to the
difference, if any, between the amount received and the Stripped
Certificateholder's adjusted basis in such Stripped Certificate, as described
above under "Certain Federal Income Tax Consequences for REMIC
Certificates--Taxation of Regular Certificates--Sale or Exchange of Regular
Certificates." To the extent that a subsequent purchaser's purchase price is
exceeded by the remaining payments on the Stripped Certificates, such subsequent
purchaser will be required for federal income tax purposes to accrue and report
such excess as if it were original issue discount in the manner described above.
It is not clear for this purpose whether the assumed prepayment rate that is to
be used in the case of a Stripped Certificateholder other than an original
Stripped Certificateholder should be the Prepayment Assumption or a new rate
based on the circumstances at the date of subsequent purchase.
Holders that recognize a loss on a sale or exchange of a Stripped
Certificate for federal income tax purposes in excess of certain theshold
amounts should consult their tax advisors as to the need to file IRS Form 8886
(disclosing certain potential tax shelters) on their federal income tax returns.
PURCHASE OF MORE THAN ONE CLASS OF STRIPPED CERTIFICATES. Where an investor
purchases more than one class of Stripped Certificates, it is currently unclear
whether for federal income tax purposes such classes of Stripped Certificates
should be treated separately or aggregated for purposes of the rules described
above.
POSSIBLE ALTERNATIVE CHARACTERIZATIONS. The characterizations of the
Stripped Certificates discussed above are not the only possible interpretations
of the applicable Code provisions. For example, the Stripped Certificateholder
may be treated as the owner of (i) one installment obligation consisting of such
Stripped Certificate's pro rata share of the payments attributable to principal
on each Mortgage Loan and a second installment obligation consisting of such
Stripped Certificate's pro rata share of the payments attributable to interest
on each Mortgage Loan, (ii) as many stripped bonds or stripped coupons as there
are scheduled payments of principal and/or interest on each Mortgage Loan or
(iii) a
97
separate installment obligation for each Mortgage Loan, representing the
Stripped Certificate's pro rata share of payments of principal and/or interest
to be made with respect thereto. Alternatively, the holder of one or more
classes of Stripped Certificates may be treated as the owner of a pro rata
fractional undivided interest in each Mortgage Loan to the extent that such
Stripped Certificate, or classes of Stripped Certificates in the aggregate,
represent the same pro rata portion of principal and interest on each such
Mortgage Loan, and a stripped bond or stripped coupon (as the case may be),
treated as an installment obligation or contingent payment obligation, as to the
remainder. Final regulations issued on December 28, 1992 regarding original
issue discount on stripped obligations make the foregoing interpretations less
likely to be applicable. The preamble to those regulations states that they are
premised on the assumption that an aggregation approach is appropriate for
determining whether original issue discount on a stripped bond or stripped
coupon is DE MINIMIS, and solicits comments on appropriate rules for aggregating
stripped bonds and stripped coupons under Code Section 1286.
Because of these possible varying characterizations of Stripped
Certificates and the resultant differing treatment of income recognition,
Stripped Certificateholders are urged to consult their own tax advisors
regarding the proper treatment of Stripped Certificates for federal income tax
purposes.
REPORTING REQUIREMENTS AND BACKUP WITHHOLDING
The Trustee will furnish, within a reasonable time after the end of each
calendar year, to each Standard Certificateholder or Stripped Certificateholder
at any time during such year, such information (prepared on the basis described
above) as the Trustee deems to be necessary or desirable to enable such
Certificateholders to prepare their federal income tax returns. Such information
will include the amount of original issue discount accrued on Certificates held
by persons other than Certificateholders exempted from the reporting
requirements. The amounts required to be reported by the Trustee may not be
equal to the proper amount of original issue discount required to be reported as
taxable income by a Certificateholder, other than an original Certificateholder
that purchased at the issue price. In particular, in the case of Stripped
Certificates, unless provided otherwise in the applicable Prospectus Supplement,
such reporting will be based upon a representative initial offering price of
each class of Stripped Certificates. The Trustee will also file such original
issue discount information with the Service. If a Certificateholder fails to
supply an accurate taxpayer identification number or if the Secretary of the
Treasury determines that a Certificateholder has not reported all interest and
dividend income required to be shown on his federal income tax return, 28%
(which rate will increase to 30% after 2010) backup withholding may be required
in respect of any reportable payments, as described above under "Certain Federal
Income Tax Consequences for REMIC Certificates--Backup Withholding."
TAXATION OF CERTAIN FOREIGN INVESTORS
To the extent that a Certificate evidences ownership in Mortgage Loans that
are issued on or before July 18, 1984, interest or original issue discount paid
by the person required to withhold tax under Code Section 1441 or 1442 to
nonresident aliens, foreign corporations, or other Non-U.S. Persons generally
will be subject to 30% United States withholding tax, or such lower rate as may
be provided for interest by an applicable tax treaty. Accrued original issue
discount recognized by the Standard Certificateholder or Stripped
Certificateholder on original issue discount recognized by the Standard
Certificateholder or Stripped Certificateholders on the sale or exchange of such
a Certificate also will be subject to federal income tax at the same rate.
Treasury regulations provide that interest or original issue discount paid
by the Trustee or other withholding agent to a Non-U.S. Person evidencing
ownership interest in Mortgage Loans issued after July 18, 1984 will be
"portfolio interest" and will be treated in the manner, and such persons will be
subject to the same certification requirements, described above under "Certain
Federal Income Tax Consequences for REMIC Certificates--Taxation of Certain
Foreign Investors--Regular Certificates."
98
STATE AND OTHER TAX CONSEQUENCES
In addition to the federal income tax consequences described in "Certain
Federal Income Tax Consequences," potential investors should consider the state
and local tax consequences of the acquisition, ownership, and disposition of the
Offered Certificates. State tax law may differ substantially from the
corresponding federal law, and the discussion above does not purport to describe
any aspect of the tax laws of any state or other jurisdiction. Therefore,
prospective investors should consult their tax advisors with respect to the
various tax consequences of investments in the Offered Certificates.
CERTAIN ERISA CONSIDERATIONS
GENERAL
Sections 404 and 406 of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), impose certain fiduciary requirements and prohibited
transaction restrictions on employee pension and welfare benefit plans subject
to ERISA ("ERISA Plans") and on certain other arrangements, including bank
collective investment funds and insurance company general and separate accounts
in which such ERISA Plans are invested. Section 4975 of the Code imposes
essentially the same prohibited transaction restrictions on tax-qualified
retirement plans described in Section 401(a) of the Code and on Individual
Retirement Accounts described in Section 408 of the Code (collectively, "Tax
Favored Plans").
Certain employee benefit plans, such as governmental plans (as defined in
ERISA Section 3(32)), and, if no election has been made under Section 410(d) of
the Code, church plans (as defined in Section 3(33) of ERISA) (collectively with
ERISA Plans and Tax-Favored plans, "Plans") are not subject to ERISA
requirements. Accordingly, assets of such plans may be invested in Offered
Certificates without regard to the ERISA considerations described below, subject
to the provisions of other applicable federal and state law ("Similar Law"). Any
such plan which is qualified and exempt from taxation under Sections 401(a) and
501(a) of the Code is subject to the prohibited transaction rules set forth in
Section 503 of the Code.
ERISA generally imposes on Plan fiduciaries certain general fiduciary
requirements, including those of investment prudence and diversification and the
requirement that a Plan's investments be made in accordance with the documents
governing the Plan. In addition, Section 406 of ERISA and Section 4975 of the
Code prohibit a broad range of transactions involving assets of a Plan and
persons ("parties in interest" within the meaning of ERISA and "disqualified
persons" within the meaning of the Code; collectively, "Parties in Interest")
who have certain specified relationships to the Plan, unless a statutory,
regulatory or administrative exemption is available with respect to any such
transaction. Pursuant to Section 4975 of the Code, certain Parties in Interest
to a prohibited transaction may be subject to a nondeductible 15% per annum
excise tax on the amount involved in such transaction, which excise tax
increases to 100% if the Party in Interest involved in the transaction does not
correct such transaction during the taxable period. In addition, such Party in
Interest may be subject to a penalty imposed pursuant to Section 502(i) of
ERISA. The United States Department of Labor ("DOL") and participants,
beneficiaries and fiduciaries of ERISA Plans may generally enforce violations of
ERISA, including the prohibited transaction provisions. If the prohibited
transaction amounts to a breach of fiduciary responsibility under ERISA, a 20%
civil penalty may be imposed on the fiduciary or other person participating in
the breach.
PLAN ASSET REGULATIONS
Certain transactions involving the Trust Fund, including a Plan's
investment in Offered Certificates, might be deemed to constitute prohibited
transactions under ERISA, the Code or Similar Law if the underlying Mortgage
Assets and other assets included in a related Trust Fund are deemed to be assets
of such Plan. Section 2510.3-101 of the DOL regulations (the "Plan Asset
Regulations") defines the term "Plan Assets" for purposes of applying the
general fiduciary responsibility provisions of ERISA and the prohibited
transaction provisions of ERISA and the Code. Under the Plan Asset Regulations,
generally,
99
when a Plan acquires an equity interest in an entity, the Plan's assets include
both such equity interest and an undivided interest in each of the underlying
assets of the entity, unless certain exceptions not applicable here apply, or
unless the equity participation in the entity by "benefit plan investors" (i.e.,
ERISA Plans and certain employee benefit plans not subject to ERISA) is not
"significant," both as defined therein. For this purpose, in general, equity
participation by benefit plan investors will be "significant" on any date if 25%
or more of the value of any class of equity interests in the entity is held by
benefit plan investors. Equity participation in a Trust Fund will be significant
on any date if immediately after the most recent acquisition of any Certificate,
25% or more of any class of Certificates is held by benefit plan investors.
The prohibited transaction provisions of Section 406 of ERISA and Section
4975 of the Code may apply to a Trust Fund and cause the Depositor, the Master
Servicer, any Special Servicer, any Sub-Servicer, any Manager, the Trustee, the
obligor under any credit enhancement mechanism or certain affiliates thereof to
be considered or become Parties in Interest with respect to an investing Plan
(or of a Plan holding an interest in an investing entity). If so, the
acquisition or holding of Certificates by or on behalf of the investing Plan
could also give rise to a prohibited transaction under ERISA, the Code or
Similar Law, unless some statutory, regulatory or administrative exemption is
available. Certificates acquired by a Plan may be assets of that Plan. Under the
Plan Asset Regulations, the Trust Fund, including the Mortgage Asset Loans and
the other assets held in the Trust Fund, may also be deemed to be Plan Assets of
each Plan that acquires Certificates. Special caution should be exercised before
Plan Assets are used to acquire a Certificate in such circumstances, especially
if, with respect to such assets, the Depositor, the Master Servicer, any Special
Servicer, any Sub-Servicer, any Manager, the Trustee, the obligor under any
credit enhancement mechanism or an affiliate thereof either (i) has investment
discretion with respect to the investment of Plan Assets; or (ii) has authority
or responsibility to give (or regularly gives) investment advice with respect to
Plan Assets for a fee pursuant to an agreement or understanding that such advice
will serve as a primary basis for investment decisions with respect to such Plan
Assets.
Any person who has discretionary authority or control respecting the
management or disposition of Plan Assets, and any person who provides investment
advice with respect to such assets for a fee, is a fiduciary of the investing
Plan. If the Mortgage Assets and other assets included in a Trust Fund
constitute Plan Assets, then any party exercising management or discretionary
control regarding those assets, such as the Master Servicer, any Special
Servicer, any Sub-Servicer, the Trustee, the obligor under any credit
enhancement mechanism, or certain affiliates thereof may be deemed to be a Plan
"fiduciary" and thus subject to the fiduciary responsibility provisions and
prohibited transaction provisions of ERISA and the Code with respect to the
investing Plan. In addition, if the Mortgage Assets and other assets included in
a Trust Fund constitute Plan Assets, the purchase of Certificates by a Plan, as
well as the operation of the Trust Fund, may constitute or involve a prohibited
transaction under ERISA or the Code.
The Plan Asset Regulations provide that where a Plan acquires a "guaranteed
governmental mortgage pool certificate," the Plan's assets include such
certificate but do not solely by reason of the Plan's holdings of such
certificate include any of the mortgages underlying such certificate. The Plan
Asset Regulations include in the definition of a "guaranteed governmental
mortgage pool certificate" FHLMC Certificates, GNMA Certificates, FNMA
Certificates and FAMC Certificates. Accordingly, even if such MBS included in a
Trust Fund were deemed to be assets of Plan investors, the mortgages underlying
such MBS would not be treated as assets of such Plans. Private label mortgage
participations, mortgage pass-through certificates or other mortgage-backed
securities are not "guaranteed governmental mortgage pool certificates" within
the meaning of the Plan Asset Regulations. Potential Plan investors should
consult their counsel and review the ERISA discussion in the related Prospectus
Supplement before purchasing any such Certificates.
PROHIBITED TRANSACTION EXEMPTIONS
The DOL granted an individual exemption, DOL Final Authorization Number
97-03E, as amended by Prohibited Transaction Exemption 97-34, Prohibited
Transaction Exemption 2000-58 and Prohibited Transaction Exemption 2002-41 (the
"Exemption"), to Deutsche Bank AG, New York Branch
100
("DBNY")and to a predecessor to Deutsche Bank Securities, Inc. ("DBSI") which
generally exempts from the application of the prohibited transaction provisions
of Section 406 of ERISA, and the excise taxes imposed on such prohibited
transactions pursuant to Section 4975(a) and (b) of the Code, certain
transactions, among others, relating to the servicing and operation of mortgage
pools and the initial purchase, holding and subsequent resale of mortgage
pass-through certificates underwritten by an Underwriter (as hereinafter
defined), provided that certain conditions set forth in the Exemption are
satisfied. For purposes of this Section "Certain ERISA Considerations," the term
"Underwriter" shall include (a) DBNY and DBSI, (b) any person directly or
indirectly, through one or more intermediaries, controlling, controlled by or
under common control with DBNY and DBSI and (c) any member of the underwriting
syndicate or selling group of which a person described in (a) or (b) is a
manager or co-manager with respect to a class of Certificates.
The Exemption sets forth five general conditions which must be satisfied
for the Exemption to apply. First, the acquisition of Certificates by a Plan or
with Plan Assets must be on terms that are at least as favorable to the Plan as
they would be in an arm's-length transaction with an unrelated party. Second,
the Certificates at the time of acquisition by a Plan or with Plan Assets must
be rated in one of the four highest generic rating categories by Standard &
Poor's Ratings Services, a division of the McGraw-Hill Companies, Inc., Moody's
Investors Service, Inc. or Fitch, Inc. (collectively, the "Exemption Rating
Agencies"). Third, the Trustee cannot be an affiliate of any member of the
Restricted Group, other than an Underwriter; the "Restricted Group" consists of
any Underwriter, the Depositor, the Trustee, the Master Servicer, any
Sub-Servicer, any party that is considered a "sponsor" within the meaning of the
Exemption and any obligor with respect to assets included in the Trust Fund
constituting more than 5% of the aggregate unamortized principal balance of the
assets in the Trust Fund as of the date of initial issuance of the Certificates.
Fourth, the sum of all payments made to and retained by the Underwriter(s) must
represent not more than reasonable compensation for underwriting the
Certificates; the sum of all payments made to and retained by the Depositor
pursuant to the assignment of the assets to the related Trust Fund must
represent not more than the fair market value of such obligations; and the sum
of all payments made to and retained by the Master Servicer and any Sub-Servicer
must represent not more than reasonable compensation for such person's services
under the related Agreement and reimbursement of such person's reasonable
expenses in connection therewith. Fifth, the Exemption states that the investing
Plan or Plan Asset investor must be an accredited investor as defined in Rule
501(a)(1) of Regulation D of the Commission under the Securities Act of 1933, as
amended.
The Exemption also requires that the Trust Fund meet the following
requirements: (i) the Trust Fund must consist solely of assets of the type that
have been included in other investment pools; (ii) Certificates evidencing
interests in such other investment pools must have been rated in one of the four
highest categories of one of the Exemption Rating Agencies for at least one year
prior to the acquisition of Certificates by or on behalf of a Plan or with Plan
Assets; and (iii) Certificates evidencing interests in such other investment
pools must have been purchased by investors other than Plans for at least one
year prior to any acquisition of Certificates by or on behalf of a Plan or with
Plan Assets.
A fiduciary of a Plan or any person investing Plan Assets intending to
purchase a Certificate must make its own determination that the conditions set
forth above will be satisfied with respect to such Certificate.
If the general conditions of the Exemption are satisfied, the Exemption may
provide an exemption from the restrictions imposed by Sections 406(a) and 407(a)
of ERISA, and the excise taxes imposed by Sections 4975(a) and (b) of the Code
by reason of Sections 4975(c)(1)(A) through (D) of the Code, in connection with
the direct or indirect sale, exchange, transfer, holding or the direct or
indirect acquisition or disposition in the secondary market of Certificates by a
Plan or with Plan Assets. However, no exemption is provided from the
restrictions of Sections 406(a)(1)(E), 406(a)(2) and 407 of ERISA for the
acquisition or holding of a Certificate on behalf of an "Excluded Plan" by any
person who has discretionary authority or renders investment advice with respect
to the assets of such Excluded Plan. For purposes of the Certificates, an
Excluded Plan is a Plan sponsored by any member of the Restricted Group.
101
If certain specific conditions of the Exemption are also satisfied, the
Exemption may provide an exemption from the restrictions imposed by Sections
406(b)(1) and (b)(2) of ERISA, and the excise taxes imposed by Sections 4975(a)
and (b) of the Code by reason of Section 4975(c)(1)(E) of the Code, in
connection with (1) the direct or indirect sale, exchange or transfer of
Certificates in the initial issuance of Certificates between the Depositor or an
Underwriter and a Plan when the person who has discretionary authority or
renders investment advice with respect to the investment of Plan Assets in the
Certificates is (a) a mortgagor with respect to 5% or less of the fair market
value of the Trust Fund Assets or (b) an affiliate of such a person, (2) the
direct or indirect acquisition or disposition in the secondary market of
Certificates by a Plan and (3) the holding of Certificates by a Plan or with
Plan Assets.
Further, if certain specific conditions of the Exemption are satisfied, the
Exemption may provide an exemption from the restrictions imposed by Sections
406(a), 406(b) and 407 of ERISA, and the excise taxes imposed by Sections
4975(a) and (b) of the Code by reason of Section 4975(c) of the Code for
transactions in connection with the servicing, management and operation of the
Trust Fund. The Depositor expects that the specific conditions of the Exemption
required for this purpose will be satisfied with respect to the Certificates so
that the Exemption would provide an exemption from the restrictions imposed by
Sections 406(a) and (b) of ERISA (as well as the excise taxes imposed by
Sections 4975(a) and (b) of the Code by reason of Section 4975(c) of the Code)
for transactions in connection with the servicing, management and operation of
the Trust Fund, provided that the general conditions of the Exemption are
satisfied.
The Exemption also may provide an exemption from the restrictions imposed
by Sections 406(a) and 407(a) of ERISA, and the excise taxes imposed by Section
4975(a) and (b) of the Code by reason of Sections 4975(c)(1)(A) through (D) of
the Code if such restrictions are deemed to otherwise apply merely because a
person is deemed to be a Party in Interest with respect to an investing Plan by
virtue of providing services to the Plan (or by virtue of having certain
specified relationships to such a person) solely as a result of the Plan's
ownership of Certificates.
Because the exemptive relief afforded by the Exemption (or any similar
exemption that might be available) will not apply to the purchase, sale or
holding of certain Certificates, such as Residual Certificates or any
Certificates ("ERISA Restricted Certificates") which are not rated in one of the
four highest generic rating categories by at least one of the Exemption Rating
Agencies, transfers of such Certificates to a Plan, to a trustee or other person
acting on behalf of any Plan, or to any other person investing Plan Assets to
effect such acquisition will not be registered by the Trustee unless the
transferee provides the Depositor, the Trustee and the Master Servicer with an
opinion of counsel satisfactory to the Depositor, the Trustee and the Master
Servicer, which opinion will not be at the expense of the Depositor, the Trustee
or the Master Servicer, that the purchase of such Certificates by or on behalf
of such Plan is permissible under applicable law, will not constitute or result
in any non-exempt prohibited transaction under ERISA or Section 4975 of the Code
or Similar Law and will not subject the Depositor, the Trustee or the Master
Servicer to any obligation in addition to those undertaken in the Agreement.
In lieu of such opinion of counsel with respect to ERISA Restricted
Certificates, the transferee may provide a certification substantially to the
effect that the purchase of ERISA Restricted Certificates by or on behalf of
such Plan is permissible under applicable law, will not constitute or result in
any non-exempt prohibited transaction under ERISA or Section 4975 of the Code,
will not subject the Depositor, the Trustee or the Master Servicer to any
obligation in addition to those undertaken in the Agreement and the following
conditions are satisfied: (i) the transferee is an insurance company and the
source of funds used to purchase such ERISA Restricted Certificates is an
"insurance company general account" (as such term is defined in PTCE 95-60);
(ii) the conditions set forth in Sections I and III of PTCE 95-60 have been
satisfied; and (iii) there is no Plan with respect to which the amount of such
general account's reserves and liabilities for contracts held by or on behalf of
such Plan and all other Plans maintained by the same employer (or any
"affiliate" thereof, as defined in PTCE 95-60) or by the same employee
organization exceed 10% of the total of all reserves and liabilities of such
general account (as determined under PTCE 95-60) as of the date of the
acquisition of such ERISA Restricted Certificates.
102
The purchaser or any transferee of any interest in an ERISA Restricted
Certificate or Residual Certificate that is not a definitive certificate, by the
act of purchasing such Certificate, shall be deemed to represent that it is not
a Plan or directly or indirectly purchasing such Certificate or interest therein
on behalf of, as named fiduciary of, as trustee of, or with assets of a Plan.
The ERISA Restricted Certificates and Residual Certificates will contain a
legend describing such restrictions on transfer and the Pooling and Servicing
Agreement will provide that any attempted or purported transfer in violation of
these transfer restrictions will be null and void.
There can be no assurance that any DOL exemption will apply with respect to
any particular Plan that acquires the Certificates or, even if all the
conditions specified therein were satisfied, that any such exemption would apply
to all transactions involving the Trust Fund. Prospective Plan investors should
consult with their legal counsel concerning the impact of ERISA, the Code and
Similar Law and the potential consequences to their specific circumstances prior
to making an investment in the Certificates. Neither the Depositor, the Trustee,
the Master Servicer nor any of their respective affiliates will make any
representation to the effect that the Certificates satisfy all legal
requirements with respect to the investment therein by Plans generally or any
particular Plan or to the effect that the Certificates are an appropriate
investment for Plans generally or any particular Plan.
Before purchasing a Certificate (other than an ERISA Restricted
Certificate, Residual Certificate or any Certificate which is not rated in one
of the four highest generic rating categories by at least one of the Exemption
Rating Agencies), a fiduciary of a Plan should itself confirm that (a) all the
specific and general conditions set forth in the Exemption or one of the Class
Exemptions would be satisfied and (b) the Certificate constitutes a
"certificate" for purposes of the Exemption. In addition, a Plan fiduciary
should consider its general fiduciary obligations under ERISA in determining
whether to purchase a Certificate on behalf of a Plan. Finally, a Plan fiduciary
should consider the fact that the DOL, in granting the Exemption, may not have
had under its consideration interests in pools of the exact nature of some of
the Certificates described herein.
TAX EXEMPT INVESTORS
A Plan that is exempt from federal income taxation pursuant to Section 501
of the Code (a "Tax Exempt Investor") nonetheless will be subject to federal
income taxation to the extent that its income is "unrelated business taxable
income" ("UBTI") within the meaning of Section 512 of the Code. All "excess
inclusions" of a REMIC allocated to a Residual Certificate held by a Tax-Exempt
Investor will be considered UBTI and thus will be subject to federal income tax.
See "Certain Federal Income Tax Consequences--Federal Income Tax Consequences
for REMIC Certificates--Taxation of Residual
Certificates--Limitations on Offset or Exemption of REMIC Income."
LEGAL INVESTMENT
If so specified in the related Prospectus Supplement, certain Classes of
the Offered Certificates will constitute "mortgage related securities" for
purposes of SMMEA. Generally, only classes of Offered Certificates that (i) are
rated in one of the two highest rating categories by one or more Rating Agencies
and (ii) are part of a series evidencing interests in a Trust Fund consisting of
loans secured by first liens on real property and originated by certain types of
Originators specified in SMMEA, will be "mortgage related securities" for
purposes of SMMEA.
The appropriate characterization of those Offered Certificates not
qualifying as "mortgage related securities" for purposes of SMMEA ("Non-SMMEA
Certificates") under various legal investment restrictions, and thus the ability
of investors subject to these restrictions to purchase such Offered
Certificates, may be subject to significant interpretive uncertainties.
Accordingly, all investors whose investment activities are subject to legal
investment laws and regulations, regulatory capital requirements, or review by
regulatory authorities should consult with their own legal advisors in
determining whether and to what extent the Non-SMMEA Certificates constitute
legal investments for them. As "mortgage related securities," such classes will
constitute legal investments for persons, trusts, corporations, partnerships,
associations, business trusts and business entities (including depository
institutions, insurance companies and pension funds) created pursuant to or
existing under
103
the laws of the United States or of any state (including the District of
Columbia and Puerto Rico) whose authorized investments are subject to state
regulation, to the same extent that, under applicable law, obligations issued by
or guaranteed as to principal and interest by the United States or any agency or
instrumentality thereof constitute legal investments for such entities.
Pursuant to SMMEA, a number of states enacted legislation, on or before the
October 3, 1991 cutoff for such enactments, limiting to varying extents the
ability of certain entities (in particular, insurance companies) to invest in
"mortgage related securities" secured by liens on residential, or mixed
residential and commercial properties, in most cases by requiring the affected
investors to rely solely upon existing state law, and not SMMEA. Pursuant to
Section 347 of the Riegle Community Development and Regulatory Improvement Act
of 1994, which amended the definition of "mortgage related security" to include,
in relevant part, Offered Certificates satisfying the rating and qualified
Originator requirements for "mortgage related securities," but evidencing
interests in a Trust Fund consisting, in whole or in part, of first liens on one
or more parcels of real estate upon which are located one or more commercial
structures, states were authorized to enact legislation, on or before September
23, 2001, specifically referring to Section 347 and prohibiting or restricting
the purchase, holding or investment by state-regulated entities in such types of
Offered Certificates. Accordingly, the investors affected by any state
legislation overriding the preemptive effect of SMMEA will be authorized to
invest in Offered Certificates qualifying as "mortgage related securities" only
to the extent provided in such legislation.
SMMEA also amended the legal investment authority of federally-chartered
depository institutions as follows: federal savings and loan associations and
federal savings banks may invest in, sell or otherwise deal in "mortgage related
securities" without limitation as to the percentage of their assets represented
thereby, federal credit unions may invest in such securities, and national banks
may purchase such securities for their own account without regard to the
limitations generally applicable to investment securities set forth in 12 U.S.C.
Section 24 (Seventh), subject in each case to such regulations as the applicable
federal regulatory authority may prescribe. In this connection, the Office of
the Comptroller of the Currency (the "OCC") has amended 12 C.F.R. Part 1 to
authorize national banks to purchase and sell for their own account, without
limitation as to a percentage of the bank's capital and surplus (but subject to
compliance with certain general standards in 12 C.F.R. Section 1.5 concerning
"safety and soundness" and retention of credit information), certain "Type IV
securities," defined in 12 C.F.R. Section 1.2(m) to include certain "commercial
mortgage-related securities" and "residential mortgage-related securities." As
so defined, "commercial mortgage-related security" and "residential
mortgage-related security" mean, in relevant part, "mortgage related security"
within the meaning of SMMEA, provided that, in the case of a "commercial
mortgage-related security," it "represents ownership of a promissory note or
certificate of interest or participation that is directly secured by a first
lien on one or more parcels of real estate upon which one or more commercial
structures are located and that is fully secured by interests in a pool of loans
to numerous obligors." In the absence of any rule or administrative
interpretation by the OCC defining the term "numerous obligors," no
representation is made as to whether any class of Offered Certificates will
qualify as "commercial mortgage-related securities," and thus as "Type IV
securities," for investment by national banks. The National Credit Union
Administration (the "NCUA") has adopted rules, codified at 12 C.F.R. Part 703,
which permit federal credit unions to invest in "mortgage related securities,"
other than stripped mortgage related securities, residual interests in mortgage
related securities, and commercial mortgage related securities, subject to
compliance with general rules governing investment policies and practices;
provided, however, credit unions approved for the NCUA's "investment pilot
program" under 12 C.F.R. ss.703.19 may be able to invest in those prohibited
forms of securities, while "RegFlex credit unions" may invest in commerical
mortgage related securities under certain conditions pursuant to 12 C.F.R.
ss.742.4(b)(2). The Office of Thrift Supervision (the "OTS") has issued Thrift
Bulletin 13a (December 1, 1998), "Management of Interest Rate Risk, Investment
Securities, and Derivatives Activities," and Thrift Bulletin 73a (December 18,
2001), "Investing in Complex Securities," which thrift institutions subject to
the jurisdiction of the OTS should consider before investing in any of the
Offered Certificates.
All depository institutions considering an investment in the Offered
Certificates should review the "Supervisory Policy Statement on Investment
Securities and End-User Derivatives Activities" (the
104
"1998 Policy Statement") of the Federal Financial Institutions Examination
Council, which has been adopted by the Board of Governors of the Federal Reserve
System, the OCC, the Federal Deposit Insurance Corporation and the OTS,
effective May 26, 1998, and by the NCUA, effective October 1, 1998. The 1998
Policy Statement sets forth general guidelines which depository institutions
must follow in managing risks (including market, credit, liquidity, operational
(transaction), and legal risks) applicable to all securities (including mortgage
pass-through securities and mortgage-derivative products) used for investment
purposes.
Investors whose investment activities are subject to regulation by federal
or state authorities should review rules, policies and guidelines adopted from
time to time by such authorities before purchasing any Offered Certificates, as
certain series or classes may be deemed unsuitable investments, or may otherwise
be restricted, under such rules, policies or guidelines (in certain instances
irrespective of SMMEA).
The foregoing does not take into consideration the applicability of
statutes, rules, regulations, orders, guidelines or agreements generally
governing investments made by a particular investor, including, but not limited
to, "prudent investor" provisions, percentage-of-assets limits, provisions which
may restrict or prohibit investment in securities which are not
"interest-bearing" or "income-paying," and, with regard to any Offered
Certificates issued in book-entry form, provisions which may restrict or
prohibit investments in securities which are issued in book-entry form.
Except as to the status of certain classes of Offered Certificates as
"mortgage related securities," no representations are made as to the proper
characterization of the Offered Certificates for legal investment purposes,
financial institution regulatory purposes, or other purposes, or as to the
ability of particular investors to purchase Offered Certificates under
applicable legal investment restrictions. The uncertainties described above (and
any unfavorable future determinations concerning legal investment or financial
institution regulatory characteristics of the Offered Certificates) may
adversely affect the liquidity of the Offered Certificates.
Accordingly, all investors whose investment activities are subject to legal
investment laws and regulations, regulatory capital requirements or review by
regulatory authorities should consult with their own legal advisors in
determining whether and to what extent the Offered Certificates of any class
constitute legal investments or are subject to investment, capital or other
restrictions and, if applicable, whether SMMEA has been overridden in any
jurisdiction relevant to such investor.
USE OF PROCEEDS
The net proceeds to be received from the sale of the Certificates of any
series will be applied by the Depositor to the purchase of Trust Assets or will
be used by the Depositor to cover expenses related thereto. The Depositor
expects to sell the Certificates from time to time, but the timing and amount of
offerings of Certificates will depend on a number of factors, including the
volume of Mortgage Assets acquired by the Depositor, prevailing interest rates,
availability of funds and general market conditions.
METHOD OF DISTRIBUTION
The Certificates offered hereby and by the related Prospectus Supplements
will be offered in series through one or more of the methods described below.
The Prospectus Supplement prepared for each series will describe the method of
offering being utilized for that series and will state the net proceeds to the
Depositor from such sale.
The Depositor intends that Offered Certificates will be offered through the
following methods from time to time and that offerings may be made concurrently
through more than one of these methods or that an offering of the Offered
Certificates of a particular series may be made through a combination of two or
more of these methods. Such methods are as follows:
1. By negotiated firm commitment or best efforts underwriting and public
offering by one or more underwriters specified in the related Prospectus
Supplement;
105
2. By placements by the Depositor with institutional investors through
dealers; and
3. By direct placements by the Depositor with institutional investors.
In addition, if specified in the related Prospectus Supplement, the Offered
Certificates of a series may be offered in whole or in part to the seller of the
related Mortgage Assets that would comprise the Trust Fund for such
Certificates.
If underwriters are used in a sale of any Offered Certificates (other than
in connection with an underwriting on a best efforts basis), such Certificates
will be acquired by the underwriters for their own account and may be resold
from time to time in one or more transactions, including negotiated
transactions, at fixed public offering prices or at varying prices to be
determined at the time of sale or at the time of commitment therefor. The
managing underwriter or underwriters with respect to the offer and sale of
Offered Certificates of a particular series will be set forth on the cover of
the Prospectus Supplement relating to such series and the members of the
underwriting syndicate, if any, will be named in such Prospectus Supplement.
In connection with the sale of Offered Certificates, underwriters may
receive compensation from the Depositor or from purchasers of the Offered
Certificates in the form of discounts, concessions or commissions. Underwriters
and dealers participating in the distribution of the Offered Certificates may be
deemed to be underwriters in connection with such Certificates, and any
discounts or commissions received by them from the Depositor and any profit on
the resale of Offered Certificates by them may be deemed to be underwriting
discounts and commissions under the Securities Act of 1933, as amended.
It is anticipated that the underwriting agreement pertaining to the sale of
the Offered Certificates of any series will provide that the obligations of the
underwriters will be subject to certain conditions precedent, that the
underwriters will be obligated to purchase all such Certificates if any are
purchased (other than in connection with an underwriting on a best efforts
basis) and that, in limited circumstances, the Depositor will indemnify the
several underwriters and the underwriters will indemnify the Depositor against
certain civil liabilities, including liabilities under the Securities Act of
1933, as amended, or will contribute to payments required to be made in respect
thereof.
The Prospectus Supplement with respect to any series offered by placements
through dealers will contain information regarding the nature of such offering
and any agreements to be entered into between the Depositor and purchasers of
Offered Certificates of such series.
The Depositor anticipates that the Offered Certificates will be sold
primarily to institutional investors. Purchasers of Offered Certificates,
including dealers, may, depending on the facts and circumstances of such
purchases, be deemed to be "underwriters" within the meaning of the Securities
Act of 1933, as amended, in connection with reoffers and sales by them of
Offered Certificates. Holders of Offered Certificates should consult with their
legal advisors in this regard prior to any such reoffer or sale.
All or part of any class of Offered Certificates may be acquired by the
Depositor or by an affiliate of the Depositor in a secondary market transaction
or from an affiliate. Such Offered Certificates may then be included in a trust
fund, the beneficial ownership of which will be evidenced by one or more classes
of mortgage-backed certificates, including subsequent series of certificates
offered pursuant to this Prospectus and a prospectus supplement.
As to any series of Certificates, only those classes rated in an investment
grade rating category by any Rating Agency will be offered hereby. Any unrated
class may be initially retained by the Depositor, and may be sold by the
Depositor at any time to one or institutional investors.
If and to the extent required by applicable law or regulation, this
Prospectus will be used by the Underwriter in connection with offers and sales
related to market-making transactions in the Offered Certificates with respect
to which the Underwriter acts as principal. The Underwriter may also act as
agent in such transactions. Sales may be made at negotiated prices determined at
the time of sales.
106
LEGAL MATTERS
Unless otherwise specified in the related Prospectus Supplement, certain
legal matters in connection with the Certificates of each series, including
certain federal income tax consequences, will be passed upon for the Depositor
by Cadwalader, Wickersham & Taft LLP or Latham & Watkins LLP.
FINANCIAL INFORMATION
A new Trust Fund will be formed with respect to each series of
Certificates, and no Trust Fund will engage in any business activities or have
any assets or obligations prior to the issuance of the related series of
Certificates. Accordingly, no financial statements with respect to any Trust
Fund will be included in this Prospectus or in the related Prospectus
Supplement. The Depositor has determined that its financial statements will not
be material to the offering of any Offered Certificates.
RATING
It is a condition to the issuance of any class of Offered Certificates that
they shall have been rated not lower than investment grade, that is, in one of
the four highest rating categories, by at least one Rating Agency.
Ratings on mortgage pass-through certificates address the likelihood of
receipt by the holders thereof of all collections on the underlying mortgage
assets to which such holders are entitled. These ratings address the structural,
legal and issuer-related aspects associated with such certificates, the nature
of the underlying mortgage assets and the credit quality of the guarantor, if
any. Ratings on mortgage pass-through certificates do not represent any
assessment of the likelihood of principal prepayments by borrowers or of the
degree by which such prepayments might differ from those originally anticipated.
As a result, Certificateholders might suffer a lower than anticipated yield,
and, in addition, holders of Stripped Interest Certificates might, in extreme
cases fail to recoup their initial investments. Furthermore, ratings on mortgage
pass-through certificates do not address the price of such certificates or the
suitability of such certificates to the investor.
A security rating is not a recommendation to buy, sell or hold securities
and may be subject to revision or withdrawal at any time by the assigning rating
organization. Each security rating should be evaluated independently of any
other security rating.
107
INDEX OF PRINCIPAL TERMS
1986 Act ............................................................ 75
1998 Policy Statement ............................................... 105
Accrual Certificates ................................................ 4
Accrued Certificate Interest ........................................ 34
Act ................................................................. 67
ADA ................................................................. 70
ARM Loans ........................................................... 23
Available Distribution Amount ....................................... 33
Bankruptcy Code ..................................................... 64
Book-Entry Certificates ............................................. 32
Call Risk ........................................................... 10
Cash Flow Agreement ................................................. 6
CERCLA .............................................................. 67
Certificate Account ................................................. 26
Certificate Balance ................................................. 4
Certificate Owner ................................................... 39
Certificates ........................................................ i
Code ................................................................ 7, 72
Commercial Properties ............................................... 1, 20
Commission .......................................................... iii
Companion Class ..................................................... 35
Condemnation Proceeds ............................................... 46
Controlled Amortization Class ....................................... 35
Controlled Amortization Classes ..................................... 3
Cooperatives ........................................................ 20
CPR ................................................................. 29
Credit Support ...................................................... 5
Cut-off Date ........................................................ 5, 34
DBNY ................................................................ 101
DBSI ................................................................ 101
Debt Service Coverage Ratio ......................................... 21
Definitive Certificates ............................................. 32
Depositor ........................................................... i
Determination Date .................................................. 27, 33
Deutsche Bank Group ................................................. 32
Disqualified Organization ........................................... 85
Distribution Date ................................................... 4
Distribution Date Statement ......................................... 36
DOL ................................................................. 99
DTC iii, ............................................................ 38
DTC Participants .................................................... 38
Due Dates ........................................................... 22
Due Period .......................................................... 27
Equity Participation ................................................ 23
ERISA ............................................................... 7, 99
ERISA Plans ......................................................... 99
Excess Funds ........................................................ 31
Exchange Act ........................................................ iv
Exemption ........................................................... 100
Exemption Rating Agencies ........................................... 101
Extension Risk ...................................................... 10
FAMC ................................................................ 25
FHLMC ............................................................... 25
Financial Intermediary .............................................. 39
FNMA ................................................................ 25
Garn Act ............................................................ 68
GNMA ................................................................ 25
Grantor Trust Certificates .......................................... 7
Insurance Proceeds .................................................. 46
IRS ................................................................. 48
Letter of Credit Bank ............................................... 58
Liquidation Proceeds ................................................ 46
Loan-to-Value Ratio ................................................. 22
Lock-out Date ....................................................... 23
Lock-out Period ..................................................... 23
Manager ............................................................. 1
Master Servicer ..................................................... 1
MBS ................................................................. i, 2, 20
MBS Administrator ................................................... 1
MBS Agreement ....................................................... 25
MBS Issuer .......................................................... 25
MBS Servicer ........................................................ 25
MBS Trustee ......................................................... 25
Mortgage Asset Pool ................................................. i
Mortgage Asset Seller ............................................... 20
Mortgage Assets ..................................................... i, 20
Mortgage Loans ...................................................... i, 1, 20
Mortgage Notes ...................................................... 20
Mortgage Rate ....................................................... 2
Mortgaged Property .................................................. 20
Mortgages ........................................................... 20
Multifamily Properties .............................................. 20
Multifamily Property ................................................ 1
Net Leases .......................................................... 22
Net Operating Income ................................................ 21
Non-U.S. Person ..................................................... 91
Nonrecoverable Advance .............................................. 36
Notional Amount ..................................................... 4
OCC ................................................................. 104
Offered Certificates ................................................ i
OID Regulations ..................................................... 75
Original Issue Discount ............................................. 78
Originator .......................................................... 20
parties in interest ................................................. 99
Pass-Through Entity ................................................. 85
Pass-Through Rate ................................................... 4
Percentage Interest ................................................. 33
Permitted Investments ............................................... 45
108
Plan Asset Regulations .............................................. 99
Pooling Agreement ................................................... 3
Prepayment Assumption ............................................... 76
Prepayment Interest Shortfall ....................................... 27
Prepayment Premium .................................................. 23
Prospectus Supplement ............................................... i
Purchase Price ...................................................... 41
Random Lot Certificates ............................................. 75
Rating Agency ....................................................... 7
Record Date ......................................................... 33
Regular Certificateholder ........................................... 75
Regular Certificates ................................................ 7
Related Proceeds .................................................... 36
Relief Act .......................................................... 71
REMIC ............................................................... ii
REMIC Administrator ................................................. iii, 1
REMIC Certificates .................................................. 72
REMIC Pool .......................................................... 72
REMIC Regulations ................................................... 72
REO Property ........................................................ 43
Residual Certificateholders ......................................... 82
Residual Certificates ............................................... 7
Restricted Group .................................................... 101
Retail Property ..................................................... 2, 20
Senior Certificates ................................................. 3
Senior Liens ........................................................ 20
Service ............................................................. 74
SMMEA ............................................................... 7
SPA ................................................................. 29
Special Servicer .................................................... 1
Standard Certificateholder .......................................... 92
Standard Certificates ............................................... 92
Startup Day ......................................................... 73
Stripped Certificateholder .......................................... 97
Stripped Certificates ............................................... 93
Stripped Interest Certificates ...................................... 3
Stripped Principal Certificates ..................................... 3
Sub-Servicer ........................................................ 45
Sub-Servicing Agreement ............................................. 45
Subordinate Certificates ............................................ 3
Tax Exempt Investor ................................................. 103
Tax Favored Plans ................................................... 99
Title V ............................................................. 70
Treasury ............................................................ 72
Trust Assets ........................................................ iii
Trust Fund .......................................................... i
Trustee ............................................................. 1
U.S. Person ......................................................... 87
UBTI ................................................................ 103
UCC ................................................................. 60
Underwriter ......................................................... 101
Value ............................................................... 22
Voting Rights ....................................................... 38
Warranting Party .................................................... 42
109
This diskette relates to the prospectus supplement in regard to the COMM
2004-LNB2, Commercial Mortgage Pass-Through Certificates. This diskette should
be reviewed only in conjunction with the entire prospectus supplement. This
diskette does not contain all relevant information relating to the underlying
Mortgage Loans. Such information is described elsewhere in the prospectus
supplement. Any information contained on this diskette will be more fully
described elsewhere in the prospectus supplement. The information on this
diskette should not be viewed as projections, forecasts, predictions or opinions
with respect to value. Prior to making any investment decision, a prospective
investor shall receive and should carefully review the prospectus supplement.
"Annex A COMM 2004-LNB2.xls" is a Microsoft Excel*, Version 5.0 spreadsheet that
provides in electronic format certain loan-level information shown in Annex A,
as well as certain Mortgage Loan and Mortgaged Property information shown in
Annex A. This spreadsheet can be put on a user-specified hard drive or network
drive. Open this file as you would normally open any spreadsheet in Microsoft
Excel. After the file is opened, a disclaimer will be displayed. READ THE
DISCLAIMER CAREFULLY.
NOTHING IN THIS DISKETTE SHOULD BE CONSIDERED AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY THE CERTIFICATES.
- ------------------
* Microsoft is a registered trademark of Microsoft Corporation.
=============================================== ===============================================
NO DEALER, SALESPERSON OR OTHER PERSON IS
AUTHORIZED TO GIVE ANY INFORMATION OR TO
REPRESENT ANYTHING NOT CONTAINED IN THIS
PROSPECTUS AND PROSPECTUS SUPPLEMENT. YOU MUST
NOT RELY ON ANY AUTHORIZED INFORMATION OR
REPRESENTATIONS. THIS PROSPECTUS AND PROSPECTUS $900,610,000
SUPPLEMENT IS AN OFFER TO SELL ONLY THE (APPROXIMATE)
CERTIFICATES OFFERED HEREBY, BUT ONLY UNDER
CIRCUMSTANCES AND IN JURISDICTIONS WHERE IT IS
LAWFUL TO DO SO. THE INFORMATION CONTAINED IN DEUTSCHE BANK SECURITIES
THIS PROSPECTUS AND PROSPECTUS SUPPLEMENT IS ABN AMRO INCORPORATED
CURRENT ONLY AS OF ITS DATE.
BANC OF AMERICA SECURITIES LLC
---------------- CITIGROUP
MERRILL LYNCH & CO.
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
Executive Summary ...................... S-5
Summary of the Prospectus Supplement ... S-8
Risk Factors ........................... S-27 COMM 2004-LNB2
Description of the Mortgage Pool ....... S-55
Description of the Offered Certificates S-86
Yield and Maturity Considerations ...... S-105
The Pooling and Servicing Agreement .... S-115 COMMERCIAL MORTGAGE
Use of Proceeds ........................ S-160 PASS-THROUGH CERTIFICATES
Certain Federal Income Tax Consequences S-160
ERISA Considerations ................... S-162 ------------------------------
Legal Investment ....................... S-164
Method of Distribution ................. S-164 PROSPECTUS SUPPLEMENT
Legal Matters .......................... S-166
Ratings ................................ S-166 ------------------------------
Index of Principal Terms ............... S-167
Until the date that is ninety days from the
date of this prospectus supplement, all dealers
that buy, sell or trade the Offered FEBRUARY __, 2004
Certificates, whether or not participating in
this offering, may be required to deliver a
prospectus supplement and the accompanying
prospectus. This is in addition to the dealersO
obligation to deliver a prospectus supplement
and the accompanying prospectus when acting as
underwriters and with respect to their unsold
allotments or subscriptions.
=============================================== ===============================================