Filed Pursuant to Rule 424(b)(5)
Registration File No.: 333-108944
PROSPECTUS SUPPLEMENT
(TO ACCOMPANY PROSPECTUS DATED FEBRUARY 4, 2004)
$924,858,000 (APPROXIMATE)
(OFFERED CERTIFICATES)
WACHOVIA BANK COMMERCIAL MORTGAGE TRUST
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2004-C10
WACHOVIA COMMERCIAL MORTGAGE SECURITIES, INC.
(DEPOSITOR)
YOU SHOULD CAREFULLY CONSIDER THE RISK FACTORS BEGINNING
ON PAGE S-44 OF THIS PROSPECTUS SUPPLEMENT AND ON PAGE
14 OF THE ACCOMPANYING PROSPECTUS.
Neither the offered certificates nor the underlying
mortgage loans are insured or guaranteed by any
government agency or instrumentality.
The offered certificates will represent interests in the
trust fund only. They will not represent obligations of
any other party.
The offered certificates will not be listed on any
national securities exchange or any automated quotation
system of any registered securities association.
This prospectus supplement may be used to offer and
sell the offered certificates only if it is accompanied by
the prospectus dated February 4, 2004.
THE TRUST FUND:
o As of February 11, 2004, the mortgage loans included in the trust fund will
have an aggregate principal balance of approximately $1,290,099,569.
o The trust fund will consist of a pool of 102 fixed rate mortgage loans.
o The mortgage loans are secured by first liens on commercial and multifamily
properties.
o All of the mortgage loans were originated by Wachovia Bank, National
Association, Artesia Mortgage Capital Corporation or Citigroup Global
Markets Realty Corp.
THE CERTIFICATES:
o The trust fund will issue twenty-seven classes of certificates.
o Only the eight classes of offered certificates described following table
are being offered by this prospectus supplement and the accompanying
prospectus.
=================================================================================================================================
ORIGINAL PERCENTAGE OF ASSUMED FINAL EXPECTED
CERTIFICATE CUT-OFF DATE PASS-THROUGH DISTRIBUTION S&P/MOODY'S
CLASS BALANCE(1) POOL BALANCE RATE DATE(2) CUSIP NO. RATING(3)
- ---------------------------------------------------------------------------------------------------------------------------------
Class A-1 ......... $ 67,117,000 5.202% 3.0650% December 15, 2008 929766 NM1 AAA/Aaa
Class A-2 ......... $104,012,000 8.062% 3.8570% December 15, 2010 929766 NN9 AAA/Aaa
Class A-3 ......... $ 71,285,000 5.526% 4.3900% February 15, 2013 929766 NP4 AAA/Aaa
Class A-4 ......... $579,236,000 44.899% 4.7480% February 15, 2014 929766 NQ2 AAA/Aaa
Class B ........... $ 38,703,000 3.000% 4.8120% February 15, 2014 929766 NR0 AA/Aa2
Class C ........... $ 16,127,000 1.250% 4.8420% February 15, 2014 929766 NS8 AA-/Aa3
Class D ........... $ 32,252,000 2.500% 4.8810% February 15, 2014 929766 NT6 A/A2
Class E ........... $ 16,126,000 1.250% 4.9310% February 15, 2014 929766 NU3 A-/A3
=================================================================================================================================
(Footnotes explaining the table are on page S-2)
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THE OFFERED CERTIFICATES OR HAS
DETERMINED THAT THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS IS
ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
Wachovia Capital Markets, LLC and Citigroup Global Markets Inc. are acting
as co-lead managers for this offering. Citigroup Global Markets Inc. is acting
as sole bookrunner with respect to 17.32% of the Class A-4 certificates.
Wachovia Capital Markets, LLC is acting as sole bookrunner with respect to the
remainder of the Class A-4 certificates and all other classes of offered
certificates. Wachovia Capital Markets, LLC, Citigroup Global Markets Inc.,
Banc of America Securities LLC and Goldman, Sachs & Co. are required to
purchase the offered certificates from us, subject to certain conditions. The
underwriters will offer the offered certificates to the public from time to
time in negotiated transactions or otherwise at varying prices to be determined
at the time of sale. We expect to receive from this offering approximately
100.48% of the initial certificate balance of the offered certificates, plus
accrued interest from February 1, 2004 before deducting expenses.
We expect that delivery of the offered certificates will be made in
book-entry form on or about February 26, 2004.
WACHOVIA SECURITIES CITIGROUP
BANC OF AMERICA SECURITIES LLC GOLDMAN, SACHS & CO.
February 12, 2004
WACHOVIA BANK COMMERCIAL MORTGAGE TRUST
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES WBCMT 2004-C10
GEOGRAPHIC OVERVIEW OF MORTGAGE POOL (1)
[MAP OMITTED]
WASHINGTON PENNSYLVANIA FLORIDA
2 properties 1 property 15 properties
$17,120,419 $2,557,666 $266,602,912
1.3% of total 0.2% of total 20.7% of total
IDAHO NEW YORK KENTUCKY
1 property 5 properties 1 property
$6,225,000 $303,623,333 $1,680,000
0.5% of total 23.5% of total 0.1% of total
UTAH CONNECTICUT ALABAMA
1 property 1 property 3 properties
$13,075,815 $3,447,072 $29,978,116
1.0% of total 0.3% of total 2.3% of total
WYOMING NEW JERSEY MISSISSIPPI
1 property 3 properties 2 properties
$459,631 $45,969,565 $2,962,093
0.04% of total 3.6% of total 0.2% of total
IOWA DISTRICT OF COLUMBIA ARKANSAS
1 property 1 property 2 properties
$1,747,489 $5,592,000 $7,440,964
0.1% of total 0.4% of total 0.6% of total
MINNESOTA MARYLAND TEXAS
2 properties 2 properties 5 properties
$8,635,672 $18,326,537 $22,074,536
0.7% of total 1.4% of total 1.7% of total
ILLINOIS VIRGINIA OKLAHOMA
5 properties 2 properties 2 properties
$98,586,031 $27,188,030 $2,343,000
7.6% of total 2.1% of total 0.2% of total
INDIANA WEST VIRGINIA NEW MEXICO
1 property 1 property 2 properties
$11,840,000 $18,384,629 $3,008,436
0.9% of total 1.4% of total 0.2% of total
MICHIGAN SOUTH CAROLINA COLORADO
2 properties 8 properties 3 properties
$5,728,122 $37,208,345 $10,065,948
0.4% of total 2.9% of total 0.8% of total
OHIO GEORGIA ARIZONA
2 properties 10 properties 3 properties
$4,784,372 $120,012,962 $34,967,229
0.4% of total 9.3% of total 2.7% of total
SOUTHERN CALIFORNIA(2) CALIFORNIA NORTHERN CALIFORNIA(2)
5 properties 7 properties 2 properties
$103,250,000 $110,856,021 $7,606,021
8.0% of total 8.6% of total 8.6% of total
NEVADA OREGON
4 properties 1 property
$43,907,625 $3,700,000
3.4% of total 0.3% of total
MORTGAGED PROPERTIES BY PROPERTY TYPE [GRAPHIC OMITTED] (greater than) 10.0%
[GRAPHIC OMITTED] of Initial Pool Balance
Mobile Home Park 0.9% [GRAPHIC OMITTED] (greater than) 5.0% - 10.0%
Mixed Use 1.4% of Initial Pool Balance
Hospitality 1.7%
Multifamily 22.3% [GRAPHIC OMITTED] (greater than) 1.0% - 5.0%
Retail 29.2% of Initial Pool Balance
Industrial 0.4%
Special Purpose 0.4% [GRAPHIC OMITTED] (less than or equal to) 1.0%
Office 43.9% of Initial Pool Balance
GEOGRAPHIC OVERVIEW OF MORTGAGED PROPERTIES
(1) All numerical information concerning the mortgage loans inlcuded in the trust fund is
provided on an approximate basis.
(2) For purposes of determining whether a mortgaged property is located in Northern or
Southern California, mortgaged properties located north of San Luis Obispo County,
Kern County and San Bernardino County were included in Northern California and mortgaged
properties located in and south of such counties were included in Southern California.
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
We provide information to you about the offered certificates 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. You should read both this
prospectus supplement and the prospectus before investing in any of the offered
certificates.
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. THE INFORMATION IN THIS
DOCUMENT MAY ONLY BE ACCURATE AS OF THE DATE OF THIS DOCUMENT. IF THE
DESCRIPTIONS OF THE OFFERED CERTIFICATES VARY BETWEEN THE ACCOMPANYING
PROSPECTUS AND THIS PROSPECTUS SUPPLEMENT, YOU SHOULD RELY ON THE INFORMATION
IN THIS PROSPECTUS SUPPLEMENT.
This prospectus supplement begins with several introductory sections
describing the offered certificates and the trust fund in abbreviated form:
o SUMMARY OF PROSPECTUS SUPPLEMENT, commencing on page S-5 of this
prospectus supplement, which gives a brief introduction of the key
features of the offered certificates and a description of the mortgage
loans included in the trust fund; and
o RISK FACTORS, commencing on page S-44 of this prospectus supplement,
which describes risks that apply to the offered certificates which are in
addition to those described in the prospectus.
This prospectus supplement and the accompanying prospectus include cross
references to sections in these materials where you can find further related
discussions. The Tables of Contents in this prospectus supplement and the
accompanying prospectus identify the pages where these sections are located.
You can find a listing of the pages where capitalized terms used in this
prospectus supplement are defined under the caption "INDEX OF DEFINED TERMS"
beginning on page S-253 in this prospectus supplement.
In this prospectus supplement, the terms "depositor," "we," "us" and "our"
refer to Wachovia Commercial Mortgage Securities, Inc.
WE DO NOT INTEND THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS TO BE AN OFFER OR SOLICITATION:
o if used in a jurisdiction in which such offer or solicitation is not
authorized;
o if the person making such offer or solicitation is not qualified to do
so; or
o if such offer or solicitation is made to anyone to whom it is unlawful
to make such offer or solicitation.
This prospectus supplement and the accompanying prospectus may be used by
us, Wachovia Capital Markets, LLC, our affiliate, and any other of our
affiliates when required under the federal securities laws in connection with
offers and sales of offered certificates in furtherance of market-making
activities in offered certificates. Wachovia Capital Markets, LLC or any such
other affiliate may act as principal or agent in these transactions. Sales will
be made at prices related to prevailing market prices at the time of sale or
otherwise.
S-1
(Footnotes to table on the front cover)
- -----------
(1) Subject to a permitted variance of plus or minus 5.0%.
(2) The Assumed Final Distribution Date has been determined on the basis of
the assumptions set forth in "DESCRIPTION OF THE CERTIFICATES--Assumed
Final Distribution Date; Rated Final Distribution Date" in this
prospectus supplement and a 0% CPR (as defined in "YIELD AND MATURITY
CONSIDERATIONS--Weighted Average Life" in this prospectus supplement).
The Rated Final Distribution Date is the distribution date to occur in
February 2041. See "DESCRIPTION OF THE CERTIFICATES--Assumed Final
Distribution Date; Rated Final Distribution Date" and "RATINGS" in this
prospectus supplement.
(3) By each of Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., and Moody's Investors Service, Inc. See
"RATINGS" in this prospectus supplement.
S-2
TABLE OF CONTENTS
PAGE
------
SUMMARY OF PROSPECTUS SUPPLEMENT .......................................... S-5
OVERVIEW OF THE CERTIFICATES ............................................. S-6
THE PARTIES .............................................................. S-8
IMPORTANT DATES AND PERIODS .............................................. S-10
THE CERTIFICATES ......................................................... S-11
THE MORTGAGE LOANS ....................................................... S-30
RISK FACTORS .............................................................. S-44
DESCRIPTION OF THE MORTGAGE POOL .......................................... S-92
General .................................................................. S-92
Mortgage Loan History .................................................... S-93
Certain Terms and Conditions of the Mortgage Loans ....................... S-94
Certain State-Specific Considerations .................................... S-98
Assessments of Property Condition ........................................ S-99
Co-Lender Loans .......................................................... S-100
Mezzanine Loans .......................................................... S-107
Additional Mortgage Loan Information ..................................... S-108
Twenty Largest Mortgage Loans ............................................ S-147
The Mortgage Loan Sellers ................................................ S-181
Underwriting Standards ................................................... S-181
Assignment of the Mortgage Loans; Repurchases and Substitutions .......... S-183
Representations and Warranties; Repurchases and Substitutions ............ S-185
Repurchase or Substitution of Cross-Collateralized Mortgage Loans ........ S-187
Changes in Mortgage Pool Characteristics ................................. S-188
SERVICING OF THE MORTGAGE LOANS ........................................... S-188
General .................................................................. S-188
The Master Servicer and the Special Servicer ............................. S-190
Servicing and Other Compensation and Payment of Expenses ................. S-193
Modifications, Waivers and Amendments .................................... S-195
The Controlling Class Representative ..................................... S-197
Defaulted Mortgage Loans; REO Properties; Purchase Option ................ S-201
Inspections; Collection of Operating Information ......................... S-203
DESCRIPTION OF THE CERTIFICATES ........................................... S-204
General .................................................................. S-204
Registration and Denominations ........................................... S-204
Certificate Balances and Notional Amount ................................. S-206
Pass-Through Rates ....................................................... S-209
Distributions ............................................................ S-212
Subordination; Allocation of Losses and Certain Expenses ................. S-224
P&I Advances ............................................................. S-227
Appraisal Reductions ..................................................... S-229
Reports to Certificateholders; Available Information ..................... S-230
Assumed Final Distribution Date; Rated Final Distribution Date ........... S-235
Voting Rights ............................................................ S-236
Termination .............................................................. S-236
The Trustee .............................................................. S-237
YIELD AND MATURITY CONSIDERATIONS ......................................... S-238
Yield Considerations ..................................................... S-238
Weighted Average Life .................................................... S-241
S-3
PAGE
------
USE OF PROCEEDS ......................................................... S-245
MATERIAL FEDERAL INCOME TAX CONSEQUENCES ................................ S-245
General ................................................................ S-245
Taxation of the Offered Certificates ................................... S-246
ERISA CONSIDERATIONS .................................................... S-247
LEGAL INVESTMENT ........................................................ S-249
METHOD OF DISTRIBUTION .................................................. S-250
LEGAL MATTERS ........................................................... S-251
RATINGS ................................................................. S-251
INDEX OF DEFINED TERMS .................................................. S-253
ANNEX A-1
Certain Characteristics of the Mortgage Loans and
Mortgaged Properties .................................................. A-1
ANNEX A-1A
Certain Characteristics of the Mortgage Loans and
Mortgaged Properties in Loan Group 1 .................................. A-1A
ANNEX A-1B
Certain Characteristics of the Mortgage Loans and
Mortgaged Properties in Loan Group 2 .................................. A-1B
ANNEX A-2
Certain Information Regarding Multifamily Mortgaged Properties ......... A-2
ANNEX A-3
Reserve Account Information ............................................ A-3
ANNEX A-4
Commercial Tenant Schedule ............................................. A-4
ANNEX A-5
Certain Characteristics of the Mortgage Loans and
Mortgaged Properties (Crossed and Portfolios) ......................... A-5
ANNEX B
Form of Distribution Date Statement .................................... B-1
ANNEX C
Class X-P Reference Rate Schedule ...................................... C-1
S-4
SUMMARY OF PROSPECTUS SUPPLEMENT
o THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THIS PROSPECTUS
SUPPLEMENT AND DOES NOT CONTAIN ALL OF THE INFORMATION THAT YOU NEED TO
CONSIDER IN MAKING YOUR INVESTMENT DECISION. TO UNDERSTAND THE TERMS OF
THE OFFERED CERTIFICATES, YOU MUST CAREFULLY READ THIS ENTIRE PROSPECTUS
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS.
o THIS SUMMARY PROVIDES AN OVERVIEW OF CERTAIN CALCULATIONS, CASH FLOWS
AND OTHER INFORMATION TO AID YOUR UNDERSTANDING AND IS QUALIFIED BY THE
FULL DESCRIPTION OF THESE CALCULATIONS, CASH FLOWS AND OTHER INFORMATION
IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS.
o WE PROVIDE INFORMATION IN THIS PROSPECTUS SUPPLEMENT ON THE CERTIFICATES
THAT ARE NOT OFFERED BY THIS PROSPECTUS SUPPLEMENT ONLY TO ENHANCE YOUR
UNDERSTANDING OF THE OFFERED CERTIFICATES. WE ARE NOT OFFERING THE
NON-OFFERED CERTIFICATES PURSUANT TO THIS PROSPECTUS SUPPLEMENT.
o FOR PURPOSES OF MAKING DISTRIBUTIONS TO THE CLASS A-1, CLASS A-2, CLASS
A-3, CLASS A-4 AND CLASS A-1A CERTIFICATES, THE POOL OF MORTGAGE LOANS
WILL BE DEEMED TO CONSIST OF 2 DISTINCT LOAN GROUPS, LOAN GROUP 1 AND
LOAN GROUP 2.
o UNLESS OTHERWISE STATED, ALL PERCENTAGES OF THE MORTGAGE LOANS INCLUDED
IN THE TRUST FUND, OR OF ANY SPECIFIED GROUP OF MORTGAGE LOANS INCLUDED
IN THE TRUST FUND, REFERRED TO IN THIS PROSPECTUS SUPPLEMENT ARE
CALCULATED USING THE AGGREGATE PRINCIPAL BALANCE OF THE MORTGAGE LOANS
INCLUDED IN THE TRUST FUND AS OF THE CUT-OFF DATE (WHICH IS FEBRUARY 11,
2004 WITH RESPECT TO 86 OF THE MORTGAGE LOANS AND FEBRUARY 1, 2004 WITH
RESPECT TO 16 OF THE MORTGAGE LOANS) AFTER GIVING EFFECT TO PAYMENTS DUE
ON OR BEFORE SUCH DATE WHETHER OR NOT RECEIVED. THE CUT-OFF DATE BALANCE
OF EACH MORTGAGE LOAN INCLUDED IN THE TRUST FUND AND EACH CUT-OFF DATE
CERTIFICATE BALANCE IN THIS PROSPECTUS SUPPLEMENT ASSUMES THE TIMELY
RECEIPT OF PRINCIPAL SCHEDULED TO BE PAID (IF ANY) ON EACH MORTGAGE LOAN
AND NO DEFAULTS, DELINQUENCIES OR PREPAYMENTS ON ANY MORTGAGE LOAN ON OR
BEFORE THE RELATED CUT-OFF DATE. PERCENTAGES OF MORTGAGED PROPERTIES ARE
REFERENCES TO THE PERCENTAGES OF THE AGGREGATE PRINCIPAL BALANCE OF ALL
THE MORTGAGE LOANS INCLUDED IN THE TRUST FUND, OR OF ANY SPECIFIED GROUP
OF MORTGAGE LOANS INCLUDED IN THE TRUST FUND, AS OF THE CUT-OFF DATE
REPRESENTED BY THE AGGREGATE PRINCIPAL BALANCE OF THE RELATED MORTGAGE
LOANS AS OF THE CUT-OFF DATE.
o ALL NUMERICAL OR STATISTICAL INFORMATION CONCERNING THE MORTGAGE LOANS
INCLUDED IN THE TRUST FUND IS PROVIDED ON AN APPROXIMATE BASIS.
S-5
OVERVIEW OF THE CERTIFICATES
The table below lists certain summary information concerning the Wachovia
Bank Commercial Mortgage Trust, Commercial Mortgage Pass-Through Certificates,
Series 2004-C10, which we are offering pursuant to the accompanying prospectus
and this prospectus supplement. Each certificate represents an interest in the
mortgage loans included in the trust fund and the other assets of the trust
fund. The table also describes the certificates that are not offered by this
prospectus supplement (other than the Class Z-I, Class Z-II, Class Z-III, Class
R-I and Class R-II) which have not been registered under the Securities Act of
1933, as amended, and which will be sold to investors in private transactions.
CLOSING DATE
CERTIFICATE PERCENTAGE
BALANCE OR OF CUT-OFF
NOTIONAL DATE POOL CREDIT
CLASS AMOUNT(1) BALANCE SUPPORT
- ------------- ------------------------ ------------ ------------
Class A-1 ... $ 67,117,000 5.202% 16.750%
Class A-2 ... $ 104,012,000 8.062% 16.750%
Class A-3 ... $ 71,285,000 5.526% 16.750%
Class A-4 ... $ 579,236,000 44.899% 16.750%
Class B ..... $ 38,703,000 3.000% 13.750%
Class C ..... $ 16,127,000 1.250% 12.500%
Class D ..... $ 32,252,000 2.500% 10.000%
Class E ..... $ 16,126,000 1.250% 8.750%
Class A-1A.. $ 252,357,000 19.561% 16.750%
Class F .... $ 19,352,000 1.500% 7.250%
Class G .... $ 14,513,000 1.125% 6.125%
Class H .... $ 17,739,000 1.375% 4.750%
Class J .... $ 12,901,000 1.000% 3.750%
Class K .... $ 8,063,000 0.625% 3.125%
Class L .... $ 6,451,000 0.500% 2.625%
Class M .... $ 4,838,000 0.375% 2.250%
Class N .... $ 4,838,000 0.375% 1.875%
Class O .... $ 4,838,000 0.375% 1.500%
Class P .... $ 19,351,569 1.500% 0.000%
Class SL ... $ 24,000,000 N/A N/A
Class X-P .. $ 1,246,996,000(7) N/A N/A
Class X-C .. $ 1,290,099,569(7) N/A N/A
WEIGHTED CASH FLOW
PASS-THROUGH INITIAL AVERAGE OR PRINCIPAL EXPECTED
RATE PASS-THROUGH LIFE WINDOW S&P/MOODY'S
CLASS DESCRIPTION RATE (YEARS)(2) (MON./YR.)(2) RATING(3)
- ------------- -------------- -------------- ------------ ------------------ ------------
Class A-1 ... Fixed 3.0650% 3.50 03/04 - 12/08 AAA/Aaa
Class A-2 ... Fixed 3.8570% 5.50 12/08 - 12/10 AAA/Aaa
Class A-3 ... Fixed 4.3900% 7.60 12/10 - 02/13 AAA/Aaa
Class A-4 ... Fixed 4.7480% 9.86 02/13 - 02/14 AAA/Aaa
Class B ..... Fixed 4.8120% 9.97 02/14 - 02/14 AA/Aa2
Class C ..... Fixed 4.8420% 9.97 02/14 - 02/14 AA-/Aa3
Class D ..... Fixed 4.8810% 9.97 02/14 - 02/14 A/A2
Class E ..... Fixed 4.9310% 9.97 02/14 - 02/14 A-/A3
Class A-1A.. Fixed 4.3240% (4) (4) (4)
Class F .... Fixed(5) 5.0890% (4) (4) (4)
Class G .... Fixed(5) 5.1880% (4) (4) (4)
Class H .... WAC(6) 5.4893% (4) (4) (4)
Class J .... Fixed(5) 5.0070% (4) (4) (4)
Class K .... Fixed(5) 5.0070% (4) (4) (4)
Class L .... Fixed(5) 5.0070% (4) (4) (4)
Class M .... Fixed(5) 5.0070% (4) (4) (4)
Class N .... Fixed(5) 5.0070% (4) (4) (4)
Class O .... Fixed(5) 5.0070% (4) (4) (4)
Class P .... Fixed(5) 5.0070% (4) (4) (4)
Class SL ... Fixed 5.7600% (4) (4) (4)
Class X-P .. Variable 1.0250% (7) (7) (7)
Class X-C .. Variable 0.0514% (7) (7) (7)
- ----------
(1) Subject to a permitted variance of plus or minus 5.0%.
(2) Based on no prepayments and the other assumptions set forth under "YIELD
AND MATURITY CONSIDERATIONS--Weighted Average Life" in this prospectus
supplement.
(3) By each of Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., and Moody's Investors Service, Inc. See
"RATINGS" in this prospectus supplement.
(4) Not offered by this prospectus supplement. Any information we provide
herein regarding the terms of these certificates is provided only to
enhance your understanding of the offered certificates.
(5) The pass-through rates applicable to the Class F, Class G, Class J, Class
K, Class L, Class M, Class N, Class O and Class P certificates for any
distribution date will equal the lesser of the applicable rate set forth
above and the applicable weighted average net mortgage rate (calculated
as described herein) for such date.
(6) The pass-through rate applicable to the Class H certificates for any
distribution date will be equal to the applicable weighted average net
mortgage rate (calculated as described herein) for such date less 0.08%
per annum.
S-6
(7) The Class X-C and Class X-P certificates are not offered by this
prospectus supplement. Any information we provide herein regarding the
terms of these certificates is provided only to enhance your
understanding of the offered certificates. The Class X-C and Class X-P
certificates will not have certificate balances and their holders will
not receive distributions of principal, but such holders are entitled to
receive payments of the aggregate interest accrued on the notional amount
of the Class X-C or Class X-P certificates, as the case may be, as
described in this prospectus supplement. The interest rates applicable to
the Class X-C and Class X-P certificates for each distribution date will
be as described in this prospectus supplement. See "DESCRIPTION OF THE
CERTIFICATES--Pass-Through Rates" in this prospectus supplement.
[ ] Offered certificates
[ ] Private certificates
S-7
THE PARTIES
THE TRUST FUND................ The trust fund will be created on or about
the closing date pursuant to a pooling and
servicing agreement, dated as of February 1,
2004, by and among the depositor, the master
servicer, the special servicers and the
trustee.
THE DEPOSITOR................. Wachovia Commercial Mortgage Securities, Inc.
We are a wholly owned subsidiary of Wachovia
Bank, National Association, which is one of the
mortgage loan sellers, the master servicer, one
of the special servicers and an affiliate of
one of the underwriters. Our principal
executive office is located at 301 South
College Street, Charlotte, North Carolina
28288-0166 and our telephone number is (704)
374-6161. Neither we nor any of our affiliates
have insured or guaranteed the offered
certificates. For more detailed information,
see "THE DEPOSITOR" in the accompanying
prospectus.
On the closing date, we will sell the mortgage
loans and related assets to be included in the
trust fund to the trustee to create the trust
fund.
THE ISSUER.................... The trust fund to be established under the
pooling and servicing agreement. For more
detailed information, see "DESCRIPTION OF THE
CERTIFICATES" in this prospectus supplement and
the accompanying prospectus.
THE MORTGAGE LOAN SELLERS..... Wachovia Bank, National Association, Artesia
Mortgage Capital Corporation and Citigroup
Global Markets Realty Corp. For more
information, see "DESCRIPTION OF THE MORTGAGE
POOL--The Mortgage Loan Sellers" in this
prospectus supplement. The mortgage loan
sellers will sell and assign to us on the
closing date the mortgage loans to be included
in the trust fund. See "DESCRIPTION OF THE
MORTGAGE POOL--Representations and Warranties;
Repurchases and Substitutions" in this
prospectus supplement.
Wachovia Bank, National Association originated
63 of the mortgage loans to be included in the
trust fund representing 82.9% of the aggregate
principal balance of the pool of mortgage
loans as of the cut-off date (46 mortgage
loans in loan group 1 or 82.4% and 17 mortgage
loans in loan group 2 or 84.7%). Artesia
Mortgage Capital Corporation originated 27 of
the mortgage loans to be included in the trust
fund representing 9.4% of the aggregate
principal balance of the pool of mortgage
loans as of the cut-off date (21 mortgage
loans in loan group 1 or 7.9% and 6 mortgage
loans in loan group 2 or 15.3%). Citigroup
Global Markets Realty Corp. originated 12 of
the mortgage loans to be included in the trust
fund representing 7.8% of the aggregate
principal balance of the pool of mortgage
loans as of the cut-off date (12 mortgage
loans in loan group 1 or 9.7%).
S-8
THE MASTER SERVICER........... Wachovia Bank, National Association. Wachovia
Bank, National Association is our affiliate,
one of the mortgage loan sellers, a special
servicer and an affiliate of one of the
underwriters. The master servicer will be
primarily responsible for collecting payments
and gathering information with respect to the
mortgage loans included in the trust fund
(including the Starrett-Lehigh Building
subordinate loan) and the companion loans which
are not part of the trust fund. See "SERVICING
OF THE MORTGAGE LOANS--The Master Servicer and
the Special Servicer" in this prospectus
supplement.
THE SPECIAL SERVICERS......... Initially, (i) Lennar Partners, Inc. with
respect to each mortgage loan other than the 11
Madison Avenue mortgage loan, and (ii) Wachovia
Bank, National Association with respect to the
11 Madison Avenue mortgage loan. References to
the special servicer herein are references to
the special servicer for an applicable mortgage
loan as the context requires.
The special servicers will be responsible for
performing certain servicing functions with
respect to the mortgage loans included in the
trust fund (including the Starrett-Lehigh
Building subordinate loan) that, in general,
are in default or as to which default is
imminent. Some holders of certificates
(initially the holder of the Class P
certificates with respect to each mortgage
loan other than the 11 Madison Avenue mortgage
loan and the Starrett-Lehigh Building mortgage
loan) will have the right to replace the
special servicer and to select a
representative who may advise and direct the
special servicer and whose approval is
required for certain actions by the special
servicer under certain circumstances. With
respect to the 11 Madison Avenue mortgage
loan, except during the continuance of a
control appraisal period under the related
intercreditor agreement, the holder of the
most subordinate existing companion loan
related to the 11 Madison Avenue mortgage loan
may appoint or remove the special servicer
with respect to the 11 Madison Avenue mortgage
loan and, with respect to the Starrett-Lehigh
Building mortgage loan, except during the
continuance of a control appraisal period
under the related intercreditor agreement, the
holder of the Class SL certificates may
appoint or remove the special servicer with
respect to the Starrett-Lehigh Building
mortgage loan. See "SERVICING OF THE MORTGAGE
LOANS--The Master Servicer and the Special
Servicer" and "--The Controlling Class
Representative" in this prospectus supplement.
It is anticipated that Lennar Partners, Inc.
will purchase certain non-offered classes of
certificates. See "SERVICING OF THE MORTGAGE
LOANS--The Master Servicer and the Special
Servicer" in this prospectus supplement. SL
Green Funding LLC will be appointed as a
sub-servicer for the special servicer with
respect to the 11 Madison Avenue mortgage
loan.
S-9
THE TRUSTEE................... Wells Fargo Bank, N.A. The trustee will be
responsible for distributing payments to
certificateholders and delivering to
certificateholders certain reports on the
mortgage loans included in the trust fund and
the certificates. See "DESCRIPTION OF THE
CERTIFICATES--The Trustee" in this prospectus
supplement.
THE UNDERWRITERS.............. Wachovia Capital Markets, LLC, Citigroup
Global Markets Inc., Banc of America Securities
LLC and Goldman, Sachs & Co. Wachovia Capital
Markets, LLC is our affiliate and is an
affiliate of Wachovia Bank, National
Association, which is the master servicer, one
of the special servicers and one of the
mortgage loan sellers. Citigroup Global Markets
Inc. is an affiliate of Citigroup Global
Markets Realty Corp., which is one of the
mortgage loan sellers. Wachovia Capital
Markets, LLC and Citigroup Global Markets Inc.
are acting as co-lead managers for this
offering. Banc of America Securities LLC and
Goldman, Sachs & Co. are acting as co-managers
for this offering. Citigroup Global Markets
Inc. is acting as sole bookrunner with respect
to 17.32% of the Class A-4 certificates.
Wachovia Capital Markets, LLC is acting as sole
bookrunner with respect to the remainder of the
Class A-4 certificates and all other classes of
offered certificates.
IMPORTANT DATES AND PERIODS
CLOSING DATE.................. On or about February 26, 2004.
CUT-OFF DATE.................. For 86 mortgage loans, representing 91.9% of
the aggregate principal balance of the pool of
mortgage loans as of the cut-off date (63
mortgage loans in loan group 1 or 89.9% and 23
mortgage loans in loan group 2 or 100.0%),
February 11, 2004; for 16 of the mortgage
loans, representing 8.1% of the aggregate
principal balance of the pool of mortgage loans
as of the cut-off date (16 mortgage loans in
loan group 1 or 10.1%), February 1, 2004. The
cut-off date balance of each mortgage loan
included in the trust fund and each cut-off
date certificate balance in this prospectus
supplement assumes the timely receipt of
principal scheduled to be paid (if any) on each
mortgage loan and no defaults, delinquencies or
prepayments on any mortgage loan as of the
related cut-off date.
DISTRIBUTION DATE............. The fourth business day following the related
determination date.
DETERMINATION DATE............ The 11th day of each month or, if such 11th
day is not a business day, the next succeeding
business day, commencing in March 2004.
S-10
COLLECTION PERIOD............. For any distribution date, the period
beginning on the 12th day in the immediately
preceding month (or the day after the
applicable cut-off date in the case of the
first collection period) through and including
the 11th day of the month in which the
distribution date occurs. Notwithstanding the
foregoing, in the event that the last day of a
collection period is not a business day, any
payments with respect to the mortgage loans
which relate to such collection period and are
received on the business day immediately
following such last day will be deemed to have
been received during such collection period and
not during any other collection period.
THE CERTIFICATES
OFFERED CERTIFICATES.......... We are offering to you the following 8
classes of certificates of our Commercial
Mortgage Pass-Through Certificates, Series
2004-C10 pursuant to this prospectus
supplement:
Class A-1
Class A-2
Class A-3
Class A-4
Class B
Class C
Class D
Class E
PRIORITY OF DISTRIBUTIONS..... On each distribution date, the owners of the
certificates (other than the Class SL
certificates) will be entitled to distributions
of payments or other collections on the
mortgage loans (other than the Starrett-Lehigh
Building subordinate loan) that the master
servicer collected or advanced during or with
respect to the related collection period after
deducting certain fees and expenses. For
purposes of making certain distributions to the
Class A-1, Class A-2, Class A-3, Class A-4 and
Class A-1A certificates, the mortgage pool will
be deemed to consist of 2 loan groups.
o Loan group 1 will consist of (i) all of
the mortgage loans that are not secured
by multifamily properties and/or mobile
home park properties, (ii) 6 mortgage
loans that are secured by multifamily
properties and (iii) 1 mortgage loan that
is secured by a mobile home park
property.
o Loan group 2 will consist of 22 mortgage
loans that are secured by multifamily
properties and 1 mortgage loan that is
secured by a mobile home park property.
Annex A to this prospectus supplement sets
forth the loan group designation for each
mortgage loan. The trustee will distribute
amounts to the extent that the money is
available, in the following order of priority,
to pay:
S-11
----------------------------------------------
Interest, concurrently (i) pro rata, on the
Class A-1, Class A-2, Class A-3 and Class A-4
certificates from the portion of money
available attributable to mortgage loans in
loan group 1, (ii) on the Class A-1A
certificates from the portion of money
available attributable to mortgage loans in
loan group 2, and (iii) pro rata, on the
Class X-C and Class X-P certificates from any
and all money attributable to the mortgage
pool; provided, however, if on any
distribution date, the money available on
such distribution date is insufficient to pay
in full the total amount of interest to be
paid to any of the classes as described
above, money available with respect to the
entire mortgage pool will be allocated among
all those classes pro rata.
----------------------------------------------
----------------------------------------------
Principal of the Class A-1 certificates, up
to the principal distribution amount relating
to loan group 1 and, after the Class A-1A
certificate balance has been reduced to zero,
the principal distribution amount relating to
loan group 2 remaining after payments to the
Class A-1A certificates have been made, until
their certificate balance is reduced to zero.
----------------------------------------------
----------------------------------------------
Principal of the Class A-2 certificates, up
to the principal distribution amount relating
to loan group 1 and, after the Class A-1A
certificate balance has been reduced to zero,
the principal distribution amount relating to
loan group 2 remaining after payments to the
Class A-1A certificates have been made, until
their certificate balance is reduced to zero.
----------------------------------------------
----------------------------------------------
Principal of the Class A-3 certificates, up
to the principal distribution amount relating
to loan group 1 and, after the Class A-1A
certificate balance has been reduced to zero,
the principal distribution amount relating to
loan group 2 remaining after payments to the
Class A-1A certificates have been made, until
their certificate balance is reduced to zero.
----------------------------------------------
----------------------------------------------
Principal of the Class A-4 certificates, up
to the principal distribution amount relating
to loan group 1 and, after the Class A-1A
certificate balance has been reduced to zero,
the principal distribution amount relating to
loan group 2 remaining after payments to the
Class A-1A certificates have been made, until
their certificate balance is reduced to zero.
----------------------------------------------
S-12
----------------------------------------------
Principal of the Class A-1A certificates, up
to the principal distribution amount relating
to loan group 2 and, after the Class A-4
certificate balance has been reduced to zero,
the principal distribution amount relating to
loan group 1 remaining after payments to the
Class A-4 certificates have been made, until
their certificate balance is reduced to zero.
----------------------------------------------
----------------------------------------------
Reimbursement to the Class A-1, Class A-2,
Class A-3, Class A-4 and Class A-1A
certificates, pro rata, for any realized loss
and trust fund expenses borne by such
classes.
----------------------------------------------
----------------------------------------------
Interest on the Class B certificates.
----------------------------------------------
----------------------------------------------
Principal of the Class B certificates, up to
the principal distribution amount, until
their certificate balance is reduced to zero.
----------------------------------------------
----------------------------------------------
Reimbursement to the Class B certificates for
any realized losses and trust fund expenses
borne by such class.
----------------------------------------------
----------------------------------------------
Interest on the Class C certificates.
----------------------------------------------
----------------------------------------------
Principal of the Class C certificates, up to
the principal distribution amount, until
their certificate balance is reduced to zero.
----------------------------------------------
----------------------------------------------
Reimbursement to the Class C certificates for
any realized losses and trust fund expenses
borne by such class.
----------------------------------------------
----------------------------------------------
Interest on the Class D certificates.
----------------------------------------------
----------------------------------------------
Principal of the Class D certificates, up to
the principal distribution amount, until
their certificate balance is reduced to zero.
----------------------------------------------
-----------------------------------------------
Reimbursement to the Class D certificates for
any realized losses and trust fund expenses
borne by such class.
----------------------------------------------
S-13
----------------------------------------------
Interest on the Class E certificates.
----------------------------------------------
----------------------------------------------
Principal of the Class E certificates, up to
the principal distribution amount, until
their certificate balance is reduced to zero.
----------------------------------------------
----------------------------------------------
Reimbursement to the Class E certificates for
any realized losses and trust fund expenses
borne by such class.
----------------------------------------------
If, on any distribution date, the certificate
balances of the Class B through Class P
certificates have been reduced to zero, but
any two or more of the Class A-1, Class A-2,
Class A-3, Class A-4 and/or Class A-1A
certificates remain outstanding, distributions
of principal and interest will be made, pro
rata, to the outstanding Class A-1, Class A-2,
Class A-3, Class A-4 and Class A-1A
certificates. See "DESCRIPTION OF THE
CERTIFICATES--Distributions" in this
prospectus supplement.
On each Distribution Date amounts available in
respect of the Starrett-Lehigh Building
subordinate loan (net of administrative costs
and fees) will be distributed in respect of
the principal of, and interest on, the Class
SL certificates.
The Starrett-Lehigh Building subordinate loan
will support only the Class SL certificates
and amounts allocated to such loan will not be
part of funds available for distributions to
holders of the other certificates. No other
companion loans will be part of the trust and
amounts received with respect to such
companion loans will not be available for
distributions to holders of any certificates.
INTEREST...................... On each distribution date each class of
certificates (other than the Class Z-I, Class
Z-II, Class Z-III, Class R-I, Class R-II and
Class SL certificates) will be entitled to
receive:
o for each such class of certificates, one
month's interest at the applicable
pass-through rate accrued during the
calendar month prior to the related
distribution date, on the certificate
balance or notional amount, as applicable,
of such class of certificates immediately
prior to such distribution date;
o plus any interest that such class of
certificates was entitled to receive on
all prior distribution dates to the extent
not received;
o minus (other than in the case of the Class
X-C and Class X-P certificates) such
class' share of any shortfalls in interest
collections due to prepayments on mortgage
loans included in the trust fund that are
not offset by certain payments made by the
master servicer; and
S-14
o minus (other than in the case of the Class
X-C and Class X-P certificates) such
class' allocable share of any reduction in
interest accrued on any mortgage loan as a
result of a modification that reduces the
related mortgage rate and allows the
reduction in accrued interest to be added
to the stated principal balance of the
mortgage loan.
As reflected in the chart under "Priority of
Distributions" above, so long as funds are
sufficient on any distribution date to make
distributions of all interest on such
distribution date to the Class A-1, Class A-2,
Class A-3, Class A-4, Class A-1A, Class X-C
and Class X-P certificates, interest
distributions on the Class A-1, Class A-2,
Class A-3 and Class A-4 certificates will be
based upon amounts available relating to
mortgage loans in loan group 1 and interest
distributions on the Class A-1A certificates
will be based upon amounts available relating
to mortgage loans in loan group 2.
See "DESCRIPTION OF THE CERTIFICATES--
Certificate Balances and Notional Amount" and
"--Distributions" in this prospectus
supplement.
The Class X-C and Class X-P certificates will
be entitled to distributions of interest-only
on their respective notional amounts. On each
distribution date, the notional amount of the
Class X-C certificates will generally be equal
to the aggregate outstanding certificate
balances of the sequential pay certificates on
such date.
The notional amount of the Class X-P
certificates generally will equal:
(1) until the distribution date in August
2004, the sum of (a) the lesser of
$64,927,000 and the certificate balance
of the Class A-1 certificates, (b) the
lesser of $251,760,000 and the
certificate balance of the Class A-1A
certificates and (c) the aggregate
certificate balances of the 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 and Class K
certificates;
(2) after the distribution date in August
2004 through and including the
distribution date in February 2005, the
sum of (a) the lesser of $62,404,000 and
the certificate balance of the Class A-1
certificates, (b) the lesser of
$251,070,000 and the certificate balance
of the Class A-1A certificates and (c)
the aggregate certificate balances of
the 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 and
Class K certificates;
(3) after the distribution date in February
2005 through and including the
distribution date in August 2005, the
sum of (a) the lesser of $42,539,000 and
the certificate balance of the Class A-1
certificates, (b) the lesser of
S-15
$246,085,000 and the certificate balance
of the Class A-1A certificates and (c)
the aggregate certificate balances of the
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 and Class K
certificates;
(4) after the distribution date in August
2005 through and including the
distribution date in February 2006, the
sum of (a) the lesser of $19,049,000 and
the certificate balance of the Class A-1
certificates, (b) the lesser of
$240,372,000 and the certificate balance
of the Class A-1A certificates and (c)
the aggregate certificate balances of
the 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 and
Class K certificates;
(5) after the distribution date in February
2006 through and including the
distribution date in August 2006, the
sum of (a) the lesser of $98,958,000 and
the certificate balance of the Class A-2
certificates, (b) the lesser of
$234,262,000 and the certificate balance
of the Class A-1A certificates and (c)
the aggregate certificate balances of
the Class A-3, Class A-4, Class B, Class
C, Class D, Class E, Class F, Class G,
Class H, Class J and Class K
certificates;
(6) after the distribution date in August
2006 through and including the
distribution date in February 2007, the
sum of (a) the lesser of $75,887,000 and
the certificate balance of the Class A-2
certificates, (b) the lesser of
$228,421,000 and the certificate balance
of the Class A-1A certificates, (c) the
aggregate certificate balances of the
Class A-3, Class A-4, Class B, Class C,
Class D, Class E, Class F, Class G and
Class H certificates and (d) the lesser
of $11,030,000 and the certificate
balance of the Class J certificates;
(7) after the distribution date in February
2007 through and including the
distribution date in August 2007, the
sum of (a) the lesser of $53,194,000 and
the certificate balance of the Class A-2
certificates, (b) the lesser of
$222,587,000 and the certificate balance
of the Class A-1A certificates, (c) the
aggregate certificate balances of the
Class A-3, Class A-4, Class B, Class C,
Class D, Class E, Class F and Class G
certificates and (d) the lesser of
$16,717,000 and the certificate balance
of the Class H certificates;
(8) after the distribution date in August
2007 through and including the
distribution date in February 2008, the
sum of (a) the lesser of $31,428,000 and
the certificate balance of the Class A-2
certificates, (b) the lesser of
$216,996,000 and the certificate balance
of the Class A-1A certificates, (c) the
aggregate certificate balances
S-16
of the Class A-3, Class A-4, Class B,
Class C, Class D, Class E, Class F and
Class G certificates and (d) the lesser
of $5,095,000 and the certificate balance
of the Class H certificates;
(9) after the distribution date in February
2008 through and including the
distribution date in August 2008, the
sum of (a) the lesser of $60,395,000 and
the certificate balance of the Class A-3
certificates, (b) the lesser of
$211,454,000 and the certificate balance
of the Class A-1A certificates, (c) the
aggregate certificate balances of the
Class A-4, Class B, Class C, Class D,
Class E and Class F certificates and (d)
the lesser of $8,404,000 and the
certificate balance of the Class G
certificates;
(10) after the distribution date in August
2008 through and including the
distribution date in February 2009, the
sum of (a) the lesser of $8,204,000 and
the certificate balance of the Class A-3
certificates, (b) the lesser of
$175,394,000 and the certificate balance
of the Class A-1A certificates, (c) the
aggregate certificate balances of the
Class A-4, Class B, Class C, Class D and
Class E certificates and (d) the lesser
of $17,095,000 and the certificate
balance of the Class F certificates;
(11) after the distribution date in February
2009 through and including the
distribution date in August 2009, the
sum of (a) the lesser of $562,594,000
and the certificate balance of the Class
A-4 certificates, (b) the lesser of
$171,001,000 and the certificate balance
of the Class A-1A certificates, (c) the
aggregate certificate balances of the
Class B, Class C, Class D and Class E
certificates and (d) the lesser of
$7,601,000 and the certificate balance
of the Class F certificates;
(12) after the distribution date in August
2009 through and including the
distribution date in February 2010, the
sum of (a) the lesser of $536,232,000
and the certificate balance of the Class
A-4 certificates, (b) the lesser of
$166,805,000 and the certificate balance
of the Class A-1A certificates, (c) the
aggregate certificate balances of the
Class B, Class C and Class D
certificates and (d) the lesser of
$14,636,000 and the certificate balance
of the Class E certificates;
(13) after the distribution date in February
2010 through and including the
distribution date in August 2010, the
sum of (a) the lesser of $513,019,000
and the certificate balance of the Class
A-4 certificates, (b) the lesser of
$162,662,000 and the certificate balance
of the Class A-1A certificates, (c) the
aggregate certificate balances of the
Class B, Class C and Class D
certificates and (d) the lesser of
$5,950,000 and the certificate balance
of the Class E certificates;
S-17
(14) after the distribution date in August
2010 through and including the
distribution date in February 2011, the
sum of (a) the lesser of $474,880,000
and the certificate balance of the Class
A-4, (b) the lesser of $96,431,000 and
the certificate balance of the Class
A-1A certificates, (c) the aggregate
certificate balances of the Class B and
Class C certificates and (d) the lesser
of $29,967,000 and the certificate
balance of the Class D certificates;
(15) after the distribution date in February
2011, $0.
The Class X-C and Class X-P certificates will
accrue interest at a rate as described under
"Pass-Through Rates" below.
The certificates (other than the Class Z-I,
Class Z-II, Class Z-III, Class R-I, Class R-II
and Class SL certificates) will accrue
interest on the basis of a 360-day year
consisting of twelve 30-day months.
The interest accrual period with respect to
any distribution date and any class of
certificates (other than the Class Z-I, Class
Z-II, Class Z-III, Class R-I and Class R-II
certificates) is the calendar month preceding
the month in which such distribution date
occurs.
As reflected in the chart under "Priority of
Distributions" beginning on page S-11 above,
on each distribution date, the trustee will
distribute interest to the holders of the
offered certificates and the Class X-C and
Class X-P certificates:
o first, pro rata, to the Class X-C
certificates, Class X-P certificates,
Class A-1 certificates, Class A-2
certificates, Class A-3 certificates,
Class A-4 certificates and Class A-1A
certificates as described above under
"Priority of Distributions", and then to
each other class of offered certificates
in alphabetical order; and
o only to the extent funds remain after the
trustee makes all distributions of
interest and principal required to be
made on such date to each class of
certificates with a higher priority of
distribution.
You may, in certain circumstances, also
receive distributions of prepayment premiums
and yield maintenance charges collected on the
mortgage loans included in the trust fund.
Such distributions are in addition to the
distributions of principal and interest
described above. See "DESCRIPTION OF THE
CERTIFICATES--Distributions" in this
prospectus supplement.
PASS-THROUGH RATES............ The pass-through rate for each class of
certificates (other than the Class X-C, Class
X-P, Class SL, Class Z-I, Class Z-II, Class
Z-III, Class R-I and Class R-II certificates)
on each distribution date is set forth under
"OVERVIEW OF THE CERTIFICATES" in this
prospectus supplement.
S-18
The pass-through rate applicable to the Class
X-C certificates for the initial distribution
date will equal approximately 0.0514% per
annum.
The pass-through rate applicable to the Class
X-C certificates for each distribution date
will, in general, equal the weighted average
of the respective Class X-C strip rates at
which interest accrues from time to time on
the respective Class X-C components prior to
such distribution date (weighted on the basis
of the respective component balances of those
Class X-C components outstanding immediately
prior to such distribution date). Each Class
X-C component will be comprised of all or a
designated portion of the certificate balance
of one of the classes of sequential pay
certificates. In general, the certificate
balance of each class of sequential pay
certificates will constitute a separate Class
X-C component. However, if a portion, but not
all, of the certificate balance of any
particular class of sequential pay
certificates is identified under "Interest"
above as being part of the notional amount of
the Class X-P certificates immediately prior
to any distribution date, then the identified
portion of the certificate balance will also
represent one or more Class X-C components for
purposes of calculating the pass-through rate
of the Class X-C certificates, and the
remaining portion of the certificate balance
will represent one or more other Class X-C
components for purposes of calculating the
pass-through rate of the Class X-C
certificates. For each distribution date
through and including the distribution date in
February 2011, the Class X-C strip rate for
each Class X-C component will be calculated as
follows:
(1) if such Class X-C component consists of
the entire certificate balance of any
class of sequential pay certificates,
and if the certificate balance does not,
in whole or in part, also constitute a
Class X-P component immediately prior to
the distribution date, then the
applicable Class X-C strip rate will
equal the excess, if any, of (a) the
weighted average net mortgage rate for
the distribution date, over (b) the
pass-through rate in effect for the
distribution date for the applicable
class of sequential pay certificates;
(2) if such Class X-C component consists of
a designated portion (but not all) of
the certificate balance of any class of
sequential pay certificates, and if the
designated portion of the certificate
balance does not also constitute a Class
X-P component immediately prior to the
distribution date, then the applicable
Class X-C strip rate will equal the
excess, if any, of (a) the weighted
average net mortgage rate for the
distribution date, over (b) the
pass-through rate in effect for the
distribution date for the applicable
class of sequential pay certificates;
S-19
(3) if such Class X-C component consists of
a designated portion (but not all) of
the certificate balance of any class of
sequential pay certificates, and if the
designated portion of the certificate
balance also constitutes a Class X-P
component immediately prior to the
distribution date, then the applicable
Class X-C strip rate will equal the
excess, if any, of (a) the weighted
average net mortgage rate for the
distribution date, over (b) the sum of
(i) the Class X-P strip rate for the
applicable Class X-P component, and (ii)
the pass-through rate in effect for the
distribution date for the applicable
class of sequential pay certificates;
and
(4) if such Class X-C component consists of
the entire certificate balance of any
class of sequential pay certificates,
and if the certificate balance also
constitutes, in its entirety, a Class
X-P component immediately prior to such
distribution date, then the applicable
Class X-C strip rate will equal the
excess, if any, of (a) the weighted
average net mortgage rate for the
distribution date, over (b) the sum of
(i) the Class X-P strip rate for the
applicable Class X-P component, and (ii)
the pass-through rate in effect for the
distribution date for the applicable
class of sequential pay certificates.
For each distribution date after the
distribution date in February 2011, the
certificate balance of each class of
sequential pay certificates will constitute
one or more separate Class X-C components, and
the applicable Class X-C strip rate with
respect to each such Class X-C component for
each distribution date will equal the excess,
if any, of (a) the weighted average net
mortgage rate for the distribution date, over
(b) the pass-through rate in effect for the
distribution date for the class of sequential
pay certificates.
The pass-through rate applicable to the Class
X-P certificates for the initial distribution
date will equal approximately 1.0250% per
annum.
The pass-through rate applicable to the Class
X-P certificates for each subsequent
distribution date will equal the weighted
average of the respective Class X-P strip
rates, at which interest accrues from time to
time on the respective components prior to
such distribution date (weighted on the basis
of the balances of those Class X-P components
outstanding immediately prior to the
distribution date). Each Class X-P component
will be comprised of all or a designated
portion of the certificate balance of a
specified class of sequential pay
certificates. If all or a designated portion
of the certificate balance of any class of
sequential pay certificates is identified
under "Interest" above as being part of the
notional amount of the Class X-P certificates
immediately prior to any distribution date,
then that certificate balance (or designated
S-20
portion thereof) will represent one or more
separate Class X-P components for purposes of
calculating the pass-through rate of the Class
X-P certificates. For each distribution date
through and including the distribution date in
February 2011, the Class X-P strip rate for
each Class X-P component will equal (a) the
lesser of (1) the weighted average net
mortgage rate for such distribution date, and
(2) the reference rate specified on Annex C to
this prospectus supplement for such
distribution date minus 0.03% per annum, minus
(b) the pass-through rate for such component
(but in no event will any Class X-P strip rate
be less than zero).
After the distribution date in February 2011,
the Class X-P certificates will cease to
accrue interest and will have a 0%
pass-through rate.
The weighted average net mortgage rate for
each distribution date is the weighted average
of the net mortgage rates for the mortgage
loans (excluding the Starrett-Lehigh Building
subordinate loan) included in the trust fund
as of the beginning of the related collection
period, weighted on the basis of their
respective stated principal balances
immediately following the preceding
distribution date; provided that, for the
purpose of determining the weighted average
net mortgage rate only, if the mortgage rate
for any mortgage loan included in the trust
fund has been modified in connection with a
bankruptcy or similar proceeding involving the
related borrower or a modification, waiver or
amendment granted or agreed to by the special
servicer, the weighted average net mortgage
rate for such mortgage loan will be calculated
without regard to such event. The net mortgage
rate for each mortgage loan included in the
trust fund will generally equal:
o the mortgage interest rate in effect for
such mortgage loan as of the closing
date; minus
o the applicable administrative cost rate,
as described in this prospectus
supplement.
For the purpose of calculating the weighted
average net mortgage rate, the mortgage rate
of each mortgage loan will be deemed adjusted
as described under "DESCRIPTION OF THE
CERTIFICATES--Pass-Through Rates" in this
prospectus supplement.
The stated principal balance of each mortgage
loan included in the trust fund will generally
equal the balance of that mortgage loan as of
the cut-off date, reduced as of any date of
determination (to not less than zero) by:
o the portion of the principal distribution
amount for the related distribution date
that is attributable to such mortgage
loan; and
S-21
o the principal portion of any realized
loss incurred in respect of such mortgage
loan during the related collection
period.
The stated principal balance of any mortgage
loan as to which the mortgage rate is reduced
through a modification may be increased in
certain circumstances by the amount of the
resulting interest reduction. See "DESCRIPTION
OF THE CERTIFICATES--Pass-Through Rates" in
this prospectus supplement.
PRINCIPAL DISTRIBUTIONS....... On the closing date, each class of
certificates (other than the Class X-C, Class
X-P, Class SL, Class Z-I, Class Z-II, Class
Z-III, Class R-I and Class R-II certificates)
will have the certificate balance set forth
above under "OVERVIEW OF THE CERTIFICATES." The
certificate balance for each class of
certificates entitled to receive principal may
be reduced by:
o distributions of principal; and
o allocations of realized losses and trust
fund expenses.
The certificate balance or notional amount of
a class of certificates may be increased in
certain circumstances by the allocation of any
increase in the stated principal balance of
any mortgage loan resulting from the reduction
of the related mortgage rate through
modification. See "DESCRIPTION OF THE
CERTIFICATES--Certificate Balances and
Notional Amount" in this prospectus
supplement.
The Class X-C and Class X-P certificates do
not have principal balances and will not
receive distributions of principal.
As reflected in the chart under "Priority of
Distributions" above:
o generally, the Class A-1, Class A-2,
Class A-3 and Class A-4 certificates will
only be entitled to receive distributions
of principal collected or advanced in
respect of mortgage loans in loan group 1
until the certificate balance of the
Class A-1A certificates has been reduced
to zero, and the Class A-1A certificates
will only be entitled to receive
distributions of principal collected or
advanced in respect of mortgage loans in
loan group 2 until the certificate
principal balance of the Class A-4
certificates has been reduced to zero;
o principal is distributed to each class of
certificates entitled to receive
distributions of principal in
alphabetical and, if applicable,
numerical designation;
o principal is only distributed on a class
of certificates to the extent funds
remain after the trustee makes all
distributions of principal and interest
on each class of
S-22
certificates with an earlier alphabetical
and, if applicable, numerical
designation;
o generally, no class of certificates is
entitled to distributions of principal
until the certificate balance of each
class of certificates with an earlier
alphabetical and, if applicable,
numerical designation has been reduced to
zero; and
o in no event will holders of the Class B,
Class C, Class D and Class E certificates
or classes of non-offered certificates
(other than the Class A-1A certificates)
be entitled to receive any payments of
principal until the certificate balances
of the Class A-1, Class A-2, Class A-3,
Class A-4 and Class A-1A certificates
have all been reduced to zero.
The amount of principal to be distributed for
each distribution date generally will be an
amount equal to:
o the scheduled principal payments (other
than balloon payments) due on the
mortgage loans included in the trust fund
during the related collection period
whether or not such scheduled payments
are actually received;
o balloon payments actually received with
respect to mortgage loans included in the
trust fund during the related collection
period;
o prior to the reduction of the principal
balance of the Starrett-Lehigh Building
mortgage loan to zero, certain interest
due on the Starrett-Lehigh Building
subordinate loan;
o prepayments received with respect to the
mortgage loans included in the trust fund
during the related collection period; and
o all liquidation proceeds, insurance
proceeds, condemnation awards and
repurchase and substitution amounts
received during the related collection
period that are allocable to principal.
For purposes of making distributions to the
Class A-1, Class A-2, Class A-3, Class A-4 and
Class A-1A certificates, the principal
distribution amount for each loan group on any
distribution date will be equal to the sum of
the collections specified above but only to
the extent such amounts relate to the mortgage
loans comprising the specified loan group.
However, if the master servicer or the trustee
reimburses itself out of general collections
on the mortgage pool for any advance that it
has determined is not recoverable out of
collections on the related mortgage loan
(including with respect to the Starrett-Lehigh
Building subordinate loan), then that advance
(together with accrued interest thereon) will
be deemed, to the fullest extent permitted
pursuant to
S-23
the terms of the pooling and servicing
agreement, to be reimbursed first out of
payments and other collections of principal
otherwise distributable on the principal
balance certificates (other than the Class SL
certificates), prior to being deemed
reimbursed out of payments and other
collections of interest otherwise
distributable on the offered certificates.
SUBORDINATION; ALLOCATION OF
LOSSES AND CERTAIN EXPENSES... Credit support for any class of certificates
(other than the Class Z-I, Class Z-II, Class
Z-III, Class R-I, Class R-II and Class SL
certificates) is provided by the subordination
of payments and allocation of any losses to
such classes of certificates which have a later
alphabetical class designation (other than the
Class X-C and Class X-P certificates) and, with
respect to the Starrett-Lehigh Building
mortgage loan, the Class SL certificates. The
certificate balance of a class of certificates
(other than the Class X-C, Class X-P, Class
Z-I, Class Z-II, Class Z-III, Class R-I and
Class R-II certificates) will be reduced on
each distribution date by any losses on the
mortgage loans that have been realized and
certain additional trust fund expenses actually
allocated to such class of certificates on such
distribution date.
Losses on the mortgage loans that have been
realized and additional trust fund expenses
will be allocated without regard to loan group
and will first be allocated to the
certificates (other than the Class A-1A, Class
X-C, Class X-P, Class Z-I, Class Z-II, Class
Z-III, Class R-I and Class R-II certificates)
that are not offered by this prospectus
supplement and then to the certificates that
are offered certificates and the Class A-1A
certificates in reverse alphabetical order as
indicated on the following table; provided,
that losses and additional trust fund expenses
on the mortgage loans (other than mortgage
loan losses and trust fund expenses with
respect to the Starrett-Lehigh Building whole
loan) will not be allocated to the Class SL
certificates.
ORDER OF
PERCENTAGE APPLICATION
ORIGINAL OF CUT-OFF OF LOSSES
CERTIFICATE DATE POOL AND
CLASS DESIGNATION BALANCE BALANCE EXPENSES
- -------------------------------- --------------- ------------ ------------
Class A-1 .................... $ 67,117,000 5.202% 6
Class A-2 .................... $104,012,000 8.062% 6
Class A-3 .................... $ 71,285,000 5.526% 6
Class A-4 .................... $579,236,000 44.899% 6
Class A-1A ................... $252,357,000 19.561% 6
Class B ...................... $ 38,703,000 3.000% 5
Class C ...................... $ 16,127,000 1.250% 4
Class D ...................... $ 32,252,000 2.500% 3
Class E ...................... $ 16,126,000 1.250% 2
Other non-offered certificates
(excluding the Class X-C,
Class X-P and the Class SL(1)
certificates) ................ $112,884,569 8.750% 1
S-24
----------
(1) The Class SL Certificates have been
excluded for purposes of the table;
mortgage loan losses and additional
trust fund expenses on the mortgage
loans will not be allocated to the Class
SL Certificates other than losses and
trust fund expenses with respect to the
Starrett-Lehigh Building whole loan.
Any losses realized on the mortgage loans
included in the trust fund or additional trust
fund expenses allocated in reduction of the
certificate balance of any class of sequential
pay certificates will result in a
corresponding reduction in the notional amount
of the Class X-C certificates and, with
respect to the 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 and Class K
certificates and portions of the Class A-1 and
Class A-1A certificates, a corresponding
reduction in the notional amount of the Class
X-P certificates.
Any losses and expenses that are associated
with each of the mortgage loans secured by the
11 Madison Avenue mortgaged property will be
allocated in accordance with the terms of the
related intercreditor agreement first, pro
rata between the three subordinate companion
loans secured by the related mortgaged
property and second, pro rata, between the
four pari passu mortgage loans secured by the
related mortgaged property. Any losses and
expenses that are associated with each of the
mortgage loans secured by the Starrett-Lehigh
Building mortgaged property will be allocated
in accordance with the terms of the related
intercreditor agreement first, to the
subordinate companion loan secured by the
related mortgaged property and second, pro
rata, between the two pari passu mortgage
loans secured by the related mortgaged
property. The portion of those losses and
expenses that is allocated to the mortgage
loans that are included in the trust fund will
be allocated among the Series 2004-C10
certificates in the manner described above.
See "DESCRIPTION OF THE CERTIFICATES--
Subordination; Allocation of Losses and
Certain Expenses" in this prospectus
supplement.
PREPAYMENT PREMIUMS; YIELD
MAINTENANCE CHARGES........... On each distribution date, any prepayment
premium or yield maintenance charge actually
collected during the related collection period
on a mortgage loan included in the trust fund
(other than the Starrett-Lehigh Building
subordinate loan) will be distributed to the
holders of each class of offered certificates
and the Class A-1A, Class F, Class G and Class
H certificates then entitled to distributions
as follows:
The holders of each class of offered
certificates and the Class A-1A, Class F,
Class G and Class H certificates then entitled
to distributions of principal with respect to
the related loan group on such distribution
date will generally be entitled to a portion
of prepayment premiums or yield maintenance
charges equal to the product of:
S-25
o the amount of such prepayment premiums or
yield maintenance charges;
o a fraction (in no event greater than
one), the numerator of which is equal to
the excess, if any, of the pass-through
rate of such class of certificates over
the relevant discount rate, and the
denominator of which is equal to the
excess, if any, of the mortgage interest
rate of the prepaid mortgage loan over
the relevant discount rate; and
o a fraction, the numerator of which is
equal to the amount of principal
distributable on such class of
certificates on such distribution date,
and the denominator of which is the
principal distribution amount for such
distribution date.
If there is more than one class of
certificates entitled to distributions of
principal with respect to the related loan
group on any particular distribution date on
which a prepayment premium or yield
maintenance charge is distributable, the
aggregate amount of such prepayment premium or
yield maintenance charge will be allocated
among all such classes up to, and on a pro
rata basis in accordance with, the foregoing
entitlements.
The portion, if any, of the prepayment
premiums or yield maintenance charges
remaining after any payments described above
will be distributed as follows: (a) on or
before the distribution date in February 2011,
85% to the holders of the Class X-C
certificates and 15% to the holders of the
Class X-P certificates and (b) thereafter,
100% to the holders of the Class X-C
certificates.
The "discount rate" applicable to any class of
offered certificates and the Class A-1A, Class
F, Class G and Class H certificates will equal
the yield (when compounded monthly) on the US
Treasury issue with a maturity date closest to
the maturity date for the prepaid mortgage
loan or mortgage loan for which title to the
related mortgaged property was acquired by the
trust fund.
o In the event that there are two or more
such US Treasury issues with the same
coupon, the issue with the lowest yield
will be utilized; and
o In the event that there are two or more
such US Treasury issues with maturity
dates equally close to the maturity date
for the prepaid mortgage loan, the issue
with the earliest maturity date will be
utilized.
EXAMPLES OF ALLOCATION OF PREPAYMENT PREMIUMS OR
YIELD MAINTENANCE CHARGES
Mortgage interest rate ......................... 8%
Pass-through rate for applicable class ......... 6%
Discount rate .................................. 5%
S-26
ALLOCATION ALLOCATION ALLOCATION
PERCENTAGE FOR PERCENTAGE FOR PERCENTAGE FOR
APPLICABLE CLASS CLASS X-P CLASS X-C
- ------------------------------------- ----------------------- ------------------
6% - 5% (100% - 33 1/3%) x 15% (100% - 33 1/3%) x
------------ = 33 1/3% =10% 85% = 56 2/3%
8% - 5%
See "DESCRIPTION OF THE CERTIFICATES--
Distributions--Allocation of Prepayment
Premiums and Yield Maintenance Charges" in
this prospectus supplement.
ALLOCATION OF
ADDITIONAL INTEREST........... On each distribution date, any additional
interest collected on a mortgage loan in the
trust (other than the Starrett- Lehigh Building
subordinate loan) with an anticipated repayment
date during the related collection period will
be distributed, in the case of mortgage loans
sold by Wachovia Bank, National Association, to
the holders of the Class Z-I certificates, in
the case of the mortgage loans sold by Artesia
Mortgage Capital Corporation, to the holders of
the Class Z-II certificates, in the case of
mortgage loans sold by Citigroup Global Markets
Realty Corp., to the holders of the Class Z-III
certificates, and in the case of the
Starrett-Lehigh Building subordinate loan, to
the holders of the Class SL certificates.
ADVANCING..................... In the event the master servicer fails to
receive one or more scheduled payments of
principal and interest (other than balloon
payments) on a mortgage loan included in the
trust fund by the last day of the related
collection period and the master servicer
determines that such scheduled payment of
principal and interest will be ultimately
recoverable from the related mortgage loan, the
master servicer, or if it fails to do so, the
trustee is required to make a principal and
interest cash advance of such scheduled payment
of principal and interest. In addition, the
master servicer (or the trustee, if applicable)
will be required to make interest advances, but
not principal advances, with respect to
delinquent scheduled payments on the
Starrett-Lehigh Building subordinate loan to
the extent the master servicer determines that
such scheduled interest will be ultimately
recoverable from the Starrett-Lehigh Building
whole loan. These cash advances are only
intended to maintain a regular flow of
scheduled principal and interest payments on
the certificates and are not intended to
guarantee or insure against losses. In other
words, the advances are intended to provide
liquidity (rather than credit enhancement) to
certificateholders. To the extent described in
this prospectus supplement, the trust fund will
pay interest to the master servicer or the
trustee, as the case may be, on the amount of
any principal and interest cash advance
(including on interest advances, but not
principal advances, with respect to the
Starrett-Lehigh Building subordinate loan)
calculated at the prime rate (provided, that no
principal and/or interest cash advance shall
accrue interest until after the expiration of
any applicable grace period for
S-27
the related scheduled payment) and will
reimburse the master servicer or the trustee
for any principal and interest cash advances
that are later determined to be not
recoverable. Neither the master servicer nor
the trustee will be required to make an
advance with respect to any companion loan
(except the Starrett-Lehigh Building
subordinate loan). See "DESCRIPTION OF THE
CERTIFICATES--P&I Advances" in this prospectus
supplement.
OPTIONAL TERMINATION OF THE
TRUST FUND.................... The trust fund may be terminated when the
aggregate principal balance of the mortgage
loans included in the trust fund (including the
Starrett-Lehigh Building subordinate loan) is
less than 1.0% of the aggregate principal
balance of the pool of mortgage loans as of the
cut-off date (including the Starrett-Lehigh
Building subordinate loan) as of the cut-off
date. See "DESCRIPTION OF THE CERTIFICATES--
Termination" in this prospectus supplement and
in the accompanying prospectus.
REGISTRATION AND
DENOMINATION.................. The offered certificates will initially be
registered in the name of Cede & Co., as
nominee for The Depository Trust Company in the
United States, or in Europe through Clearstream
Banking societe anonyme or Euroclear Bank S.A./
N.V., as operator of the Euroclear System. You
will not receive a definitive certificate
representing your interest in the trust fund,
except in the limited circumstances described
in the accompanying prospectus. See
"DESCRIPTION OF THE CERTIFICATES--Book-Entry
Registration and Definitive Certificates" in
the accompanying prospectus.
Beneficial interests in the Class A-1, Class
A-2, Class A-3, Class A-4, Class B, Class C,
Class D and Class E certificates will be
offered in minimum denominations of $10,000
actual principal amount and in integral
multiples of $1 in excess of those amounts.
MATERIAL FEDERAL INCOME TAX
CONSEQUENCES................. Two separate real estate mortgage investment
conduit (each, a "REMIC") elections will be
made with respect to most of the trust fund.
The offered certificates will evidence regular
interests in a REMIC and generally will be
treated as debt instruments of such REMIC. The
Class R-I and Class R-II certificates will
represent the residual interests in such
REMICs. The Class Z-I, Class Z-II, Class Z-III
and Class SL certificateholders' entitlement to
any additional interest that has accrued on a
related mortgage loan that provides for the
accrual of such additional interest if the
unamortized principal amount of such mortgage
loan is not repaid on the anticipated repayment
date set forth in the related mortgage note
will be treated as a grantor trust (as
described in the related prospectus) for United
States federal income tax purposes.
S-28
The offered certificates will be treated as
newly originated debt instruments for federal
income tax purposes. You will be required to
report income with respect to the offered
certificates using the accrual method of
accounting, even if you otherwise use the cash
method of accounting. It is anticipated that
the offered certificates will be treated as
having been issued at a premium for federal
income tax reporting purposes.
For further information regarding the federal
income tax consequences of investing in the
offered certificates, see "MATERIAL FEDERAL
INCOME TAX CONSEQUENCES" in this prospectus
supplement and in the accompanying prospectus.
ERISA CONSIDERATIONS.......... Subject to important considerations described
under "ERISA CONSIDERATIONS" in this prospectus
supplement and the accompanying prospectus, the
following certificates may be eligible for
purchase by persons investing assets of
employee benefit plans, individual retirement
accounts, or other retirement plans and
accounts:
Class A-1
Class A-2
Class A-3
Class A-4
Class B
Class C
Class D
Class E
This is based on individual prohibited
transaction exemptions granted to each of
Wachovia Capital Markets, LLC, Citigroup
Global Markets Inc., Banc of America
Securities LLC and Goldman, Sachs & Co. by the
US Department of Labor. See "ERISA
CONSIDERATIONS" in this prospectus supplement
and in the accompanying prospectus.
SMMEA ELIGIBILITY............. The offered certificates will not constitute
"mortgage related securities" for purposes of
the Secondary Mortgage Market Enhancement Act
of 1984, as amended. If your investment
activities are subject to legal investment laws
and regulations, regulatory capital
requirements, or review by regulatory
authorities, then you may be subject to
restrictions on investment in the offered
certificates. You should consult your own legal
advisers for assistance in determining the
suitability of and consequences to you of the
purchase, ownership and sale of the offered
certificates.
See "LEGAL INVESTMENT" in this prospectus
supplement and in the accompanying prospectus.
S-29
RATINGS....................... The offered certificates will not be issued
unless they have received the following ratings
from Standard & Poor's Ratings Services, a
division of The McGraw-Hill Companies, Inc.,
and Moody's Investors Service, Inc.:
EXPECTED RATING FROM
CLASS S&P/MOODY'S
---------------------- ---------------------
Class A-1 .......... AAA/Aaa
Class A-2 .......... AAA/Aaa
Class A-3 .......... AAA/Aaa
Class A-4 .......... AAA/Aaa
Class B ............ AA/Aa2
Class C ............ AA-/Aa3
Class D ............ A/A2
Class E ............ A-/A3
The ratings on the offered certificates
address the likelihood of timely receipt of
interest and ultimate receipt of principal by
the rated final distribution date by the
holders of offered certificates. They do not
address the likely actual rate of prepayments.
Such rate of prepayments, if different than
originally anticipated, could adversely affect
the yield realized by holders of the offered
certificates. See "RATINGS" in this prospectus
supplement and in the accompanying prospectus
for a discussion of the basis upon which
ratings are given, the limitations and
restrictions on the ratings, and conclusions
that should not be drawn from a rating.
THE MORTGAGE LOANS
GENERAL....................... It is expected that the mortgage loans to be
included in the trust fund will have the
following approximate characteristics as of the
cut-off date. All information presented herein
(including loan-to-value ratios and debt
service coverage ratios) with respect to the
one (1) mortgage loan (loan number 30) with
only a subordinate companion loan is calculated
without regard to the related subordinate
companion loan. With respect to two (2)
mortgage loans (loan numbers 1 and 3), unless
otherwise specified, the calculations of loan
balance per square foot, loan-to-value ratios
and debt service coverage ratios were based on
the aggregate indebtedness of each of these
mortgage loans and the related pari passu
companion loans (but not any subordinate
companion loans).
Although the Starrett-Lehigh Building
subordinate loan will be part of the trust,
for purposes of the information contained in
this prospectus supplement (including the
appendices), unless otherwise indicated, the
Starrett-Lehigh Building subordinate loan is
not reflected in this prospectus supplement
and the term "mortgage loan" does not include
the Starrett-Lehigh Building subordinate loan.
The Starrett-Lehigh Building subordinate loan
supports only the Class SL certificates, which
certificates are not being offered pursuant
S-30
to this prospectus supplement. For purposes of
the presentation of numbers and statistical
information set forth in this prospectus
supplement, unless otherwise noted, all
numbers and statistical information regarding
the mortgage loans exclude the Starrett-Lehigh
Building subordinate loan. All percentages of
the mortgage loans, or any specified group of
mortgage loans, referred to in this prospectus
supplement are approximate percentages.
The totals in the following tables may not add
up to 100% due to rounding.
ALL MORTGAGE LOAN LOAN
LOANS GROUP 1 GROUP 2
------------------- ------------------- -----------------
Number of mortgage loans ....... 102 79 23
Number of crossed loan pools.... 2 2 0
Number of mortgaged
properties ................... 102 79 23
Aggregate balance of all
mortgage loans ............... $ 1,290,099,569 $ 1,037,741,642 $ 252,357,927
Number of mortgage loans
with balloon payments(1) ..... 37 31 6
Aggregate balance of
mortgage loans with balloon
payments(1) .................. $ 421,126,266 $ 376,481,562 $ 44,644,704
Number of mortgage loans
with anticipated repayment
dates(2) ..................... 45 29 16
Aggregate balance of
mortgage loans with
anticipated repayment
dates(2) ..................... $ 695,216,967 $ 491,570,707 $ 203,646,260
Number of fully amortizing
mortgage loans ............... 5 4 1
Aggregate balance of fully
amortizing mortgage loans .... $ 9,006,086 $ 4,939,123 $ 4,066,964
Number of non-amortizing
mortgage loans ............... 15 15 0
Aggregate balance of
non-amortizing mortgage
loans ........................ $ 164,750,250 $ 164,750,250 $ 0
Average mortgage loan
balance ...................... $ 12,648,035 $ 13,135,970 $ 10,972,084
Minimum mortgage loan
balance ...................... $ 280,589 $ 280,589 $ 1,300,000
Maximum mortgage loan
balance ...................... $ 143,333,333 $ 143,333,333 $ 45,000,000
Maximum balance for a group
of cross-collateralized and
cross-defaulted loans(3) ..... $ 19,650,250 $ 19,650,250 $ 0
Weighted average cut-off date
loan-to-value ratio(4) ....... 68.4% 66.6% 76.2%
Minimum cut-off date
loan-to-value ratio(4) ....... 28.1% 28.1% 34.7%
Maximum cut-off date
loan-to-value ratio(4) ....... 80.0% 80.0% 80.0%
Weighted average
loan-to-value ratio at stated
maturity or anticipated
repayment date(5) ............ 60.7% 59.1% 67.2%
Weighted average
underwritten debt service
coverage ratio(6) ............ 1.65x 1.74x 1.28x
S-31
ALL MORTGAGE LOAN LOAN
LOANS GROUP 1 GROUP 2
------------- --------- ----------
Minimum underwritten debt
service coverage ratio(6) ..... 1.17x 1.17x 1.20x
Maximum underwritten debt
service coverage ratio(6) ..... 3.68x 3.68x 2.99x
Weighted average mortgage
interest rate ................. 5.613% 5.642% 5.496%
Minimum mortgage interest
rate .......................... 4.290% 4.290% 4.960%
Maximum mortgage interest
rate .......................... 8.500% 8.500% 6.540%
Weighted average remaining
term to maturity or
anticipated repayment date
(months) ...................... 110 113 97
Minimum remaining term to
maturity or anticipated
repayment date (months) ....... 56 56 58
Maximum remaining term to
maturity or anticipated
repayment date (months) ....... 239 191 239
Weighted average occupancy
rate(7) ....................... 93.2% 92.7% 95.2%
----------
(1) Does not include mortgage loans with
anticipated repayment dates or mortgage
loans that are interest-only for their
entire term.
(2) Not including mortgage loans that are
interest-only for their entire term.
(3) Consists of a group of 11 individual
mortgage loans (loan numbers 72, 82, 84,
85, 88, 91, 94, 95, 96, 97 and 99).
(4) For purposes of determining the
loan-to-value ratio of 3 mortgage loans
(loan numbers 18, 20 and 59),
representing 2.5% of the aggregate
principal balance of the pool of
mortgage loans as of the cut-off date
(3.1% of loan group 1), such ratio was
adjusted by taking into account amounts
available under certain letters of
credit or in cash reserves. See
"DESCRIPTION OF THE MORTGAGE
POOL--Additional Mortgage Loan
Information" in this prospectus
supplement.
(5) For purposes of determining the LTV
ratio at Maturity or Anticipated
Repayment Date of 1 Mortgage Loan (loan
number 59), representing 0.3% of the
aggregate principal balance of the pool
of mortgage loans as of the cut-off date
(0.4% of loan group 1), such ratio was
reduced by taking into account an amount
available under a letter of credit or
cash reserve.
(6) For purposes of determining the debt
service coverage ratio of 2 mortgage
loans (loan numbers 20 and 59),
representing 1.4% of the aggregate
principal balance of the pool of
mortgage loans as of the cut-off date
(1.7% of loan group 1), such ratios were
adjusted by taking into account amounts
available under certain letters of
credit or in cash reserves. See
"DESCRIPTION OF THE MORTGAGE POOL--
Additional Mortgage Loan Information" in
this prospectus supplement.
(7) The weighted average occupancy
information shown above excludes two
mortgage loans secured by hospitality
properties, representing 1.7% of the
aggregate principal balance of the pool
of mortgage loans as of the cut-off date
(2.1% of loan group 1).
SECURITY FOR THE MORTGAGE LOANS
IN THE TRUST FUND............. Generally, all of the mortgage loans included
in the trust fund are non-recourse obligations
of the related borrowers.
o No mortgage loan included in the trust
fund is insured or guaranteed by any
government agency or private insurer.
S-32
o All of the mortgage loans included in the
trust fund are secured by first lien fee
mortgages and/or leasehold mortgages on
commercial or multifamily properties.
PROPERTY TYPES................ The following table describes the mortgaged
properties securing the mortgage loans expected
to be included in the trust fund as of the
cut-off date:
MORTGAGED PROPERTIES BY PROPERTY TYPE
PERCENTAGE
PERCENTAGE OF CUT-OFF PERCENTAGE
NUMBER OF OF CUT-OFF DATE OF CUT-OFF DATE
LOANS/ AGGREGATE CUT-OFF DATE POOL GROUP 1 GROUP 2
PROPERTY TYPE PROPERTIES DATE BALANCE BALANCE BALANCE BALANCE
- ------------------------------------- ------------ ------------------- ------------ ------------ ----------------
Office ............................ 13 / 13 $ 565,822,244 43.9% 54.5% 0.0%
Retail ............................ 52 / 52 376,182,513 29.2 36.3 0.0
Retail--Anchored ................ 38 / 38 318,453,013 24.7 30.7 0.0
Retail--Shadow Anchored(1)....... 6 / 6 34,301,892 2.7 3.3 0.0
Retail--Unanchored .............. 8 / 8 23,427,609 1.8 2.3 0.0
Multifamily ....................... 28 / 28 287,933,996 22.3 4.3 96.3
Hospitality ....................... 2 / 2 21,492,513 1.7 2.1 0.0
Mixed Use ......................... 3 / 3 17,537,800 1.4 1.7 0.0
Mobile Home Park .................. 2 / 2 11,807,666 0.9 0.2 3.7
Industrial ........................ 1 / 1 4,738,590 0.4 0.5 0.0
Special Purpose(2) ................ 1 / 1 4,584,248 0.4 0.4 0.0
------------ -------------- ----- ----- -----
TOTAL ............................. 102 / 102 $1,290,099,569 100.0% 100.0% 100.0%
============ ============== ===== ===== =====
- ----------
(1) A mortgaged property is considered "shadow anchored" if it is in close
proximity to an anchored retail property.
(2) Specifically, a mortgaged property where the sole tenant is a movie
theater.
[GRAPHIC PIE CHART OMITTED]
Office Special Purpose Industrial Mobile Home Park Mixed Use
43.9% 0.4% 0.4% 0.9% 1.4%
Hospitality Multifamily Retail
1.7% 22.3% 29.2%
GEOGRAPHIC CONCENTRATIONS..... The mortgaged properties are located
throughout 32 states and the District of
Columbia. The following table describes the
number and percentage of mortgaged properties
in states which have concentrations of
mortgaged properties above 5.0%:
S-33
MORTGAGED PROPERTIES BY GEOGRAPHIC CONCENTRATION(1)
PERCENTAGE
NUMBER OF OF CUT-OFF
MORTGAGED AGGREGATE CUT-OFF DATE POOL
STATE PROPERTIES DATE BALANCE BALANCE
- ----------------------- ------------ ------------------- -----------
NY .................. 5 $ 303,623,333 23.5%
FL .................. 15 266,602,912 20.7
GA .................. 10 120,012,962 9.3
CA .................. 7 110,856,021 8.6
Southern(2) ......... 5 103,250,000 8.0
Northern(2) ......... 2 7,606,021 0.6
IL .................. 5 98,586,031 7.6
Other ............... 60 390,418,311 30.3
-- -------------- -----
TOTAL ............... 102 $1,290,099,569 100.0%
=== ============== =====
- ----------
(1) Because this table presents information relating to the mortgaged
properties and not the mortgage loans, the information for mortgage loans
secured by more than one mortgaged property is based on allocated loan
amounts (allocating the mortgage loan principal balance to each of those
properties by the appraised values of the mortgaged properties).
(2) For purposes of determining whether a mortgaged property is in Northern
California or Southern California, mortgaged properties located north of
San Luis Obispo County, Kern County and San Bernardino County were
included in Northern California and mortgaged properties located in or
south of such counties were included in Southern California.
LOAN GROUP 1
MORTGAGED PROPERTIES BY GEOGRAPHIC CONCENTRATION(1)
PERCENTAGE
NUMBER OF OF CUT-OFF
MORTGAGED AGGREGATE CUT-OFF DATE GROUP 1
STATE PROPERTIES DATE BALANCE BALANCE
- ------------------------ ------------ ------------------- -------------
NY ................... 5 $ 303,623,333 29.3%
FL ................... 13 234,502,912 22.6
GA ................... 7 110,755,997 10.7
IL ................... 4 95,591,541 9.2
CA ................... 5 56,606,021 5.5
Southern(2) ......... 3 49,000,000 4.7
Northern(2) ......... 2 7,606,021 0.7
Other ................ 45 236,661,837 22.8
-- -------------- -----
TOTAL ............... 79 $1,037,741,642 100.0%
== ============== =====
- ----------
(1) Because this table presents information relating to the mortgaged
properties and not the mortgage loans, the information for mortgage loans
secured by more than one mortgaged property is based on allocated loan
amounts (allocating the mortgage loan principal balance to each of those
properties by the appraised values of the mortgaged properties).
(2) For purposes of determining whether a mortgaged property is in Northern
California or Southern California, mortgaged properties located north of
San Luis Obispo County, Kern County and San Bernardino County were
included in Northern California and mortgaged properties located in or
south of such counties were included in Southern California.
S-34
LOAN GROUP 2
MORTGAGED PROPERTIES BY GEOGRAPHIC CONCENTRATION(1)
PERCENTAGE
NUMBER OF OF CUT-OFF
MORTGAGED AGGREGATE CUT-OFF DATE GROUP 2
STATE PROPERTIES DATE BALANCE BALANCE
- ------------------------ ------------ ------------------- -------------
CA ................... 2 $ 54,250,000 21.5%
Southern(2) ......... 2 54,250,000 21.5
NV ................... 3 35,285,955 14.0
FL ................... 2 32,100,000 12.7
AZ ................... 1 23,500,000 9.3
NJ ................... 1 21,500,000 8.5
SC ................... 4 17,600,000 7.0
TX ................... 1 15,000,000 5.9
UT ................... 1 13,075,815 5.2
Other ................ 8 40,046,157 15.9
- ------------ -----
TOTAL ............... 23 $252,357,927 100.0%
== ============ =====
- ----------
(1) Because this table presents information relating to the mortgaged
properties and not the mortgage loans, the information for mortgage loans
secured by more than one mortgaged property is based on allocated loan
amounts (allocating the mortgage loan principal balance to each of those
properties by the appraised values of the mortgaged properties).
(2) For purposes of determining whether a mortgaged property is in Northern
California or Southern California, mortgaged properties located north of
San Luis Obispo County, Kern County and San Bernardino County were
included in Northern California and mortgaged properties located in or
south of such counties were included in Southern California.
PAYMENT TERMS................. All of the mortgage loans included in the
trust fund accrue interest at a fixed rate,
other than mortgage loans providing for an
anticipated repayment date, which provide for
an increase of fixed interest after a certain
date.
o Payments on the mortgage loans included
in the trust fund are due on the 11th day
of the month, except payments on 16
mortgage loans, representing 8.1% of the
aggregate principal balance of the pool
of mortgage loans as of the cut-off date
(16 mortgage loans in loan group 1 or
10.1%), are due on the first day of the
month. No mortgage loan has a grace
period that extends payment beyond the
15th day of any calendar month.
o As of the cut-off date, 97 of the
mortgage loans, representing 98.6% of the
aggregate principal balance of the pool
of mortgage loans as of the cut-off date
(74 mortgage loans in loan group 1 or
98.2% and 23 mortgage loans in loan group
2 or 100.0%), accrue interest on an
actual/360 basis, and 5 of the mortgage
loans, representing 1.4% of the aggregate
principal balance of the pool of mortgage
loans as of the cut-off date (1.8% in
loan group 1), accrue interest on a
30/360
S-35
basis. Twenty-two (22) of the mortgage
loans, representing 49.5% of the
aggregate principal balance of the pool
of mortgage loans as of the cut-off date
(11 mortgage loans in loan group 1 or
47.3% and 11 mortgage loans in loan group
2 or 58.3%), have periods during which
only interest is due and periods in which
principal and interest are due. Fifteen
(15) of the mortgage loans, representing
12.8% of the aggregate principal balance
of the pool of mortgage loans as of the
cut-off date (15.9% in loan group 1),
provide that only interest is due until
maturity or the anticipated repayment
date.
The following tables set forth additional
characteristics of the mortgage loans that we
anticipate to be included in the trust fund as
of the cut-off date:
RANGE OF CUT-OFF DATE BALANCES
PERCENTAGE PERCENTAGE
PERCENTAGE OF CUT-OFF OF CUT-OFF
AGGREGATE CUT- OF CUT-OFF DATE DATE
RANGE OF CUT-OFF DATE NUMBER OF OFF DATE DATE POOL GROUP 1 GROUP 2
BALANCES($) LOANS BALANCE BALANCE BALANCE BALANCE
- -------------------------- ----------- ---------------- ------------ ------------ -----------
(less than) 2,000,000 15 $ 17,840,387 1.4% 1.4% 1.2%
2,000,001 - 3,000,000 12 30,166,232 2.3 2.4 2.0
3,000,001 - 4,000,000 14 49,088,943 3.8 4.4 1.3
4,000,001 - 5,000,000 11 50,360,997 3.9 3.2 7.0
5,000,001 - 6,000,000 1 5,592,000 0.4 0.5 0.0
6,000,001 - 7,000,000 5 32,319,616 2.5 2.5 2.6
7,000,001 - 8,000,000 6 45,436,641 3.5 4.4 0.0
8,000,001 - 9,000,000 3 25,805,984 2.0 2.5 0.0
9,000,001 - 10,000,000 5 48,488,582 3.8 3.8 3.7
10,000,001 - 15,000,000 14 174,397,893 13.5 7.4 38.8
15,000,001 - 20,000,000 3 54,384,629 4.2 3.4 7.7
20,000,001 - 25,000,000 3 68,558,899 5.3 2.3 17.8
25,000,001 - 30,000,000 2 54,975,432 4.3 5.3 0.0
30,000,001 - 35,000,000 1 30,350,000 2.4 2.9 0.0
40,000,001 - 45,000,000 1 45,000,000 3.5 0.0 17.8
45,000,001 - 50,000,000 1 49,000,000 3.8 4.7 0.0
75,000,001 - 80,000,000 2 160,000,000 12.4 15.4 0.0
80,000,001 - 143,333,333 3 348,333,333 27.0 33.6 0.0
-- -------------- ----- ----- -----
TOTAL .................. 102 $1,290,099,569 100.0% 100.0% 100.0%
=== ============== ===== ===== =====
S-36
RANGE OF MORTGAGE RATES
PERCENTAGE PERCENTAGE
PERCENTAGE OF CUT-OFF OF CUT-OFF
OF CUT-OFF DATE DATE
RANGE OF MORTGAGE NUMBER OF AGGREGATE CUT-OFF DATE POOL GROUP 1 GROUP 2
RATES(%) LOANS DATE BALANCE BALANCE BALANCE BALANCE
- ------------------------- ----------- ------------------- ------------ ------------ -----------
4.290 - 5.249 ......... 21 $ 109,739,122 8.5% 8.8% 7.5%
5.250 - 5.499 ......... 17 466,353,173 36.1 33.3 47.7
5.500 - 5.749 ......... 23 262,960,362 20.4 15.5 40.6
5.750 - 5.999 ......... 15 234,683,765 18.2 22.2 1.9
6.000 - 6.249 ......... 14 66,623,711 5.2 6.4 0.0
6.250 - 6.499 ......... 4 117,702,636 9.1 11.0 1.6
6.500 - 6.749 ......... 1 1,747,489 0.1 0.0 0.7
7.000 - 7.249 ......... 2 14,088,194 1.1 1.4 0.0
7.250 - 7.499 ......... 1 11,988,567 0.9 1.2 0.0
8.000 - 8.249 ......... 1 280,589 0.0 0.0 0.0
8.250 - 8.499 ......... 1 3,021,774 0.2 0.3 0.0
8.500 - 8.749 ......... 2 910,189 0.1 0.1 0.0
-- -------------- ----- ----- -----
TOTAL ................. 102 $1,290,099,569 100.0% 100.0% 100.0%
=== ============== ===== ===== =====
RANGE OF UNDERWRITTEN DSC RATIOS*
PERCENTAGE PERCENTAGE
PERCENTAGE OF CUT-OFF OF CUT-OFF
OF CUT-OFF DATE DATE
RANGE OF UNDERWRITTEN NUMBER OF AGGREGATE CUT-OFF DATE POOL GROUP 1 GROUP 2
DSCRS(X) LOANS DATE BALANCE BALANCE BALANCE BALANCE
- ----------------------- ----------- ------------------- ------------ ------------ -----------
1.15 - 1.19 ......... 1 $ 3,748,345 0.3% 0.4% 0.0%
1.20 - 1.24 ......... 13 121,024,265 9.4 6.0 23.4
1.25 - 1.29 ......... 22 229,106,317 17.8 9.9 50.2
1.30 - 1.34 ......... 7 176,942,713 13.7 12.1 20.5
1.35 - 1.39 ......... 6 41,199,094 3.2 2.9 4.2
1.40 - 1.44 ......... 11 80,235,166 6.2 7.7 0.0
1.45 - 1.49 ......... 8 53,084,439 4.1 5.1 0.0
1.50 - 1.54 ......... 2 14,492,900 1.1 1.4 0.0
1.55 - 1.59 ......... 6 170,390,805 13.2 16.1 1.3
1.60 - 1.64 ......... 1 6,750,000 0.5 0.7 0.0
1.70 - 1.74 ......... 1 6,225,000 0.5 0.6 0.0
1.75 - 1.79 ......... 4 30,569,686 2.4 2.9 0.0
1.85 - 1.89 ......... 2 80,280,589 6.2 7.7 0.0
2.05 - 2.09 ......... 2 180,000,000 14.0 17.3 0.0
2.15 - 2.19 ......... 1 10,000,000 0.8 1.0 0.0
2.30 - 3.79 ......... 15 86,050,250 6.7 8.2 0.5
-- -------------- ----- ----- -----
TOTAL ............... 102 $1,290,099,569 100.0% 100.0% 100.0%
=== ============== ===== ===== =====
- ----------
* For purposes of determining the debt service coverage ratio of two
mortgage loans (loan numbers 20 and 59), representing 1.4% of the
aggregate principal balance of the pool of mortgage loans as of the
cut-off date (1.7% of loan group 1), such ratios were adjusted by taking
into account amounts available under certain letters of credit or in cash
reserves. See "DESCRIPTION OF THE MORTGAGE POOL-- Additional Mortgage Loan
Information" in this prospectus supplement.
S-37
RANGE OF CUT-OFF DATE LTV RATIOS*
PERCENTAGE PERCENTAGE
AGGREGATE PERCENTAGE OF CUT-OFF OF CUT-OFF
CUT-OFF OF CUT-OFF DATE DATE
RANGE OF CUT-OFF NUMBER OF DATE DATE POOL GROUP 1 GROUP 2
DATE LTVS (%) LOANS BALANCE BALANCE BALANCE BALANCE
- ------------------------ ----------- ----------------- ------------ ------------ -----------
25.01 - 30.00 ........ 2 $ 10,280,589 0.8% 1.0% 0.0%
30.01 - 35.00 ........ 1 1,300,000 0.1 0.0 0.5
35.01 - 40.00 ........ 1 10,000,000 0.8 1.0 0.0
40.01 - 50.00 ........ 5 151,657,678 11.8 14.4 0.7
50.01 - 55.00 ........ 13 37,453,640 2.9 3.6 0.0
55.01 - 60.00 ........ 3 8,871,119 0.7 0.9 0.0
60.01 - 65.00 ........ 6 245,836,613 19.1 23.7 0.0
65.01 - 70.00 ........ 7 54,139,730 4.2 5.2 0.0
70.01 - 75.00 ........ 23 265,445,446 20.6 16.5 37.4
75.01 - 80.00 ........ 41 505,114,754 39.2 33.7 61.4
-- -------------- ----- ----- -----
TOTAL ............... 102 $1,290,099,569 100.0% 100.0% 100.0%
=== ============== ===== ===== =====
- ----------
* For purposes of determining the loan-to-value ratio of three mortgage
loans (loan numbers 18, 20 and 59), representing 2.5% of the aggregate
principal balance of the pool of mortgage loans as of the cut-off date
(3.1% of loan group 1), such ratio was adjusted by taking into account
amounts available under certain letters of credit or in cash reserves. See
"DESCRIPTION OF THE MORTGAGE POOL--Additional Mortgage Loan Information"
in this prospectus supplement.
RANGE OF REMAINING TERMS TO MATURITY DATE OR
ANTICIPATED REPAYMENT DATE*
PERCENTAGE PERCENTAGE
AGGREGATE PERCENTAGE OF CUT-OFF OF CUT-OFF
RANGE OF CUT-OFF OF CUT-OFF DATE DATE
REMAINING TERMS NUMBER OF DATE DATE POOL GROUP 1 GROUP 2
(MOS.) LOANS BALANCE BALANCE BALANCE BALANCE
- --------------------- ----------- ----------------- ------------ ------------ -----------
0 - 60 ......... 19 $ 111,295,941 8.6% 6.7% 16.5%
61 - 84 ......... 20 156,126,802 12.1 5.6 38.7
85 - 108 ......... 5 23,536,103 1.8 2.3 0.0
109 - 120 ......... 51 908,387,149 70.4 77.2 42.5
121 - 156 ......... 4 81,190,778 6.3 7.8 0.0
169 - 180 ......... 1 1,747,489 0.1 0.0 0.7
181 - 192 ......... 1 3,748,345 0.3 0.4 0.0
229 - 240 ......... 1 4,066,964 0.3 0.0 1.6
-- -------------- ----- ----- -----
TOTAL ............ 102 $1,290,099,569 100.0% 100.0% 100.0%
=== ============== ===== ===== =====
- ----------
* With respect to the mortgage loans with anticipated repayment dates, the
remaining term to maturity was calculated as of the related anticipated
repayment date.
S-38
AMORTIZATION TYPES
PERCENTAGE PERCENTAGE
PERCENTAGE OF CUT-OFF OF CUT-OFF
AGGREGATE OF CUT-OFF DATE DATE
NUMBER OF CUT-OFF DATE DATE POOL GROUP 1 GROUP 2
AMORTIZATION TYPE LOANS BALANCE BALANCE BALANCE BALANCE
- ------------------------- ----------- ----------------- ------------ ------------ -----------
Interest-only,
Amortizing
ARD* .................. 14 $ 403,508,333 31.3% 27.4% 47.1%
Amortizing ARD ........ 31 291,708,634 22.6 19.9 33.6
Interest-only,
Amortizing
Balloon* .............. 8 235,070,000 18.2 19.9 11.2
Amortizing
Balloon ............... 29 186,056,266 14.4 16.4 6.5
Interest-only ......... 4 145,100,000 11.2 14.0 0.0
Interest-only, ARD..... 11 19,650,250 1.5 1.9 0.0
Fully Amortizing ...... 5 9,006,086 0.7 0.5 1.6
-- -------------- ----- ----- -----
TOTAL ................ 102 $1,290,099,569 100.0% 100.0% 100.0%
=== ============== ===== ===== =====
- ----------
* These mortgage loans require payments of interest-only for a period of 12
to 60 months from origination prior to the commencement of payments of
principal and interest with respect to the mortgage pool and loan group 1,
and a period of 12 to 48 months for loan group 2.
Balloon loans have amortization schedules
significantly longer than their terms to
maturity and have substantial principal
payments due on their maturity dates, unless
prepaid earlier.
Mortgage loans providing for anticipated
repayment dates generally fully or
substantially amortize through their terms to
maturity. However, if such a mortgage loan is
not prepaid by a date specified in its
mortgage note, interest will accrue at a
higher rate and the borrower will be required
to apply all cash flow generated by the
mortgaged property in excess of its regular
debt service payments and certain other
permitted expenses and reserves to repay
principal on the mortgage loan.
In addition, because the fixed periodic
payment on the mortgage loans is determined
assuming interest is calculated on a "30/360
basis", but interest actually accrues and is
applied on the majority of the mortgage loans
on an "actual/ 360 basis", there will be less
amortization, absent prepayments, of the
principal balance during the term of the
related mortgage loan, resulting in a higher
final payment on such mortgage loan. This will
occur even if a mortgage loan is a "fully
amortizing" mortgage loan.
See "DESCRIPTION OF THE MORTGAGE POOL--
Certain Terms and Conditions of the Mortgage
Loans," in this prospectus supplement.
PREPAYMENT RESTRICTIONS....... All of the mortgage loans included in the
trust fund restrict or prohibit voluntary
prepayments of principal in some manner for
some period of time.
S-39
TYPES OF PREPAYMENT RESTRICTIONS
PERCENTAGE PERCENTAGE
AGGREGATE PERCENTAGE OF CUT-OFF OF CUT-OFF
CUT-OFF OF CUT-OFF DATE DATE
TYPE OF PREPAYMENT NUMBER DATE DATE POOL GROUP 1 GROUP 2
RESTRICTION OF LOANS BALANCE BALANCE BALANCE BALANCE
- --------------------------- ---------- ----------------- ------------ ------------ -----------
Prohibit prepayment
for most of the term
of the mortgage
loan; but permit
defeasance after date
specified in related
mortgage note for
most or all of the
remaining term* ......... 96 $1,267,224,544 98.2% 97.8% 100.0%
Prohibit prepayment
until date specified in
related mortgage
note and then
impose a fee or a
yield maintenance
charge for most of
the remaining term*...... 6 22,875,025 1.8 2.2 0.0
-- -------------- ----- ----- -----
TOTAL: .................. 102 $1,290,099,569 100.0% 100.0% 100.0%
=== ============== ===== ===== =====
- ----------
* For the purposes hereof, "remaining term" refers to either remaining term
to maturity or anticipated repayment date, as applicable.
See "DESCRIPTION OF THE MORTGAGE POOL--
Additional Mortgage Loan Information" in this
prospectus supplement. The ability of the
master servicer or special servicer to waive
or modify the terms of any mortgage loan
relating to the payment of a prepayment
premium or yield maintenance charge will be
limited as described in this prospectus
supplement. See "SERVICING OF THE MORTGAGE
LOANS--Modifications, Waivers and Amendments"
in this prospectus supplement. We make no
representations as to the enforceability of
the provisions of any mortgage notes requiring
the payment of a prepayment premium or yield
maintenance charge or limiting prepayments to
defeasance or the ability of the master
servicer or special servicer to collect any
prepayment premium or yield maintenance
charge.
DEFEASANCE.................... Ninety-six (96) of the mortgage loans
included in the trust fund as of the cut-off
date, representing 98.2% of the aggregate
principal balance of the pool of mortgage loans
as of the cut-off date (73 mortgage loans in
loan group 1 or 97.8% and all mortgage loans in
loan group 2), permit the borrower, under
certain conditions, to substitute United States
government obligations as collateral for the
related mortgage loans (or a portion thereof)
following their respective lock-out periods.
Upon such substitution, the related mortgaged
property (or in the case of a mortgage loan
secured by multiple mortgaged properties, one
or more of such mortgaged properties) will no
longer secure such mortgage loan. The payments
on the
S-40
defeasance collateral are required to be at
least equal to an amount sufficient to make,
when due, all payments on the related mortgage
loan or allocated to the related mortgaged
property (provided, that in the case of
certain mortgage loans, such defeasance
payments may cease at the beginning of the
open prepayment period with respect to such
mortgage loan, and the final payment on the
defeasance collateral would fully prepay the
mortgage loan). Defeasance may not occur prior
to the second anniversary of the issuance of
the certificates. See "DESCRIPTION OF THE
MORTGAGE POOL--Certain Terms and Conditions of
the Mortgage Loans--Prepayment Provisions" in
this prospectus supplement.
TWENTY LARGEST
MORTGAGE LOANS................ The following table describes certain
characteristics of the twenty largest mortgage
loans or groups of cross-collateralized
mortgage loans in the trust fund by aggregate
principal balance as of the cut-off date. With
respect to the loans referred to as the 11
Madison Avenue mortgage loan and the
Starrett-Lehigh Building mortgage loan in the
immediately following table, the loan balance
per square foot, the debt service coverage
ratio and the loan-to-value ratio set forth in
such table, in each case, are based on the
aggregate combined principal balance of each of
the 11 Madison Avenue mortgage loan and the
Starrett-Lehigh Building mortgage loan, as the
case may be, and its related pari passu
companion loans (but not any subordinate
companion loans). The subordinate companion
loans with respect to the 11 Madison Avenue
mortgage loan are not included in the trust
S-41
% OF
NUMBER OF APPLICABLE
MORTGAGE % OF CUT- CUT-OFF
MORTGAGE LOANS/NUMBER CUT-OFF OFF DATE DATE LOAN
LOAN OF MORTGAGED LOAN DATE POOL GROUP
LOAN NAME SELLER PROPERTIES GROUP BALANCE BALANCE BALANCE
- ----------------------- ----------- -------------- ------- ---------------- ----------- ------------
11 Madison
Avenue ............... Wachovia 1 / 1 1 $ 143,333,333 11.1% 13.8%
Phillips Point
Office Building....... Wachovia 1 / 1 1 105,000,000 8.1 10.1%
Starrett-Lehigh
Building ............. Wachovia 1 / 1 1 100,000,000 7.8 9.6%
IBM Center ............ Wachovia 1 / 1 1 80,000,000 6.2 7.7%
North Riverside
Park Mall ............ Wachovia 1 / 1 1 80,000,000 6.2 7.7%
520 Eighth
Avenue ............... Wachovia 1 / 1 1 49,000,000 3.8 4.7%
Villa Del Sol
Apartments ........... Wachovia 1 / 1 2 45,000,000 3.5 17.8%
Pine Trail Square...... Wachovia 1 / 1 1 30,350,000 2.4 2.9%
Pacific Center ........ Wachovia 1 / 1 1 27,500,000 2.1 2.6%
Bal Harbour
Square ............... Wachovia 1 / 1 1 27,475,432 2.1 2.6%
-------------- ------------- ----
SUBTOTAL/WTD. AVG...... 10 / 10 $ 687,658,765 53.3%
============== ============= ====
Fairfax
Corner-Building
D .................... Citigroup 1 / 1 1 $ 23,558,899 1.8% 2.3%
Indigo Creek
Apartments ........... Artesia 1 / 1 2 23,500,000 1.8 9.3%
Sunrise Bay
Apartments ........... Wachovia 1 / 1 2 21,500,000 1.7 8.5%
Cole Companies
Portfolio ............ Wachovia 11 / 11 1 19,650,250 1.5 1.9%
Caribbean Isle
Apartments ........... Wachovia 1 / 1 2 19,500,000 1.5 7.7%
Merritt Creek
Farm Shopping
Center ............... Wachovia 1 / 1 1 18,384,629 1.4 1.8%
Flemington Mall ....... Wachovia 1 / 1 1 16,500,000 1.3 1.6%
Summit San
Raphael
Apartments ........... Wachovia 1 / 1 2 15,000,000 1.2 5.9%
Festival Plaza ........ Citigroup 1 / 1 1 14,877,866 1.2 1.4%
840 North
Broadway ............. Artesia 1 / 1 1 13,770,919 1.1 1.3%
-------------- ------------- ----
SUBTOTAL/WTD. AVG...... 20 / 20 $ 186,242,562 14.4%
============== ============= ====
TOTALS/WTD AVG. ....... 30 / 30 $ 873,901,327 67.7%
============== ============= ====
WEIGHTED
WEIGHTED AVERAGE
AVERAGE LTV WEIGHTED
LOAN WEIGHTED CUT-OFF RATIO AT AVERAGE
PROPERTY BALANCE PER AVERAGE DATE LTV MATURITY MORTGAGE
LOAN NAME TYPE SF/UNIT DSCR RATIO OR ARD RATE
- ----------------------- ---------------------------- ------------- ---------- ---------- ---------- ------------
11 Madison
Avenue ............... Office - CBD $ 191 1.55x 63.7% 59.0% 5.3043%
Phillips Point
Office Building....... Office - CBD $ 249 1.32x 75.6% 67.4% 6.250%
Starrett-Lehigh
Building ............. Office - CBD $ 69 2.08x 45.7% 38.3% 5.760%
IBM Center ............ Office - Suburban $ 102 1.89x 61.1% 53.8% 5.360%
North Riverside
Park Mall ............ Retail - Anchored $ 182 2.08x 73.4% 73.4% 5.320%
520 Eighth
Avenue ............... Office - CBD $ 66 3.68x 48.0% 48.0% 4.800%
Villa Del Sol
Apartments ........... Multifamily - Conventional $ 80,071 1.26x 75.0% 66.1% 5.730%
Pine Trail Square...... Retail - Anchored $ 113 1.45x 78.2% 65.8% 5.760%
Pacific Center ........ Office - CBD $ 68 1.44x 76.4% 73.4% 5.540%
Bal Harbour
Square ............... Retail - Anchored $ 198 1.27x 79.8% 67.1% 5.710%
SUBTOTAL/WTD. AVG...... 1.81X 65.1% 59.2% 5.561%
Fairfax
Corner-Building
D .................... Office - Suburban $ 182 1.20x 79.1% 66.8% 5.820%
Indigo Creek
Apartments ........... Multifamily - Conventional $ 57,598 1.33x 70.8% 65.5% 5.250%
Sunrise Bay
Apartments ........... Multifamily - Conventional $ 68,690 1.32x 79.0% 65.6% 5.290%
Cole Companies
Portfolio ............ Retail - Various $ 128 3.18x 54.8% 54.8% 4.290%
Caribbean Isle
Apartments ........... Multifamily - Conventional $ 43,527 1.22x 77.4% 70.7% 5.600%
Merritt Creek
Farm Shopping
Center ............... Retail - Anchored $ 72 1.28x 79.9% 67.8% 5.970%
Flemington Mall ....... Retail - Anchored $ 70 1.33x 79.7% 67.1% 5.750%
Summit San
Raphael
Apartments ........... Multifamily - Conventional $ 67,568 1.25x 78.5% 72.8% 5.390%
Festival Plaza ........ Retail - Anchored $ 138 1.29x 79.9% 69.9% 6.064%
840 North
Broadway ............. Office - Suburban $ 123 1.55x 69.7% 65.1% 5.540%
SUBTOTAL/WTD. AVG...... 1.50X 74.8% 66.4% 5.475%
TOTALS/WTD AVG. ....... 1.74X 67.2% 60.7% 5.543%
For more information on the twenty largest
mortgage loans in the trust fund, see
"DESCRIPTION OF THE MORTGAGE POOL--Twenty
Largest Mortgage Loans" in this prospectus
supplement.
CO-LENDER LOANS............... Three (3) mortgage loans to be included in
the trust that were originated by Wachovia
Bank, National Association, representing
approximately 19.6% of the aggregate principal
balance of the pool of mortgage loans as of the
cut-off date (2 mortgage loans in loan group 1
or 23.4% and 1 mortgage loan in loan group 2 or
4.0%), are, in each case, evidenced by one of
two or more notes which are secured by a single
mortgaged real property. In each case, other
than the Starrett-Lehigh Building subordinate
loan, the related companion loan(s) will not be
part of the trust fund. One (1) mortgage loan,
loan number 1 (the 11 Madison Avenue mortgage
loan), is part of a split loan structure where
three (3) companion loans that are part of this
split loan structure are pari passu in right of
entitlement to payment with the related
mortgage loan and the other three (3) companion
loans are junior to the four (4) loans that are
pari passu in right of entitlement to payment.
One (1) mortgage loan, loan number 3 (the
Starrett-Lehigh Building mortgage loan), is
part of a split loan structure where one (1)
companion loan that is part
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of this split loan structure is pari passu in
right of entitlement to payment with the
related mortgage loan and the other companion
loan is subordinate to the two (2) loans that
are pari passu in right of entitlement to
payment. The remaining mortgage loan, loan
number 30, is part of a split loan structure
in which the related companion loan is
subordinate to the related mortgage loan. Each
of these mortgage loans and its related
companion loan(s) are subject to intercreditor
agreements.
The intercreditor agreement for each of the 11
Madison Avenue mortgage loan and the
Starrett-Lehigh Building mortgage loan
generally allocate collections in respect of
such mortgage loans first, to the related
mortgage loan and the related pari passu
companion loans, on a pro rata basis, and
second, to amounts due on the related
subordinate companion loans. The related
intercreditor agreement with respect to the
mortgage loan with a subordinate companion
loan only, among other things, generally
allocates collections in respect of such loans
first to amounts due on the mortgage loan in
the trust fund and second to amounts due on
the related junior companion loan. The master
servicer and special servicers will service
and administer these mortgage loans and their
related companion loans, pursuant to the
pooling and servicing agreement and the
related intercreditor agreement, for so long
as the related mortgage loan is part of the
trust fund (and, in the case of the
Starrett-Lehigh Building mortgage loan, so
long as the Starrett-Lehigh Building
subordinate loan is part of the trust fund).
Amounts attributable to any companion loan
(other than the Starrett-Lehigh Building
subordinate loan) will not be assets of the
trust fund, and will be beneficially owned by
the holder of such companion loan. See
"DESCRIPTION OF THE MORTGAGE POOL--Co-Lender
Loans" in this prospectus supplement.
See "DESCRIPTION OF THE MORTGAGE
POOL--Co-Lender Loans" and "SERVICING OF THE
MORTGAGE LOANS" in this prospectus supplement
for a description of certain rights of the
holders of these companion loans to direct or
consent to the servicing of the related
mortgage loans.
In addition to the mortgage loans described
above, certain of the mortgaged properties or
the equity interests in the related borrowers
are subject to, or are permitted to become
subject to, additional debt. In certain cases,
this additional debt is secured by the related
mortgaged properties. See "RISK
FACTORS--Additional Debt on Some Mortgage
Loans Creates Additional Risks" in this
prospectus supplement.
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RISK FACTORS
o You should carefully consider, among other things, the following risk
factors (as well as the risk factors set forth under "RISK FACTORS" in
the accompanying prospectus) before making your investment decision.
Additional risks are described elsewhere in this prospectus supplement
under separate headings in connection with discussions regarding
particular aspects of the mortgage loans included in the trust fund or
the certificates.
o 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.
o This prospectus supplement contains forward-looking statements that
involve risk and uncertainties. Actual results could differ materially
from those anticipated in these forward-looking statements as a result
of certain factors, including risks described below and elsewhere in
this prospectus supplement.
o If any of the following risks are realized, your investment could be
materially and adversely affected.
THE OFFERED CERTIFICATES
ONLY TRUST FUND ASSETS ARE
AVAILABLE TO PAY YOU......... Neither the offered certificates nor the
mortgage loans will be guaranteed or insured by
us or any of our affiliates, by any
governmental agency or instrumentality or by
any other person. If the assets of the trust
fund, primarily the mortgage loans, are
insufficient to make payments on the offered
certificates, no other assets will be available
for payment of the deficiency. See "RISK
FACTORS--The Assets of the Trust Fund May Not
Be Sufficient to Pay Your Certificates" in the
accompanying prospectus.
PREPAYMENTS WILL AFFECT
YOUR YIELD.................... Prepayments. The yield to maturity on the
offered certificates will depend on the rate
and timing of principal payments (including
both voluntary prepayments, in the case of
mortgage loans that permit voluntary
prepayment, and involuntary prepayments, such
as prepayments resulting from casualty or
condemnation, defaults, liquidations or
repurchases for breaches of representations or
warranties or other sales of defaulted mortgage
loans, which in either case may not require any
accompanying prepayment premium or yield
maintenance charge) on the mortgage loans
included in the trust fund and how such
payments are allocated among the offered
certificates entitled to distributions of
In addition, upon the occurrence of certain
limited events, a party may be required or
permitted to repurchase or purchase a mortgage
loan from the trust fund and the money paid
would be passed through to the holders of the
certificates with the same effect as if such
mortgage loan had been prepaid in full (except
that no prepayment premium or yield
maintenance charge would be payable with
respect to any such purchase or repurchase).
In addition, certain mortgage loans may permit
prepayment without an accompanying prepayment
premium or yield maintenance charge if the
S-44
mortgagee elects to apply casualty or
condemnation proceeds to the mortgage loan. We
cannot make any representation as to the
anticipated rate of prepayments (voluntary or
involuntary) on the mortgage loans or as to
the anticipated yield to maturity of any
certificate.
In addition, because the amount of principal
that will be distributed to the Class A-1,
Class A-2, Class A-3, Class A-4 and Class A-1A
certificates will generally be based upon the
particular loan group in which the related
mortgage loan is deemed to be a part, the
yield on the Class A-1, Class A-2, Class A-3
and Class A-4 certificates will be
particularly sensitive to prepayments on
mortgage loans in loan group 1 and the yield
on the Class A-1A certificates will be
particularly sensitive to prepayments on
mortgage loans in loan group 2.
See "YIELD AND MATURITY CONSIDERATIONS" in
this prospectus supplement and "YIELD
CONSIDERATIONS" in the accompanying
prospectus.
Yield. In general, if you purchase an offered
certificate at a premium and principal
distributions on that offered certificate
occur at a rate faster than you anticipated at
the time of purchase, and no prepayment
premiums or yield maintenance charges are
collected, your actual yield to maturity may
be lower than you had predicted at the time of
purchase. Conversely, if you purchase an
offered certificate at a discount and
principal distributions on that offered
certificate occur at a rate slower than you
anticipated at the time of purchase, your
actual yield to maturity may be lower than you
had predicted at the time of purchase.
The yield on the Class F, Class G, Class H,
Class J, Class K, Class L, Class M, Class N,
Class O and Class P certificates could be
adversely affected if mortgage loans with
higher interest rates pay faster than mortgage
loans with lower interest rates, since those
classes bear interest at a rate based upon or
limited by the weighted average net mortgage
rate of the mortgage loans.
Interest Rate Environment. Mortgagors
generally are less likely to prepay if
prevailing interest rates are at or above the
rates borne by their mortgage loans. On the
other hand, mortgagors are more likely to
prepay if prevailing interest rates fall
significantly below the mortgage interest
rates of their mortgage loans. Mortgagors are
less likely to prepay mortgage loans with a
lockout period, yield maintenance charge or
prepayment premium provision, to the extent
enforceable, than similar mortgage loans
without such provisions, with shorter lockout
periods or with lower yield maintenance
charges or prepayment premiums.
Performance Escrows. In connection with the
origination of some of the mortgage loans, the
related borrowers were required to escrow
funds or post a letter of credit related to
obtaining certain performance objectives. In
general, such
S-45
funds will be released to the related borrower
upon the satisfaction of certain conditions.
If the conditions are not satisfied, although
the master servicer will be directed in the
pooling and servicing agreement (in accordance
with the servicing standard) to hold the
escrows, letters of credit or proceeds of such
letters of credit as additional collateral and
not use the funds to reduce the principal
balance of the related mortgage loan, in the
event such funds are required to be used to
reduce the principal balance of such mortgage
loans, such amounts will be passed through to
the holders of the certificates as principal
prepayments.
Premiums. Provisions requiring prepayment
premiums and yield maintenance charges may not
be enforceable in some states and under
federal bankruptcy law, and may constitute
interest for usury purposes. Accordingly, we
cannot provide assurance that the obligation
to pay such premium or charge will be
enforceable or, if enforceable, that the
foreclosure proceeds will be sufficient to pay
such prepayment premium or yield maintenance
charge. Additionally, although the collateral
substitution provisions related to defeasance
are not intended to be, and do not have the
same effect on the certificateholders as, a
prepayment, we cannot provide assurance that a
court would not interpret such provisions as
requiring a prepayment premium or yield
maintenance charge and possibly determine that
such provisions are unenforceable or usurious
under applicable law. Prepayment premiums and
yield maintenance charges are generally not
charged for prepayments resulting from
casualty or condemnation and would not be paid
in connection with repurchases of mortgage
loans for breaches of representations or
warranties. No prepayment premium or yield
maintenance charge will be required for
prepayments in connection with a casualty or
condemnation unless, in the case of certain of
the mortgage loans, an event of default has
occurred and is continuing.
Pool Concentrations. Principal payments
(including prepayments) on the mortgage loans
included in the trust fund or in a particular
loan group will occur at different rates. In
addition, mortgaged properties can be released
from the trust fund as a result of
prepayments, defeasance, repurchases,
casualties or condemnations. As a result, the
aggregate balance of the mortgage loans
concentrated in various property types in the
trust fund or in a particular loan group
changes over time. You therefore may be
exposed to varying concentration risks as the
mixture of property types and relative
principal balance of the mortgage loans
associated with certain property types
changes. See the table entitled "Range of
Remaining Terms to Maturity or Anticipated
Repayment Date for all Mortgage Loans as of
the Cut-Off Date" under "DESCRIPTION OF THE
MORTGAGE POOL--Additional Mortgage Loan
Information" in this prospectus supplement for
a description of the respective maturity dates
of the mortgage loans included in the trust
fund and in each loan group. Because principal
on the
S-46
certificates (other than the Class X-C, Class
X-P, Class Z-I, Class Z-II, Class Z-III, Class
R-I and Class R-II certificates) is payable in
sequential order to the extent described under
"DESCRIPTION OF THE CERTIFICATES--
Distributions" in this prospectus supplement,
classes that have a lower priority of
distributions are more likely to be exposed to
the risk of changing concentrations discussed
under "--Special Risks Associated With High
Balance Mortgage Loans" below than classes
with a higher sequential priority.
OPTIONAL EARLY TERMINATION OF
THE TRUST FUND MAY RESULT IN
AN ADVERSE IMPACT ON YOUR
YIELD OR MAY RESULT IN A LOSS The offered certificates will be subject to
optional early termination by means of the
purchase of the mortgage loans in the trust
fund. We cannot assure you that the proceeds
from a sale of the mortgage loans will be
sufficient to distribute the outstanding
certificate balance plus accrued interest and
any undistributed shortfalls in interest
accrued on the certificates that are subject to
the termination. Accordingly, the holders of
offered certificates affected by such a
termination may suffer an adverse impact on the
overall yield on their certificates, may
experience repayment of their investment at an
unpredictable and inopportune time or may even
incur a loss on their investment. See
"DESCRIPTION OF THE CERTIFICATES--Termination"
in this prospectus supplement.
BORROWER DEFAULTS MAY ADVERSELY
AFFECT YOUR YIELD............ The aggregate amount of distributions on the
offered certificates, the yield to maturity of
the offered certificates, the rate of principal
payments on the offered certificates and the
weighted average life of the offered
certificates will be affected by the rate and
timing of delinquencies and defaults on the
mortgage loans included in the trust fund.
Delinquencies on the mortgage loans included in
the trust fund, if the delinquent amounts are
not advanced, may result in shortfalls in
distributions of interest and/or principal to
the offered certificates for the current month.
Any late payments received on or in respect of
the mortgage loans will be distributed to the
certificates in the priorities described more
fully in this prospectus supplement, but no
interest will accrue on such shortfall during
the period of time such payment is delinquent.
If you calculate your anticipated yield based
on an assumed default rate and an assumed
amount of losses on the mortgage pool that are
lower than the default rate and the amount of
losses actually experienced, and if such
losses are allocated to your class of
certificates, your actual yield to maturity
will be lower than the yield so calculated and
could, under certain scenarios, be negative.
The timing of any loss on a liquidated
mortgage loan also will affect the actual
yield to maturity of
S-47
the offered certificates to which all or a
portion of such loss is allocable, even if the
rate of defaults and severity of losses are
consistent with your expectations. In general,
the earlier you bear a loss, the greater the
effect on your yield to maturity. See "YIELD
AND MATURITY CONSIDERATIONS" in this
prospectus supplement and "YIELD
CONSIDERATIONS" in the accompanying
prospectus.
Even if losses on the mortgage loans included
in the trust fund are allocated to a
particular class of offered certificates, such
losses may affect the weighted average life
and yield to maturity of other certificates.
Losses on the mortgage loans, to the extent
not allocated to such class of offered
certificates, may result in a higher
percentage ownership interest evidenced by
such certificates than would otherwise have
resulted absent such loss. The consequent
effect on the weighted average life and yield
to maturity of the offered certificates will
depend upon the characteristics of the
remaining mortgage loans.
ADDITIONAL COMPENSATION
TO THE SERVICER WILL
AFFECT YOUR RIGHT TO
RECEIVE DISTRIBUTIONS........ To the extent described in this prospectus
supplement, the master servicer or the trustee,
as applicable, will be entitled to receive
interest on unreimbursed advances and
unreimbursed servicing expenses. The right of
the master servicer or the trustee to receive
such payments of interest is senior to the
rights of certificateholders to receive
distributions on the offered certificates and,
consequently, may result in additional trust
fund expenses being allocated to the offered
certificates that would not have resulted
absent the accrual of such interest. In
addition, the applicable special servicer will
receive a fee with respect to each specially
serviced mortgage loan and any collections
thereon, including specially serviced mortgage
loans which have been returned to performing
status. This will result in shortfalls which
will be allocated to the offered certificates.
Amounts in respect of the Starrett-Lehigh
Building subordinate loan are not avaliable
for distributions on the offered certificates,
nor are they available for the reimbursement
of nonrecoverable advances of principal and
interest unrelated to the Starrett-Lehigh
whole loan on the offered certificates.
Nevertheless, if an advance by the master
servicer (or trustee, if applicable) on the
Starrett-Lehigh Building subordinate loan
becomes a nonrecoverable advance and the
master servicer (or trustee, if applicable) is
unable to recover such amounts from amounts
available for distribution on the Class SL
certificates, the master servicer (or trustee,
if applicable) will be permitted to recover a
nonrecoverable advance (including interest
thereon) from the assets of the trust
available for distribution on the offered
certificates. This may result in shortfalls
which will be allocated to the offered
certificates.
S-48
SUBORDINATION OF SUBORDINATE
OFFERED CERTIFICATES.......... As described in this prospectus supplement,
unless your certificates are Class A-1, Class
A-2, Class A-3, Class A-4, Class X-C or Class
X-P 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 A-1A,
Class X-C and Class X-P certificates.
See "DESCRIPTION OF THE CERTIFICATES--
Distributions--Application of the Available
Distribution Amount" and "DESCRIPTION OF THE
CERTIFICATES-- Subordination; Allocation of
Losses and Certain Expenses" in this
prospectus supplement.
YOUR LACK OF CONTROL OVER THE
TRUST FUND CAN CREATE RISKS... You and other certificateholders generally do
not have a right to vote and do not have the
right to make decisions with respect to the
administration of the trust. See "SERVICING OF
THE MORTGAGE LOANS--General" in this prospectus
supplement. Those decisions are generally made,
subject to the express terms of the pooling and
servicing agreement, by the master servicer,
the trustee or the special servicer, as
applicable. Any decision made by one of those
parties in respect of the trust, even if that
decision is determined to be in your best
interests by that party, may be contrary to the
decision that you or other certificateholders
would have made and may negatively affect your
interests.
Under certain circumstances, the consent or
approval of less than all certificateholders
will be required to take, and will bind all
certificateholders to, certain actions
relating to the trust fund. The interests of
those certificateholders may be in conflict
with those of the other certificateholders.
For example, certificateholders of certain
classes that are subordinate in right of
payment may direct the actions of the special
servicer with respect to troubled mortgage
loans and related mortgaged properties. In
certain circumstances, the holder of a
companion loan, mezzanine loan or subordinate
debt may direct the actions of the special
servicer with respect to the related mortgage
loan and the holder of mezzanine or
subordinate debt will have certain consent
rights relating to foreclosure or modification
of the related loans. The interests of such
holder of a companion loan, mezzanine loan or
subordinate debt may be in conflict with those
of the certificateholders.
Additionally, less than all of the
certificateholders may amend the pooling and
servicing agreement in certain circumstances.
See "SERVICING OF THE MORTGAGE LOANS--The
Controlling Class Representative" and
"DESCRIPTION OF THE CERTIFICATES--Voting
Rights" in this prospectus supplement and
"DESCRIPTION OF THE
S-49
CERTIFICATES--Voting Rights" in the
accompanying prospectus.
LIQUIDITY FOR CERTIFICATES MAY
BE LIMITED................... There is currently no secondary market for
the offered certificates. While each
underwriter has advised us that it intends to
make a secondary market in one or more classes
of the offered certificates, none of them are
under any obligation to do so. No secondary
market for your certificates may develop. If a
secondary market does develop, there can be no
assurance that it will be available for the
offered certificates or, if it is available,
that it will provide holders of the offered
certificates with liquidity of investment or
continue for the life of your certificates.
Lack of liquidity could result in a substantial
decrease in the market value of your
certificates. Your certificates will not be
listed on any securities exchange or traded in
any automated quotation system of any
registered securities association such as
NASDAQ.
BOOK-ENTRY REGISTRATION....... Your certificates will be initially
represented by one or more certificates
registered in the name of Cede & Co., as the
nominee for DTC, and will not be registered in
your name. As a result, you will not be
recognized as a certificateholder, or holder of
record of your certificates.
POTENTIAL CONFLICTS
OF INTEREST................... The master servicer is an affiliate of the
depositor and is one of the underwriters and
one of the mortgage loan sellers. The master
servicer is also acting as the initial special
servicer for the 11 Madison Avenue mortgage
loan. These affiliations could cause conflicts
with the master servicer's duties to the trust
under the pooling and servicing agreement.
However, the pooling and servicing agreement
provides that the mortgage loans shall be
administered in accordance with the servicing
standard described in this prospectus
supplement without regard to an affiliation
with any other party to the pooling and
servicing agreement. See "SERVICING OF THE
MORTGAGE LOANS--General" in this prospectus
supplement.
Wachovia Bank, National Association, which is
the master servicer and a special servicer, or
one of its affiliates, is also the initial
holder of certain companion loans with respect
to two (2) mortgage loans, representing 18.9%
of the aggregate principal balance of the pool
of mortgage loans as of the cut-off date (2
mortgage loans in loan group 1 or 23.4%), and
may also purchase certain classes of the
certificates. This could cause a conflict
between Wachovia Bank, National Association's
duties to the trust under the pooling and
servicing agreement and its or its affiliate's
interest as a holder of a companion loan. See
"DESCRIPTION OF THE MORTGAGE POOL--Co-Lender
Loans" in this prospectus supplement. In
addition, it is expected that Wachovia Bank,
National Association or one of its affiliates
will be the initial holder of the Class SL
certificates and may be able to make certain
determinations with respect to the
Starrett-Lehigh Building whole loan. This
could cause a conflict between Wachovia Bank,
National Association's duties to
S-50
the trust under the pooling and servicing
agreement and its or its affiliate's interest
as a holder of the Class SL certificates.
Lennar Partners, Inc., the other special
servicer, or an affiliate is expected to
purchase certain of the non-offered
certificates (including the controlling
class). This could cause a conflict between
the duties of Lennar Partners, Inc. to the
trust as special servicer under the pooling
and servicing agreement and its interest as a
holder of a certificate.
In addition, SL Green Funding LLC will be
appointed by the special servicer as a
sub-servicer with respect to the 11 Madison
Avenue mortgage loan. An affiliate of SL Green
Funding LLC owns the most subordinate
companion loan in the 11 Madison Avenue
mortgage loan. This could cause a conflict
between SL Green Funding LLC's duty to the
trust as a sub-servicer and its interest in
the related 11 Madison Avenue subordinate
loan.
The special servicer (and any related
sub-servicer) will be involved in determining
whether to modify or foreclose a defaulted
mortgage loan. The special servicer or an
affiliate of the special servicer may purchase
certain other non-offered certificates
(including the controlling class, Class SL,
Class Z-I, Class Z-II and Class Z-III
certificates). The special servicer or its
affiliate may serve as the initial controlling
class representative. The special servicer or
its affiliates may acquire non-performing
loans or interests in non-performing loans,
which may include REO properties that compete
with the mortgaged properties securing
mortgage loans in the trust. The special
servicer or its affiliates own and are in the
business of acquiring assets similar in type
to the assets of the trust fund. The special
servicer or its affiliates may also make loans
on properties that may compete with the
mortgaged properties and may also advise other
clients that own or are in the business of
owning properties that compete with the
mortgaged properties or that own loans like
the mortgage loans included in the trust.
Accordingly, the assets of the special
servicer and its affiliates may, depending
upon the particular circumstances, including
the nature and location of such assets,
compete with the mortgaged properties for
tenants, purchasers, financing and so forth.
See "SERVICING OF THE MORTGAGE LOANS--
Modifications, Waivers and Amendments"
in this prospectus supplement.
This could cause a conflict between the
special servicer's duties to the trust under
the pooling and servicing agreement and its
interest as a holder of a certificate.
However, the pooling and servicing agreement
provides that the mortgage loans shall be
administered in accordance with the servicing
standard without regard to ownership of any
certificate by the master servicer, the
special servicer or any affiliate of the
special servicer. See "SERVICING OF THE
MORTGAGE LOANS--General" in this prospectus
supplement.
In addition, the related property managers and
borrowers may experience conflicts of interest
in the management
S-51
and/or ownership of the mortgaged properties
securing the mortgage loans because:
o a substantial number of the mortgaged
properties are managed by property
managers affiliated with the respective
borrowers;
o these property managers also may manage
and/or franchise additional properties,
including properties that may compete
with the mortgaged properties;
o affiliates of the property manager
and/or the borrowers, or the property
managers and/or the borrowers
themselves also may own other
properties, including competing
properties; or
o the mortgaged property is self-managed.
In addition, certain mortgage loans included
in the trust may have been refinancings of
debt previously held by (or by an affiliate
of) one of the mortgage loan sellers.
TERRORIST ATTACKS MAY ADVERSELY
AFFECT YOUR INVESTMENT........ On September 11, 2001, the United States was
subjected to multiple terrorist attacks which
resulted in considerable uncertainty in the
world financial markets. The full impact of
these events is not yet known, but could
include, among other things, increased
volatility in the price of securities including
your certificates. The terrorist attacks may
also adversely affect the revenues or costs of
operation of the mortgaged properties. The
terrorist attacks on the World Trade Center and
the Pentagon suggest an increased likelihood
that large public areas such as shopping malls
or large office buildings could become the
target of terrorist attacks in the future. The
possibility of such attacks could (i) lead to
damage to one or more of the mortgaged
properties if any such attacks occur, (ii)
result in higher costs for security and
insurance premiums, particularly for large
properties, which could adversely affect the
cash flow at such mortgaged properties, or
(iii) impact leasing patterns or shopping
patterns which could adversely impact leasing
revenue and mall traffic and percentage rent.
As a result, the ability of the mortgaged
properties to generate cash flow may be
adversely affected. See "--Insurance Coverage
on Mortgaged Properties May Not Cover Special
Hazard Losses" below.
The terrorist attacks and the military
conflict in Iraq may continue to significantly
reduce air travel throughout the United
States, and, therefore, continue to have a
negative effect on revenues in areas heavily
dependent on tourism. The decrease in air
travel may have a negative effect on certain
of the mortgaged properties, including hotel
mortgaged properties and those mortgaged
properties located in tourist areas, which
could reduce the ability of such mortgaged
properties to generate cash flow.
It is uncertain what continued effect armed
conflict involving the United States,
including the recent war between the United
States and Iraq or any future conflict with
any other
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country, will have on domestic and world
financial markets, economies, real estate
markets, insurance costs or business segments.
Foreign conflicts of any kind could have an
adverse effect on the mortgaged properties.
Accordingly, these disruptions, uncertainties
and costs could materially and adversely
affect your investment in the certificates.
THE MORTGAGE LOANS
RISKS ASSOCIATED WITH
COMMERCIAL LENDING MAY BE
DIFFERENT THAN FOR
RESIDENTIAL LENDING.......... Commercial and multifamily lending is
generally viewed as exposing a lender (and your
investment in the trust fund) to a greater risk
of loss than lending which is secured by
single-family residences, in part because it
typically involves making larger loans to
single borrowers or groups of related
mortgagors. In addition, unlike loans which are
secured by single- family residences, repayment
of loans secured by commercial and multifamily
properties depends upon the ability of the
related real estate project:
o to generate income sufficient to pay
debt service, operating expenses and
leasing commissions and to make
necessary repairs, tenant improvements
and capital improvements; and
o in the case of loans that do not fully
amortize over their terms, to retain
sufficient value to permit the borrower
to pay off the loan at maturity through
a sale or refinancing of the mortgaged
property.
FUTURE CASH FLOW AND PROPERTY
VALUES ARE NOT PREDICTABLE......A number of factors, many beyond the control
of the property owner, may affect the ability
of an income-producing real estate project to
generate sufficient net operating income to pay
debt service and/or to maintain its value.
Among these factors are:
o economic conditions generally and in
the area of the project;
o the age, quality, functionality and
design of the project;
o the degree to which the project
competes with other projects in the
area;
o changes or continued weakness in
specific industry segments;
o increases in operating costs;
o the willingness and ability of the
owner to provide capable property
management and maintenance;
o the degree to which the project's
revenue is dependent upon a single
tenant or user, a small group of
tenants, tenants concentrated in a
particular business or industry and the
competition to any such tenants;
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o an increase in the capital expenditures
needed to maintain the properties or
make improvements;
o a decline in the financial condition of
a major tenant;
o the location of a mortgaged property;
o whether a mortgaged property can be
easily converted (or converted at all)
to alternative uses;
o an increase in vacancy rates;
o perceptions regarding the safety,
convenience and attractiveness of such
properties;
o vulnerability to litigation by tenants
and patrons; and
o environmental contamination.
Many of the mortgaged properties securing
mortgage loans included in the trust fund have
leases that expire or may be subject to tenant
termination rights prior to the maturity date
of the related mortgage loan. Certain of such
loans may be leased entirely to a single
tenant. If leases are not renewed or replaced,
if tenants default, if rental rates fall
and/or if operating expenses increase, the
borrower's ability to repay the loan may be
impaired and the resale value of the property,
which is substantially dependent upon the
property's ability to generate income, may
decline. With respect to 1 mortgage loan, the
11 Madison Avenue mortgage loan, representing
11.1% of the aggregate principal balance of
the pool of mortgage loans as of the cut-off
date, the largest tenant, Credit Suisse First
Boston LLC, has the right to terminate a
portion of its leased space. Although 74.3% of
Credit Suisse First Boston LLC's 1,921,459
square feet of net rentable area is leased
through April 2017, Credit Suisse First Boston
LLC does have the option to terminate up to
528,730 square feet (27.5% of Credit Suisse
First Boston LLC's space and 23.4% of the
mortgaged property's total space) after April
2007 in its sole discretion, provided that
they meet certain notice requirements and pay
a termination fee. See "DESCRIPTION OF THE
MORTGAGE POOL--Twenty Largest Mortgage
Loans--11 Madison Avenue" in this prospectus
supplement. There can be no assurance that the
related borrower will be able to relet the
terminated space or that such space could be
relet at the same rate being paid by Credit
Suisse First Boston Corporation. Even if
borrowers successfully renew leases or relet
vacated space, the costs associated with
reletting, including tenant improvements,
leasing commissions and free rent, can exceed
the amount of any reserves maintained for that
purpose and reduce cash from the mortgaged
properties. Although some of the mortgage
loans included in the trust fund require the
borrower to maintain escrows for leasing
expenses, there is no guarantee that these
reserves will be sufficient. In addition,
there are other factors, including changes in
zoning or tax laws,
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restrictive covenants, tenant exclusives and
rights of first refusal to lease or purchase,
the availability of credit for refinancing and
changes in interest-rate levels that may
adversely affect the value of a project and/or
the borrower's ability to sell or refinance
without necessarily affecting the ability to
generate current income. In addition, certain
of the mortgaged properties are leased in
whole or in part by government sponsored
tenants who may have certain rights to cancel
their leases or reduce the rent payable with
respect to such leases.
Other factors are more general in nature, such
as:
o national, regional or local economic
conditions (including plant and
military installation closings,
industry slowdowns and unemployment
rates);
o local real estate conditions (such as
an oversupply of retail space, office
space or multifamily housing);
o demographic factors;
o consumer confidence;
o consumer tastes and preferences; and
o changes in building codes and other
applicable laws.
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 in the case of rental properties, the
rate at which new rentals occur;
o the 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); and
o 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 property with short-term
revenue sources, such as short-term or
month-to-month leases, and may lead to
higher rates of delinquency or
defaults.
SOME MORTGAGED PROPERTIES MAY
NOT BE READILY CONVERTIBLE TO
ALTERNATIVE USES............. Some of the mortgaged properties securing the
mortgage loans included in the trust fund may
not be readily convertible (or convertible at
all) to alternative uses if those properties
were to become unprofitable for any reason. For
example, a mortgaged property may not be
readily convertible (or convertible at all) due
to restrictive covenants related
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to such mortgaged property, including, in the
case of mortgaged properties which are part of
a condominium regime, the use and other
restrictions imposed by the condominium
declaration and other related documents,
especially in a situation where a mortgaged
property does not represent the entire
condominium regime. In addition converting
commercial properties to alternate uses
generally requires substantial capital
expenditures. The liquidation value of any
mortgaged property subject to limitations of
the kind described above or other limitations
on convertibility of use may be substantially
less than would be the case if the property
were readily adaptable to other uses. See
"--Special Risks Associated with Industrial
and Mixed Use Facilities" below.
LOANS NOT INSURED
OR GUARANTEED................. Generally, the mortgage loans included in the
trust fund will not be an obligation of, or be
insured or guaranteed by, any governmental
entity, by any private mortgage insurer, or by
the depositor, any mortgage loan seller, the
underwriters, the master servicer, the special
servicer, the trustee or any of their
respective affiliates.
We have not evaluated the significance of the
recourse provisions of mortgage loans that may
permit recourse against the related borrower
or another person in the event of a default.
Accordingly, you should assume all of the
mortgage loans included in the trust fund are
nonrecourse loans, and that recourse in the
case of default will be limited to the related
mortgaged property.
However, in certain circumstances a mortgage
loan seller will be obligated to repurchase or
substitute a mortgage loan sold by it if:
o there is a defect or omission with
respect to certain of the documents
relating to such mortgage loan and such
defect or omission materially and
adversely affects the value of a
mortgage loan or the interests of the
trust therein or the interests of any
certificateholder; or
o certain of their respective
representations or warranties
concerning such mortgage loan are
breached, and such breach materially
and adversely affects the value of such
mortgage loan, the interests of the
trust therein or the interests of any
certificateholder and is not cured as
required.
We cannot provide assurance that the
applicable mortgage loan seller will be in a
financial position to make such a repurchase
or substitution.
RISKS RELATING TO CERTAIN
PROPERTY TYPES............... Particular types of income properties are
exposed to particular risks. For instance:
S-56
SPECIAL RISKS ASSOCIATED WITH
OFFICE PROPERTIES............ Office properties may require their owners to
expend significant amounts of cash to pay for
general capital improvements, tenant
improvements and costs of re-leasing space.
Office properties that are not equipped to
accommodate the needs of modern businesses may
become functionally obsolete and thus
non-competitive.
In addition, a large number of factors may
adversely affect the value of office
properties, including:
o the quality of an office building's
tenants;
o the physical attributes of the building
in relation to competing buildings
(e.g. age, condition, design, access to
transportation and ability to offer
certain amenities, such as
sophisticated building systems);
o the physical attributes of the building
with respect to the technological needs
of the tenants, including the
adaptability of the building to changes
in the technological needs of the
tenants;
o the desirability of the area as a
business location;
o the presence of competing properties;
and
o the strength and nature of the local
economy (including labor costs and
quality, tax environment and quality of
life for employees).
Moreover, the cost of refitting office space
for a new tenant is often higher than the cost
of refitting other types of property.
Office properties secure 13 of the mortgage
loans included in the trust fund as of the
cut-off date, representing 43.9% of the
aggregate principal balance of the pool of
mortgage loans as of the cut-off date (54.5%
of loan group 1).
SPECIAL RISKS ASSOCIATED WITH
SHOPPING CENTERS AND OTHER
RETAIL PROPERTIES............. Shopping centers are affected by the health of
the retail industry, which is currently
undergoing a consolidation and is experiencing
changes due to the growing market share of
"off-price" retailing, including the popularity
of home shopping networks, shopping via
Internet web sites and telemarketing. A
particular shopping center may be adversely
affected by the bankruptcy or decline in
drawing power of an anchor, shadow anchor or
major tenant, a shift in consumer demand due to
demographic changes (for example, population
decreases or changes in average age or income)
and/or changes in consumer preference (for
example, to discount retailers).
In the case of retail properties, the failure
of an anchor, shadow anchor or major tenant to
renew its lease, the termination of an anchor,
shadow anchor or major tenant's lease, the
bankruptcy or economic decline of an anchor,
shadow anchor or major tenant, or the
cessation of the business of an anchor, shadow
anchor or major tenant at its
S-57
store, notwithstanding that such tenant may
continue payment of rent after "going dark,"
may have a particularly negative effect on the
economic performance of a shopping center
property given the importance of anchor
tenants, shadow anchor tenants and major
tenants in attracting traffic to other stores
within the same shopping center. In addition,
the failure of one or more major tenants, such
as an anchor or shadow anchor tenant, to
operate from its premises may entitle other
tenants to rent reductions or the right to
terminate their leases. See "--The Failure of
a Tenant Will Have a Negative Impact on Single
Tenant and Tenant Concentration Properties"
below.
Retail properties securing 3 of the mortgage
loans included in the trust fund as of the
cut-off date, representing 7.7% of the
aggregate principal balance of the pool of
mortgage loans as of the cut-off date (9.6% of
loan group 1), have movie theaters as tenants.
These mortgaged properties are exposed to
certain unique risks. Significant factors
determining the value of a theater property
include the ability to secure film licenses,
agreements for first-run movies, the ability
to maintain high attendance levels, the
ability to achieve sales of food and beverages
to attendees and the strength and experience
of the operator. In addition, the performance
of a theater property can also be impacted by
the quality, size and proximity of competitive
theater properties and the relative appeal of
films being screened at other theater
properties within the market, as well as the
location of the theater, visibility and
accessibility to transportation arteries, the
number of screens and seating capacity, the
adequacy of patron parking, and the quality
and modernity of sound and projection systems.
In recent years, the theater industry has
experienced a high level of construction of
new theaters and an increase in competition
among theater operators. This new construction
has caused some operators to experience
financial difficulties, resulting in
downgrades in their credit ratings and, in
certain cases, bankruptcy filings. In
addition, because of the unique construction
requirements of theaters, any vacant theater
space would not easily be converted to other
uses.
Retail properties, including shopping centers,
secure 52 of the mortgage loans included in
the trust fund as of the cut-off date,
representing 29.2% of the aggregate principal
balance of the pool of mortgage loans as of
the cut-off date (36.3% of loan group 1).
SPECIAL RISKS ASSOCIATED WITH
MULTIFAMILY PROJECTS......... Multifamily projects are part of a market
that, in general, is characterized by low
barriers to entry. Thus, a particular apartment
market with historically low vacancies could
experience substantial new construction and a
resultant oversupply of units in a relatively
short period of time. Since multifamily
apartment units are typically leased on a
short-term basis, the tenants who reside in a
particular project
S-58
within such a market may easily move to
alternative projects with more desirable
amenities or locations.
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 (for example, its
age, appearance and construction
quality);
o the location of the property (for
example, a change in the neighborhood
over time);
o the ability of management to provide
adequate maintenance and insurance;
o the types of services and amenities
that the property provides;
o the property's reputation;
o the level of mortgage interest rates
(which, if relatively low, may
encourage tenants to purchase rather
than lease housing);
o the tenant mix, such as the tenant
population being predominantly students
or being heavily dependent on workers
from a particular business or personnel
from a local military base;
o dependence upon governmental programs
that provide rent subsidies to tenants
pursuant to tenant voucher programs or
tax credits to developers to provide
certain types of development;
o the presence of competing properties;
o adverse local or national economic
conditions; and
o state and local regulations.
Furthermore, multifamily projects may be
subject to various tax credit, city, state and
federal housing subsidies, rent stabilization
or similar programs. The limitations and
restrictions imposed by these programs could
result in realized losses on the mortgage
loans. In addition, in the event that the
program is cancelled, it could result in less
income for the project. These programs may
include:
o rent limitations that could adversely
affect the ability of borrowers to
increase rents to maintain the
condition of their mortgaged properties
and satisfy operating expenses; and
o tenant income restrictions that may
reduce the number of eligible tenants
in those mortgaged properties and
result in a reduction in occupancy
rates.
The differences in rents between subsidized or
supported properties and other multifamily
rental properties in the same area may not be
a sufficient economic incentive for
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some eligible tenants to reside at a
subsidized or supported property that may have
fewer amenities or be less attractive as a
residence. As a result, occupancy levels at a
subsidized or supported property may decline,
which may adversely affect the value and
successful operation of such property.
Multifamily properties secure 28 of the
mortgage loans included in the trust fund as
of the cut-off date, representing 22.3% of the
aggregate principal balance of the pool of
mortgage loans as of the cut-off date (6
mortgage loans in loan group 1 or 4.3% and 22
mortgage loans in loan group 2 or 96.3%).
SPECIAL RISKS ASSOCIATED
WITH INDUSTRIAL AND MIXED
USE FACILITIES............... Industrial and mixed use facilities present
risks not associated with other properties.
Significant factors determining the value of
industrial properties include:
o the quality of tenants;
o building design and adaptability; and
o the location of the property.
Concerns about the quality of tenants,
particularly major tenants, are similar in
both office properties and industrial
properties, although industrial properties are
more frequently dependent on a single tenant.
In addition, properties used for many
industrial purposes are more prone to
environmental concerns than other property
types.
Aspects of building site design and
adaptability affect the value of an industrial
property. Site characteristics which are
valuable to an industrial property include
clear ceiling heights, column spacing, zoning
restrictions, number of bays and bay depths,
divisibility, truck turning radius and overall
functionality and accessibility. In addition,
because of the unique construction
requirements of many industrial properties,
any vacant industrial property may not be
easily converted to other uses. Location is
also important because an industrial property
requires the availability of labor sources,
proximity to supply sources and customers and
accessibility to rail lines, major roadways
and other distribution channels.
Industrial properties may be adversely
affected by reduced demand for industrial
space occasioned by a decline in a particular
industry segment (e.g., a decline in defense
spending), and a particular industrial
property that suited the needs of its original
tenant may be difficult to relet to another
tenant or may become functionally obsolete
relative to newer properties. In addition,
lease terms with respect to industrial
properties are generally for shorter periods
of time than with respect to other properties
and may result in a substantial percentage of
leases expiring in the same year at any
particular industrial property.
S-60
Industrial and mixed use facilities secure 4
of the mortgage loans included in the trust
fund as of the cut-off date, representing 1.7%
of the aggregate principal balance of the pool
of mortgage loans as of the cut-off date (2.1%
of loan group 1).
SPECIAL RISKS ASSOCIATED WITH
HOSPITALITY PROPERTIES........ Hospitality properties are affected by
various factors, including:
o location;
o quality;
o management ability;
o amenities;
o franchise affiliation (or lack
thereof);
o continuing expenditures for
modernizing, refurbishing and
maintaining existing facilities prior
to the expiration of their anticipated
useful lives;
o a deterioration in the financial
strength or managerial capabilities of
the owner and operator of a hotel;
o changes in travel patterns caused by
changes in access, energy prices,
strikes, relocation of highways, the
construction of additional highways or
other factors;
o adverse economic conditions, either
local, regional or national, which may
limit the amount that may be charged
for a room and may result in a
reduction in occupancy levels; and
o construction of competing hotels or
motels, which may also limit the amount
that may be charged for a room and may
result in a reduction in occupancy
levels.
Because hotel rooms generally are rented for
short periods of time, hospitality properties
tend to be affected more quickly by adverse
economic conditions and competition than other
commercial properties. All of the mortgage
loans secured by hotel properties are
affiliated with a franchise or hotel
management company through a franchise or
management agreement. The performance of a
hotel property affiliated with a franchise or
hotel management company depends in part on:
o the continued existence and financial
strength of the franchisor or hotel
management company;
o the public perception of the franchise
or hotel chain service mark; and
o the duration of the franchise licensing
or management agreements.
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Any provision in a franchise agreement or
management agreement providing for termination
because of a bankruptcy of a franchisor or
manager generally will not be enforceable.
Replacement franchises may require
significantly higher fees.
The transferability of franchise license
agreements is restricted. In the event of a
foreclosure, the lender or its agent would not
have the right to use the franchise license
without the franchisor's consent.
Conversely, in the case of certain mortgage
loans, the lender may be unable to remove a
franchisor or a hotel management company that
it desires to replace following a foreclosure.
Furthermore, the ability of a hotel to attract
customers, and some of such hotel's revenues,
may depend in large part on its having a
liquor license. Such a license may not be
transferable (for example, in connection with
a foreclosure).
Moreover, the hotel and lodging industry is
generally seasonal in nature; different
seasons affect different hotels depending on
type and location. This seasonality can be
expected to cause periodic fluctuations in a
hospitality property's room and restaurant
revenues, occupancy levels, room rates and
operating expenses. In addition, the events of
September 11, 2001 have had an adverse impact
on the tourism and convention industry. See
"--Terrorist Attacks May Adversely Affect Your
Investment" above.
The mortgaged properties securing 2 of the
mortgage loans included in the trust fund as
of the cut-off date, representing 1.7% of the
aggregate principal balance of the pool of
mortgage loans as of the cut-off date (2.1% of
loan group 1), are each currently being
operated as a hotel.
ENVIRONMENTAL LAWS MAY
ADVERSELY AFFECT THE VALUE
OF AND CASH FLOW FROM A
MORTGAGED PROPERTY............ If an adverse environmental condition exists
with respect to a mortgaged property securing a
mortgage loan included in the trust fund, the
trust fund may be subject to certain risks
including the following:
o a reduction in the value of such
mortgaged property which may make it
impractical or imprudent to foreclose
against such mortgaged property;
o the potential that the related borrower
may default on the related mortgage
loan due to such borrower's inability
to pay high remediation costs or costs
of defending lawsuits due to an
environmental impairment or difficulty
in bringing its operations into
compliance with environmental laws;
o liability for clean-up costs or other
remedial actions, which could exceed
the value of such mortgaged property or
the unpaid balance of the related
mortgage loan; and
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o the inability to sell the related
mortgage loan in the secondary market
or to lease such mortgaged property to
potential tenants.
Under certain federal, state and local laws,
federal, state and/or local agencies may
impose a statutory lien over affected property
to secure the reimbursement of remedial costs
incurred by these agencies to correct adverse
environmental conditions. This lien may be
superior to the lien of an existing mortgage.
Any such lien arising with respect to a
mortgaged property securing a mortgage loan
included in the trust fund would adversely
affect the value of such mortgaged property
and could make impracticable the foreclosure
by the special servicer on such mortgaged
property in the event of a default by the
related borrower.
Under various federal, state and local laws,
ordinances and regulations, a current or
previous owner or operator of real property,
as well as certain other types of parties, may
be liable for the costs of investigation,
removal or remediation of hazardous or toxic
substances on, under, adjacent to or in such
property. The cost of any required
investigation, delineation and/or remediation
and the owner's liability therefor is
generally not limited under applicable laws.
Such liability could exceed the value of the
property and/or the aggregate assets of the
owner. Under some environmental laws, a
secured lender (such as the trust fund) may be
found to be an "owner" or "operator" of the
related mortgaged property if it is determined
that the lender actually participated in the
hazardous waste management of the borrower,
regardless of whether the borrower actually
caused the environmental damage. In such
cases, a secured lender may be liable for the
costs of any required investigation, removal
or remediation of hazardous substances. The
trust fund's potential exposure to liability
for environmental costs will increase if the
trust fund, or an agent of the trust fund,
actually takes possession of a mortgaged
property or control of its day-to-day
operations. See "CERTAIN LEGAL ASPECTS OF
MORTGAGE LOANS AND LEASES--Environmental
Considerations" in the accompanying
prospectus, and "DESCRIPTION OF THE MORTGAGE
POOL--Assessments of Property
Condition--Environmental Assessments" in this
prospectus supplement.
A third-party environmental consultant
conducted an environmental site assessment,
updated a previously conducted environmental
site assessment or performed a transaction
screen environmental assessment with respect
to each mortgaged property securing a mortgage
loan included in the trust fund. Such
assessments or transaction screens do not
generally include invasive environmental
testing. In each case where the environmental
site assessment, update or transaction screen
revealed a material adverse environmental
condition or circumstance at any mortgaged
property, then (depending on the nature of the
condition or circumstance)
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one or more of the following actions has been
or is expected to be taken:
o an environmental consultant
investigated those conditions and
recommended no further investigations
or remediation; or
o an environmental insurance policy,
having the characteristics described
below, was obtained from a third-party
insurer; or
o either (i) an operations and
maintenance program, including, in
several cases, with respect to
asbestos-containing materials,
lead-based paint, microbial matter
and/or radon, or periodic monitoring of
nearby properties, has been or is
expected to be implemented in the
manner and within the time frames
specified in the related loan
documents, or (ii) remediation in
accordance with applicable law or
regulations has been performed, is
currently being performed or is
expected to be performed either by the
borrower or by the party responsible
for the contamination; or
o an escrow or reserve was established to
cover the estimated cost of
remediation, with each remediation
required to be completed within a
reasonable time frame in accordance
with the related loan documents; or
o the related borrower or other
responsible party having financial
resources reasonably estimated to be
adequate to address the related
condition or circumstance is required
to take (or is liable for the failure
to take) actions, if any, with respect
to those circumstances or conditions
that have been required by the
applicable governmental regulatory
authority or any environmental law or
regulation.
We cannot provide assurance, however, that the
environmental assessments or transaction
screens identified all environmental
conditions and risks, that the related
borrowers will implement all recommended
operations and maintenance plans, that such
plans will adequately remediate the
environmental condition, or that any
environmental indemnity, insurance or escrow
will fully cover all potential environmental
conditions and risks. In addition, the
environmental condition of the underlying real
properties could be adversely affected by
tenants or by the condition of land or
operations in the vicinity of the properties,
such as underground storage tanks.
With respect to 2 mortgage loans (loan numbers
58 and 81) included in the trust fund as of
the cut-off date, representing 0.5% of the
aggregate principal balance of the pool of
mortgage loans as of the cut-off date (0.7% of
loan group 1), the related borrower was
required to obtain (or the related
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mortgage loan seller has obtained) a secured
creditor impaired property environmental
insurance policy in lieu of or in addition to
environmental escrows established, or in
certain cases, in lieu of a guarantee of a
sponsor. The premium for each policy was paid
in full at origination of the loan and at
issuance, the issuer has a claims paying
ability of not less than "AAA" by S&P, and
each policy has a limit of liability in an
amount greater than or equal to the full
principal amount of the applicable loan with
no deductible.
We cannot provide assurance, however, that
should such coverage be needed, coverage would
be available or uncontested, that the terms
and conditions of such coverage would be met,
that coverage would be sufficient for the
claims at issue or that coverage would not be
subject to certain deductibles.
With respect to the Starrett-Lehigh Building
loan (loan number 3), representing 7.8% of the
aggregate principal balance of the pool of
mortgage loans as of the cut-off date (9.6% of
loan group 1), an environmental site
assessment revealed that the mortgaged
property is listed on an environmental
database as a result of a fuel oil spill in
July 1993. Clean up of the spill was completed
and a request for closure has been submitted
to the New York State Department of
Environmental Conservation; a determination
with respect to which is pending.
Approximately 3,000 linear feet of damaged
suspect friable asbestos containing materials
has been identified in the basement. The
environmental report recommended appropriate
testing and abatement of the asbestos
containing materials. See "DESCRIPTION OF THE
MORTGAGE POOL--Twenty Largest Mortgage
Loans--Starrett-Lehigh Building" in this
prospectus supplement.
Two (2) mortgage loans (loan numbers 82 and
84), representing 0.4% of the aggregate
principal balance of the pool of mortgage
loans as of the cut-off date (0.5% of loan
group 1), which are part of the Cole Companies
Portfolio (loan numbers 72, 82, 84, 85, 88,
91, 94, 95, 96, 97 and 99) representing 1.5%
of the aggregate principal balance of the pool
of mortgage loans as of the cut-off date (11
mortgage loans in loan group 1 or 1.9%), have
ongoing environmental remediation under the
auspices of a regulatory authority taking
place. An environmental insurance policy has
been obtained from the Chubb Custom Insurance
Company, effective March 3, 2002 through March
2013 in an amount equal to four times the
projected clean up cost.
The pooling and servicing agreement will
require that the special servicer obtain an
environmental site assessment of a mortgaged
property securing a mortgage loan included in
the trust fund prior to taking possession of
the property through foreclosure or otherwise
or assuming control of its operation. Such
requirement effectively precludes enforcement
of the security for the related mortgage note
until a satisfactory
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environmental site assessment is obtained (or
until any required remedial action is
thereafter taken), but will decrease the
likelihood that the trust fund will become
liable for a material adverse environmental
condition at the mortgaged property. However,
we cannot give assurance that the requirements
of the pooling and servicing agreement will
effectively insulate the trust fund from
potential liability for a materially adverse
environmental condition at any mortgaged
property. See "DESCRIPTION OF THE POOLING AND
SERVICING AGREEMENTS--Realization Upon
Defaulted Mortgage Loans," "RISK FACTORS--
Environmental Liability May Affect the Lien on
a Mortgaged Property and Expose the Lender to
Costs" and "CERTAIN LEGAL ASPECTS OF MORTGAGE
LOANS AND LEASES--Environmental
Considerations" in the accompanying
prospectus.
SPECIAL RISKS ASSOCIATED
WITH BALLOON LOANS AND
ANTICIPATED REPAYMENT
DATE LOANS................... Ninety-seven (97) of the mortgage loans,
representing 99.3% of the aggregate principal
balance of the pool of mortgage loans as of the
cut-off date (75 mortgage loans in loan group 1
or 99.5% and 22 mortgage loans in loan group 2
or 98.4%), provide for scheduled payments of
principal and/or interest based on amortization
schedules significantly longer than their
respective remaining terms to maturity or
provide for payments of interest only until the
respective maturity date and, in each case, a
balloon payment on the respective maturity
date. Fifty-six (56) of these mortgage loans,
representing 55.4% of the aggregate principal
balance of the pool of mortgage loans as of the
cut-off date (40 mortgage loans in loan group 1
or 49.3% and 16 mortgage loans in loan group 2
or 80.7%), are anticipated repayment date
loans, which provide that if the principal
balance of the loan is not repaid on a date
specified in the related mortgage note, the
loan will accrue interest at an increased rate.
o A borrower's ability to make a balloon
payment or repay its anticipated
repayment date loan on the anticipated
repayment date typically will depend
upon its ability either to refinance
fully the loan or to sell the related
mortgaged property at a price
sufficient to permit the borrower to
make such payment.
o Whether or not losses are ultimately
sustained, any delay in the collection
of a balloon payment on the maturity
date or repayment on the anticipated
repayment date that would otherwise be
distributable on your certificates will
likely extend the weighted average life
of your certificates.
o The ability of a borrower to effect a
refinancing or sale will be affected by
a number of factors, including (but not
limited to) the value of the related
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mortgaged property, the level of
available mortgage rates at the time of
sale or refinancing, the borrower's
equity in the mortgaged property, the
financial condition and operating
history of the borrower and the
mortgaged property, rent rolling
status, rent control laws with respect
to certain residential properties, tax
laws, prevailing general and regional
economic conditions and the
availability of credit for loans
secured by multifamily or commercial
properties, as the case may be.
We cannot assure you that each borrower under
a balloon loan or an anticipated repayment
date loan will have the ability to repay the
principal balance of such mortgage loan on the
related maturity date or anticipated repayment
date, as applicable. In addition, fully
amortizing mortgage loans which pay interest
on an actual/360 basis but have fixed monthly
payments may, in fact, have a small balloon
payment due at maturity. For additional
description of risks associated with balloon
loans, see "RISK FACTORS--Balloon Payments on
Mortgage Loans Result in Heightened Risk of
Borrower Default" in the accompanying
prospectus.
In order to maximize recoveries on defaulted
mortgage loans, the pooling and servicing
agreement permits the special servicer to
extend and modify mortgage loans that are in
material default or as to which a payment
default (including the failure to make a
balloon payment) is imminent; subject,
however, to the limitations described under
"SERVICING OF THE MORTGAGE LOANS--
Modifications, Waivers and Amendments"
in this prospectus supplement. We cannot
provide assurance, however, that any such
extension or modification will increase the
present value of recoveries in a given case.
Any delay in collection of a balloon payment
that would otherwise be distributable on your
certificates, whether such delay is due to
borrower default or to modification of the
related mortgage loan, will likely extend the
weighted average life of your certificates.
See "YIELD AND MATURITY CONSIDERATIONS" in
this prospectus supplement and "YIELD
CONSIDERATIONS" in the accompanying
prospectus.
ADVERSE CONSEQUENCES ASSOCIATED
WITH BORROWER CONCENTRATION,
BORROWERS UNDER COMMON
CONTROL AND RELATED
BORROWERS.................... Certain borrowers under the mortgage loans
included in the trust fund are affiliated or
under common control with one another. In such
circumstances, any adverse circumstances
relating to a borrower or an affiliate thereof
and affecting one of the related mortgage loans
or mortgaged properties could also affect other
mortgage loans or mortgaged properties of the
related borrower. In particular, the bankruptcy
or insolvency of any such borrower or affiliate
could have an adverse effect on the operation
of all of the mortgaged properties of that
borrower and its affiliates and on the
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ability of such related mortgaged properties
to produce sufficient cash flow to make
required payments on the mortgage loans. For
example, if a person that owns or directly or
indirectly controls several mortgaged
properties experiences financial difficulty at
one mortgaged property, they could defer
maintenance at one or more other mortgaged
properties in order to satisfy current
expenses with respect to the mortgaged
property experiencing financial difficulty, or
they could attempt to avert foreclosure by
filing a bankruptcy petition that might have
the effect of interrupting payments for an
indefinite period on all the related mortgage
loans. In particular, such person experiencing
financial difficulty or becoming subject to a
bankruptcy proceeding may have an adverse
effect on the funds available to make
distributions on the certificates and may lead
to a downgrade, withdrawal or qualification
(if applicable) of the ratings of the
certificates.
Mortgaged properties owned by related
borrowers are likely to:
o have common management, increasing the
risk that financial or other
difficulties experienced by the
property manager could have a greater
impact on the pool of mortgage loans
included in the trust fund; and
o have common general partners or
managing members which would increase
the risk that a financial failure or
bankruptcy filing would have a greater
impact on the pool of mortgage loans
included in the trust fund.
The Lieberman concentration (loan numbers 22,
26 and 36), consists of 3 mortgage loans which
collectively represent 2.6% of the aggregate
principal balance of the pool of mortgage
loans as of the cut-off date (1 mortgage loan
in loan group 1 or 0.8% and 2 mortgage loans
in loan group 2 or 9.8%). These mortgage loans
are not cross-collateralized or cross-
defaulted but have a common sponsor. The
sponsor of each mortgage loan in the Lieberman
concentration is Myron Lieberman. The Cole
concentration consists of 11 mortgage loans
(loan numbers 72, 82, 84, 85, 88, 91, 94, 95,
96, 97 and 99), which collectively represent
1.5% of the aggregate principal balance of the
pool of mortgage loans as of the cut-off date
(1.9% of loan group 1). These mortgage loans
are cross-defaulted and cross-collateralized.
The sponsor of each mortgage loan in the Cole
concentration is Cole Credit Property Fund
Limited Partnership. The Eckerd concentration
consists of 3 mortgage loans (loan numbers 87,
92 and 98) which collectively represent 0.4%
of the aggregate principal balance of the pool
of mortgage loans as of the cut-off date (0.5%
of loan group 1). These mortgage loans are
cross-defaulted and cross-collateralized. The
sponsors of each mortgage loan in the Eckerd
concentration are Eliecer Sredni and Erwin
Sredni.
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Although the mortgage loans within an
individual portfolio are generally
cross-collateralized and cross-defaulted with
the other mortgage loans in such portfolio,
the mortgage loans in one portfolio are not
cross-collateralized or cross-defaulted with
the mortgage loans in the other portfolio. No
group or borrower concentration represents
more than 11.1% of the aggregate principal
balance of the pool of mortgage loans as of
the cut-off date or 13.8% of loan group 1.
THE GEOGRAPHIC CONCENTRATION
OF MORTGAGED PROPERTIES
SUBJECTS THE TRUST FUND
TO A GREATER EXTENT TO
STATE AND REGIONAL
CONDITIONS.................... Except as indicated in the following table,
less than 5.0% of the mortgage loans, by
cut-off date pool or loan group balance, are
secured by mortgaged properties in any one
state or the District of Columbia.
MORTGAGED PROPERTIES BY GEOGRAPHIC CONCENTRATION(1)
NUMBER OF PERCENTAGE OF
MORTGAGED AGGREGATE CUT-OFF CUT-OFF DATE
STATE PROPERTIES DATE BALANCE POOL BALANCE
- ----------------------- ------------ ------------------- --------------
NY .................. 5 $ 303,623,333 23.5%
FL .................. 15 266,602,912 20.7
GA .................. 10 120,012,962 9.3
CA .................. 7 110,856,021 8.6
Southern(2)........ 5 103,250,000 8.0
Northern(2)........ 2 7,606,021 0.6
IL .................. 5 98,586,031 7.6
Other ............... 60 390,418,311 30.3
-- -------------- -----
TOTAL ............... 102 $1,290,099,569 100.0%
=== ============== =====
- ----------
(1) Because this table presents information relating to the mortgaged
properties and not the mortgage loans, the information for mortgage loans
secured by more than one mortgaged property is based on allocated loan
amounts (allocating the mortgage loan principal balance to each of those
properties by the appraised values of the mortgaged properties).
(2) For purposes of determining whether a mortgaged property is in Northern
California or Southern California, mortgaged properties located north of
San Luis Obispo County, Kern County and San Bernardino County were
included in Northern California and mortgaged properties located in or
south of such counties were included in Southern California.
LOAN GROUP 1
MORTGAGED PROPERTIES BY GEOGRAPHIC CONCENTRATION(1)
NUMBER OF PERCENTAGE OF
MORTGAGED AGGREGATE CUT-OFF CUT-OFF DATE
STATE PROPERTIES DATE BALANCE GROUP 1 BALANCE
- ------------------ ------------ ------------------- ----------------
NY ............. 5 $ 303,623,333 29.3%
FL ............. 13 234,502,912 22.6
GA ............. 7 110,755,997 10.7
IL ............. 4 95,591,541 9.2
CA ............. 5 56,606,021 5.5
Southern(2)... 3 49,000,000 4.7
Northern(2)... 2 7,606,021 0.7
Other .......... 45 236,661,837 22.8
-- -------------- -----
TOTAL .......... 79 $1,037,741,642 100.0%
== ============== =====
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- ----------
(1) Because this table presents information relating to the mortgaged
properties and not the mortgage loans, the information for mortgage loans
secured by more than one mortgaged property is based on allocated loan
amounts (allocating the mortgage loan principal balance to each of those
properties by the appraised values of the mortgaged properties).
(2) For purposes of determining whether a mortgaged property is in Northern
California or Southern California, mortgaged properties located north of
San Luis Obispo County, Kern County and San Bernardino County were
included in Northern California and mortgaged properties located in or
south of such counties were included in Southern California.
LOAN GROUP 2
MORTGAGED PROPERTIES BY GEOGRAPHIC CONCENTRATION(1)
NUMBER OF PERCENTAGE OF
MORTGAGED AGGREGATE CUT-OFF CUT-OFF DATE
STATE PROPERTIES DATE BALANCE GROUP 2 BALANCE
- ----------------------- ------------ ------------------- ----------------
CA .................. 2 $ 54,250,000 21.5%
Southern(2) ......... 2 54,250,000 21.5
NV .................. 3 35,285,955 14.0
FL .................. 2 32,100,000 12.7
AZ .................. 1 23,500,000 9.3
NJ .................. 1 21,500,000 8.5
SC .................. 4 17,600,000 7.0
TX .................. 1 15,000,000 5.9
UT .................. 1 13,075,815 5.2
Other ............... 8 40,046,157 15.9
- ------------ -----
TOTAL ............... 23 $252,357,927 100.0%
== ============ =====
- ----------
(1) Because this table presents information relating to the mortgaged
properties and not the mortgage loans, the information for mortgage loans
secured by more than one mortgaged property is based on allocated loan
amounts (allocating the mortgage loan principal balance to each of those
properties by the appraised values of the mortgaged properties).
(2) For purposes of determining whether a mortgaged property is in Northern
California or Southern California, mortgaged properties located north of
San Luis Obispo County, Kern County and San Bernardino County were
included in Northern California and mortgaged properties located in or
south of such counties were included in Southern California.
The concentration of mortgaged properties in a
specific state or region will make the
performance of the trust fund as a whole more
sensitive to the following in the state or
region where the mortgagors and the mortgaged
properties are located:
o economic conditions;
o conditions in the real estate market;
o changes in governmental rules and
fiscal policies;
o acts of God or terrorism (which may
result in uninsured losses); and
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o other factors which are beyond the
control of the mortgagors.
For more information regarding the
concentration of mortgaged properties in
California, see "DESCRIPTION OF THE MORTGAGE
POOL--Certain State-Specific Considerations"
in this prospectus supplement.
SPECIAL RISKS ASSOCIATED
WITH HIGH BALANCE MORTGAGE
LOANS........................ Several of the mortgage loans included in the
trust fund, individually or together with other
such mortgage loans with which they are
cross-collateralized, have principal balances
as of the cut-off date that are substantially
higher than the average principal balance of
the mortgage loans in the trust fund as of the
cut-off date.
In general, concentrations in a mortgage pool
of 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.
o The largest single mortgage loan
included in the trust fund as of the
cut-off date represents 11.1% of the
aggregate principal balance of the pool
of mortgage loans as of the cut-off
date (13.8% of loan group 1).
o The largest group of
cross-collateralized mortgage loans
included in the trust fund as of the
cut-off date represents in the
aggregate 1.5% of the aggregate
principal balance of the pool of
mortgage loans as of the cut-off date
(1.9% of loan group 1).
o The three largest mortgage loans or
groups of cross-collateralized mortgage
loans included in the trust fund as of
the cut-off date represent, in the
aggregate, 27.0% of the aggregate
principal balance of the pool of
mortgage loans as of the cut-off date
(33.6% of loan group 1).
o The five largest mortgage loans or
groups of cross-collateralized mortgage
loans included in the trust fund as of
the cut-off date represent, in the
aggregate, 39.4% of the aggregate
principal balance of the pool of
mortgage loans as of the cut-off date
(49.0% of loan group 1).
o The ten largest mortgage loans or
groups of cross-collateralized mortgage
loans included in the trust fund as of
the cut-off date represent, in the
aggregate, 53.3% of the aggregate
principal balance of the pool of
mortgage loans as of the cut-off date
(9 mortgage loans in loan group 1 or
61.9% and 1 mortgage loan in loan group
2 or 17.8%).
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CONCENTRATION OF MORTGAGED
PROPERTY TYPES SUBJECT THE
TRUST FUND TO INCREASED
RISK OF DECLINE IN A
PARTICULAR INDUSTRY.......... A concentration of mortgaged property types
can increase the risk that a decline in a
particular industry or business would have a
disproportionately large impact on a pool of
mortgage loans. For example, if there is a
decline in tourism, the hotel industry might be
adversely affected, leading to increased losses
on loans secured by hospitality properties as
compared to the mortgage loans secured by other
property types.
In that regard:
o mortgage loans included in the trust
fund and secured by office properties
represent as of the cut-off date 43.9%
of the aggregate principal balance of
the pool of mortgage loans as of the
cut-off date (based on the primary
property type for combined
office/retail properties) (54.5% of
loan group 1);
o mortgage loans included in the trust
fund and secured by retail properties
represent as of the cut-off date 29.2%
of the aggregate principal balance of
the pool of mortgage loans as of the
cut-off date (based on the primary
property type for combined
office/retail properties) (36.3% of
loan group 1);
o mortgage loans included in the trust
fund and secured by multifamily
properties represent as of the cut-off
date 22.3% of the aggregate principal
balance of the pool of mortgage loans
as of the cut-off date (4.3% of loan
group 1 and 96.3% of loan group 2); and
o mortgage loans included in the trust
fund and secured by hospitality
properties represent as of the cut-off
date 1.7% of the aggregate principal
balance of the pool of mortgage loans
as of the cut-off date (2.1% of loan
group 1).
WE HAVE NOT REUNDERWRITTEN
ANY OF THE MORTGAGE LOANS...... We have not reunderwritten the mortgage loans
included in the trust fund. Instead, we have
relied on the representations and warranties
made by the mortgage loan sellers, and the
mortgage loan sellers' respective obligations
to repurchase, cure or substitute a mortgage
loan in the event that a representation or
warranty was not true when made and such breach
materially and adversely affects the value of
the mortgage loan, the interest of the trust or
the interests of any certificateholder. These
representations and warranties do not cover all
of the matters that we would review in
underwriting a mortgage loan and you should not
view them as a substitute for reunderwriting
the mortgage loans. If we
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had reunderwritten the mortgage loans included
in the trust fund, it is possible that the
reunderwriting process may have revealed
problems with a mortgage loan not covered by
representations or warranties given by the
mortgage loan sellers. In addition, we cannot
provide assurance that the mortgage loan
sellers will be able to repurchase or
substitute a mortgage loan if a representation
or warranty has been breached. See
"DESCRIPTION OF THE MORTGAGE POOL--
Representations and Warranties;
Repurchases and Substitutions" in this
prospectus supplement.
FORECLOSURE ON MORTGAGED
PROPERTIES MAY RESULT IN
ADVERSE TAX CONSEQUENCES...... One of the REMICs relating to the assets of
the trust fund might become subject to federal
(and possibly state or local) tax on certain of
its net income from the operation and
management of a mortgaged property subsequent
to the trust fund's acquisition of a mortgaged
property pursuant to a foreclosure or
deed-in-lieu of foreclosure. Any such tax would
substantially reduce net proceeds available for
distribution to you. See "MATERIAL FEDERAL
INCOME TAX CONSEQUENCES--Taxation of Owners of
REMIC Regular Certificates," and "--Taxation of
Owners of REMIC Residual Certificates" in the
accompanying prospectus. In addition, if the
trust fund 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 fund 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 to the certificateholders.
INSURANCE COVERAGE ON MORTGAGED
PROPERTIES MAY NOT COVER
SPECIAL HAZARD LOSSES......... The master servicer (with respect to mortgage
loans that are not specially serviced mortgage
loans) and/or special servicer (with respect to
specially serviced mortgage loans) will
generally be required to cause the borrower on
each mortgage loan included in the trust fund
and serviced by it to maintain such insurance
coverage on the related mortgaged property as
is required under the related mortgage,
including hazard insurance; provided that each
of the master servicer and/or the special
servicer may satisfy its obligation to cause
hazard insurance to be maintained with respect
to any mortgaged property by acquiring a
blanket or master single interest insurance
policy. In general, the standard form of fire
and extended coverage policy covers physical
damage to or destruction of the improvements on
the related mortgaged 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. The mortgage loans
generally do not require earthquake insurance.
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Although the policies covering the mortgaged
properties are underwritten by different
insurers under different state laws in
accordance with different applicable state
forms, and therefore do not contain identical
terms and conditions, most such policies
typically may not cover any physical damage
resulting from:
o war;
o terrorism;
o revolution;
o governmental actions;
o floods, and other water-related causes;
o earth movement (including earthquakes,
landslides and mud flows);
o wet or dry rot;
o vermin;
o domestic animals;
o sink holes or similarly occurring soil
conditions; and
o other kinds of risks not specified in
the preceding paragraph.
In light of the September 11, 2001 terrorist
attacks in New York City and the Washington,
D.C. area, many reinsurance companies (which
assume some of the risk of policies sold by
primary insurers) indicated that they intended
to eliminate coverage for acts of terrorism
from their reinsurance policies. Without that
reinsurance coverage, primary insurance
companies would have to assume that risk
themselves, which may cause them to eliminate
such coverage in their policies, increase the
amount of the deductible for acts of terrorism
or charge higher premiums for such coverage.
In order to offset this risk, Congress passed
the Terrorism Risk Insurance Act of 2002,
which established the Terrorism Insurance
Program. The Terrorism Insurance Program is
administered by the Secretary of the Treasury
and was established to provide financial
assistance from the United States government
to insurers in the event of another terrorist
attack that is the subject of an insurance
claim. The Terrorism Risk Insurance Act of
2002 requires the Treasury Department to
establish procedures for the Terrorism
Insurance Program under which the federal
share of compensation will be equal to 90% of
that portion of insured losses that exceeds an
applicable insurer deductible required to be
paid 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 is not liable for the
payment of any portion of total annual United
States-wide losses that exceed $100 billion,
regardless of the terms of the individual
insurance contracts.
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The Terrorism Insurance Program required that
each insurer for policies in place prior to
November 26, 2002, provide its insureds with a
statement of the proposed premiums for
terrorism coverage, identifying the portion of
the risk that the federal government will
cover, within 90 days after November 26, 2002.
Insureds had 30 days to accept the continued
coverage and pay the premium. If an insured
does not pay the premium or authorizes the
exclusion, insurance for acts of terrorism may
be excluded from the policy. All policies for
insurance issued after November 26, 2002, must
make similar disclosure and provide a similar
opportunity for the insured to purchase
coverage. The Terrorism Risk Insurance Act of
2002 does not require insureds to purchase the
coverage nor does it stipulate the pricing of
the coverage.
Through December 2004, insurance carriers are
required under the program to provide
terrorism coverage in their basic "all-risk"
policies. By September 1, 2004, the Secretary
of the Treasury is required to determine
whether mandatory participation should be
extended through December 2005. 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, subject to the immediately
preceding paragraph. Any state approval of
such types of exclusions in force on November
26, 2002, is also voided.
However, the Terrorism Insurance Program
applies to United States risks only and to
acts that are committed by an individual or
individuals acting on behalf of a foreign
person or foreign interest as an effort to
influence or coerce United States civilians or
the United States government. Further, the act
must be certified as an "act of terrorism" by
the federal government, which decision is not
subject to judicial review. It remains unclear
what acts will fall under the purview of the
Terrorism Insurance Program.
Furthermore, because the Terrorism Insurance
Program has only been recently passed into
law, there can be no assurance that it or
state legislation will substantially lower the
cost of obtaining terrorism insurance.
Finally, the Terrorism Insurance Program
terminates on December 31, 2004 (with a
potential to extend to December 31, 2005).
There can be no assurance that such temporary
program will create any long-term changes in
the availability and cost of such insurance.
Moreover, there can be no assurance that such
program will be renewed or subsequent
terrorism insurance legislation will be passed
upon its expiration.
No assurance can be given that the mortgaged
properties will continue to have the benefit
of insurance against terrorist acts. In
addition, no assurance can be given that the
coverage for such acts, if obtained or
maintained, will be broad enough
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to cover the particular act of terrorism that
may be committed or that the amount of
coverage will be sufficient to repair and
restore the mortgaged property or to repay the
mortgage loan in full. The insufficiency of
insurance coverage in any respect could have a
material and adverse affect on your
certificates.
Pursuant to the terms of the pooling and
servicing agreement, the master servicer or
the special servicer may not be required to
maintain insurance covering terrorist or
similar acts, nor will it be required to call
a default under a mortgage loan, if the
related borrower fails to maintain such
insurance (even if required to do so under the
related loan documents) if the special
servicer has determined, in consultation with
the controlling class representative, in
accordance with the servicing standard that
either--
o such insurance is not available at
commercially reasonable rates 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 region in
which such mortgaged property is
located, or
o such insurance is not available at any
rate.
In addition, with respect to certain mortgage
loans, the mortgagee may have waived the right
to require terrorism insurance or may have
limited the circumstances under which
terrorism insurance is required.
Any losses incurred with respect to mortgage
loans included in the trust fund due to
uninsured risks or insufficient hazard
insurance proceeds could adversely affect
distributions on your certificates.
ADDITIONAL DEBT ON SOME
MORTGAGE LOANS CREATES
ADDITIONAL RISKS.............. In general, the borrowers are:
o required to satisfy any existing
indebtedness encumbering the related
mortgaged property as of the closing of
the related mortgage loan; and
o prohibited from encumbering the related
mortgaged property with additional
secured debt without the lender's prior
approval.
None of the mortgage loans included in the
trust fund, other than the mortgage loans with
companion loans, are secured by mortgaged
properties that secure other loans outside the
trust fund.
With respect to 1 mortgage loan (loan number
23), representing 1.0% of the aggregate
principal balance of the pool of mortgage
loans as of the cut-off date (5.0% of the
cut-off date group 2 balance), there is
existing subordinated debt secured by the
mortgaged property, subject to the terms of a
subordination and standstill agreement in
favor of the related
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additional lender. In addition, the related
additional lender has a security interest in
the equity interests in the borrower.
One (1) mortgage loan (loan number 31)
representing 0.8% of the aggregate principal
balance of the pool of mortgage loans as of
the cut-off date (1.0% of the cut-off date
group 1 balance), is part of a pool of 18
mortgaged properties with secured debt, the
position of which is subordinated pursuant to
the terms of a subordination agreement. The
subordinate lender has agreed that, prior to
commencing any foreclosure action, exercising
any rights under the assignment of leases and
rents or seeking a receiver under the
subordinated lien, it will repurchase or
defease the mortgage loan in accordance with
the terms of the mortgage loan documents.
Two (2) mortgage loans (loan numbers 24 and
28), representing 1.8% of the aggregate
principal balance of the pool of mortgage
loans as of the cut-off date (2.2% of the
cut-off date group 1 balance), provide that
the related borrower under certain specified
circumstances may encumber the related
mortgaged property with subordinate debt in
the future.
Two (2) mortgage loans (loan numbers 16 and
17), representing 2.4% of the aggregate
principal balance of the pool of mortgage
loans as of the cut-off date (1 mortgage loan
in loan group 1 or 1.6% and 1 mortgage loan in
loan group 2 or 5.9%), have existing unsecured
debt incurred by the borrower other than in
the ordinary course of business.
With respect to 1 mortgage loan (loan number
3), representing approximately 7.8% of the
aggregate principal balance of the pool of
mortgage loans as of the cut-off date (9.6% of
the cut-off date group 1 balance), the
ownership interests of the direct and indirect
owners of the related borrower have been
pledged as security for mezzanine debt subject
to the terms of an intercreditor agreement and
a subordination and standstill agreement.
With respect to 9 mortgage loans (loan numbers
6, 8, 9, 10, 28, 32, 52, 53 and 59)
representing 13.1% of the aggregate principal
balance of the pool of mortgage loans as of
the cut-off date (16.3% of the cut-off date
group 1 balance), the related mortgage loan
documents provide that, under certain
circumstances, the entities with a controlling
interest in the borrower may pledge their
interests in the borrower as security for
mezzanine debt in the future, subject to the
terms of a subordination and standstill
agreement to be entered into in favor of the
lender and the satisfaction of certain
financial conditions.
Two (2) mortgage loans (loan numbers 11 and
89), representing 2.0% of the aggregate
principal balance of the pool of mortgage
loans as of the cut-off date (1 mortgage loan
in loan group 1 or 2.3% and 1 mortgage loan in
loan group 2 or 0.7%), provide that the
borrower under certain circumstances may incur
additional unsecured indebtedness other than
in the ordinary course of business.
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Five (5) mortgage loans (loan numbers 31, 75,
100, 101 and 102) representing 1.1% of the
aggregate principal balance of the pool of
mortgage loans as of the cut-off date (1.4% of
the cut-off date group 1 balance), do not
prohibit the related borrower from incurring
additional unsecured debt or an owner of an
interest in the related borrower from pledging
its ownership interest in the related borrower
as security for mezzanine debt because the
related borrower is not required by either the
mortgage loan documents or related
organizational documents to be a special
purpose entity. Further, certain of the
mortgage loans included in the trust fund do
not prohibit limited partners or other owners
of non-controlling interests in the related
borrower from pledging their interests in the
borrower as security for mezzanine debt.
Secured subordinated debt encumbering any
mortgaged property may increase the difficulty
of refinancing the related mortgage loan at
maturity and the possibility that reduced cash
flow could result in deferred maintenance.
Also, in the event that the holder of the
subordinated debt has filed for bankruptcy or
been placed in involuntary receivership,
foreclosure by any senior lienholder
(including the trust fund) on the mortgaged
property could be delayed. In addition,
substantially all of the mortgage loans permit
the related borrower to incur limited
indebtedness in the ordinary course of
business or for capital improvements that is
not secured by the related mortgaged property
which is generally limited to a specified
percentage of the outstanding principal
balance of the related mortgage loan. Further,
certain of the mortgage loans included in the
trust fund do not prohibit limited partners or
other owners of non-controlling interests in
the related borrower from pledging their
interests in the borrower as security for
mezzanine debt.
In addition, certain mortgage loans, which may
include the mortgage loans previously
described in this risk factor, permit the
related borrower to incur, or do not prohibit
the related borrower from incurring, unsecured
debt to an affiliate of, or owner of an
interest in, the borrower or to an affiliate
of such an owner, subject to certain
conditions under the related mortgage loan
documents. Further, certain of the mortgage
loans permit additional liens on the related
mortgaged properties for (1) assessments,
taxes or other similar charges or (2) liens
which in the aggregate constitute an
immaterial and insignificant monetary amount
with respect to the net value of the related
borrower's assets. A default by the borrower
on such additional indebtedness could impair
the borrower's financial condition and result
in the bankruptcy or receivership of the
borrower which would cause a delay in the
foreclosure by the trust fund on the mortgaged
property. It may not be evident that a
borrower has incurred any such future
subordinate second lien debt until the related
mortgage loan otherwise defaults. In cases in
which one or more subordinate liens are
imposed on a mortgaged property or the
borrower incurs other indebtedness, the trust
fund is
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subject to additional risks, including,
without limitation, the following:
o the risk that the necessary maintenance
of the mortgaged property could be
deferred to allow the borrower to pay
the required debt service on the
subordinate financing and that the
value of the mortgaged property may
fall as a result;
o the risk that the borrower may have a
greater incentive to repay the
subordinate or unsecured indebtedness
first;
o the risk that it may be more difficult
for the borrower to refinance the
mortgage loan or to sell the mortgaged
property for purposes of making any
balloon payment upon the maturity of
the mortgage loan;
o the existence of subordinated debt
encumbering any mortgaged property may
increase the difficulty of refinancing
the related mortgage loan at maturity
and the possibility that reduced cash
flow could result in deferred
maintenance; and
o the risk that, in the event that the
holder of the subordinated debt has
filed for bankruptcy or been placed in
involuntary receivership, foreclosing
on the mortgaged property could be
delayed and the trust may be subjected
to the costs and administrative burdens
of involvement in foreclosure or
bankruptcy proceedings or related
litigation.
See "CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS
AND LEASES--Subordinate Financing" and
"--Due-on-Sale and Due-on-Encumbrance" in the
accompanying prospectus and "DESCRIPTION OF
THE MORTGAGE POOL--Certain Terms and
Conditions of the Mortgage Loans--Other
Financing" and "--Due-on-Sale and Due-on-
Encumbrance Provisions" in this prospectus
supplement.
Mezzanine debt is debt that is incurred by the
owner of equity in one or more borrowers and
is secured by a pledge of the equity ownership
interests in such borrowers. Because mezzanine
debt is secured by the obligor's equity
interest in the related borrowers, such
financing effectively reduces the obligor's
economic stake in the related mortgaged
property. The existence of mezzanine debt may
reduce cash flow on the borrower's mortgaged
property after the payment of debt service and
may increase the likelihood that the owner of
a borrower will permit the value or income
producing potential of a mortgaged property to
fall and may create a greater risk that a
borrower will default on the mortgage loan
secured by a mortgaged property whose value or
income is relatively weak.
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Generally, upon a default under mezzanine
debt, the holder of such mezzanine debt would
be entitled to foreclose upon the equity in
the related mortgagor, which has been pledged
to secure payment of such mezzanine debt.
Although such transfer of equity may not
trigger the due on sale clause under the
related mortgage loan, it could cause the
obligor under such mezzanine debt to file for
bankruptcy, which could negatively affect the
operation of the related mortgaged property
and such borrower's ability to make payments
on the related mortgage loan in a timely
manner. Additionally, some intercreditor
agreements with respect to certain mezzanine
debt may give the holder of the mezzanine debt
the right to cure certain defaults and, upon a
default, to purchase the related mortgage loan
for an amount equal to the then-current
outstanding balance of such loan. Some
intercreditor agreements relating to mezzanine
debt may also limit the special servicer's
ability to enter into certain modifications of
the mortgage loan without the consent of the
related mezzanine lender.
See "CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS
AND LEASES--Due-on-Sale and
Due-on-Encumbrance" in the accompanying
prospectus and "DESCRIPTION OF THE MORTGAGE
POOL--Certain Terms and Conditions of the
Mortgage Loans--Other Financing" and
"--Due-on-Sale and Due-on-Encumbrance
Provisions" in this prospectus supplement.
Although the assets of the trust do not
include the companion loans (other than the
Starrett-Lehigh Building subordinate loan)
related to the mortgage loans which have
companion loans, the related borrower is still
obligated to make interest and principal
payments on those additional obligations. As a
result, the trust fund is subject to
additional risks, including:
o the risk that the necessary maintenance
of the related mortgaged property could
be deferred to allow the borrower to
pay the required debt service on these
subordinate or pari passu obligations
and that the value of the mortgaged
property may fall as a result; and
o the risk that it may be more difficult
for the borrower to refinance the
mortgage loan or to sell the mortgaged
property for purposes of making any
balloon payment on the entire balance
of both the loans contained in the loan
pair upon the maturity of the mortgage
loans.
In addition, although 3 of the mortgage loans
have companion loans that are subordinate to
the related mortgage loan, each of the 11
Madison Avenue mortgage loan and the
Starrett-Lehigh Building mortgage loan,
representing 18.9% of the aggregate principal
balance of the pool of mortgage loans as of
the cut-off date (23.4% of loan group 1), also
have companion loan(s) that are pari passu
with such mortgage
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loan. See "DESCRIPTION OF THE MORTGAGE
POOL--Twenty Largest Mortgage Loans" in this
prospectus supplement.
THE BORROWER'S FORM OF ENTITY
MAY CAUSE SPECIAL RISKS....... Most of the borrowers are legal entities
rather than individuals. Mortgage loans made to
legal entities may entail risks of loss greater
than those of mortgage loans made to
individuals. For example, a legal entity, as
opposed to an individual, may be more inclined
to seek legal protection from its creditors
under the bankruptcy laws. Unlike individuals
involved in bankruptcies, most of the entities
generally do not have personal assets and
creditworthiness at stake. The bankruptcy of a
borrower, or a general partner or managing
member of a borrower, may impair the ability of
the lender to enforce its rights and remedies
under the related mortgage.
Many of the borrowers are not special purpose
entities structured to limit the possibility
of becoming insolvent or bankrupt, and
therefore may be more likely to become
insolvent or the subject of a voluntary or
involuntary bankruptcy proceeding because such
borrowers may be:
o operating entities with businesses
distinct from the operation of the
property with the associated
liabilities and risks of operating an
ongoing business; or
o individuals that have personal
liabilities unrelated to the property.
However, any borrower, even a special purpose
entity structured to be bankruptcy-remote, as
an owner of real estate will be subject to
certain potential liabilities and risks. We
cannot provide assurances that any borrower
will not file for bankruptcy protection or
that creditors of a borrower or a corporate or
individual general partner or managing member
of a borrower will not initiate a bankruptcy
or similar proceeding against such borrower or
corporate or individual general partner or
managing member.
Furthermore, with respect to any related
borrowers, creditors of a common parent in
bankruptcy may seek to consolidate the assets
of such borrowers with those of the parent.
Consolidation of the assets of such borrowers
would likely have an adverse effect on the
funds available to make distributions on your
certificates, and may lead to a downgrade,
withdrawal or qualification of the ratings of
your certificates. See "CERTAIN LEGAL ASPECTS
OF MORTGAGE LOANS AND LEASES--Bankruptcy Laws"
in the accompanying prospectus.
In addition, with respect to 11 mortgage loans
included in the trust fund as of the cut-off
date, representing 14.1% of the aggregate
principal balance of the pool of mortgage
loans as of the cut-off date (5 mortgage loans
in loan group 1 or 8.8% and 6 mortgage loans
in loan group 2 or 36.0%), the
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borrowers own the related mortgaged property
as tenants-in-common. As a result, the related
mortgage loans may be subject to prepayment
including during periods when prepayment might
otherwise be prohibited as a result of
partition. Although some of the related
borrowers have purported to waive any right of
partition, we cannot assure you that any such
waiver would be enforced by a court of
competent jurisdiction. In addition,
enforcement of remedies against
tenant-in-common borrowers may be prolonged if
the tenant-in-common borrowers become
insolvent or bankrupt at different times
because each time a tenant-in-common borrower
files for bankruptcy, the bankruptcy court
stay is reinstated.
BANKRUPTCY PROCEEDINGS ENTAIL
CERTAIN RISKS................. Under federal bankruptcy law, the filing of a
petition in bankruptcy by or against a borrower
will stay the sale of the mortgaged property
owned by that borrower, as well as the
commencement or continuation of a foreclosure
action. In addition, 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, which would make the lender
a general unsecured creditor for the difference
between the then-current value and the amount
of its outstanding mortgage indebtedness. A
bankruptcy court also may: (1) grant a debtor a
reasonable time to cure a payment default on a
mortgage loan; (2) reduce periodic payments due
under a mortgage loan; (3) change the rate of
interest due on a mortgage loan; or (4)
otherwise alter the mortgage loan's repayment
schedule.
Moreover, the filing of a petition in
bankruptcy by, or on behalf of, a junior
lienholder may stay the senior lienholder from
taking action to foreclose on the junior lien.
Additionally, the borrower's trustee or the
borrower, as debtor-in-possession, has certain
special powers to avoid, subordinate or
disallow debts. In certain circumstances, the
claims of the trustee may be subordinated to
financing obtained by a debtor-in-possession
subsequent to its bankruptcy.
Under federal bankruptcy law, the lender will
be stayed from enforcing a borrower's
assignment of rents and leases. Federal
bankruptcy law also may interfere with the
master servicer's or applicable special
servicer's ability to enforce lockbox
requirements. The legal proceedings necessary
to resolve these issues can be time consuming
and costly and may significantly delay or
diminish the receipt of rents. Rents also may
escape an assignment to the extent they are
used by the borrower to maintain the mortgaged
property or for other court authorized
expenses.
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Additionally, pursuant to subordination
agreements for certain of the mortgage loans,
the subordinate lenders may have agreed that
they will not take any direct actions with
respect to the related subordinated debt,
including any actions relating to the
bankruptcy of the borrower, and that the
holder of the mortgage loan will have all
rights to direct all such actions. There can
be no assurance that in the event of the
borrower's bankruptcy, a court will enforce
such restrictions against a subordinated
lender.
In its decision in In re 203 North LaSalle
Street Partnership, 246 B.R. 325 (Bankr. N.D.
Ill. March 10, 2000), the United States
Bankruptcy Court for the Northern District of
Illinois refused to enforce a provision of a
subordination agreement that allowed a first
mortgagee to vote a second mortgagee's claim
with respect to a Chapter 11 reorganization
plan on the grounds that pre-bankruptcy
contracts cannot override rights expressly
provided by the Bankruptcy Code. This holding,
which one court has already followed,
potentially limits the ability of a senior
lender to accept or reject a reorganization
plan or to control the enforcement of remedies
against a common borrower over a subordinated
lender's objections.
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.
Certain of the mortgage loans have a sponsor
that has previously filed bankruptcy. In each
case, the related entity or person has
emerged from bankruptcy. However, we cannot
assure you that such sponsors will not be
more likely than other sponsors to utilize
their rights in bankruptcy in the event of
any threatened action by the mortgagee to
enforce its rights under the related loan
documents.
INSPECTIONS AND APPRAISALS
MAY NOT ACCURATELY REFLECT
VALUE OR CONDITION OF
MORTGAGED PROPERTY............ In general, appraisals represent only the
analysis and opinion of qualified experts and
are not guaranties of present or future value,
and may determine a value of a property that is
significantly higher than the amount that can
be obtained from the sale of a mortgaged
property under a distress or liquidation sale.
Information regarding the values of the
mortgaged properties at the date of such report
is presented under "DESCRIPTION OF THE MORTGAGE
Additional Mortgage Loan Information" in this
prospectus supplement for illustrative
purposes only. Any engineering reports or site
inspections obtained in connection with this
offering represent only the analysis of the
individual engineers or site inspectors
preparing such reports at the time of such
report, and may not reveal all necessary or
desirable repairs, maintenance or capital
improvement items.
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THE MORTGAGED PROPERTIES MAY
NOT BE IN COMPLIANCE WITH
CURRENT ZONING LAWS........... The mortgaged properties securing the
mortgage loans included in the trust fund are
typically subject to building and zoning
ordinances and codes affecting the construction
and use of real property. Since the zoning laws
applicable to a mortgaged property (including,
without limitation, density, use, parking and
set-back requirements) are usually subject to
change by the applicable regulatory authority
at any time, the improvements upon the
mortgaged properties may not, currently or in
the future, comply fully with all applicable
current and future zoning laws. Such changes
may limit the ability of the related borrower
to rehabilitate, renovate and update the
premises, and to rebuild or utilize the
premises "as is" in the event of a casualty
loss with respect thereto. Such limitations may
adversely affect the cash flow of the mortgaged
property following such loss. Insurance
proceeds may not be sufficient to pay off such
mortgage loan in full. In addition, if the
mortgaged property were 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.
RESTRICTIONS ON CERTAIN OF
THE MORTGAGED PROPERTIES MAY
LIMIT THEIR USE............... Certain of the mortgaged properties securing
mortgage loans included in the trust fund which
are non-conforming may not be "legal
non-conforming" uses. The failure of a
mortgaged property to comply with zoning laws
or to be a "legal non-conforming" use may
adversely affect the market value of the
mortgaged property or the borrower's ability to
continue to use it in the manner it is
currently being used.
In addition, certain of the mortgaged
properties are subject to certain use
restrictions imposed pursuant to restrictive
covenants, governmental requirements,
reciprocal easement agreements or operating
agreements or, in the case of those mortgaged
properties that are condominiums, condominium
declarations or other condominium use
restrictions or regulations, especially in a
situation where the mortgaged property does
not represent the entire condominium building.
Such use restrictions include, for example,
limitations on the character of the
improvements or the properties, limitations
affecting noise and parking requirements,
among other things, and limitations on the
borrowers' right to operate certain types of
facilities within a prescribed radius. These
limitations could adversely affect the ability
of the related borrower to lease the mortgaged
property on favorable terms, thus adversely
affecting the borrower's ability to fulfill
its obligations under the related mortgage
loan.
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COMPLIANCE WITH APPLICABLE
LAWS AND REGULATIONS MAY
RESULT IN LOSSES.............. A borrower may be required to incur costs to
comply with various existing and future
federal, state or local laws and regulations
applicable to the related mortgaged property
securing a mortgage loan included in the trust
fund. Examples of these laws and regulations
include zoning laws and the Americans with
Disabilities Act of 1990, which requires all
public accommodations to meet certain federal
requirements related to access and use by
disabled persons. See "CERTAIN LEGAL ASPECTS OF
MORTGAGE LOANS AND LEASES--Americans with
Disabilities Act" in the accompanying
prospectus. The expenditure of such costs or
the imposition of injunctive relief, penalties
or fines in connection with the borrower's
noncompliance could negatively impact the
borrower's cash flow and, consequently, its
ability to pay its mortgage loan.
ENFORCEABILITY OF DUE-ON-SALE
CLAUSES AND ASSIGNMENTS OF
LEASES AND RENTS IS LIMITED... The mortgages securing the mortgage loans
included in the trust fund generally contain
due-on-sale clauses, which permit the
acceleration of the maturity of the related
mortgage loan if the borrower sells, transfers
or conveys the related mortgaged property or
its interest in the mortgaged property without
the consent of the lender. There also may be
limitations on the enforceability of such
clauses. The mortgages also generally include a
debt-acceleration clause, which permits the
acceleration of the related mortgage loan upon
a monetary or non-monetary default by the
borrower. The courts of all states will
generally enforce clauses providing for
acceleration in the event of a material payment
default, but may refuse the foreclosure of a
mortgaged property when acceleration of the
indebtedness would be inequitable or unjust or
the circumstances would render acceleration
unconscionable. However, certain of the
mortgage loans included in the trust fund
permit one or more transfers of the related
mortgaged property to pre-approved borrowers or
pursuant to pre-approved conditions set forth
in the related mortgage loan documents without
the lender's approval. See "CERTAIN LEGAL
ASPECTS OF MORTGAGE LOANS AND LEASES--Due-on-
Sale and Due-on-Encumbrance" in the
accompanying prospectus.
The mortgage loans included in the trust fund
may also be secured by an assignment of leases
and rents pursuant to which the borrower
typically assigns its right, title and
interest as landlord under the leases on the
related mortgaged property and the income
derived therefrom to the lender as further
security for the related mortgage loan, while
retaining a license to collect rents for so
long as there is no default. In the event the
borrower defaults, the license terminates and
the lender is entitled to collect the rents.
Such assignments are typically not perfected
as security interests
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prior to the lender's taking possession of the
related mortgaged property and/or appointment
of a receiver. Some state laws may require
that the lender take possession of the
mortgaged property and obtain a judicial
appointment of a receiver before becoming
entitled to collect the rents. In addition, if
bankruptcy or similar proceedings are
commenced by or in respect of the borrower,
the lender's ability to collect the rents may
be adversely affected. See "CERTAIN LEGAL
ASPECTS OF MORTGAGE LOANS AND LEASES--Leases
and Rents" in the accompanying prospectus.
LIMITATIONS ON THE BENEFITS
OF CROSS-COLLATERALIZED AND
CROSS-DEFAULTED PROPERTIES... Two (2) groups of mortgage loans included in
the trust fund as of the cut-off date (loan
numbers 72, 82, 84, 85, 88, 91, 94, 95, 96, 97
and 99 and 87, 92, and 98), representing in the
aggregate 1.9% of the aggregate principal
balance of the pool of mortgage loans as of the
cut-off date (2.4% of loan group 1), are groups
of mortgage loans that are cross-collateralized
and cross-defaulted with each of the other
mortgage loans in their respective groups. Such
arrangements could be challenged as fraudulent
conveyances by creditors of any of the related
borrowers or by the representative of the
bankruptcy estate of any related borrower if
one or more of such borrowers becomes a debtor
in a bankruptcy case. Generally, under federal
and most state fraudulent conveyance statutes,
a lien granted by any such borrower could be
voided if a court determines that:
o such borrower was insolvent at the time
of granting the lien, was rendered
insolvent by the granting of the lien,
was left with inadequate capital or was
not able to pay its debts as they
matured; and
o the borrower did not, when it allowed
its mortgaged property to be encumbered
by the liens securing the indebtedness
represented by the other
cross-collateralized loans, receive
"fair consideration" or "reasonably
equivalent value" for pledging such
mortgaged property for the equal
benefit of the other related borrowers.
We cannot provide assurances that a lien
granted by a borrower on a
cross-collateralized loan to secure the
mortgage loan of another borrower, or any
payment thereon, would not be avoided as a
fraudulent conveyance. See "DESCRIPTION OF THE
MORTGAGE POOL--Certain Terms and Conditions of
the Mortgage Loans--Cross-Default and
Cross-Collateralization of Certain Mortgage
Loans; Certain Multi-Property Mortgage Loans"
in this prospectus supplement and Annex A-5 to
this prospectus supplement for more
information regarding the cross-collateralized
loans. No mortgage loan included in the trust
fund (other than the mortgage loans with
companion loans)
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is cross-collateralized with a mortgage loan
not included in the trust fund.
SINGLE TENANTS AND
CONCENTRATION OF TENANTS
SUBJECT THE TRUST FUND TO
INCREASED RISK............... Twenty-nine (29) of the mortgaged properties
securing mortgage loans included in the trust
fund, representing 12.4% of the aggregate
principal balance of the pool of mortgage loans
as of the cut-off date (15.4% of loan group 1),
are leased wholly to a single tenant or are
wholly owner occupied. The mortgaged property
related to 1 mortgage loan (loan number 4),
representing approximately 6.2% of the
aggregate principal balance of the pool of
mortgage loans as of the cut-off date (7.7% of
loan group 1), is leased entirely to
International Business Machines Corporation.
Certain other of the mortgaged properties are
leased in large part to a single tenant or are
in large part owner occupied. Any default by a
major tenant could adversely affect the related
borrower's ability to make payments on the
related mortgage loan. We cannot provide
assurances that any major tenant will continue
to perform its obligations under its lease (or,
in the case of an owner-occupied mortgaged
property, under the related mortgage loan
documents).
With respect to certain of the mortgage loans,
the related borrower has given to certain
tenants a right of first refusal in the event
a sale is contemplated or an option to
purchase all or a portion of the mortgaged
property and this provision, if not waived,
may impede the mortgagee's ability to sell the
related mortgaged property at foreclosure or
adversely affect the foreclosure proceeds.
In addition, certain of the mortgaged
properties that are leased to single tenants
or a major tenant may have leases that
terminate prior to the maturity date of the
related mortgage loan. Mortgaged properties
leased to a single tenant, or a small number
of tenants, are more likely to experience
interruptions of cash flow if a tenant fails
to renew its lease because there may be less
or no rental income until new tenants are
found and it may be necessary to expend
substantial amounts of capital to make the
space acceptable to new tenants.
With respect to 1 mortgage loan, the 11
Madison Avenue mortgage loan, representing
11.1% of the aggregate principal balance of
the pool of mortgage loans as of the cut-off
date, the largest tenant, Credit Suisse First
Boston LLC, has the right to terminate a
portion of its leased space. Although 74.3% of
Credit Suisse First Boston LLC's 1,921,459
square feet of net rentable area is leased
through April 30, 2017, Credit Suisse First
Boston LLC does have the option to terminate
up to 528,730 square feet (27.5% of Credit
Suisse First Boston LLC's space and 23.4% of
the mortgaged property's total space) after
April 30, 2007 in its sole discretion,
provided that they meet certain notice
requirements
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and pay a termination fee. See "DESCRIPTION OF
THE MORTGAGE POOL--Twenty Largest Mortgage
Loans--11 Madison Avenue" in this prospectus
supplement. There can be no assurance that the
related borrower will be able to relet the
terminated space or that such space could be
relet at the same rate being paid by Credit
Suisse First Boston LLC.
Retail and office properties also may be
adversely affected if there is a concentration
of particular tenants among the mortgaged
properties or of tenants in a particular
business or industry. For example, with
respect to 11 mortgage loans (loan numbers 63,
66, 67, 71, 72, 76, 82, 84, 85, 96 and 97)
representing 2.4% of the aggregate principal
balance of the pool of mortgage loans as of
the cut-off date (2.9% of loan group 1), the
single tenant of each mortgaged property is
Walgreens.
For further information regarding certain
significant tenants at the mortgaged
properties, see Annex A-4 to this prospectus
supplement.
THE FAILURE OF A TENANT WILL
HAVE A NEGATIVE IMPACT ON
SINGLE TENANT AND TENANT
CONCENTRATION PROPERTIES...... The bankruptcy or insolvency of a major
tenant or sole tenant, or a number of smaller
tenants, in retail, industrial and office
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) and the
amounts the landlord could claim would be
limited.
LITIGATION MAY HAVE ADVERSE
AFFECT ON BORROWERS........... From time to time, there may be legal
proceedings pending, threatened or ongoing
against the borrowers, managers, sponsors and
their respective affiliates relating to the
business of, or arising out of the ordinary
course of business of, the borrowers, managers,
sponsors and their respective affiliates, and
certain of the borrowers, managers, sponsors
and their respective affiliates are subject to
legal proceedings relating to the business of,
or arising out of the ordinary course of
business of, the borrowers, managers, sponsors
or their respective affiliates. It is possible
that such proceedings may have a material
adverse effect on any borrower's ability to
meet its obligations under the related mortgage
loan and, thus, on distributions on your
certificates.
POOR PROPERTY MANAGEMENT WILL
LOWER THE PERFORMANCE OF THE
RELATED MORTGAGED PROPERTY.... The successful operation of a real estate
project depends upon the property manager's
performance and viability. The property manager
is responsible for:
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o responding to changes in the local
market;
o planning and implementing the rental
structure;
o operating the property and providing
building services;
o managing operating expenses; and
o assuring that maintenance and capital
improvements are carried out in a
timely fashion.
Properties deriving revenues primarily from
short-term sources, such as short-term leases,
are generally more management intensive than
properties leased to creditworthy tenants
under long-term leases.
We make no representation or warranty as to
the skills of any present or future managers.
Additionally, we cannot provide assurance that
the property managers will be in a financial
condition to fulfill their management
responsibilities throughout the terms of their
respective management agreements.
CONDEMNATIONS OF MORTGAGED
PROPERTIES MAY RESULT
IN LOSSES..................... From time to time, there may be condemnations
pending or threatened against one or more of
the mortgaged properties securing mortgage
loans included in the trust fund. The proceeds
payable in connection with a total condemnation
may not be sufficient to restore the related
mortgaged property or to satisfy the remaining
indebtedness of the related mortgage loan. The
occurrence of a partial condemnation may have a
material adverse effect on the continued use
of, or income generation from, the affected
mortgaged property. Therefore, we cannot give
assurances that the occurrence of any
condemnation will not have a negative impact
upon distributions on your certificates.
THE STATUS OF A GROUND LEASE
MAY BE UNCERTAIN IN A
BANKRUPTCY PROCEEDING......... Five (5) of the mortgaged properties included
in the trust fund as of the cut-off date,
representing 4.2% of the aggregate principal
balance of the pool of mortgage loans as of the
cut-off date (5.3% of loan group 1), are
secured in whole or in part by leasehold
interests. Pursuant to Section 365(h) of the
Bankruptcy Code, ground lessees in possession
under a ground lease that has commenced have
the right to continue in a ground lease even
though the representative of their bankrupt
ground lessor rejects the lease. The leasehold
mortgages generally provide that the borrower
may not elect to treat the ground lease as
terminated on account of any such rejection by
the ground lessor without the prior approval of
the holder of the mortgage note, or otherwise
prohibit the borrower from terminating the
ground lease. In a bankruptcy of a ground
lessee/borrower, the ground lessee/ borrower
under the protection of the Bankruptcy Code
has the right to assume (continue) or reject
(breach and/or terminate) any or all of its
ground leases. If the ground lessor
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and the ground lessee/borrower are
concurrently involved in bankruptcy
proceedings, the trustee may be unable to
enforce the bankrupt ground lessee/borrower's
right to continue in a ground lease rejected
by a bankrupt ground lessor. In such
circumstances, a ground lease could be
terminated notwithstanding lender protection
provisions contained therein or in the related
mortgage. Further, in a recent decision by the
United States Court of Appeals for the Seventh
Circuit (Precision Indus. v. Qualitech Steel
SBQ, LLC, 327 F.3d 537 (7th Cir. 2003)), the
court ruled with respect to an unrecorded
lease of real property that where a statutory
sale of the fee interest in leased property
occurs under Section 363(f) of the Bankruptcy
Code (11 U.S.C. Section 363(f)) upon the
bankruptcy of a landlord, such sale terminates
a lessee's possessory interest in the
property, and the purchaser assumes title free
and clear of any interest, including any
leasehold estates. Pursuant to Section 363(e)
of the Bankruptcy Code (11 U.S.C. Section
363(a)), a lessee may request the bankruptcy
court to prohibit or condition the statutory
sale of the property so as to provide adequate
protection of the leasehold interest; however,
the court ruled that this provision does not
ensure continued possession of the property,
but rather entitles the lessee to compensation
for the value of its leasehold interest,
typically from the sale proceeds. While there
are certain circumstances under which a "free
and clear" sale under Section 363(f) of the
Bankruptcy Code would not be authorized
(including that the lessee could not be
compelled in a legal or equitable proceeding
to accept a monetary satisfaction of his
possessory interest, and that none of the
other conditions of Section 363(f)(1)-(4) of
the Bankruptcy Code otherwise permits the
sale), we cannot provide assurances that those
circumstances would be present in any proposed
sale of a leased premises. As a result, we
cannot provide assurances that, in the event
of a statutory sale of leased property
pursuant to Section 363(f) of the Bankruptcy
Code, the lessee may be able to maintain
possession of the property under the ground
lease. In addition, we cannot provide
assurances that the lessee and/or the lender
will be able to recuperate the full value of
the leasehold interest in bankruptcy court.
In addition, certain of the mortgaged
properties securing the mortgage loans are
subject to operating leases. The operating
lessee then sublets space in the mortgaged
property to sub-tenants. Therefore, the cash
flow from the rented mortgaged property will
be subject to the bankruptcy risks with
respect to the operating lessee.
MORTGAGE LOAN SELLERS MAY NOT
BE ABLE TO MAKE A REQUIRED
REPURCHASE OR SUBSTITUTION
OF A DEFECTIVE MORTGAGE LOAN.. Each mortgage loan seller is the sole
warranting party in respect of the mortgage
loans sold by such mortgage loan seller to us.
Neither we nor any of our affiliates (except,
in certain circumstances, for Wachovia Bank,
National Association in its capacity as a
mortgage loan seller) are obligated to
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repurchase or substitute any mortgage loan in
connection with either a breach of any
mortgage loan seller's representations and
warranties or any document defects, if such
mortgage loan seller defaults on its
obligation to do so. We cannot provide
assurances that the mortgage loan sellers will
have the financial ability to effect such
repurchases or substitutions.
ONE ACTION JURISDICTION MAY
LIMIT THE ABILITY OF THE
SPECIAL SERVICER TO
FORECLOSE ON THE MORTGAGED
PROPERTY..................... Some states (including California) have laws
that prohibit more than one judicial action to
enforce a mortgage obligation, and some courts
have construed the term judicial action
broadly. Accordingly, the special servicer is
required to obtain advice of counsel prior to
enforcing any of the trust fund's rights under
any of the mortgage loans that include
mortgaged properties where this rule could be
applicable. In the case of either a
cross-collateralized and cross-defaulted
mortgage loan or a multi-property mortgage loan
which is secured by mortgaged properties
located in multiple states, the special
servicer may be required to foreclose first on
properties located in states where such "one
action" rules apply (and where non-judicial
foreclosure is permitted) before foreclosing on
properties located in the states where judicial
foreclosure is the only permitted method of
foreclosure. As a result, the special servicer
may incur delay and expense in foreclosing on
mortgaged properties located in states affected
by one action rules. See "DESCRIPTION OF THE
MORTGAGE POOL--Certain State-Specific
Considerations" in this prospectus supplement
and "CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS
AND LEASES--Foreclosure" in the accompanying
prospectus.
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DESCRIPTION OF THE MORTGAGE POOL
GENERAL
The mortgage pool (the "Mortgage Pool") is expected to consist of 102
fixed rate mortgage loans (the "Mortgage Loans"), with an aggregate principal
balance (the "Cut-Off Date Pool Balance") as of February 11, 2004 for 86 of the
Mortgage Loans and February 1, 2004 for 16 of the Mortgage Loans (such date
with respect to each Mortgage Loan, the "Cut-Off Date"), of $1,290,099,569. The
"Cut-Off Date Balance" of each Mortgage Loan will equal the unpaid principal
balance thereof as of the Cut-Off Date, after reduction for all payments of
principal due on or before such date, whether or not received. The Mortgage
Pool will be deemed to consist of 2 loan groups ("Loan Group 1" and "Loan Group
2" and, collectively, the "Loan Groups"). Loan Group 1 will consist of all of
the Mortgage Loans that are not secured by multifamily properties and/or mobile
home park properties, 6 Mortgage Loans that are secured by multifamily
properties and 1 Mortgage Loan that is secured by a mobile home park property.
Loan Group 1 is expected to consist of 79 Mortgage Loans, with an aggregate
Cut-Off Date Balance of $1,037,741,642 (the "Cut-Off Date Group 1 Balance").
Loan Group 2 will consist of 22 Mortgage Loans that are secured by Mortgaged
Properties that are multifamily properties and 1 Mortgage Loan that is secured
by a mobile home park property. Loan Group 2 is expected to consist of 23
Mortgage Loans, with an aggregate Cut-Off Date Balance of $252,357,927 (the
"Cut-Off Date Group 2 Balance" and, together with the Cut-Off Date Group 1
Balance the "Cut-Off Date Group Balances"). Annex A-1 to this prospectus
supplement sets forth the Loan Group designation with respect to each Mortgage
Loan. The Cut-Off Date Balances of all of the Mortgage Loans in the Mortgage
Pool range from $280,589 to $143,333,333. The Mortgage Loans in the Mortgage
Pool have an average Cut-Off Date Balance of $12,648,035. The Cut-Off Date
Balances of the Mortgage Loans in Loan Group 1 range from $280,589 to
$143,333,333. The Mortgage Loans in Loan Group 1 have an average Cut-Off Date
Balance of $13,135,970. The Cut-Off Date Balances of the Mortgage Loans in Loan
Group 2 range from $1,300,000 to $45,000,000. The Mortgage Loans in Loan Group
2 have an average Cut-Off Date Balance of $10,972,084. References to
percentages of Mortgaged Properties referred to in this prospectus supplement
without further description are references to the percentages of the Cut-Off
Date Pool Balance represented by the aggregate Cut-Off Date Balance of the
related Mortgage Loans and references to percentages of Mortgage Loans in a
particular Loan Group without further description are references to the related
Cut-Off Date Group Balance. The descriptions in this prospectus supplement of
the Mortgage Loans and the Mortgaged Properties are based upon the pool of
Mortgage Loans as it is expected to be constituted as of the close of business
on the Closing Date, assuming that (1) all scheduled principal and/or interest
payments due on or before the Cut-Off Date will be made, and (2) there will be
no principal prepayments on or before the Cut-Off Date. All percentages of the
Mortgage Loans, or of any specified group of Mortgage Loans, referred to in
this prospectus supplement are approximate percentages. All numerical and
statistical information presented herein (including Cut-Off Date Balances,
loan-to-value ratios and debt service coverage ratios) with respect to the
Co-Lender Loans are calculated without regard to the related Subordinate
Companion Loans (or the Starrett-Lehigh Subordinate Loan); provided that, with
respect to 2 Mortgage Loans (loan numbers 1 and 3), numerical and statistical
information presented herein with respect to loan balance per square foot,
loan-to-value ratios and debt service coverage ratios include the related Pari
Passu Loans (but not any related Subordinate Companion Loans) as well as such
Mortgage Loan.
The trust's assets will also include the Starrett-Lehigh Building
Subordinate Loan. The Starrett-Lehigh Building Subordinate Loan supports only
the Class SL Certificates. Although the Starrett-Lehigh Building Subordinate
Loan is an asset of the trust, for the purpose of information contained in this
prospectus supplement (including the annexes and statistical information
contained in this prospectus supplement), unless otherwise specified, the
Starrett-Lehigh Building Subordinate Loan is not reflected in this prospectus
supplement and the term "Mortgage Loan" does not include the Starrett-Lehigh
Building Subordinate Loan. The principal balance of the Starrett-Lehigh
Building Subordinate Loan as of the Cut-Off Date will be $24,000,000.
All of the Mortgage Loans are evidenced by a promissory note (each a
"Mortgage Note"). All of the Mortgage Loans are secured by a mortgage, deed of
trust or other similar security instrument (each, a
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"Mortgage") that creates a first mortgage lien on a fee simple estate (or, with
respect to 3 Mortgage Loans representing 3.5% of the Cut-Off Date Pool Balance
and 4.4% of the Cut-Off Date Group 1 Balance, on the related borrower's fee
simple estate and leasehold estate, or, with respect to 2 Mortgage Loans
representing 0.7% of the Cut-Off Date Pool Balance and 0.8% of the Cut-Off Date
Group 1 Balance, on the related borrower's leasehold estate in an
income-producing real property (each, a "Mortgaged Property"). The security for
the 11 Madison Avenue Loan consists of the borrower's interest in the IDA
Premises under the IDA lease as well as the borrower's fee interest in the
remainder of the mortgaged property. The fee interest in the IDA Premises is
owned by the IDA but will revert to the borrower upon the termination of the
IDA lease. See "DESCRIPTION OF THE MORTGAGE POOL--Twenty Largest Mortgage
Loans--11 Madison Avenue" in this prospectus supplement.
Set forth below are the number of Mortgage Loans, and the approximate
percentage of the Cut-Off Date Pool Balance represented by such Mortgage Loans,
that are secured by Mortgaged Properties operated for each indicated purpose:
MORTGAGED PROPERTIES BY PROPERTY TYPE
PERCENTAGE OF PERCENTAGE OF
NUMBER OF AGGREGATE PERCENTAGE OF CUT-OFF DATE CUT-OFF DATE
MORTGAGED CUT-OFF DATE CUT-OFF DATE GROUP 1 GROUP 2
PROPERTY TYPE PROPERTIES BALANCE POOL BALANCE BALANCE BALANCE
- ------------------------------------- ------------ ----------------- --------------- --------------- --------------
Office .............................. 13 $ 565,822,244 43.9% 54.5% 0.0%
Retail .............................. 52 376,182,513 29.2 36.3 0.0
Retail--Anchored ................... 38 318,453,013 24.7 30.7 0.0
Retail--Shadow Anchored(1) ......... 6 34,301,892 2.7 3.3 0.0
Retail--Unanchored ................. 8 23,427,609 1.8 2.3 0.0
Multifamily ......................... 28 287,933,996 22.3 4.3 96.3
Hospitality ......................... 2 21,492,513 1.7 2.1 0.0
Mixed Use ........................... 3 17,537,800 1.4 1.7 0.0
Mobile Home Park .................... 2 11,807,666 0.9 0.2 3.7
Industrial .......................... 1 4,738,590 0.4 0.5 0.0
Special Purpose(2) .................. 1 4,584,248 0.4 0.4 0.0
-- -------------- ----- ----- -----
TOTAL .............................. 102 $1,290,099,569 100.0% 100.0% 100.0%
=== ============== ===== ===== =====
- ----------
(1) A Mortgaged Property is classified as "shadow anchored" if it is in close
proximity to an anchored retail property.
(2) Specifically, a Mortgaged Property where the sole tenant is a movie
theater.
[GRAPHIC PIE CHART OMITTED]
Office Special Purpose Industrial Mobile Home Park Mixed Use
43.9% 0.4% 0.4% 0.9% 1.4%
Hospitality Multifamily Retail
1.7% 22.3% 29.2%
MORTGAGE LOAN HISTORY
All of the Mortgage Loans will be acquired on the Closing Date by the
Depositor from the Mortgage Loan Sellers. Wachovia Bank, National Association,
("Wachovia"), in its capacity as a Mortgage Loan Seller, originated 63 of the
Mortgage Loans to be included in the Trust Fund representing 82.9% of the
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Cut-Off Date Pool Balance (46 Mortgage Loans in Loan Group 1 or 82.4% of the
Cut-Off Date Group 1 Balance and 17 Mortgage Loans in Loan Group 2 or 84.7% of
the related Cut-Off Date Group Balance). Artesia Mortgage Capital Corporation
("Artesia") originated 27 of the Mortgage Loans to be included in the Trust
Fund representing 9.4% of the Cut-Off Date Pool Balance (21 Mortgage Loans in
Loan Group 1 or 7.9% of the Cut-Off Date Group 1 Balance and 6 Mortgage Loans
in Loan Group 2 or 15.3% of the Cut-Off Date Group 2 Balance). Citigroup Global
Markets Realty Corp. ("Citigroup") originated 12 of the Mortgage Loans to be
included in the Trust Fund representing 7.8% of the Cut-Off Date Pool Balance
(12 Mortgage Loans in Loan Group 1 or 9.7% of the Cut-Off Date Group 1
Balance). None of the Mortgage Loans was 30 days or more delinquent as of the
Cut-Off Date, and no Mortgage Loan has been 30 days or more delinquent during
the 12 months preceding the Cut-Off Date (or since the date of origination if
such Mortgage Loan has been originated within the past 12 months).
CERTAIN TERMS AND CONDITIONS OF THE MORTGAGE LOANS
Mortgage Rates; Calculations of Interest. All of the Mortgage Loans bear
interest at rates (each a "Mortgage Rate") that will remain fixed for their
remaining terms, provided, however, that after the applicable Anticipated
Repayment Date, the interest rate on the related ARD Loans will increase as
described in this prospectus supplement. See "--Amortization" below.
Ninety-seven (97) of the Mortgage Loans, representing 98.6% of the Cut-Off Date
Pool Balance (74 Mortgage Loans in Loan Group 1 or 98.2% of the Cut-Off Date
Group 1 Balance and 23 Mortgage Loans in Loan Group 2 or 100.0% of the Cut-Off
Date Group 2 Balance), accrue interest on the basis (an "Actual/360 basis") of
the actual number of days elapsed over a 360 day year. Five (5) of the Mortgage
Loans, representing 1.4% of the Cut-Off Date Pool Balance (1.8% of the Cut-Off
Date Group 1 Balance), accrue interest on the basis (a "30/360 basis") of a
360-day year consisting of 12 thirty-day months. Twenty-two (22) of the
Mortgage Loans, representing 49.5% of the Cut-Off Date Pool Balance (11
Mortgage Loans in Loan Group 1 or 47.3% of the Cut-Off Date Group 1 Balance and
11 Mortgage Loans in Loan Group 2 or 58.3% of the Cut-Off Date Group 2
Balance), have periods during which only interest is due and periods in which
principal and interest are due. Four (4) of the Mortgage Loans, representing
11.2% of the Cut-Off Date Pool Balance (14.0% of the Cut-Off Date Group 1
Balance), are interest-only for their entire term. Eleven (11) of the Mortgage
Loans, representing 1.5% of the Cut-Off Date Pool Balance (1.9% of the Cut-Off
Date Group 1 Balance), are interest-only until the related Anticipated
Repayment Date.
Mortgage Loan Payments. Scheduled payments of principal and/or interest
other than Balloon Payments (the "Periodic Payments") on all of the Mortgage
Loans (and the Starrett-Lehigh Building Subordinate Loan) are due monthly.
Due Dates. Generally, the Periodic Payment for each Mortgage Loan is due
on the date (each such date, a "Due Date") occurring on the 11th day of the
month (or in the case of 16 Mortgage Loans, the first day of the month). None
of the Mortgage Loans has a grace period that extends payment beyond the 15th
day of any calendar month.
Amortization. Ninety-seven (97) of the Mortgage Loans (the "Balloon
Loans") (including the ARD Loans), representing 99.3% of the Cut-Off Date Pool
Balance (75 Mortgage Loans in Loan Group 1 or 99.5% of the Cut-Off Date Group 1
Balance and 22 Mortgage Loans in Loan Group 2 or 98.4% of the Cut-Off Date
Group 2 Balance), provide for Periodic Payments based on amortization schedules
significantly longer than their respective terms to maturity, in each case with
payments on their respective scheduled maturity dates of principal amounts
outstanding (each such amount, together with the corresponding payment of
interest, a "Balloon Payment"). Four (4) of the Balloon Loans, representing
11.2% of the Cut-Off Date Pool Balance (14.0% of the Cut-Off Date Group 1
Balance), provide for interest-only Periodic Payments for the entire term and
do not amortize. Five (5) of the Mortgage Loans (the "Fully Amortizing Loans"),
representing 0.7% of the Cut-Off Date Pool Balance (4 Mortgage Loans in Loan
Group 1 or 0.5% of the Cut-Off Date Group 1 Balance and 1 Mortgage Loan in Loan
Group 2 or 1.6% of the Cut-Off Date Group 2 Balance), fully or substantially
amortize through their respective remaining terms to maturity. In addition,
because the fixed periodic payments on the Fully Amortizing Loans are
determined assuming interest is calculated on a 30/360 Basis, but interest
actually accrues and is applied on the Fully Amortizing Loans on an Actual/360
Basis for 2 Mortgage Loans, there will be less
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amortization, absent prepayments, of the related principal balances during the
terms of these 2 Fully Amortizing Loans, resulting in a higher final payment on
these Fully Amortizing Loans.
Fifty-six (56) of the Mortgage Loans (the "ARD Loans"), representing 55.4%
of the Cut-Off Date Pool Balance (40 Mortgage Loans in Loan Group 1 or 49.3% of
the Cut-Off Date Group 1 Balance and 16 Mortgage Loans in Loan Group 2 or 80.7%
of the Cut-Off Date Group 2 Balance), provide that if the unamortized principal
amount thereof is not repaid on a date set forth in the related Mortgage Note
(the "Anticipated Repayment Date"), the Mortgage Loan will accrue additional
interest (the "Additional Interest") at the rate set forth therein and the
borrower will be required to apply excess monthly cash flow (the "Excess Cash
Flow") generated by the Mortgaged Property (as determined in the related loan
documents) to the repayment of principal outstanding on the Mortgage Loan. On
or before the Anticipated Repayment Date, the ARD Loans generally require the
related borrower to enter into a cash management agreement whereby all Excess
Cash Flow will be deposited directly into a lockbox account. Eleven (11) of the
ARD Loans, representing 1.5% of the Cut-Off Date Pool Balance (1.9% of the
Cut-Off Date Group 1 Balance), provide for monthly payments of interest-only
until the related Anticipated Repayment Date and do not provide for any
amortization of principal before the related Anticipated Repayment Date. Any
amount received in respect of Additional Interest will be distributed to, in
the case of Additional Interest collected on a Wachovia Mortgage Loan (other
than the Starrett-Lehigh Building Subordinate Loan), all the holders of the
Class Z-I Certificates, in the case of Additional Interest collected on an
Artesia Mortgage Loan, all the holders of the Class Z-II Certificates, in the
case of Additional Interest collected on a Citigroup Mortgage Loan, all the
holders of the Class Z-III Certificates and, in the case of Additional Interest
collected on the Starrett-Lehigh Building Subordinate Loan, to the holders of
the Class SL Certificates. Generally, Additional Interest will not be included
in the calculation of the Mortgage Rate for a Mortgage Loan, and will only be
paid after the outstanding principal balance of the Mortgage Loan together with
all interest thereon at the Mortgage Rate has been paid. With respect to such
Mortgage Loans, no Prepayment Premiums or Yield Maintenance Charges will be due
in connection with any principal prepayment after the Anticipated Repayment
Date.
Twenty-two (22) of the Balloon Loans, representing 49.5% of the Cut-Off
Date Pool Balance (11 Mortgage Loans in Loan Group 1 or 47.3% of the Cut-Off
Date Group 1 Balance and 11 Mortgage Loans in Loan Group 2 or 58.3% of the
Cut-Off Date Group 2 Balance), provide for monthly payments of interest only
for the first 12 months to 60 months of their respective terms followed by
payments which amortize a portion of the principal balance of the Mortgage
Loans by their related maturity dates or Anticipated Repayment Dates, as
applicable, but not the entire principal balance of the Mortgage Loans. Fifteen
(15) of the Balloon Loans, representing 12.8% of the Cut-Off Date Pool Balance
(15.9% of the Cut-Off Date Group 1 Balance), provide for monthly payments of
interest-only until maturity or ARD and do not provide for any amortization of
principal.
Prepayment Provisions. As of the Cut-Off Date, all of the Mortgage Loans
restrict or prohibit voluntary principal prepayment. In general, the Mortgage
Loans either (i) prohibit voluntary prepayment of principal until a date
specified in the related Mortgage Note, but permit defeasance after a date
specified in the related Mortgage Note for most or all of the remaining term
(96 Mortgage Loans, representing 98.2% of the Cut-Off Date Pool Balance (73
Mortgage Loans in Loan Group 1 or 97.8% of the Cut-Off Date Group 1 Balance and
23 Mortgage Loans in Loan Group 2 or 100.0% of the Cut-Off Date Group 2
Balance)) or (ii) prohibit voluntary prepayment of principal for a period
ending on a date specified in the related Mortgage Note, and thereafter impose
a fee or a Yield Maintenance Charge for most of the remaining term (6 Mortgage
Loans, representing 1.8% of the Cut-Off Date Pool Balance (2.2% of the Cut-Off
Date Group 1 Balance)); provided that, for purposes of each of the foregoing,
"remaining term" refers to either the remaining term to maturity or the
Anticipated Repayment Date, as applicable, of the related Mortgage Loan. See
"--Additional Mortgage Loan Information" in this prospectus supplement.
Prepayment Premiums and Yield Maintenance Charges, if and to the extent
collected, will be distributed as described under "DESCRIPTION OF THE
CERTIFICATES--Distributions--Allocation of Prepayment Premiums and Yield
Maintenance Charges" in this prospectus supplement. The Depositor makes no
representation as to the enforceability of the provisions of any Mortgage Note
requiring the payment of a Prepayment Premium or Yield Maintenance Charge, or
of the collectability of any Prepayment Premium or Yield Maintenance Charge.
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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. The Mortgage Loans generally do not require the payment of
Prepayment Premiums or Yield Maintenance Charges in connection with a
prepayment, in whole or in part, of the related Mortgage Loan as a result of or
in connection with a total casualty or condemnation. Furthermore, the
enforceability, under the laws of a number of states, of provisions providing
for payments comparable to the Prepayment Premiums and/or Yield Maintenance
Charges upon an involuntary prepayment is unclear. No assurance can be given
that, at the time a Prepayment Premium or Yield Maintenance Charge is required
to be made on a Mortgage Loan in connection with an involuntary prepayment, any
obligation to pay such Prepayment Premium or Yield Maintenance Charge will be
enforceable under applicable state law.
The Mortgage Loans included in the Trust Fund (other than certain of the
Citigroup Mortgage Loans and certain of the Artesia Mortgage Loans) provide
that, in the event of a partial prepayment of such Mortgage Loan due to the
receipt of insurance proceeds or a condemnation award in connection with a
casualty or condemnation, the monthly debt service payment of such Mortgage
Loan will remain unchanged. See "RISK FACTORS--Prepayments Will Affect Your
Yield," in this prospectus supplement.
Eleven (11) of the Mortgage Loans, representing 1.5% of the Cut-Off Date
Pool Balance (1.9% of the Cut-Off Date Group 1 Balance) provide that, in
general, under certain conditions, the related borrower will have the right, no
earlier than two years following the Closing Date, to substitute a pledge of
Defeasance Collateral in exchange for a release of the related Mortgaged
Property (or a portion thereof) from the lien of the related Mortgage without
the prepayment of the Mortgage Loan or the payment of the applicable Prepayment
Premium or Yield Maintenance Charge. In general, "Defeasance Collateral" is
required to consist of United States government obligations that provide for
payments on or prior, but as close as possible, to all successive Due Dates and
the scheduled maturity date (or the Anticipated Repayment Date in the case of
the ARD Loans) (provided, that in the case of certain Mortgage Loans, such
defeasance payments may cease at the beginning of the open prepayment period
with respect to such Mortgage Loan, and the final payment on the Defeasance
Collateral may be sufficient to fully prepay the Mortgage Loan), with each such
payment being equal to or greater than (with any excess to be returned to the
borrower (in some cases, after the related Mortgage Loan is paid in full)) the
Periodic Payment (including the portion related to the Starrett-Lehigh Building
Subordinate Loan) due on such date or (i) in the case of a Balloon Loan on the
scheduled maturity date, the Balloon Payment, or (ii) in the case of an ARD
Loan, the principal balance on its Anticipated Repayment Date. The Pooling and
Servicing Agreement requires the Master Servicer or the Special Servicer to
require each borrower that proposes to prepay its Mortgage Loan to pledge
Defeasance Collateral in lieu of making a prepayment, to the extent the related
Mortgage Loan documents enable the Master Servicer or the Special Servicer, as
applicable, to make such requirement, but in each case subject to certain
conditions, including that the defeasance would not have an adverse effect on
REMIC status of any of the REMICs (accordingly, no defeasance would be required
or permitted prior to the second anniversary of the Closing Date). The cash
amount a borrower must expend to purchase, or deliver to the Master Servicer in
order for the Master Servicer to purchase, such Defeasance Collateral may be in
excess of the principal balance of the related Mortgage Loan. There can be no
assurances that a court would not interpret such portion of the cash amount
that exceeds the principal balance as a form of prepayment consideration and
would not take it into account for usury purposes. In some states some forms of
prepayment consideration are unenforceable.
Neither the Master Servicer nor the Special Servicer is permitted to waive
or modify the terms of any Mortgage Loan prohibiting voluntary prepayments
during a Lockout Period or requiring the payment of a Prepayment Premium or
Yield Maintenance Charge except under the circumstances described in "SERVICING
OF THE MORTGAGE LOANS--Modifications, Waivers and Amendments" in this
prospectus supplement.
Other Financing. With limited exceptions, all of the Mortgage Loans
prohibit the related borrower from encumbering the Mortgaged Property with
additional secured debt without the lender's prior consent. Two (2) Mortgage
Loans (loan numbers 24 and 28), representing 1.8% of the Cut-Off Date Pool
Balance (2.2% of the Cut-Off Date Group 1 Balance), provide that the borrower
under certain
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circumstances may encumber the related Mortgaged Property with subordinate debt
in the future. With respect to 1 Mortgage Loan (loan number 23), representing
1.0% of the Cut-Off Date Pool Balance (5.0% of the Cut-Off Date Group 2
Balance), there is existing subordinated debt secured by the mortgaged
property, subject to the terms of a subordination and standstill agreement in
favor of the lender. In addition, the lender has taken a security interest in
the equity interest in the borrower. One (1) Mortgage Loan (loan number 31)
representing 0.8% of the Cut-Off Date Pool Balance (1.0% of the Cut-Off Date
Group 1 Balance), is part of a pool of 18 mortgaged properties with secured
debt, the position of which is subordinated pursuant to the terms of a
subordination agreement. The subordinate lender has agreed that, prior to
commencing any foreclosure action, exercising any rights under the assignment
of leases and rents or seeking a receiver under the subordinated lien, it will
repurchase or defease the mortgage loan in accordance with the terms of the
mortgage loan documents.
Two (2) Mortgage Loans (loan numbers 11 and 89), representing 2.0% of the
Cut-Off Date Pool Balance (1 Mortgage Loan in Loan Group 1 or 2.3% of the
Cut-Off Date Group 1 Balance and 1 Mortgage Loan in Loan Group 2 or 0.7% of the
Cut-Off Date Group 2 Balance), provide that the related borrower, under certain
circumstances, may incur additional unsecured indebtedness other than in the
ordinary course of business and without the consent of the mortgagee. Two (2)
Mortgage Loans (loan numbers 16 and 17), representing 2.4% of the Cut-Off Date
Pool Balance (1 Mortgage Loan in Loan Group 1 or 1.6% of the Cut-Off Date Group
1 Balance and 1 Mortgage Loan in Loan Group 2 or 5.9% of the Cut-Off Date Group
2 Balance), have existing unsecured debt incurred by the borrower other than in
the ordinary course of business. In addition, in the case of those Mortgage
Loans which require or allow letters of credit to be posted by the related
borrowers as additional security for such Mortgage Loans, in lieu of reserves
or otherwise, the related borrower may be obligated to pay fees and expenses
associated with the letter of credit and/or to reimburse the letter of credit
issuer or others in the event of a draw upon the letter of credit by the
lender. See "--Due-On-Sale and Due-On-Encumbrance Provisions" below.
With respect to 1 Mortgage Loan (loan number 3), representing 7.8% of the
Cut-Off Date Pool Balance (9.6% of the Cut-Off Date Group 1 Balance), the
ownership interests of the direct or indirect owners of the related borrower
have been pledged as security for mezzanine debt, subject to the terms of an
intercreditor agreement or a subordination and standstill agreement.
With respect to 9 Mortgage Loans (loan numbers 6, 8, 9, 10, 28, 32, 52, 53
and 59), representing 13.1% of the Cut-Off Date Pool Balance (16.3% of the
Cut-Off Date Group 1 Balance), the related Mortgage Loan documents provide
that, under certain circumstances, the owners with a controlling ownership
interest in the borrower may pledge their interests in the borrower as security
for debt financing, generally referred to as mezzanine debt, in the future,
subject to the terms of a subordination and standstill agreement to be entered
into in favor of the lender and the satisfaction of certain financial
conditions. See "RISK FACTORS--Some Mortgaged Properties May be Encumbered by
Subordinated Debt Which May Delay Foreclosure" in this prospectus supplement.
In addition, certain of the Mortgage Loans do not prohibit the related borrower
from incurring additional unsecured debt or an owner of an interest in the
related borrower from pledging its ownership interest in the related borrower
as security for mezzanine debt because the related borrower is not required by
either the mortgage loan documents or related organizational documents to be a
special purpose entity. Further, certain of the Mortgage Loans included in the
Trust Fund do not prohibit limited partners or other owners of non-controlling
interests in the related borrower from pledging their interests in the borrower
as security for mezzanine debt. See "RISK FACTORS--Additional Debt on Some
Mortgage Loans Creates Additional Risks" in this prospectus supplement.
In addition, with respect to the Co-Lender Loans, the related Mortgaged
Property also secures one or more Companion Loans. See "--Co-Lender Loans"
below.
Nonrecourse Obligations. The Mortgage Loans are generally nonrecourse
obligations of the related borrowers and, upon any such borrower's default in
the payment of any amount due under the related Mortgage Loan, the holder
thereof may look only to the related Mortgaged Property for satisfaction of the
borrower's obligations. In addition, in those cases where recourse to a
borrower or guarantor is purportedly permitted, the Depositor has not
undertaken an evaluation of the financial condition of any such person, and
prospective investors should therefore consider all of the Mortgage Loans to be
nonrecourse.
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Due-On-Sale and Due-On-Encumbrance Provisions. Substantially all of the
Mortgages contain "due-on-sale" and "due-on-encumbrance" clauses that, in
general, permit the holder of the Mortgage to accelerate the maturity of the
related Mortgage Loan if the borrower sells or otherwise transfers or encumbers
the related Mortgaged Property or prohibit the borrower from doing so without
the consent of the holder of the Mortgage. However, certain of the Mortgage
Loans may permit one or more transfers of the related Mortgaged Property to
pre-approved borrowers or pursuant to pre-approved conditions without approval
of the mortgagee. As provided in, and subject to, the Pooling and Servicing
Agreement, the Special Servicer will determine, in a manner consistent with the
servicing standard described under "SERVICING OF THE MORTGAGE LOANS--General"
in this prospectus supplement, whether to exercise any right the holder of any
Mortgage 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.
Cross-Default and Cross-Collateralization of Certain Mortgage Loans;
Certain Multi-Property Mortgage Loans. Two (2) groups of Mortgage Loans (loan
numbers 72, 82, 84, 85, 88, 91, 94, 95, 96, 97 and 99 and 87, 92 and 98),
representing 1.9% of the Cut-Off Date Pool Balance (2.4% of the Cut-Off Date
Group 1 Balance), are groups of Mortgage Loans that are cross-collateralized
and cross-defaulted with the other Mortgage Loans in such group as indicated in
Annex A-5. Although the Mortgage Loans within each group are
cross-collateralized and cross-defaulted with the other mortgage loans in such
group, the Mortgage Loans in one group are not cross-collateralized or
cross-defaulted with the Mortgage Loans in the other group. As of the Closing
Date, no Mortgage Loan, except the Co-Lender Loans, will be
cross-collateralized or cross-defaulted with any loan that is not included in
the Mortgage Pool. The Master Servicer or the Special Servicer, as the case may
be, will determine whether to enforce the cross-default and
cross-collateralization rights upon a mortgage loan default with respect to any
of these Mortgage Loans. The Certificateholders will not have any right to
participate in or control any such determination. No other Mortgage Loans are
subject to cross-collateralization or cross-default provisions.
Eleven (11) of the Mortgage Loans (loan numbers 72, 82, 84, 85, 88, 91,
94, 95, 96, 97 and 99), representing 1.5% of the Cut-Off Date Pool Balance
(1.9% of the Cut-Off Date Group 1 Balance), which are cross-collateralized and
cross-defaulted with each other, each provides for the release of one of the
Mortgaged Properties from the effects of the cross-collateralization and
cross-default provisions in connection with an approved sale of the subject
Mortgaged Property and assumption (upon the consent of the lender) of the
applicable Mortgage Loan by the purchaser of such Mortgaged Property. With
respect to three (3) of the Mortgage Loans (loan numbers 87, 92 and 98),
representing 0.4% of the Cut-Off Date Pool Balance (0.5% of the Cut-Off Date
Group 1 Balance), which are cross-collateralized and cross-defaulted with each
other, in the event that the borrower only seeks the release of a Mortgaged
Property under one or more but not all of the loans, then, in addition to
delivering a defeasance deposit sufficient for all remaining payments which
would have been due under the loan or loans being defeased and meeting certain
debt service coverage ratios and loan-to-value ratio tests, the borrower is
also obligated to partially defease the other cross-collateralized loan or
loans in the amount equal to 125% of the principal balance of the note being
defeased, less the current outstanding principal balance of the note as of the
defeasance date.
Partial Releases. Certain of the Mortgage Loans permit a partial release
of a portion of the related Mortgaged Property not material to the underwriting
of the Mortgage Loan at the time of origination, without any prepayment or
defeasance of the Mortgage Loan.
CERTAIN STATE-SPECIFIC CONSIDERATIONS
Five (5) of the Mortgaged Properties, representing 23.5% of the Cut-Off
Date Pool Balance (29.3% of the Cut-Off Date Group 1 Balance), are located in
New York. Mortgage loans in New York are generally secured by mortgages on the
related real estate. Foreclosure of a mortgage is usually accomplished in
judicial proceedings. After an action for foreclosure is commenced, and if the
lender secures a ruling that is entitled to foreclosure ordinarily by motion
for summary judgment, the court then appoints a referee to compute the amount
owed together with certain costs, expenses and legal fees of the action. The
lender then moves to confirm the referee's report and enter a final judgment of
foreclosure and sale. Public notice of the foreclosure sale, including the
amount of the judgment, is given for a
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statutory period of time, after which the mortgaged real estate is sold by a
referee at public auction. There is no right of redemption after the
foreclosure of sale. In certain circumstances, deficiency judgments may be
obtained. Under mortgages containing a statutorily sanctioned covenant, the
lender has a right to have a receiver appointed without notice and without
regard to the adequacy of the mortgaged real estate as security for the amount
owned.
Fifteen (15) of the Mortgaged Properties, representing 20.7% of the
Cut-Off Date Pool Balance (13 Mortgage Loans in Loan Group 1 or 22.6% of the
Cut-Off Date Group 1 Balance and 2 Mortgage Loans in Loan Group 2 or 12.7% of
the Cut-Off Date Group 2 Balance), are located in Florida. Mortgage loans
involving real property in Florida are secured by mortgages and foreclosures
are accomplished by judicial foreclosure. There is no power of sale in Florida.
After an action for foreclosure is commenced and the lender secures a judgment,
the final judgment will provide that the property be sold at a public sale at
the courthouse if the full amount of the judgment is not paid prior to the
scheduled sale. Generally, the foreclosure sale must occur no earlier than 20
(but not more than 35) days after the judgment is entered. During this period,
a notice of sale must be published twice in the county in which the property is
located. There is no right of redemption after the foreclosure sale. Florida
does not have a "one action rule" or "anti-deficiency legislation." Subsequent
to a foreclosure sale, however, a lender may be required to prove the value of
the property sold as of the date of foreclosure in order to recover a
deficiency. Further, other statutory provisions in Florida limit any deficiency
judgment (if otherwise permitted) against a borrower following a judicial sale
to the excess of the outstanding debt over the value of the property at the
time of the judicial sale. In certain circumstances, the lender may have a
receiver appointed.
ASSESSMENTS OF PROPERTY CONDITION
Property Inspections. Generally, the Mortgaged Properties were inspected
by or on behalf of the Mortgage Loan Sellers in connection with the origination
or acquisition of the related Mortgage Loans to assess their general condition.
No inspection revealed any patent structural deficiency or any deferred
maintenance considered material and adverse to the value of the Mortgaged
Property as security for the related Mortgage Loan, except in such cases where
adequate reserves have been established.
Appraisals. All of the Mortgaged Properties were appraised by a
state-certified appraiser or an appraiser belonging to the Appraisal Institute
in accordance with the Federal Institutions Reform, Recovery and Enforcement
Act of 1989. The primary purpose of each appraisal was to provide an opinion as
to the market value of the related Mortgaged Property. There can be no
assurance that another appraiser would have arrived at the same opinion of
market value.
Environmental Assessments. A Phase I environmental site assessment was
performed by independent environmental consultants with respect to each
Mortgaged Property in connection with the origination of the related Mortgage
Loans, except in the case of 1 Mortgaged Property securing 1 Mortgage Loan,
representing 0.02% of the Cut-Off Date Pool Balance (0.03% of the Cut-Off Date
Group 1 Balance), in which case an environmental transaction screen was
received rather than an assessment being performed. Phase I environmental site
assessments generally do not include environmental testing. In certain cases,
environmental testing, including in some cases a Phase II environmental site
assessment as recommended by such Phase I assessment, was performed. Generally,
in each case where environmental assessments recommended corrective action, the
originator of the Mortgage Loan determined that the necessary corrective action
had been undertaken in a satisfactory manner, was being undertaken in a
satisfactory manner or that such corrective action would be adequately
addressed post-closing. In some instances, the originator required that
reserves be established to cover the estimated cost of such remediation or an
environmental insurance policy was obtained from a third party.
Engineering Assessments. In connection with the origination of all of the
Mortgage Loans, a licensed engineer or architect inspected the related
Mortgaged Property to assess the condition of the structure, exterior walls,
roofing, interior structure and mechanical and electrical systems. The
resulting reports indicated deferred maintenance items and/or recommended
capital improvements on the Mortgaged Properties. Generally, with respect to a
majority of Mortgaged Properties, the related borrowers were required to
deposit with the lender an amount equal to at least 110% of the licensed
engineer's estimated cost of the recommended repairs, corrections or
replacements to assure their completion.
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Earthquake Analyses. An architectural and/or engineering consultant
performed an analysis on certain Mortgaged Properties located in areas
considered to be an earthquake risk, which includes California, in order to
evaluate the structural and seismic condition of the property and to assess,
based primarily on statistical information, the maximum probable loss for the
property in an earthquake scenario. The resulting reports concluded that in the
event of an earthquake, 2 Mortgaged Properties securing 2 Mortgage Loans,
representing 5.6% of the Cut-Off Date Pool Balance (1 Mortgage Loan in Loan
Group 1 or 2.6% of the Cut-Off Date Group 1 Balance and 1 Mortgage Loan in Loan
Group 2 or 17.8% of the Cut-Off Date Group 2 Balance), are likely to suffer a
probable maximum loss in excess of 20% of the amount of the estimated
replacement cost of the improvements located on the related Mortgaged Property.
The Mortgaged Properties for 3 Mortgage Loans, including the Mortgaged
Properties described above, representing 6.4% of the Cut-Off Date Pool Balance
(2 Mortgage Loans in Loan Group 1 or 3.6% of the Cut-Off Date Group 1 Balance
and 1 Mortgage Loan in Loan Group 2 or 17.8% of the Cut-Off Date Group 2
Balance) have earthquake insurance in place.
CO-LENDER LOANS
General. Two (2) Mortgage Loans (loan number 1, the "11 Madison Avenue
Loan" and loan number 3, the "Starrett-Lehigh Building Loan") originated by
Wachovia Bank, National Association are each evidenced by one of two or more
notes each secured by a single mortgage and a single assignment of leases and
rents. The 11 Madison Avenue Loan is part of a split loan structure where three
(3) companion loans that are part of this split loan structure are pari passu
in right of entitlement to payment with the 11 Madison Avenue Loan (the "11
Madison Avenue Pari Passu Loans") and three (3) companion loans that are part
of this split loan structure are subordinate in their right of entitlement to
payment with the 11 Madison Avenue Loan and the 11 Madison Avenue Pari Passu
Loans (the "11 Madison Avenue Subordinate Loans" and, together with the 11
Madison Avenue Pari Passu Loans, the "11 Madison Avenue Companion Loans"). The
11 Madison Avenue Loan and the 11 Madison Avenue Pari Passu Loans are referred
to collectively herein as the "11 Madison Avenue Senior Loans". The 11 Madison
Avenue Companion Loans and the 11 Madison Avenue Loan are referred to
collectively herein as the "11 Madison Avenue Whole Loan". None of the 11
Madison Avenue Companion Loans are included in the trust. The 11 Madison Avenue
Loan has a Cut-Off Date Balance of $143,333,333, representing 11.1% of the
Cut-Off Date Pool Balance (13.8% of the Cut-Off Date Group 1 Balance).
The Starrett-Lehigh Building Loan is part of a split loan structure where
one (1) companion loan that is part of this split loan structure is pari passu
in right of entitlement to payment with the Starrett-Lehigh Building Loan (the
"Starrett-Lehigh Building Pari Passu Loan" and, together with the 11 Madison
Avenue Pari Passu Loans, the "Pari Passu Companion Loans" ) and one (1)
companion loan that is part of this split loan structure is subordinate in its
right of entitlement to payment with the Starrett-Lehigh Building Loan and the
Starrett-Lehigh Building Pari Passu Loan (the "Starrett-Lehigh Building
Subordinate Loan" and, together with the Starrett-Lehigh Building Pari Passu
Loan, the "Starrett-Lehigh Building Companion Loans"). The Starrett-Lehigh
Building Loan and the Starrett-Lehigh Building Pari Passu Loan are referred to
collectively herein as the "Starrett-Lehigh Building Senior Loans". The
Starrett-Lehigh Building Companion Loans and the Starrett-Lehigh Building Loan
are referred to collectively herein as the "Starrett-Lehigh Building Whole
Loan". The Starrett-Lehigh Building Loan has a Cut-Off Date Balance of
$100,000,000, representing 7.8% of the Cut-Off Date Pool Balance (9.6% of the
Cut-Off Date Group 1 Balance). The Starrett-Lehigh Building Subordinate Loan
will be included in the trust and has a Cut-Off Date Balance of $24,000,000,
however, the Starrett-Lehigh Building Subordinate Loan will support only the
Class SL Certificates. The Starrett-Lehigh Building Pari Passu Loan will not
be included in the Trust. Amounts allocated to the Starrett-Lehigh Building
Subordinate Loan will not be part of the funds available for distributions to
holders of the other Certificates as more fully described herein. See
"--Starrett-Lehigh Building Loan" below.
One (1) Mortgage Loan (loan number 30, the "Cedarbrook Apartments Loan"
and, together with the 11 Madison Avenue Loan and the Starrett-Lehigh Building
Loan, the "Co-Lender Loans") is represented by the senior note of two notes.
The related subordinate companion loan (the "Cedarbrook Apartments Subordinate
Loan") is not part of the Trust Fund. The Cedarbrook Apartments Subordinate
Loan, the 11 Madison Avenue Companion Loans and the Starrett-Lehigh Building
Companion Loans are
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referred to hereunder as the "Companion Loans". The 11 Madison Avenue
Subordinate Loans and the Cedarbrook Apartments Subordinate Loan are
collectively referred to herein as the "Non-Trust Subordinate Companion Loans".
The Non-Trust Subordinate Companion Loans, together with the Starrett-Lehigh
Building Subordinate Loan are referred to collectively herein as the
"Subordinate Companion Loans". The Cedarbrook Apartments Subordinate Loan and
the Cedarbrook Apartments Loan are referred to collectively herein as the
"Cedarbrook Apartments Whole Loan".
Wachovia Bank, National Association is the holder of the 11 Madison Avenue
Pari Passu Loans, at least one of the 11 Madison Avenue Subordinate Loans and
the Starrett-Lehigh Building Pari Passu Loan. The Cedarbrook Apartments
Subordinate Loan and the other 11 Madison Avenue Subordinate Loans are held by
entities not affiliated with the Mortgage Loan Sellers. The Starrett-Lehigh
Building Subordinate Loan will be held by the trust.
With respect to the 11 Madison Avenue Loan, the terms of an intercreditor
agreement (the "11 Madison Avenue Intercreditor Agreement") provide that the 11
Madison Avenue Loan and the 11 Madison Avenue Pari Passu Loans are of equal
priority with each other and no portion of any of these loans will have
priority or preference over the other and that the 11 Madison Avenue
Subordinate Loans are subordinate in certain respects to the 11 Madison Avenue
Senior Loans. With respect to the Starrett-Lehigh Building Loan, the terms of
an intercreditor agreement (the "Starrett-Lehigh Building Intercreditor
Agreement") provide that the Starrett-Lehigh Building Loan and the
Starrett-Lehigh Building Pari Passu Loan are of equal priority with each other
and no portion of either loan will have priority or preference over the other
and that the Starrett-Lehigh Building Subordinate Loan is subordinate in
certain respects to the Starrett-Lehigh Building Loan and the Starrett-Lehigh
Building Pari Passu Loan. With respect to the Cedarbrook Apartments Loan under
the terms of the related intercreditor and servicing agreements among
noteholders (the "Cedarbrook Apartments Intercreditor Agreement" and,
collectively with the 11 Madison Avenue Intercreditor Agreement and the
Starrett-Lehigh Building Intercreditor Agreement, the "Intercreditor
Agreements") the holder of the Cedarbrook Apartments Subordinate Loan has
agreed to subordinate its interest in certain respects to the Cedarbrook
Apartments Loan.
The following table presents certain information with respect to the
Co-Lender Loans:
CO-LENDER LOANS
ORIGINAL
PRINCIPAL
BALANCE PRINCIPAL BALANCE COMBINED COMBINED
OF MORTGAGE OF SENIOR PRINCIPAL BALANCE UNDERWRITTEN ORIGINAL
MORTGAGE LOAN LOAN COMPONENTS OF WHOLE LOAN DSCR LTV
- --------------------------------------- --------------- ------------------- ------------------- -------------- ---------
11 Madison Avenue Loan ................ $143,333,333 $430,000,000 $515,000,000 1.20x 76.3%
Starrett-Lehigh Building Loan ......... $100,000,000 $160,000,000 $184,000,000 1.81x 52.6%
Cedarbrook Apartments Loan ............ $ 10,150,000 N/A $ 10,800,000 1.12x 83.1%
11 Madison Avenue Loan
Servicing Provisions of the 11 Madison Avenue Intercreditor Agreement.
Pursuant to the terms of the 11 Madison Avenue Intercreditor Agreement, the 11
Madison Avenue Whole Loan will be serviced and administered pursuant to the
terms of the Pooling and Servicing Agreement by the Master Servicer and Special
Servicer, as applicable, on behalf of the holders of the various notes (as a
collective whole). The 11 Madison Avenue Intercreditor Agreement provides that
expenses, losses and shortfalls relating to the 11 Madison Avenue Whole Loan
will be allocated first, to the holders of the 11 Madison Avenue Subordinate
Loans and thereafter, pro rata and pari passu, to the 11 Madison Avenue Senior
Loans.
With respect to the 11 Madison Avenue Loan, the Master Servicer and
Special Servicer will service and administer the 11 Madison Avenue Loan and
each of the 11 Madison Avenue Companion Loans pursuant to the Pooling and
Servicing Agreement and the 11 Madison Avenue Intercreditor Agreement for so
long as the 11 Madison Avenue Loan is part of the trust. If the principal
amount of any 11 Madison Avenue Subordinate Loan, less any existing related
Appraisal Reduction Amount, is at least equal to 25% of the original principal
amount of such 11 Madison Avenue Subordinate Loan, the holder of such 11
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Madison Avenue Companion Loan, or an advisor on its behalf, will be entitled to
advise and direct the Master Servicer and/or Special Servicer with respect to
certain matters, including, among other things, foreclosure or material
modifications of the 11 Madison Avenue Loan. However, no advice or direction
may require or cause the Master Servicer or the Special Servicer to violate any
provision of the Pooling and Servicing Agreement, including the Master
Servicer's and the Special Servicer's obligation to act in accordance with the
Servicing Standard. See "SERVICING OF THE MORTGAGE LOANS--The Controlling Class
Representative" in this prospectus supplement.
In the event of certain defaults under the 11 Madison Avenue Loan or any
of the 11 Madison Avenue Companion Loans, the holders of the 11 Madison Avenue
Subordinate Loans will be entitled to (i) cure such default within five (5)
business days of receipt of notice from the Master Servicer with respect to
monetary defaults and within twenty (20) days (which twenty-day period may be
extended by up to two (2) additional five-day periods) of receipt of notice
from the Master Servicer with respect to non-monetary defaults and/or (ii)
purchase the 11 Madison Avenue Loan from the trust after the expiration of the
cure period subject to the conditions contained in the 11 Madison Avenue
Intercreditor Agreement. Upon exercising its right to purchase the 11 Madison
Avenue Loan, such purchasing holder of an 11 Madison Avenue Subordinate Loan
will also be required to purchase all of the 11 Madison Avenue Companion Loans
senior to the 11 Madison Avenue Subordinate Loan held by such holder. The
purchase price will generally equal the unpaid aggregate principal balance of
the 11 Madison Avenue Companion Loans being purchased, together with all unpaid
interest thereon (other than default interest) at the related mortgage rate and
any unreimbursed servicing expenses, advances and interest on advances for
which the borrower under the 11 Madison Avenue Loan is responsible; provided,
however, that the purchase price shall not be reduced by any outstanding P&I
Advance, include any Prepayment Premium, late payment charge, default interest
or exit fees or include any Liquidation Fee or Workout Fee payable to the
Special Servicer pursuant to the Pooling and Servicing Agreement but shall
include, in the event the purchase price is being calculated in connection with
the purchase of REO Property, any and all costs and expenses incurred by the
trust during the time it owned the Mortgaged Property, net of all cash receipts
from the Mortgaged Property actually received by the trust during such period,
and any and all costs and expenses incurred by the trust in connection with the
transfer of the Mortgaged Property to such purchasing holder, including,
without limitation, reasonable attorneys fees and expenses, and any transfer or
gains or similar taxes and fees paid in connection with such transfer. No
prepayment consideration will be payable in connection with such a purchase of
the 11 Madison Avenue Whole Loan.
Application of Payments. Pursuant to the 11 Madison Avenue Intercreditor
Agreement, to the extent described below: (a) the right of the holders of the
11 Madison Avenue Pari Passu Loans to receive payments with respect to the
applicable Companion Loans are pari passu to the rights of the trust to receive
payments with respect to the 11 Madison Avenue Loan; and (b) the right of the
holders of the 11 Madison Avenue Subordinate Loans to receive payments with
respect to the applicable Companion Loans are subordinated to the rights of the
trust to receive payments with respect to the 11 Madison Avenue Loan. Prior to
the occurrence of an event of default with respect to the 11 Madison Avenue
Loan or prior to a Servicing Transfer Event related to the 11 Madison Avenue
Loan, after payment or reimbursement of any advances, advance interest or other
costs, fees or expenses related to or allocable to the 11 Madison Avenue Loan
or the 11 Madison Avenue Companion Loans, all payments and proceeds (of
whatever nature) received with respect to the 11 Madison Avenue Loan and the 11
Madison Avenue Companion Loans will be paid first, pro rata, between the trust
and the holders of the 11 Madison Avenue Pari Passu Loans, in an amount equal
to interest due with respect to the 11 Madison Avenue Loan and 11 Madison
Avenue Pari Passu Loans; second, pro rata, among the trust and the holders of
the 11 Madison Avenue Pari Passu Loans, in an amount equal to the principal
payments received, if any, with respect to the 11 Madison Avenue Loan and the
11 Madison Avenue Pari Passu Loans; third, pro rata, among the trust and the
holders of the 11 Madison Avenue Pari Passu Loans, in an amount equal to any
unreimbursed realized losses, if any, with respect to the 11 Madison Avenue
Loan and the 11 Madison Avenue Pari Passu Loans; fourth, to the holders of the
11 Madison Avenue Subordinate Loans, in order of seniority, in an amount equal
to any unreimbursed cure payments previously paid by the holder of such 11
Madison Avenue Subordinate Loan in respect of the 11 Madison Avenue Senior
Loans; fifth, to certain holders of the 11 Madison Avenue Subordinate Loans, in
an amount equal to (i) interest due with respect
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to such 11 Madison Avenue Subordinate Loan, (ii) the principal payments
received with respect to such 11 Madison Avenue Subordinate Loan, if any, and
(iii) any unreimbursed realized losses, if any, with respect to such 11 Madison
Avenue Subordinate Loan; sixth, to certain holders of the 11 Madison Avenue
Subordinate Loans, in order of seniority, in an amount equal to any
unreimbursed cure payments previously paid by the holder of such 11 Madison
Avenue Subordinate Loan in respect of certain other 11 Madison Avenue
Subordinate Loans; seventh, to certain holders of the 11 Madison Avenue
Subordinate Loans (other than the holders receiving payments pursuant to clause
fifth above), in an amount equal to (i) interest due with respect to such 11
Madison Avenue Subordinate Loan (ii) the principal payments received with
respect to such 11 Madison Avenue Subordinate Loan, if any, and (iii) any
unreimbursed realized losses, if any, with respect to such 11 Madison Avenue
Subordinate Loan; eighth, to certain holders of the 11 Madison Avenue
Subordinate Loans, in an amount equal to any unreimbursed cure payments
previously paid by the holder of such 11 Madison Avenue Subordinate Loan in
respect of certain other 11 Madison Avenue Subordinate Loans; ninth, to certain
holders of the 11 Madison Avenue Subordinate Loans (other than the holders
receiving payments pursuant to clause fifth and seventh above), in an amount
equal to (i) interest due with respect to such 11 Madison Avenue Subordinate
Loan, (ii) the principal payments received with respect to such 11 Madison
Avenue Subordinate Loan, if any, and (iii) any unreimbursed realized losses, if
any, with respect to such 11 Madison Avenue Subordinate Loan; tenth, pro rata,
among the trust and the holders of the 11 Madison Avenue Pari Passu Loans, in
an amount equal to default interest, if any, with respect to the 11 Madison
Avenue Loan and the 11 Madison Avenue Pari Passu Loans; eleventh, to certain
holders of the 11 Madison Avenue Subordinate Loans, in order of seniority, in
an amount equal to default interest, if any, with respect to such 11 Madison
Avenue Subordinate Loan; twelfth, pro rata, among the trust, the holders of the
11 Madison Avenue Pari Passu Loans and the holders of the 11 Madison Avenue
Subordinate Loans, in an amount equal to any prepayment premiums; thirteenth,
to the holders of the 11 Madison Avenue Subordinate Loans, in order of
seniority, in an amount equal to unreimbursed costs and expenses, if any, with
respect to the 11 Madison Avenue Whole Loan; and fourteenth, pro rata, among
the trust, the holders of the 11 Madison Avenue Pari Passu Loans and the
holders of the 11 Madison Avenue Subordinate Loans, any excess.
Following the occurrence and during the continuance of an event of default
with respect to the 11 Madison Avenue Loan or such mortgage loan becoming a
specially serviced mortgage loan pursuant to the 11 Madison Avenue
Intercreditor Agreement, and subject to the right to purchase the 11 Madison
Avenue Loan from the trust by the holders of the 11 Madison Avenue Subordinate
Loans, after payment or reimbursement of any advances, advance interest or
other costs, fees or expenses related to or allocable to the 11 Madison Avenue
Loan and each of the 11 Madison Avenue Companion Loans, all payments and
proceeds (of whatever nature) on the 11 Madison Avenue Loan and the 11 Madison
Avenue Companion Loans will be paid first, pro rata, between the trust and the
holders of the 11 Madison Avenue Pari Passu Loans, in an amount equal to
interest due with respect to the 11 Madison Avenue Loan and 11 Madison Avenue
Pari Passu Loans; second, pro rata, among the trust and the holders of the 11
Madison Avenue Pari Passu Loans, in an amount equal to the principal balance of
such loans until paid in full; third, pro rata, among the trust and the holders
of the 11 Madison Avenue Pari Passu Loans, in an amount equal to any
unreimbursed realized losses, if any, with respect to the 11 Madison Avenue
Loan and the 11 Madison Avenue Pari Passu Loans; fourth, to the holders of the
11 Madison Avenue Subordinate Loans, in order of seniority, in an amount equal
to any unreimbursed cure payments previously paid by the holder of such 11
Madison Avenue Subordinate Loan; fifth, to certain holders of the 11 Madison
Avenue Subordinate Loans, in an amount equal to (i) interest due with respect
to such 11 Madison Avenue Subordinate Loan, (ii) the principal balance until
paid in full, and (iii) any unreimbursed realized losses, if any, with respect
to such 11 Madison Avenue Subordinate Loan; sixth, to certain holders of the 11
Madison Avenue Subordinate Loans, in order of seniority, in an amount equal to
any unreimbursed cure payments previously paid by the holder of such 11 Madison
Avenue Subordinate Loan in respect of certain other 11 Madison Avenue
Subordinate Loans; seventh, to certain holders of the 11 Madison Avenue
Subordinate Loans (other than the holders receiving payments pursuant to clause
fifth above), in an amount equal to (i) interest due with respect to such 11
Madison Avenue Subordinate Loan, (ii) the principal balance until paid in full,
and (iii) any unreimbursed realized losses, if any, with respect to such 11
Madison Avenue Subordinate Loan; eighth, to certain holders of the 11 Madison
Avenue Subordinate
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Loans, in an amount equal to any unreimbursed cure payments previously paid by
the holder of such 11 Madison Avenue Subordinate Loan in respect of certain
other 11 Madison Avenue Subordinate Loans; ninth, to certain holders of the 11
Madison Avenue Subordinate Loans (other than the holders receiving payments
pursuant to clause fifth and seventh above), in an amount equal to (i) interest
due with respect to such 11 Madison Avenue Subordinate Loan, (ii) the principal
balance until paid in full, and (iii) any unreimbursed realized losses, if any,
with respect to such 11 Madison Avenue Subordinate Loan; tenth, pro rata, among
the trust and the holders of the 11 Madison Avenue Pari Passu Loans, in an
amount equal to default interest, if any, with respect to the 11 Madison Avenue
Loan and the 11 Madison Avenue Pari Passu Loans; eleventh, to certain holders
of the 11 Madison Avenue Subordinate Loans, in order of seniority, in an amount
equal to default interest, if any, with respect to such 11 Madison Avenue
Subordinate Loan; twelfth, pro rata, among the trust and the holders of the 11
Madison Avenue Pari Passu Loans in an amount equal to any prepayment premiums
payable with respect to the 11 Madison Avenue Senior Loans; thirteenth, to
certain holders of the 11 Madison Avenue Subordinate Loans, in order of
seniority, in an amount equal to any prepayment premiums payable with respect
to such 11 Madison Avenue Subordinate Loans; fourteenth, to the holders of the
11 Madison Avenue Subordinate Loans, in order of seniority, in an amount equal
to unreimbursed costs and expenses, if any, with respect to the 11 Madison
Avenue Whole Loan; and fifteenth, pro rata, among the trust, the holders of the
11 Madison Avenue Pari Passu Loans and the holders of the 11 Madison Avenue
Subordinate Loans, any excess.
Starrett-Lehigh Building Loan
Servicing Provisions of the Starrett-Lehigh Building Intercreditor
Agreement. Pursuant to the terms of the Starrett-Lehigh Building Intercreditor
Agreement, the Starrett-Lehigh Building Whole Loan will be serviced and
administered pursuant to the terms of the Pooling and Servicing Agreement by
the Master Servicer and Special Servicer, as applicable. The Starrett-Lehigh
Building Intercreditor Agreement provides that expenses, losses and shortfalls
relating to the Starrett-Lehigh Building Whole Loan will be allocated first, to
the holder of the Starrett-Lehigh Building Subordinate Loan and thereafter, to
the Starrett-Lehigh Building Senior Loans, pro rata and pari passu.
Prior to a Starrett-Lehigh Building Control Appraisal Period, the holder
of the Starrett-Lehigh Building Subordinate Loan will have the right to consult
with and advise the Special Servicer with respect to the Starrett-Lehigh
Building Whole Loan; following the occurrence and during the continuance of a
Starrett-Lehigh Building Control Appraisal Period, the holder of the
Starrett-Lehigh Building Loan and the Starrett-Lehigh Building Pari Passu Loan
will have such rights as provided in the Starrett-Lehigh Building Intercreditor
Agreement. The holders of the Class SL Certificates will be entitled to
exercise the rights and powers granted to the Starrett-Lehigh Building
Subordinate Noteholder. See "SERVICING OF THE MORTGAGE LOANS--The Controlling
Class Representative" in this prospectus supplement. A "Starrett-Lehigh
Building Control Appraisal Period" will exist if, and for so long as, the
initial principal balance of the Starrett-Lehigh Building Subordinate Loan
(minus (i) the sum of any principal payments (whether as scheduled
amortization, principal prepayments or otherwise) allocated to, and received
on, the Starrett-Lehigh Building Subordinate Loan after the Cut-Off Date, (ii)
any Appraisal Reduction Amount for the Starrett-Lehigh Building Subordinate
Loan and (iii) Realized Losses with respect to the Starrett-Lehigh Building
Subordinate Loan) is less than 25% of its initial principal balance.
In the event that the Starrett-Lehigh Building Loan is in default, the
majority holder of the Class SL Certificates will have an option (the
"Starrett-Lehigh Building Purchase Option") to purchase the Starrett-Lehigh
Building Loan together with the Starrett-Lehigh Building Pari Passu Loan from
the Trust Fund and the Trust Fund holding the Starrett-Lehigh Building Pari
Passu Loan at a price (the "Starrett-Lehigh Building Loan Option Price")
generally equal to the unpaid principal balance of the Starrett-Lehigh Building
Whole Loan, plus accrued and unpaid interest on such balance, all related
unreimbursed Advances, together with accrued and unpaid interest on all
Advances and all accrued Special Servicing Fees allocable to the
Starrett-Lehigh Building Whole Loan whether paid or unpaid and any other
expenses relating to the Starrett-Lehigh Building Whole Loan. If the majority
holder of the Class SL Certificates fails to exercise this option within the
time period set forth in the Pooling and Servicing Agreement, certain other
parties may have the right to exercise the related Starrett-Lehigh Building
Loan Purchase Option as described under "SERVICING OF THE MORTGAGE LOANS--
Defaulted Mortgage Loans; REO Properties; Purchase Option" in this prospectus
supplement.
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So long as no Starrett-Lehigh Building Control Appraisal Period has
occurred and is continuing, and all of the holders of the Class SL Certificates
unanimously agree, the holders of the Class SL Certificates will be entitled to
cure a monetary event of default under the Starrett-Lehigh Building Whole Loan
within five (5) business days of receipt of notice from the Master Servicer,
subject to certain limitations set forth in the Starrett-Lehigh Building
Intercreditor Agreement. In connection with the exercise of a cure right, the
holders of the Class SL Certificates must pay or reimburse the Master Servicer,
the Special Servicer, the Trustee and any other appropriate person for all
unreimbursed Advances and unpaid fees with respect to the Starrett-Lehigh
Building Whole Loan, together with interest thereon, and any other expenses
incurred by the Trust Fund in respect of the Starrett-Lehigh Building Whole
Loan.
Application of Payments. Under the terms of the Starrett-Lehigh Building
Intercreditor Agreement, prior to the occurrence and continuance of a monetary
event of default or other material non-monetary event of default with respect
to the Starrett-Lehigh Building Whole Loan (or, if such a default has occurred,
but the majority holder of the Class SL Certificates has cured such a default),
after payment of amounts payable or reimbursable under the Pooling and
Servicing Agreement, payments and proceeds received with respect to the
Starrett-Lehigh Building Whole Loan will generally be paid in the following
manner: first, each holder of the Starrett-Lehigh Building Loan and the
Starrett-Lehigh Building Pari Passu Loan will receive accrued and unpaid
interest on its outstanding principal at its interest rate, pro rata; second,
any scheduled principal payments will be paid to each of the holders of the
Starrett-Lehigh Building Loan and the Starrett-Lehigh Building Pari Passu Loan,
pro rata, based on the principal balance of the Starrett-Lehigh Building Loan,
the Starrett-Lehigh Building Pari Passu Loan and the Starrett-Lehigh Building
Subordinate Loan; third, the holder of the Starrett-Lehigh Building Subordinate
Loan will receive accrued and unpaid interest on its outstanding principal
balance at its interest rate; fourth, any remaining scheduled principal
payments will be paid to the Starrett-Lehigh Building Subordinate Loan, pro
rata, based on the principal balance of the Starrett-Lehigh Building Loan, the
Starrett-Lehigh Building Pari Passu Loan and the Starrett-Lehigh Building
Subordinate Loan; fifth, any unscheduled principal payments will be paid to the
Starrett-Lehigh Building Loan, the Starrett-Lehigh Building Pari Passu Loan and
the Starrett-Lehigh Building Subordinate Loan, pro rata, based on the principal
balance of each such loan, first to the Starrett-Lehigh Building Senior Loans
and then to the Starrett-Lehigh Building Subordinate Loan; sixth, any
prepayment premiums that are allocable to the Starrett-Lehigh Building Loan and
the Starrett-Lehigh Building Pari Passu Loan on the one hand, and the
Starrett-Lehigh Building Subordinate Loan on the other hand, to the extent
actually paid by the borrower, will be paid first to the trust and the holder
of the Starrett-Lehigh Building Pari Passu Loan, pro rata, and then to the
holder of the Starrett-Lehigh Building Subordinate Loan, pro rata; seventh, any
default interest (in excess of the interest paid in accordance with clauses
first and third above) will be paid to each of the holders of the
Starrett-Lehigh Building Loan, the Starrett-Lehigh Building Pari Passu Loan and
the Starrett-Lehigh Building Subordinate Loan, on a pro rata basis in
accordance with the respective principal balance of each loan, first to each
holder of the Starrett-Lehigh Building Loan and the Starrett-Lehigh Building
Pari Passu Loan and then to the holder of the Starrett-Lehigh Building
Subordinate Loan; eighth, the holder of the Starrett-Lehigh Building
Subordinate Loan will receive the amount of any unreimbursed cure payments made
by such holder; and ninth, if any excess amount is paid by the borrower, and
not otherwise applied in accordance with the foregoing clauses first through
eighth above, such amount will be paid to each of the holders of the
Starrett-Lehigh Building Loan, the Starrett-Lehigh Building Pari Passu Loan and
the Starrett-Lehigh Building Subordinate Loan on a pro rata basis in accordance
with the respective initial principal balance of each loan, first to each
holder of the Starrett-Lehigh Building Loan and the Starrett-Lehigh Building
Pari Passu Loan and then to the holder of the Starrett-Lehigh Building
Subordinate Loan.
Following the occurrence and during the continuance of a monetary event of
default or other material non-monetary event of default with respect to the
Starrett-Lehigh Building Whole Loan (unless the Starrett-Lehigh Building
Operating Advisor has cured such a default), after payment of all amounts then
payable or reimbursable under the Pooling and Servicing Agreement, liquidation
proceeds and other collections with respect to the Starrett-Lehigh Building
Whole Loan will generally be applied in the following manner: first, each
holder of the Starrett-Lehigh Building Loan and the Starrett-Lehigh Building
Pari Passu Loan will receive accrued and unpaid interest on its outstanding
principal balance at
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its interest rate, pro rata; second, any scheduled principal payments will be
paid to each holder of the Starrett-Lehigh Building Loan and the
Starrett-Lehigh Building Pari Passu Loan, pro rata, based on the principal
balance of each such loan; third, the holder of the Starrett-Lehigh Building
Subordinate Loan will receive accrued and unpaid interest on its outstanding
principal balance at its interest rate; fourth, any remaining principal
payments will be paid to each holder of the Starrett-Lehigh Building Loan and
the Starrett-Lehigh Building Pari Passu Loan, pro rata, until the principal
balance of the related loan is reduced to zero; fifth, the holder of the
Starrett-Lehigh Building Subordinate Loan will receive an amount up to its
principal balance, until such principal has been paid in full; sixth, if the
proceeds of any foreclosure sale or any liquidation of the Starrett-Lehigh
Building Whole Loan or the Starrett-Lehigh Building Mortgaged Property exceed
the amounts required to be applied in accordance with the foregoing clauses
first through fifth and, as a result of a workout, the principal balance of
either the Starrett-Lehigh Building Loan and the Starrett-Lehigh Building Pari
Passu Loan on the one hand, and the Starrett-Lehigh Building Subordinate Loan
on the other hand have been reduced, such excess amount will first be paid to
the trust and the holder of the Starrett-Lehigh Building Pari Passu Loan, pro
rata, in an amount up to the reduction, if any, of the respective principal
balance as a result of such workout, and then to the holder of the
Starrett-Lehigh Building Subordinate Loan in an amount up to the reduction, if
any, of its principal balance as a result of such workout; seventh, any
prepayment premiums that are allocable to the Starrett-Lehigh Building Loan and
the Starrett-Lehigh Building Pari Passu Loan on the one hand, and the
Starrett-Lehigh Building Subordinate Loan on the other hand, to the extent
actually paid by the borrower, will be paid first to the trust and the holder
of the Starrett-Lehigh Building Pari Passu Loan, pro rata, and then to the
holder of the Starrett-Lehigh Building Subordinate Loan, respectively; eighth,
any default interest in excess of the interest paid in accordance with clauses
first and third above, will be paid first to the holder of the Starrett-Lehigh
Building Loan and the Starrett-Lehigh Building Pari Passu Loan, pro rata, and
then to the holder of the Starrett-Lehigh Building Subordinate Loan, based on
the total amount of default interest then owing to each such party; ninth, the
holder of the Starrett-Lehigh Building Subordinate Loan will receive the amount
of any unreimbursed cure payments made by such holder; and tenth, if any excess
amount is paid by the borrower that is not otherwise applied in accordance with
the foregoing clauses first through ninth or the proceeds of any foreclosure
sale or any liquidation of the Starrett-Lehigh Building Whole Loan or the
Starrett-Lehigh Building Mortgaged Property are received in excess of the
amounts required to be applied in accordance with the foregoing clauses first
through ninth, such amount will generally be paid, pro rata, first to the
holders of the Starrett-Lehigh Building Loan and Starrett-Lehigh Building Pari
Passu Loan (on a pro rata basis) on the one hand, and then to the holder of the
Starrett-Lehigh Building Subordinate Loan on the other hand, in accordance with
the respective initial principal balances of each loan.
Cedarbrook Apartments Loan
Servicing Provisions of the Cedarbrook Apartments Intercreditor
Agreement. With respect to the Cedarbrook Apartments Loan, the Master Servicer
and Special Servicer will service and administer such loan and the Cedarbrook
Apartments Subordinate Loan pursuant to the Pooling and Servicing Agreement and
the related Intercreditor Agreement for so long as the Cedarbrook Apartments
Loan is part of the trust. The Master Servicer and/or Special Servicer may not
enter into amendments, modifications or extensions of a Cedarbrook Apartments
Loan and the Cedarbrook Apartments Subordinate Loan without the consent of the
holder of the Cedarbrook Apartments Subordinate Loan if the proposed amendment,
modification or extension adversely affects the holder of the related
Cedarbrook Apartments Subordinate Loan in a material manner; provided, however,
that such consent right will expire when the repurchase period described in the
next paragraph expires. See "SERVICING OF THE MORTGAGE LOANS--The Controlling
Class Representative" in this prospectus supplement.
In the event that (i) any payment of principal or interest on a Cedarbrook
Apartments Loan or the Cedarbrook Apartments Subordinate Loan becomes 90 or
more days delinquent, (ii) the principal balance of such Cedarbrook Apartments
Loan or the Cedarbrook Apartments Subordinate Loan has been accelerated, (iii)
the principal balance of such Cedarbrook Apartments Loan or the Cedarbrook
Apartments Subordinate Loan is not paid at maturity, (iv) the borrower declares
bankruptcy or (v) any other event where the cash flow payment under a
Cedarbrook Apartments Subordinate Loan has been interrupted and payments are
made pursuant to the event of default waterfall, the holder of the
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Cedarbrook Apartments Subordinate Loan will be entitled to purchase the
Cedarbrook Apartments Loan from the trust for a period of 30 days after its
receipt of a repurchase option notice, subject to certain conditions set forth
in the related Intercreditor Agreement. The purchase price will generally equal
the unpaid principal balance of the Cedarbrook Apartments Loan, together with
all unpaid interest on the Cedarbrook Apartments Loan (other than default
interest) at the related mortgage rate and any outstanding servicing expenses,
advances and interest on advances for which the borrower under the Cedarbrook
Apartments Loan is responsible. Unless the borrower or an affiliate is
purchasing the Cedarbrook Apartments Loan, no prepayment consideration will be
payable in connection with the purchase of the Cedarbrook Apartments Loan.
Application of Payments. Pursuant to the related Cedarbrook Apartments
Intercreditor Agreement and prior to the occurrence of (i) the acceleration of
the related Cedarbrook Apartments Loan or the Cedarbrook Apartments Subordinate
Loan, (ii) a monetary event of default or (iii) an event of default triggered
by the bankruptcy of the borrower, the related borrower will make separate
monthly payments of principal and interest to the Master Servicer and the
holder of the related Cedarbrook Apartments Subordinate Loan. Any escrow and
reserve payments required in respect of such Cedarbrook Apartments Loan or the
related Cedarbrook Apartments Subordinate Loan will be paid to the Master
Servicer.
Following the occurrence and during the continuance of (i) the
acceleration of a Cedarbrook Apartments Loan or the Cedarbrook Apartments
Subordinate Loan, (ii) a monetary event of default or (iii) an event of default
triggered by the bankruptcy of the borrower, and subject to certain rights of
the holder of the Cedarbrook Apartments Subordinate Loan to purchase the
Cedarbrook Apartments Loan from the trust, all payments and proceeds (of
whatever nature) on the Cedarbrook Apartments Subordinate Loan will be
subordinated to all payments due on the Cedarbrook Apartments Loan and the
amounts with respect to such Loan Pair will be paid first, to the Master
Servicer, Special Servicer or Trustee, up to the amount of any unreimbursed
costs and expenses paid by such entity, including unreimbursed advances and
interest thereon, second, to the Master Servicer and the Special Servicer, in
an amount equal to the accrued and unpaid servicing fees earned by such entity,
third, to the trust, in an amount equal to interest due with respect to the
Cedarbrook Apartments Loan; fourth, to the trust, in an amount equal to the
principal balance of the Cedarbrook Apartments Loan until paid in full; fifth,
to the trust, in an amount equal to any prepayment premium, to the extent
actually paid, allocable to the Cedarbrook Apartments Loan; sixth, to the
holder of the Cedarbrook Apartments Subordinate Loan, up to the amount of any
unreimbursed costs and expenses paid by the holder of the Cedarbrook Apartments
Subordinate Loan; seventh, to the holder of the Cedarbrook Apartments
Subordinate Loan, in an amount equal to interest due with respect to the
Cedarbrook Apartments Subordinate Loan, eighth, to the holder of the Cedarbrook
Apartments Subordinate Loan, in an amount equal to the principal balance of the
Cedarbrook Apartments Subordinate Loan until paid in full; ninth, to the holder
of the Cedarbrook Apartments Subordinate Loan, in an amount equal to any
prepayment premium, to the extent actually paid, allocable to the Cedarbrook
Apartments Subordinate Loan; tenth, to the trust and the holder of the
Cedarbrook Apartments Subordinate Loan, in an amount equal to any unpaid
default interest accrued on the Cedarbrook Apartments Loan and Cedarbrook
Apartments Subordinate Loan, respectively; and eleventh, any excess, to the
trust and the holder of the Cedarbrook Apartments Subordinate Loan, pro rata,
based upon the outstanding principal balances; provided that if the principal
balance of the Cedarbrook Apartments Subordinate Loan is equal to zero, then
based upon the initial principal balances.
Application of Amounts Paid to Trust. On or before each distribution date,
amounts payable to the trust as holder of any Co-Lender Loan pursuant to the
Intercreditor Agreements will be included in the Available Distribution Amount
for such Distribution Date to the extent described in this prospectus
supplement and amounts payable to the holder of the related Companion Loan will
be distributed to the holder net of fees and expenses on such Companion Loan.
MEZZANINE LOANS
With respect to the Mortgage Loans with existing mezzanine debt, the
holder of each mezzanine loan generally has the right to purchase the related
Mortgage Loan from the trust if certain defaults on the related Mortgage Loan
occur and, in some cases, may have the right to cure certain defaults occurring
on
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the related Mortgage Loan. The purchase price required to be paid in connection
with such a purchase is generally equal to the outstanding principal balance of
the related Mortgage Loan, together with accrued and unpaid interest on, and
all unpaid servicing expenses, advances and interest on advances relating to,
such Mortgage Loan. The lenders for this mezzanine debt are generally not
affiliates of the related Mortgage Loan borrower. Upon a default under the
mezzanine debt, the holder of the mezzanine debt may foreclose upon the
ownership interests in the related borrower.
ADDITIONAL MORTGAGE LOAN INFORMATION
The Mortgage Pool. For a detailed presentation of certain of the
characteristics of the Mortgage Loans and the Mortgaged Properties, on an
individual basis, see Annexes A-1, A-2, A-3, A-4 and A-5 to this prospectus
supplement. For purposes of numerical and statistical information set forth in
this prospectus supplement and Annexes A-1, A-2, A-3, A-4 and A-5, unless
otherwise specified such numerical and statistical information excludes any
Subordinate Companion Loans (including the Starrett- Lehigh Building
Subordinate Loan). For purposes of the calculation of DSC Ratios and LTV Ratios
with respect to the 11 Madison Avenue Loan and the Starrett-Lehigh Building
Loan, such ratios are calculated based upon the aggregate indebtedness of such
Mortgage Loan and the related Pari Passu Companion Loans (but excluding the 11
Madison Avenue Subordinate Loans and the Starrett-Lehigh Building Subordinate
Loan). Certain additional information regarding the Mortgage Loans is contained
under "--Assignment of the Mortgage Loans; Repurchases and Substitutions" and
"--Representations and Warranties; Repurchases and Substitutions," in this
prospectus supplement and under "DESCRIPTION OF THE TRUST FUNDS" and "CERTAIN
LEGAL ASPECTS OF MORTGAGE LOANS AND LEASES" in the accompanying prospectus.
In the schedule and tables set forth in Annexes A-1, A-2, A-3, A-4 and A-5
to this prospectus supplement, cross-collateralized Mortgage Loans are not
grouped together; instead, references are made under the heading
"Cross-Collateralized Pool" with respect to the other Mortgage Loans with which
they are cross-collateralized.
Each of the following tables sets forth certain characteristics of the
Mortgage Pool presented, where applicable, as of the Cut-Off Date. For purposes
of the tables and Annexes A-1, A-2, A-3, A-4 and A-5:
(i) References to "DSC Ratio" and "DSCR" are references to debt service
coverage ratios. 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 (that is, cash that remains after
average cost of non-capital expenses of operation, tenant improvements,
leasing commissions and replacement reserves during the term of the
Mortgage Loan) 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. The DSC Ratio for any Mortgage Loan is
the ratio of "Net Cash Flow" produced by the related Mortgaged Property to
the annualized amount of debt service that will be payable under that
Mortgage Loan commencing after the origination date. The Net Cash Flow for
a Mortgaged Property is the "net cash flow" of such Mortgaged Property as
set forth in, or determined by the applicable Mortgage Loan Seller on the
basis of, Mortgaged Property operating statements, generally unaudited,
and certified rent rolls (as applicable) supplied by the related borrower
in the case of multifamily, mixed use, retail, mobile home park,
industrial, residential health care, self-storage and office properties
(each a "Rental Property"); provided, however, for purposes of calculating
the DSC Ratios and DSCR (i) with respect to 22 Mortgage Loans (loan
numbers 1, 2 3, 4, 7, 9, 12, 14, 17, 23, 28, 35, 41, 46, 48, 50, 54, 55,
61, 78, 83 and 86), representing 49.5% of the Cut-Off Date Pool Balance
(11 Mortgage Loans in Loan Group 1 or 47.3% of the Cut-Off Date Group 1
Balance and 11 Mortgage Loans in Loan Group 2 or 58.3% of the Cut-Off Date
Group 2 Balance), where Periodic Payments are interest-only for a certain
amount of time after origination after which date the Mortgage Loan
amortizes principal for the remaining term of the loan, the debt service
used is the annualized amount of debt service that will be payable under
the Mortgage Loan commencing after the amortization period begins, and
(ii) with respect to two Mortgage Loans (loan numbers 20 and 59),
representing 1.4% of the Cut-Off Date Pool Balance (1.7% of the Cut-Off
Date Group 1 Balance), the debt service used is decreased by taking into
account amounts available under certain letters of credit or in cash
reserves. In general, the Mortgage Loan Sellers relied on either
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full-year operating statements, rolling 12-month operating statements
and/or applicable year-to-date financial statements, if available, and on
rent rolls for all Rental Properties that were current as of a date not
earlier than six months prior to the respective date of origination in
determining Net Cash Flow for the Mortgaged Properties.
In general, "net cash flow" is the revenue derived from the use and
operation of a Mortgaged Property less operating expenses (such as utilities,
administrative expenses, repairs and maintenance, tenant improvement costs,
leasing commissions, management fees and advertising), fixed expenses (such as
insurance, real estate taxes and, if applicable, ground lease payments) and
replacement reserves and an allowance for vacancies and credit losses. Net cash
flow does not reflect interest expenses and non-cash items such as depreciation
and amortization, and generally does not reflect capital expenditures, but does
reflect reserves for replacements and an allowance for vacancies and credit
losses.
In determining the "revenue" component of Net Cash Flow for each Rental
Property, the applicable Mortgage Loan Seller generally relied on the most
recent rent roll and/or other known, signed tenant leases or executed extension
options supplied and, where the actual vacancy shown thereon and the market
vacancy was less than 5.0%, assumed a 5.0% vacancy in determining revenue from
rents, except that in the case of certain non-multifamily properties, space
occupied by such anchor or single tenants or other large creditworthy tenants
may have been disregarded in performing the vacancy adjustment due to the
length of the related leases or creditworthiness of such tenants, in accordance
with the respective Mortgage Loan Seller's underwriting standards. Where the
actual or market vacancy was not less than 5.0%, the applicable Mortgage Loan
Seller determined revenue from rents by generally relying on the most recent
rent roll and/or other known, signed leases or executed lease extension options
supplied and the greater of (a) actual historical vacancy at the related
Mortgaged Property, (b) historical vacancy at comparable properties in the same
market as the related Mortgaged Property, and (c) 5.0%. In determining rental
revenue for multifamily, self storage and mobile home park properties, the
Mortgage Loan Sellers generally either reviewed rental revenue shown on the
certified rolling 12-month operating statements, the rolling 3-month operating
statements for multifamily properties or annualized the rental revenue and
reimbursement of expenses shown on rent rolls or operating statements with
respect to the prior one-to-twelve month periods. For the other Rental
Properties, the Mortgage Loan Sellers generally annualized rental revenue shown
on the most recent certified rent roll (as applicable), after applying the
vacancy factor, without further regard to the terms (including expiration
dates) of the leases shown thereon. In the case of hospitality properties,
gross receipts were generally determined based upon the average occupancy not
to exceed 75.0% and daily rates achieved during the prior two-to-three year
annual reporting period. In the case of residential health care facilities,
receipts were based on historical occupancy levels, historical operating
revenues and the then-current occupancy rates. Occupancy rates for the private
health care facilities were generally within the then-current market ranges,
and vacancy levels were generally a minimum of 5.0%. In general, any
non-recurring items and non-property related revenue were eliminated from the
calculation except in the case of residential health care facilities.
In determining the "expense" component of Net Cash Flow for each Mortgaged
Property, the Mortgage Loan Sellers generally relied on rolling 12-month
operating statements and/or full-year or year-to-date financial statements
supplied by the related borrower, except that (a) if tax or insurance expense
information more current than that reflected in the financial statements was
available, the newer information was used, (b) property management fees were
generally assumed to be 3.0% to 7.0% of effective gross revenue (except with
respect to full service hospitality properties, where a minimum of 3.5% of
gross receipts was assumed, with respect to limited service hospitality
properties, where a minimum of 4.0% of gross receipts was assumed, and with
respect to single tenant properties, where fees as low as 3.0% of effective
gross receipts were assumed), (c) assumptions were made with respect to
reserves for leasing commissions, tenant improvement expenses and capital
expenditures and (d) expenses were assumed to include annual replacement
reserves. See "--Underwriting Standards--Escrow Requirements--Replacement
Reserves" below. In addition, in some instances, the Mortgage Loan Sellers
recharacterized as capital expenditures those items reported by borrowers as
operating expenses (thus increasing "net cash flow") where the Mortgage Loan
Sellers determined appropriate.
The borrowers' financial information used to determine Net Cash Flow was
in most cases borrower certified, but unaudited, and neither the Mortgage Loan
Sellers nor the Depositor verified their accuracy.
S-109
(ii) References to "Cut-Off Date LTV" and "Cut-Off Date LTV Ratio" are
references to the ratio, expressed as a percentage, of the Cut-Off Date
Balance of a Mortgage Loan to the appraised value of the related Mortgaged
Property as shown on the most recent third-party appraisal thereof
available to the Mortgage Loan Sellers; provided, however, that with
respect to three Mortgage Loans (loan numbers 18, 20 and 59), representing
2.5% of the Cut-Off Pool Balance (3.1% of the Cut-Off Date Group 1
Balance), the related LTV ratio was reduced by taking into account amounts
available under certain letters of credit or in cash reserves.
(iii) References to "Maturity Date LTV Ratio" and "LTV at ARD or
Maturity" are references to the ratio, expressed as a percentage, of the
expected balance of a Balloon Loan on its scheduled maturity date (or ARD
Loan on its Anticipated Repayment Date) (prior to the payment of any
Balloon Payment or principal prepayments) to the appraised value of the
related Mortgaged Property as shown on the most recent third-party
appraisal thereof available to the Mortgage Loan Sellers prior to the
Cut-Off Date; provided, however, that with respect to 1 Mortgage Loan (loan
number 59), representing 0.3% of the Cut-Off Date Pool Balance (0.4% of the
Cut-Off Date Group 1 Balance), the related LTV ratio was reduced by taking
into account amounts available in certain cash reserves.
(iv) References to "Loan per Sq. Ft., Unit, Pad or Room" are, for each
Mortgage Loan secured by a lien on a multifamily property (including a
mobile home park property), hospitality property or assisted living
facility or other healthcare property, respectively, references to the
Cut-Off Date Balance of such Mortgage Loan divided by the number of
dwelling units, pads, or guest rooms, respectively that the related
Mortgaged Property comprises, and, for each Mortgage Loan secured by a lien
on a retail, industrial/warehouse, self storage or office property,
references to the Cut-Off Date Balance of such Mortgage Loan divided by the
net rentable square foot area of the related Mortgaged Property.
(v) References to "Year Built" are references to the year that a
Mortgaged Property was originally constructed or substantially renovated.
With respect to any Mortgaged Property which was constructed in phases, the
"Year Built" refers to the year that the first phase was originally
constructed.
(vi) References to "weighted averages" are references to averages
weighted on the basis of the Cut-Off Date Balances of the related Mortgage
Loans.
(vii) References to "Underwritten Replacement Reserves" represent
estimated annual capital costs, as used by the Mortgage Loan Sellers in
determining Net Cash Flow.
(viii) References to "Administrative Cost Rate" for each Mortgage Loan
represent the sum of (a) the Master Servicing Fee Rate for such Mortgage
Loan, and (b) 0.00190%, which percentage represents the trustee fee rate
with respect to each Mortgage Loan. The Administrative Cost Rate for each
Mortgage Loan is set forth on Annex A-1 hereto.
(ix) References to "Remaining Term to Maturity" represent, with
respect to each Mortgage Loan, the number of months remaining from the
Cut-Off Date to the stated maturity date of such Mortgage Loan (or the
remaining number of months to the Anticipated Repayment Date with respect
to each ARD Loan).
(x) References to "Remaining Amortization Term" represent, with
respect to each Mortgage Loan, the number of months remaining from the
later of the Cut-Off Date and the end of any interest-only period, if any,
to the month in which such Mortgage Loan would fully or substantially
amortize in accordance with such loan's amortization schedule without
regard to any Balloon Payment, if any, due on such Mortgage Loan.
(xi) References to "L ( )" or "Lockout" or "Lockout Period" represent,
with respect to each Mortgage Loan, the period during which prepayments of
principal are prohibited and no substitution of Defeasance Collateral is
permitted. The number indicated in the parentheses indicates the number of
monthly payments of such period (calculated for each Mortgage Loan from the
date of its origination). References to "O ( )" represent the number of
monthly payments for which (a) no
S-110
Prepayment Premium or Yield Maintenance Charge is assessed and (b)
defeasance is no longer required. References to "YM ( )" represent the
period for which the Yield Maintenance Charge is assessed. "3% ( )", "2%
( )" and "1% ( )" each represents the period for which a Prepayment Premium
is assessed and the respective percentage used in the calculation thereof.
The periods, if any, between consecutive Due Dates occurring prior to the
maturity date or Anticipated Repayment Date, as applicable, of a Mortgage
Loan during which the related borrower will have the right to prepay such
Mortgage Loan without being required to pay a Prepayment Premium or a Yield
Maintenance Charge (each such period, an "Open Period") with respect to all
of the Mortgage Loans have been calculated as those Open Periods occurring
immediately prior to the maturity date or Anticipated Repayment Date, as
applicable, of such Mortgage Loan as set forth in the related Mortgage Loan
documents.
(xii) References to "D ( )" or "Defeasance" represent, with respect to
each Mortgage Loan, the period (in months) during which the related holder
of the Mortgage has the right to require the related borrower, in lieu of a
principal prepayment, to pledge to such holder Defeasance Collateral.
(xiii) References to "Occupancy Percentage" are, with respect to any
Mortgaged Property and references as of the most recently available rent
rolls to (a) in the case of multifamily properties, mobile home park
properties and assisted living facilities, the percentage of units or pads
rented, (b) in the case of office and retail properties, the percentage of
the net rentable square footage rented, and is exclusive of hospitality
properties, and (c) in the case of self-storage facilities, either the
percentage of the net rentable square footage rented or the percentage of
units rented (depending on borrower reporting), and is exclusive of
hospitality properties.
(xiv) References to "Original Term to Maturity" are references to the
term from origination to maturity for each Mortgage Loan (or the term from
origination to the Anticipated Repayment Date with respect to each ARD
Loan).
(xv) References to "NA" indicate that with respect to a particular
category of data, that such data is not applicable.
(xvi) References to "NAV" indicate that, with respect to a particular
category of data, such data is not available.
(xvii) References to "Capital Imp. Reserve" are references to funded
reserves escrowed for repairs, replacements and corrections of issues
outlined in the engineering reports.
(xviii) References to "Replacement Reserve" are references to funded
reserves escrowed for ongoing items such as repairs and replacements,
including, in the case of hospitality properties, reserves for furniture,
fixtures and equipment. In certain cases, however, the subject reserve will
be subject to a maximum amount, and once such maximum amount is reached,
such reserve will not thereafter be funded, except, in some such cases, to
the extent it is drawn upon.
(xix) References to "TI/LC Reserve" are references to funded reserves
escrowed for tenant improvement allowances and leasing commissions. In
certain cases, however, the subject reserve will be subject to a maximum
amount, and once such maximum amount is reached, such reserve will not
thereafter be funded, except, in some such cases, to the extent it is drawn
upon.
(xx) The sum in any column of any of the following tables may not
equal the indicated total due to rounding.
S-111
MORTGAGED PROPERTIES BY PROPERTY TYPE FOR ALL MORTGAGE LOANS
NUMBER OF AGGREGATE % BY AVERAGE HIGHEST
NUMBER OF MORTGAGED CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
PROPERTY TYPE LOANS PROPERTIES BALANCE POOL BALANCE BALANCE BALANCE
- ------------------ ----------- ------------ ------------------ -------------- -------------- ----------------
Office ........... 13 13 $ 565,822,244 43.9% $43,524,788 $143,333,333
Retail ........... 52 52 376,182,513 29.2 $ 7,234,279 $ 80,000,000
Retail --
Anchored ....... 38 38 318,453,013 24.7 $ 8,380,342 $ 80,000,000
Retail --
Shadow
Anchored(3)..... 6 6 34,301,892 2.7 $ 5,716,982 $ 11,500,000
Retail --
Unanchored ..... 8 8 23,427,609 1.8 $ 2,928,451 $ 9,734,636
Multifamily ...... 28 28 287,933,996 22.3 $10,283,357 $ 45,000,000
Hospitality ...... 2 2 21,492,513 1.7 $10,746,256 $ 11,988,567
Mixed Use ........ 3 3 17,537,800 1.4 $ 5,845,933 $ 6,750,000
Mobile Home
Park ............ 2 2 11,807,666 0.9 $ 5,903,833 $ 9,250,000
Industrial ....... 1 1 4,738,590 0.4 $ 4,738,590 $ 4,738,590
Special
Purpose(4) ...... 1 1 4,584,248 0.4 $ 4,584,248 $ 4,584,248
--- --- -------------- -----
102 102 $1,290,099,569 100.0% $12,648,035 $143,333,333
=== === ============== =====
WTD. AVG.
STATED
WTD. AVG. REMAINING
WTD. AVG. LTV TERM TO WTD. AVG. MINIMUM MAXIMUM WTD. AVG. WTD. AVG.
CUT-OFF DATE RATIO AT MATURITY DSC DSC DSC OCCUPANCY MORTGAGE
PROPERTY TYPE LTV RATIO MATURITY(1) (MOS.)(1) RATIO RATIO RATIO RATE(2) RATE
- ------------------ -------------- ------------- ----------- ----------- --------- --------- ----------- ----------
Office ........... 62.8% 56.6% 115 1.81x 1.20x 3.68x 92.3% 5.574%
Retail ........... 72.2% 63.1% 112 1.69x 1.17x 3.36x 93.3% 5.628%
Retail --
Anchored ....... 72.2% 63.6% 113 1.74x 1.17x 3.36x 93.3% 5.557%
Retail --
Shadow
Anchored(3)..... 74.8% 63.5% 107 1.34x 1.22x 1.48x 94.1% 5.827%
Retail --
Unanchored ..... 67.9% 56.2% 106 1.46x 1.21x 3.06x 92.3% 6.301%
Multifamily ...... 74.9% 66.5% 97 1.31x 1.20x 2.99x 94.8% 5.494%
Hospitality ...... 61.3% 47.4% 106 1.66x 1.52x 1.77x 0.0% 7.289%
Mixed Use ........ 72.2% 62.0% 110 1.50x 1.44x 1.60x 88.9% 5.844%
Mobile Home
Park ............ 74.4% 65.7% 120 1.28x 1.25x 1.40x 98.6% 5.654%
Industrial ....... 73.5% 57.7% 118 1.27x 1.27x 1.27x 90.9% 6.320%
Special
Purpose(4) ...... 56.6% 38.8% 118 1.78x 1.78x 1.78x 100.0% 7.070%
68.4% 60.7% 110 1.65X 1.17X 3.68X 93.2% 5.613%
- -------
(1) Calculated with respect to the Anticipated Repayment Date for ARD Loans.
(2) Occupancy Rates were calculated based upon rent rolls made available to
the applicable Mortgage Loan Seller by the related borrowers as of the
rent roll date set forth on Annex A-1 to this prospectus supplement but
excludes 2 Mortgage Loans secured by a hospitality property representing
1.7% of the Cut-Off Date Pool Balance.
(3) A Mortgaged Property is considered "shadow anchored" if it is in close
proximity to an anchored property.
(4) Specifically, a Mortgaged Property where the sole tenant is a movie
theater.
S-112
MORTGAGED PROPERTIES BY PROPERTY TYPE FOR LOAN GROUP 1 MORTGAGE LOANS
NUMBER OF AGGREGATE % BY AVERAGE HIGHEST
NUMBER OF MORTGAGED CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
PROPERTY TYPE LOANS PROPERTIES BALANCE GROUP 1 BALANCE BALANCE BALANCE
- --------------------- ----------- ------------ ------------------ ----------------- -------------- ----------------
Office .............. 13 13 $ 565,822,244 54.5% $43,524,788 $ 143,333,333
Retail .............. 52 52 376,182,513 36.3 $ 7,234,279 $ 80,000,000
Retail --
Anchored .......... 38 38 318,453,013 30.7 $ 8,380,342 $ 80,000,000
Retail --
Shadow(3)
Anchored .......... 6 6 34,301,892 3.3 $ 5,716,982 $ 11,500,000
Retail --
Unanchored ........ 8 8 23,427,609 2.3 $ 2,928,451 $ 9,734,636
Multifamily ......... 6 6 44,826,069 4.3 $ 7,471,011 $ 13,318,521
Hospitality ......... 2 2 21,492,513 2.1 $10,746,256 $ 11,988,567
Mixed Use ........... 3 3 17,537,800 1.7 $ 5,845,933 $ 6,750,000
Industrial .......... 1 1 4,738,590 0.5 $ 4,738,590 $ 4,738,590
Special
Purpose(4) ......... 1 1 4,584,248 0.4 $ 4,584,248 $ 4,584,248
-- -- -------------- -----
Mobile Home
Park ............... 1 1 2,557,666 0.2 $ 2,557,666 $ 2,557,666
79 79 $1,037,741,642 100.0% $13,135,970 $143,333,333
== == ============== =====
WTD. AVG.
STATED
WTD. AVG. REMAINING
WTD. AVG. LTV TERM TO WTD. AVG. MINIMUM MAXIMUM WTD. AVG. WTD. AVG.
CUT-OFF DATE RATIO AT MATURITY DSC DSC DSC OCCUPANCY MORTGAGE
PROPERTY TYPE LTV RATIO MATURITY(1) (MOS.)(1) RATIO RATIO RATIO RATE(2) RATE
- --------------------- -------------- ------------- ----------- ----------- --------- --------- ----------- ----------
Office .............. 62.8% 56.6% 115 1.81x 1.20x 3.68x 92.3% 5.574%
Retail .............. 72.2% 63.1% 112 1.69x 1.17x 3.36x 93.3% 5.628%
Retail --
Anchored .......... 72.2% 63.6% 113 1.74x 1.17x 3.36x 93.3% 5.557%
Retail --
Shadow(3)
Anchored .......... 74.8% 63.5% 107 1.34x 1.22x 1.48x 94.1% 5.827%
Retail --
Unanchored ........ 67.9% 56.2% 106 1.46x 1.21x 3.06x 92.3% 6.301%
Multifamily ......... 66.9% 62.0% 99 1.46x 1.21x 2.16x 93.0% 5.516%
Hospitality ......... 61.3% 47.4% 106 1.66x 1.52x 1.77x 0.0% 7.289%
Mixed Use ........... 72.2% 62.0% 110 1.50x 1.44x 1.60x 88.9% 5.844%
Industrial .......... 73.5% 57.7% 118 1.27x 1.27x 1.27x 90.9% 6.320%
Special
Purpose(4) ......... 56.6% 38.8% 118 1.78x 1.78x 1.78x 100.0% 7.070%
Mobile Home
Park ............... 79.9% 67.1% 119 1.40x 1.40x 1.40x 100.0% 5.630%
66.6% 59.1% 113 1.74X 1.17X 3.68X 92.7% 5.642%
- -------
(1) Calculated with respect to the Anticipated Repayment Date for ARD Loans.
(2) Occupancy Rates were calculated based upon rent rolls made available to
the applicable Mortgage Loan Seller by the related borrowers as of the
rent roll date set forth on Annex A-1 to this prospectus supplement but
excludes 2 Mortgage Loans secured by a hospitality property representing
2.1% of the Cut-Off Date Group 1 Balance.
(3) A Mortgaged Property is considered "shadow anchored" if it is in close
proximity to an anchored property.
(4) Specifically, a Mortgaged Property where the sole tenant is a movie
theater.
S-113
MORTGAGED PROPERTIES BY PROPERTY TYPE FOR LOAN GROUP 2 MORTGAGE LOANS
NUMBER OF AGGREGATE % BY AVERAGE HIGHEST
NUMBER OF MORTGAGED CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
PROPERTY TYPE LOANS PROPERTIES BALANCE GROUP 2 BALANCE BALANCE BALANCE
- --------------------- ----------- ------------ ---------------- ----------------- -------------- --------------
Multifamily ......... 22 22 $243,107,927 96.3% $11,050,360 $45,000,000
Mobile Home
Park ............... 1 1 9,250,000 3.7 $ 9,250,000 $ 9,250,000
- --------------------- -- -- ------------ -----
23 23 $252,357,927 100.0% $10,972,084 $45,000,000
== == ------------ =====
WTD. AVG.
STATED
WTD. AVG. REMAINING
WTD. AVG. LTV TERM TO WTD. AVG. MINIMUM MAXIMUM WTD. AVG. WTD. AVG.
CUT-OFF DATE RATIO AT MATURITY DSC DSC DSC OCCUPANCY MORTGAGE
PROPERTY TYPE LTV RATIO MATURITY* (MOS.)* RATIO RATIO RATIO RATE RATE
- --------------------- -------------- ----------- ---------- ----------- --------- --------- ----------- ----------
Multifamily ......... 76.3% 67.3% 96 1.29x 1.20x 2.99x 95.1% 5.490%
Mobile Home
Park ............... 72.8% 65.4% 120 1.25x 1.25x 1.25x 98.3% 5.660%
- ----------------------
76.2% 67.2% 97 1.28X 1.20X 2.99X 95.2% 5.496%
- -------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-114
RANGE OF CUT-OFF DATE BALANCES FOR ALL MORTGAGE LOANS
AGGREGATE % BY AVERAGE
RANGE OF CUT-OFF NUMBER OF CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
DATE BALANCES ($) LOANS BALANCE POOL BALANCE BALANCE
- ---------------------------- ----------- ------------------ -------------- ----------------
(less than) 2,000,000 .. .. 15 $ 17,840,387 1.4% $ 1,189,359
2,000,001 -- 3,000,000 ... 12 30,166,232 2.3 $ 2,513,853
3,000,001 -- 4,000,000 ... 14 49,088,943 3.8 $ 3,506,353
4,000,001 -- 5,000,000 ... 11 50,360,997 3.9 $ 4,578,272
5,000,001 -- 6,000,000 ... 1 5,592,000 0.4 $ 5,592,000
6,000,001 -- 7,000,000 ... 5 32,319,616 2.5 $ 6,463,923
7,000,001 -- 8,000,000 ... 6 45,436,641 3.5 $ 7,572,774
8,000,001 -- 9,000,000 ... 3 25,805,984 2.0 $ 8,601,995
9,000,001 -- 10,000,000 ... 5 48,488,582 3.8 $ 9,697,716
10,000,001 -- 15,000,000 ... 14 174,397,893 13.5 $ 12,456,992
15,000,001 -- 20,000,000 ... 3 54,384,629 4.2 $ 18,128,210
20,000,001 -- 25,000,000 ... 3 68,558,899 5.3 $ 22,852,966
25,000,001 -- 30,000,000 ... 2 54,975,432 4.3 $ 27,487,716
30,000,001 -- 35,000,000 ... 1 30,350,000 2.4 $ 30,350,000
40,000,001 -- 45,000,000 ... 1 45,000,000 3.5 $ 45,000,000
45,000,001 -- 50,000,000 ... 1 49,000,000 3.8 $ 49,000,000
75,000,001 -- 80,000,000 ... 2 160,000,000 12.4 $ 80,000,000
80,000,001 -- 143,333,333 .. 3 348,333,333 27.0 $116,111,111
--- -------------- -----
102 $1,290,099,569 100.0% $ 12,648,035
=== ============== =====
WTD. AVG.
STATED
WTD. AVG. REMAINING
HIGHEST WTD. AVG. LTV TERM TO WTD. AVG. WTD. AVG.
RANGE OF CUT-OFF CUT-OFF DATE CUT-OFF DATE RATIO AT MATURITY DSC MORTGAGE
DATE BALANCES ($) BALANCE LTV RATIO MATURITY* (MOS.)* RATIO RATE
- ---------------------------- ---------------- -------------- ----------- ---------- ----------- ----------
(less than) 2,000,000 .. .. $ 1,787,500 55.3% 48.7% 83 2.46x 5.254%
2,000,001 -- 3,000,000 ... $ 2,996,872 70.2% 62.0% 97 1.83x 5.390%
3,000,001 -- 4,000,000 ... $ 3,996,344 71.3% 55.7% 112 1.48x 5.908%
4,000,001 -- 5,000,000 ... $ 4,990,423 73.0% 57.0% 117 1.42x 5.934%
5,000,001 -- 6,000,000 ... $ 5,592,000 70.8% 65.4% 81 1.40x 5.100%
6,000,001 -- 7,000,000 ... $ 6,750,000 70.4% 64.9% 90 1.75x 5.422%
7,000,001 -- 8,000,000 ... $ 7,969,565 75.4% 64.1% 104 1.35x 5.671%
8,000,001 -- 9,000,000 ... $ 8,621,669 79.7% 69.3% 99 1.26x 5.553%
9,000,001 -- 10,000,000 ... $ 10,000,000 55.4% 47.0% 112 1.93x 6.009%
10,000,001 -- 15,000,000 ... $ 15,000,000 73.8% 65.9% 91 1.35x 5.666%
15,000,001 -- 20,000,000 ... $ 19,500,000 78.9% 68.6% 107 1.27x 5.771%
20,000,001 -- 25,000,000 ... $ 23,558,899 76.2% 66.0% 106 1.28x 5.458%
25,000,001 -- 30,000,000 ... $ 27,500,000 78.1% 70.2% 88 1.36x 5.625%
30,000,001 -- 35,000,000 ... $ 30,350,000 78.2% 65.8% 120 1.45x 5.760%
40,000,001 -- 45,000,000 ... $ 45,000,000 75.0% 66.1% 118 1.26x 5.730%
45,000,001 -- 50,000,000 ... $ 49,000,000 48.0% 48.0% 120 3.68x 4.800%
75,000,001 -- 80,000,000 ... $ 80,000,000 67.2% 63.6% 124 1.99x 5.340%
80,000,001 -- 143,333,333 .. $143,333,333 62.1% 55.6% 119 1.63x 5.720%
$143,333,333 68.4% 60.7% 110 1.65X 5.613%
- -------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-115
RANGE OF CUT-OFF DATE BALANCES FOR LOAN GROUP 1 MORTGAGE LOANS
AGGREGATE % BY AVERAGE
RANGE OF CUT-OFF NUMBER OF CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
DATE BALANCES ($) LOANS BALANCE GROUP 1 BALANCE BALANCE
- ---------------------------- ----------- ------------------ ----------------- ----------------
(less than) 2,000,000 .. .. 13 $ 14,792,898 1.4% $ 1,137,915
2,000,001 -- 3,000,000 .. 10 25,021,743 2.4 $ 2,502,174
3,000,001 -- 4,000,000 .. 13 45,931,979 4.4 $ 3,533,229
4,000,001 -- 5,000,000 .. 7 32,694,034 3.2 $ 4,670,576
5,000,001 -- 6,000,000 .. 1 5,592,000 0.5 $ 5,592,000
6,000,001 -- 7,000,000 .. 4 25,669,616 2.5 $ 6,417,404
7,000,001 -- 8,000,000 .. 6 45,436,641 4.4 $ 7,572,774
8,000,001 -- 9,000,000 .. 3 25,805,984 2.5 $ 8,601,995
9,000,001 -- 10,000,000 .. 4 39,238,582 3.8 $ 9,809,646
10,000,001 -- 15,000,000 .. 6 76,455,873 7.4 $ 12,742,645
15,000,001 -- 20,000,000 .. 2 34,884,629 3.4 $ 17,442,314
20,000,001 -- 25,000,000 .. 1 23,558,899 2.3 $ 23,558,899
25,000,001 -- 30,000,000 .. 2 54,975,432 5.3 $ 27,487,716
30,000,001 -- 35,000,000 .. 1 30,350,000 2.9 $ 30,350,000
45,000,001 -- 50,000,000 .. 1 49,000,000 4.7 $ 49,000,000
75,000,001 -- 80,000,000 .. 2 160,000,000 15.4 $ 80,000,000
80,000,001 -- 143,333,333 .. 3 348,333,333 33.6 $116,111,111
- ---------------------------- -- -------------- -----
79 $1,037,741,642 100.0% $ 13,135,970
== ============== =====
WTD. AVG.
STATED
WTD. AVG. REMAINING
HIGHEST WTD. AVG. LTV TERM TO WTD. AVG. WTD. AVG.
RANGE OF CUT-OFF CUT-OFF DATE CUT-OFF DATE RATIO AT MATURITY DSC MORTGAGE
DATE BALANCES ($) BALANCE LTV RATIO MATURITY* (MOS.)* RATIO RATE
- ---------------------------- ---------------- -------------- ----------- ---------- ----------- ----------
(less than) 2,000,000 .. .. $ 1,787,500 58.6% 52.2% 74 2.56x 5.127%
2,000,001 -- 3,000,000 .. $ 2,996,872 68.3% 60.2% 95 1.95x 5.376%
3,000,001 -- 4,000,000 .. $ 3,996,344 70.7% 54.4% 115 1.47x 5.942%
4,000,001 -- 5,000,000 .. $ 4,990,423 70.5% 58.0% 111 1.50x 6.095%
5,000,001 -- 6,000,000 .. $ 5,592,000 70.8% 65.4% 81 1.40x 5.100%
6,000,001 -- 7,000,000 .. $ 6,750,000 68.1% 61.9% 92 1.86x 5.469%
7,000,001 -- 8,000,000 .. $ 7,969,565 75.4% 64.1% 104 1.35x 5.671%
8,000,001 -- 9,000,000 .. $ 8,621,669 79.7% 69.3% 99 1.26x 5.553%
9,000,001 -- 10,000,000 .. $ 10,000,000 51.3% 42.7% 110 2.09x 6.091%
10,000,001 -- 15,000,000 .. $ 14,877,866 68.6% 60.4% 103 1.47x 5.952%
15,000,001 -- 20,000,000 .. $ 18,384,629 79.8% 67.5% 119 1.30x 5.866%
20,000,001 -- 25,000,000 .. $ 23,558,899 79.1% 66.8% 118 1.20x 5.820%
25,000,001 -- 30,000,000 .. $ 27,500,000 78.1% 70.2% 88 1.36x 5.625%
30,000,001 -- 35,000,000 .. $ 30,350,000 78.2% 65.8% 120 1.45x 5.760%
45,000,001 -- 50,000,000 .. $ 49,000,000 48.0% 48.0% 120 3.68x 4.800%
75,000,001 -- 80,000,000 .. $ 80,000,000 67.2% 63.6% 124 1.99x 5.340%
80,000,001 -- 143,333,333 .. $143,333,333 62.1% 55.6% 119 1.63x 5.720%
- -----------------------------
$143,333,333 66.6% 59.1% 113 1.74X 5.642%
- -------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-116
RANGE OF CUT-OFF DATE BALANCES FOR LOAN GROUP 2 MORTGAGE LOANS
AGGREGATE % BY AVERAGE
RANGE OF CUT-OFF NUMBER OF CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
DATE BALANCES ($) LOANS BALANCE GROUP 2 BALANCE BALANCE
- --------------------------- ----------- -------------- ----------------- --------------
(less than) 2,000,000 . .. 2 $ 3,047,489 1.2% $ 1,523,745
2,000,001 -- 3,000,000 .. 2 5,144,489 2.0 $ 2,572,245
3,000,001 -- 4,000,000 .. 1 3,156,965 1.3 $ 3,156,965
4,000,001 -- 5,000,000 .. 4 17,666,964 7.0 $ 4,416,741
6,000,001 -- 7,000,000 .. 1 6,650,000 2.6 $ 6,650,000
9,000,001 -- 10,000,000 .. 1 9,250,000 3.7 $ 9,250,000
10,000,001 -- 15,000,000 .. 8 97,942,021 38.8 $12,242,753
15,000,001 -- 20,000,000 .. 1 19,500,000 7.7 $19,500,000
20,000,001 -- 25,000,000 .. 2 45,000,000 17.8 $22,500,000
40,000,001 -- 45,000,000 .. 1 45,000,000 17.8 $45,000,000
-- ------------ -----
23 $252,357,927 100.0% $10,972,084
== ============ =====
WTD. AVG.
STATED
WTD. AVG. REMAINING
HIGHEST WTD. AVG. LTV TERM TO WTD. AVG. WTD. AVG.
RANGE OF CUT-OFF CUT-OFF DATE CUT-OFF DATE RATIO AT MATURITY DSC MORTGAGE
DATE BALANCES ($) BALANCE LTV RATIO MATURITY* (MOS.)* RATIO RATE
- --------------------------- -------------- -------------- ----------- ---------- ----------- ----------
(less than) 2,000,000 . .. $ 1,747,489 39.3% 32.0% 128 1.98x 5.866%
2,000,001 -- 3,000,000 .. $ 2,994,489 79.8% 70.4% 103 1.27x 5.455%
3,000,001 -- 4,000,000 .. $ 3,156,965 79.9% 74.3% 59 1.55x 5.420%
4,000,001 -- 5,000,000 .. $ 4,800,000 77.6% 55.0% 128 1.27x 5.634%
6,000,001 -- 7,000,000 .. $ 6,650,000 79.6% 76.3% 82 1.34x 5.240%
9,000,001 -- 10,000,000 .. $ 9,250,000 72.8% 65.4% 120 1.25x 5.660%
10,000,001 -- 15,000,000 .. $15,000,000 77.9% 70.3% 82 1.26x 5.442%
15,000,001 -- 20,000,000 .. $19,500,000 77.4% 70.7% 84 1.22x 5.600%
20,000,001 -- 25,000,000 .. $23,500,000 74.7% 65.6% 100 1.33x 5.269%
40,000,001 -- 45,000,000 .. $45,000,000 75.0% 66.1% 118 1.26x 5.730%
$45,000,000 76.2% 67.2% 97 1.28X 5.496%
- -------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-117
MORTGAGED PROPERTIES BY STATE FOR ALL MORTGAGE LOANS
NUMBER OF AGGREGATE % BY AVERAGE
MORTGAGED CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
STATE PROPERTIES BALANCE POOL BALANCE BALANCE
- ------------------- ------------ ------------------ -------------- --------------
NY ................ 5 $ 303,623,333 23.5% $ 60,724,667
FL ................ 15 266,602,912 20.7 $ 17,773,527
GA ................ 10 120,012,962 9.3 $ 12,001,296
CA ................ 7 110,856,021 8.6 $ 15,836,574
Southern(2) ...... 5 103,250,000 8.0 $ 20,650,000
Northern(2) ...... 2 7,606,021 0.6 $ 3,803,011
IL ................ 5 98,586,031 7.6 $ 19,717,206
NJ ................ 3 45,969,565 3.6 $ 15,323,188
NV ................ 4 43,907,625 3.4 $ 10,976,906
SC ................ 8 37,208,345 2.9 $ 4,651,043
AZ ................ 3 34,967,229 2.7 $ 11,655,743
AL ................ 3 29,978,116 2.3 $ 9,992,705
VA ................ 2 27,188,030 2.1 $ 13,594,015
TX ................ 5 22,074,536 1.7 $ 4,414,907
WV ................ 1 18,384,629 1.4 $ 18,384,629
MD ................ 2 18,326,537 1.4 $ 9,163,268
WA ................ 2 17,120,419 1.3 $ 8,560,210
UT ................ 1 13,075,815 1.0 $ 13,075,815
IN ................ 1 11,840,000 0.9 $ 11,840,000
CO ................ 3 10,065,948 0.8 $ 3,355,316
MN ................ 2 8,635,672 0.7 $ 4,317,836
AR ................ 2 7,440,964 0.6 $ 3,720,482
ID ................ 1 6,225,000 0.5 $ 6,225,000
MI ................ 2 5,728,122 0.4 $ 2,864,061
DC ................ 1 5,592,000 0.4 $ 5,592,000
OH ................ 2 4,784,372 0.4 $ 2,392,186
OR ................ 1 3,700,000 0.3 $ 3,700,000
CT ................ 1 3,447,072 0.3 $ 3,447,072
NM ................ 2 3,008,436 0.2 $ 1,504,218
MS ................ 2 2,962,093 0.2 $ 1,481,047
PA ................ 1 2,557,666 0.2 $ 2,557,666
OK ................ 2 2,343,000 0.2 $ 1,171,500
IA ................ 1 1,747,489 0.1 $ 1,747,489
KY ................ 1 1,680,000 0.1 $ 1,680,000
WY ................ 1 459,631 0.0 $ 459,631
-- --------------- -----
102 $ 1,290,099,569 100.0% $ 12,648,035
=== =============== =====
WTD. AVG.
STATED
WTD. AVG. REMAINING
HIGHEST WTD. AVG. LTV TERM TO WTD. AVG. WTD. AVG.
CUT-OFF DATE CUT-OFF DATE RATIO AT MATURITY DSC MORTGAGE
STATE BALANCE LTV RATIO MATURITY(1) (MOS.)(1) RATIO RATE
- ------------------- ---------------- -------------- ------------- ----------- ----------- ----------
NY ................ $ 143,333,333 54.3% 49.7% 119 2.09x 5.373%
FL ................ $ 105,000,000 73.6% 64.3% 110 1.39x 6.025%
GA ................ $ 80,000,000 64.6% 56.6% 117 1.79x 5.428%
CA ................ $ 45,000,000 69.7% 62.4% 99 1.51x 5.790%
Southern(2) ...... $ 45,000,000 70.5% 63.5% 99 1.50x 5.656%
Northern(2) ...... $ 4,584,248 58.9% 46.3% 102 1.57x 7.618%
IL ................ $ 80,000,000 73.5% 71.1% 120 1.94x 5.413%
NJ ................ $ 21,500,000 79.4% 66.4% 119 1.34x 5.519%
NV ................ $ 12,947,490 79.0% 71.7% 73 1.27x 5.405%
SC ................ $ 7,500,000 74.8% 60.6% 100 1.34x 5.353%
AZ ................ $ 23,500,000 73.2% 65.8% 94 1.33x 5.517%
AL ................ $ 14,877,866 79.3% 69.4% 107 1.31x 5.799%
VA ................ $ 23,558,899 79.0% 66.9% 118 1.20x 5.868%
TX ................ $ 15,000,000 74.8% 68.1% 83 1.46x 5.426%
WV ................ $ 18,384,629 79.9% 67.8% 119 1.28x 5.970%
MD ................ $ 9,734,636 74.4% 62.9% 118 1.38x 5.872%
WA ................ $ 13,770,919 66.8% 63.1% 56 1.85x 5.295%
UT ................ $ 13,075,815 78.1% 65.5% 118 1.20x 5.590%
IN ................ $ 11,840,000 80.0% 71.4% 84 1.26x 5.410%
CO ................ $ 6,750,000 71.3% 62.4% 92 1.57x 5.631%
MN ................ $ 4,738,590 75.5% 61.8% 118 1.27x 6.347%
AR ................ $ 4,066,964 74.9% 29.8% 185 1.25x 6.167%
ID ................ $ 6,225,000 75.0% 70.7% 69 1.74x 5.320%
MI ................ $ 3,445,622 67.0% 56.9% 95 2.14x 5.337%
DC ................ $ 5,592,000 70.8% 65.4% 81 1.40x 5.100%
OH ................ $ 2,996,872 56.3% 52.3% 74 2.34x 4.785%
OR ................ $ 3,700,000 65.4% 54.8% 120 1.46x 5.620%
CT ................ $ 3,447,072 70.4% 59.6% 119 1.58x 5.910%
NM ................ $ 2,557,878 74.6% 57.7% 124 1.41x 6.374%
MS ................ $ 1,692,093 66.2% 62.1% 70 2.33x 5.198%
PA ................ $ 2,557,666 79.9% 67.1% 119 1.40x 5.630%
OK ................ $ 1,215,500 55.0% 55.0% 58 3.24x 4.290%
IA ................ $ 1,747,489 42.7% 32.1% 178 1.23x 6.540%
KY ................ $ 1,680,000 54.2% 54.2% 58 3.36x 4.290%
WY ................ $ 459,631 47.1% 0.0% 150 1.21x 8.500%
$ 143,333,333 68.4% 60.7% 110 1.65X 5.613%
- -------
(1) Calculated with respect to the Anticipated Repayment Date for ARD Loans.
(2) For purposes of determining whether a Mortgaged Property is in Northern
California or Southern California, Mortgaged Properties north of San Luis
Obispo County, Kern County and San Bernardino County were included in
Northern California and Mortgaged Properties in or south of such counties
were included in Southern California.
S-118
MORTGAGED PROPERTIES BY STATE FOR LOAN GROUP 1 MORTGAGE LOANS
NUMBER OF AGGREGATE % BY AVERAGE
MORTGAGED CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
STATE PROPERTIES BALANCE GROUP 1 BALANCE BALANCE
- ------------------- ------------ ------------------ ----------------- --------------
NY ................ 5 $ 303,623,333 29.3% $ 60,724,667
FL ................ 13 234,502,912 22.6 $ 18,038,686
GA ................ 7 110,755,997 10.7 $ 15,822,285
IL ................ 4 95,591,541 9.2 $ 23,897,885
CA ................ 5 56,606,021 5.5 $ 11,321,204
Southern(2) ...... 3 49,000,000 4.7 $ 16,333,333
Northern(2) ...... 2 7,606,021 0.7 $ 3,803,011
VA ................ 2 27,188,030 2.6 $ 13,594,015
NJ ................ 2 24,469,565 2.4 $ 12,234,783
AL ................ 2 19,837,866 1.9 $ 9,918,933
SC ................ 4 19,608,345 1.9 $ 4,902,086
WV ................ 1 18,384,629 1.8 $ 18,384,629
MD ................ 2 18,326,537 1.8 $ 9,163,268
WA ................ 2 17,120,419 1.6 $ 8,560,210
AZ ................ 2 11,467,229 1.1 $ 5,733,615
CO ................ 3 10,065,948 1.0 $ 3,355,316
MN ................ 2 8,635,672 0.8 $ 4,317,836
NV ................ 1 8,621,669 0.8 $ 8,621,669
TX ................ 4 7,074,536 0.7 $ 1,768,634
ID ................ 1 6,225,000 0.6 $ 6,225,000
MI ................ 2 5,728,122 0.6 $ 2,864,061
DC ................ 1 5,592,000 0.5 $ 5,592,000
OH ................ 2 4,784,372 0.5 $ 2,392,186
OR ................ 1 3,700,000 0.4 $ 3,700,000
CT ................ 1 3,447,072 0.3 $ 3,447,072
AR ................ 1 3,374,000 0.3 $ 3,374,000
NM ................ 2 3,008,436 0.3 $ 1,504,218
MS ................ 2 2,962,093 0.3 $ 1,481,047
PA ................ 1 2,557,666 0.2 $ 2,557,666
OK ................ 2 2,343,000 0.2 $ 1,171,500
KY ................ 1 1,680,000 0.2 $ 1,680,000
WY ................ 1 459,631 0.0 $ 459,631
- ------------------- -- --------------- -----
79 $ 1,037,741,642 100.0% $ 13,135,970
== =============== =====
WTD. AVG.
STATED
WTD. AVG. REMAINING
HIGHEST WTD. AVG. LTV TERM TO WTD. AVG. WTD. AVG.
CUT-OFF DATE CUT-OFF DATE RATIO AT MATURITY DSC MORTGAGE
STATE BALANCE LTV RATIO MATURITY(1) (MOS.)(1) RATIO RATE
- ------------------- ---------------- -------------- ------------- ----------- ----------- ----------
NY ................ $ 143,333,333 54.3% 49.7% 119 2.09x 5.373%
FL ................ $ 105,000,000 73.4% 63.5% 115 1.41x 6.089%
GA ................ $ 80,000,000 63.8% 56.0% 119 1.81x 5.417%
IL ................ $ 80,000,000 73.3% 71.2% 120 1.96x 5.407%
CA ................ $ 27,500,000 65.0% 58.9% 81 1.74x 5.860%
Southern(2) ...... $ 27,500,000 65.9% 60.9% 78 1.77x 5.587%
Northern(2) ...... $ 4,584,248 58.9% 46.3% 102 1.57x 7.618%
VA ................ $ 23,558,899 79.0% 66.9% 118 1.20x 5.868%
NJ ................ $ 16,500,000 79.7% 67.1% 119 1.36x 5.721%
AL ................ $ 14,877,866 79.9% 69.3% 119 1.33x 5.993%
SC ................ $ 7,500,000 70.9% 47.3% 116 1.38x 5.455%
WV ................ $ 18,384,629 79.9% 67.8% 119 1.28x 5.970%
MD ................ $ 9,734,636 74.4% 62.9% 118 1.38x 5.872%
WA ................ $ 13,770,919 66.8% 63.1% 56 1.85x 5.295%
AZ ................ $ 7,274,045 78.1% 66.3% 119 1.34x 6.065%
CO ................ $ 6,750,000 71.3% 62.4% 92 1.57x 5.631%
MN ................ $ 4,738,590 75.5% 61.8% 118 1.27x 6.347%
NV ................ $ 8,621,669 79.8% 74.1% 59 1.22x 5.400%
TX ................ $ 2,277,000 67.0% 58.0% 84 1.92x 5.504%
ID ................ $ 6,225,000 75.0% 70.7% 69 1.74x 5.320%
MI ................ $ 3,445,622 67.0% 56.9% 95 2.14x 5.337%
DC ................ $ 5,592,000 70.8% 65.4% 81 1.40x 5.100%
OH ................ $ 2,996,872 56.3% 52.3% 74 2.34x 4.785%
OR ................ $ 3,700,000 65.4% 54.8% 120 1.46x 5.620%
CT ................ $ 3,447,072 70.4% 59.6% 119 1.58x 5.910%
AR ................ $ 3,374,000 77.6% 65.8% 120 1.23x 6.030%
NM ................ $ 2,557,878 74.6% 57.7% 124 1.41x 6.374%
MS ................ $ 1,692,093 66.2% 62.1% 70 2.33x 5.198%
PA ................ $ 2,557,666 79.9% 67.1% 119 1.40x 5.630%
OK ................ $ 1,215,500 55.0% 55.0% 58 3.24x 4.290%
KY ................ $ 1,680,000 54.2% 54.2% 58 3.36x 4.290%
WY ................ $ 459,631 47.1% 0.0% 150 1.21x 8.500%
- --------------------
$ 143,333,333 66.6% 59.1% 113 1.74X 5.642%
- -------
(1) Calculated with respect to the Anticipated Repayment Date for ARD Loans.
(2) For purposes of determining whether a Mortgaged Property is in Northern
California or Southern California, Mortgaged Properties north of San Luis
Obispo County, Kern County and San Bernardino County were included in
Northern California and Mortgaged Properties in or south of such counties
were included in Southern California.
S-119
MORTGAGED PROPERTIES BY STATE FOR LOAN GROUP 2 MORTGAGE LOANS
NUMBER OF AGGREGATE % BY AVERAGE
MORTGAGED CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
STATE PROPERTIES BALANCE GROUP 2 BALANCE BALANCE
- ------------------- ------------ ---------------- ----------------- --------------
CA ................ 2 $ 54,250,000 21.5% $ 27,125,000
Southern(2) ...... 2 54,250,000 21.5 $ 27,125,000
NV ................ 3 35,285,955 14.0 $ 11,761,985
FL ................ 2 32,100,000 12.7 $ 16,050,000
AZ ................ 1 23,500,000 9.3 $ 23,500,000
NJ ................ 1 21,500,000 8.5 $ 21,500,000
SC ................ 4 17,600,000 7.0 $ 4,400,000
TX ................ 1 15,000,000 5.9 $ 15,000,000
UT ................ 1 13,075,815 5.2 $ 13,075,815
IN ................ 1 11,840,000 4.7 $ 11,840,000
AL ................ 1 10,140,250 4.0 $ 10,140,250
GA ................ 3 9,256,965 3.7 $ 3,085,655
AR ................ 1 4,066,964 1.6 $ 4,066,964
IL ................ 1 2,994,489 1.2 $ 2,994,489
IA ................ 1 1,747,489 0.7 $ 1,747,489
- ------------------- -- ------------- -----
23 $ 252,357,927 100.0% $ 10,972,084
== ============= =====
WTD. AVG.
STATED
WTD. AVG. REMAINING
HIGHEST WTD. AVG. LTV TERM TO WTD. AVG. WTD. AVG.
CUT-OFF DATE CUT-OFF DATE RATIO AT MATURITY DSC MORTGAGE
STATE BALANCE LTV RATIO MATURITY(1) (MOS.)(1) RATIO RATE
- ------------------- -------------- -------------- ------------- ----------- ----------- ----------
CA ................ $ 45,000,000 74.6% 65.9% 118 1.26x 5.718%
Southern(2) ...... $ 45,000,000 74.6% 65.9% 118 1.26x 5.718%
NV ................ $ 12,947,490 78.8% 71.1% 77 1.28x 5.406%
FL ................ $ 19,500,000 75.3% 70.1% 74 1.25x 5.561%
AZ ................ $ 23,500,000 70.8% 65.5% 82 1.33x 5.250%
NJ ................ $ 21,500,000 79.0% 65.6% 120 1.32x 5.290%
SC ................ $ 6,650,000 79.1% 75.3% 82 1.30x 5.240%
TX ................ $ 15,000,000 78.5% 72.8% 83 1.25x 5.390%
UT ................ $ 13,075,815 78.1% 65.5% 118 1.20x 5.590%
IN ................ $ 11,840,000 80.0% 71.4% 84 1.26x 5.410%
AL ................ $ 10,140,250 78.0% 69.7% 83 1.27x 5.420%
GA ................ $ 4,800,000 73.6% 63.8% 90 1.60x 5.558%
AR ................ $ 4,066,964 72.6% 0.0% 239 1.27x 6.280%
IL ................ $ 2,994,489 79.9% 67.1% 118 1.28x 5.610%
IA ................ $ 1,747,489 42.7% 32.1% 178 1.23x 6.540%
- --------------------
$ 45,000,000 76.2% 67.2% 97 1.28X 5.496%
- -------
(1) Calculated with respect to the Anticipated Repayment Date for ARD Loans.
(2) For purposes of determining whether a Mortgaged Property is in Northern
California or Southern California, Mortgaged Properties north of San Luis
Obispo County, Kern County and San Bernardino County were included in
Northern California and Mortgaged Properties in or south of such counties
were included in Southern California.
S-120
RANGE OF UNDERWRITTEN DSC RATIOS FOR ALL MORTGAGE LOANS
AGGREGATE % BY AVERAGE
NUMBER CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
RANGE OF DSC RATIOS (X) OF LOANS BALANCE POOL BALANCE BALANCE
- -------------------------- ---------- ------------------ -------------- --------------
1.15 -- 1.19 ............. 1 $ 3,748,345 0.3% $ 3,748,345
1.20 -- 1.24 ............. 13 121,024,265 9.4 $ 9,309,559
1.25 -- 1.29 ............. 22 229,106,317 17.8 $ 10,413,924
1.30 -- 1.34 ............. 7 176,942,713 13.7 $ 25,277,530
1.35 -- 1.39 ............. 6 41,199,094 3.2 $ 6,866,516
1.40 -- 1.44 ............. 11 80,235,166 6.2 $ 7,294,106
1.45 -- 1.49 ............. 8 53,084,439 4.1 $ 6,635,555
1.50 -- 1.54 ............. 2 14,492,900 1.1 $ 7,246,450
1.55 -- 1.59 ............. 6 170,390,805 13.2 $ 28,398,468
1.60 -- 1.64 ............. 1 6,750,000 0.5 $ 6,750,000
1.70 -- 1.74 ............. 1 6,225,000 0.5 $ 6,225,000
1.75 -- 1.79 ............. 4 30,569,686 2.4 $ 7,642,422
1.85 -- 1.89 ............. 2 80,280,589 6.2 $ 40,140,294
2.05 -- 2.09 ............. 2 180,000,000 14.0 $ 90,000,000
2.15 -- 2.19 ............. 1 10,000,000 0.8 $ 10,000,000
2.30 -- 3.79 ............. 15 86,050,250 6.7 $ 5,736,683
--- --------------- -----
102 $ 1,290,099,569 100.0% $ 12,648,035
=== =============== =====
WTD. AVG.
STATED
REMAINING
HIGHEST WTD. AVG. WTD. AVG. TERM TO WTD. AVG. WTD. AVG.
CUT-OFF DATE CUT-OFF DATE LTV RATIO AT MATURITY DSC MORTGAGE
RANGE OF DSC RATIOS (X) BALANCE LTV RATIO MATURITY* (MOS.)* RATIO RATE
- -------------------------- ---------------- -------------- -------------- ---------- ----------- ----------
1.15 -- 1.19 ............. $ 3,748,345 70.7% 0.0% 191 1.17x 5.660%
1.20 -- 1.24 ............. $ 23,558,899 77.1% 67.9% 97 1.21x 5.664%
1.25 -- 1.29 ............. $ 45,000,000 76.9% 66.5% 108 1.27x 5.743%
1.30 -- 1.34 ............. $ 105,000,000 75.9% 67.1% 112 1.32x 5.912%
1.35 -- 1.39 ............. $ 10,589,818 75.9% 64.9% 109 1.37x 5.595%
1.40 -- 1.44 ............. $ 27,500,000 73.7% 64.0% 95 1.42x 5.718%
1.45 -- 1.49 ............. $ 30,350,000 75.9% 63.8% 117 1.46x 5.810%
1.50 -- 1.54 ............. $ 9,503,946 67.8% 49.2% 119 1.51x 6.713%
1.55 -- 1.59 ............. $ 143,333,333 64.9% 60.0% 111 1.55x 5.352%
1.60 -- 1.64 ............. $ 6,750,000 71.1% 62.2% 96 1.60x 5.480%
1.70 -- 1.74 ............. $ 6,225,000 75.0% 70.7% 69 1.74x 5.320%
1.75 -- 1.79 ............. $ 11,988,567 57.9% 48.2% 106 1.77x 6.421%
1.85 -- 1.89 ............. $ 80,000,000 61.0% 53.6% 127 1.89x 5.370%
2.05 -- 2.09 ............. $ 100,000,000 58.0% 53.9% 120 2.08x 5.564%
2.15 -- 2.19 ............. $ 10,000,000 37.0% 37.0% 120 2.16x 5.450%
2.30 -- 3.79 ............. $ 49,000,000 47.7% 47.3% 98 3.44x 4.793%
$ 143,333,333 68.4% 60.7% 110 1.65X 5.613%
- -------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-121
RANGE OF UNDERWRITTEN DSC RATIOS FOR LOAN GROUP 1 MORTGAGE LOANS
AGGREGATE % BY AVERAGE
NUMBER CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
RANGE OF DSC RATIOS (X) OF LOANS BALANCE GROUP 1 BALANCE BALANCE
- ------------------------- ---------- ------------------ ----------------- --------------
1.15 -- 1.19 ............ 1 $ 3,748,345 0.4% $ 3,748,345
1.20 -- 1.24 ............ 8 62,004,823 6.0 $ 7,750,603
1.25 -- 1.29 ............ 10 102,464,614 9.9 $ 10,246,461
1.30 -- 1.34 ............ 4 125,292,713 12.1 $ 31,323,178
1.35 -- 1.39 ............ 5 30,609,276 2.9 $ 6,121,855
1.40 -- 1.44 ............ 11 80,235,166 7.7 $ 7,294,106
1.45 -- 1.49 ............ 8 53,084,439 5.1 $ 6,635,555
1.50 -- 1.54 ............ 2 14,492,900 1.4 $ 7,246,450
1.55 -- 1.59 ............ 5 167,233,841 16.1 $ 33,446,768
1.60 -- 1.64 ............ 1 6,750,000 0.7 $ 6,750,000
1.70 -- 1.74 ............ 1 6,225,000 0.6 $ 6,225,000
1.75 -- 1.79 ............ 4 30,569,686 2.9 $ 7,642,422
1.85 -- 1.89 ............ 2 80,280,589 7.7 $ 40,140,294
2.05 -- 2.09 ............ 2 180,000,000 17.3 $ 90,000,000
2.15 -- 2.19 ............ 1 10,000,000 1.0 $ 10,000,000
2.30 -- 3.79 ............ 14 84,750,250 8.2 $ 6,053,589
-- --------------- -----
79 $ 1,037,741,642 100.0% $ 13,135,970
== =============== =====
WTD. AVG.
STATED
REMAINING
HIGHEST WTD. AVG. WTD. AVG. TERM TO WTD. AVG. WTD. AVG.
CUT-OFF DATE CUT-OFF DATE LTV RATIO AT MATURITY DSC MORTGAGE
RANGE OF DSC RATIOS (X) BALANCE LTV RATIO MATURITY* (MOS.)* RATIO RATE
- ------------------------- ---------------- -------------- -------------- ---------- ----------- ----------
1.15 -- 1.19 ............ $ 3,748,345 70.7% 0.0% 191 1.17x 5.660%
1.20 -- 1.24 ............ $ 23,558,899 76.6% 66.1% 109 1.21x 5.780%
1.25 -- 1.29 ............ $ 27,475,432 77.8% 66.5% 115 1.28x 5.940%
1.30 -- 1.34 ............ $ 105,000,000 76.2% 67.2% 118 1.32x 6.179%
1.35 -- 1.39 ............ $ 8,591,901 75.8% 65.4% 106 1.36x 5.655%
1.40 -- 1.44 ............ $ 27,500,000 73.7% 64.0% 95 1.42x 5.718%
1.45 -- 1.49 ............ $ 30,350,000 75.9% 63.8% 117 1.46x 5.810%
1.50 -- 1.54 ............ $ 9,503,946 67.8% 49.2% 119 1.51x 6.713%
1.55 -- 1.59 ............ $ 143,333,333 64.6% 59.8% 112 1.55x 5.351%
1.60 -- 1.64 ............ $ 6,750,000 71.1% 62.2% 96 1.60x 5.480%
1.70 -- 1.74 ............ $ 6,225,000 75.0% 70.7% 69 1.74x 5.320%
1.75 -- 1.79 ............ $ 11,988,567 57.9% 48.2% 106 1.77x 6.421%
1.85 -- 1.89 ............ $ 80,000,000 61.0% 53.6% 127 1.89x 5.370%
2.05 -- 2.09 ............ $ 100,000,000 58.0% 53.9% 120 2.08x 5.564%
2.15 -- 2.19 ............ $ 10,000,000 37.0% 37.0% 120 2.16x 5.450%
2.30 -- 3.79 ............ $ 49,000,000 47.9% 47.5% 99 3.44x 4.791%
$ 143,333,333 66.6% 59.1% 113 1.74X 5.642%
- -------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-122
RANGE OF UNDERWRITTEN DSC RATIOS FOR LOAN GROUP 2 MORTGAGE LOANS
AGGREGATE % BY AVERAGE
NUMBER CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
RANGE OF DSC RATIOS (X) OF LOANS BALANCE GROUP 2 BALANCE BALANCE
- ------------------------- ---------- ---------------- ----------------- --------------
1.20 -- 1.24 ............ 5 $ 59,019,442 23.4% $ 11,803,888
1.25 -- 1.29 ............ 12 126,641,703 50.2 $ 10,553,475
1.30 -- 1.34 ............ 3 51,650,000 20.5 $ 17,216,667
1.35 -- 1.39 ............ 1 10,589,818 4.2 $ 10,589,818
1.55 -- 1.59 ............ 1 3,156,965 1.3 $ 3,156,965
2.30 -- 3.79 ............ 1 1,300,000 0.5 $ 1,300,000
- ------------------------- -- ------------- ----- ------------
23 $ 252,357,927 100.0% $ 10,972,084
== ============= ===== ------------
WTD. AVG.
STATED
REMAINING
HIGHEST WTD. AVG. WTD. AVG. TERM TO WTD. AVG. WTD. AVG.
CUT-OFF DATE CUT-OFF DATE LTV RATIO AT MATURITY DSC MORTGAGE
RANGE OF DSC RATIOS (X) BALANCE LTV RATIO MATURITY* (MOS.)* RATIO RATE
- ------------------------- -------------- -------------- -------------- ---------- ----------- ----------
1.20 -- 1.24 ............ $ 19,500,000 77.6% 69.9% 84 1.22x 5.542%
1.25 -- 1.29 ............ $ 45,000,000 76.2% 66.6% 103 1.26x 5.582%
1.30 -- 1.34 ............ $ 23,500,000 75.4% 66.9% 98 1.33x 5.265%
1.35 -- 1.39 ............ $ 10,589,818 76.4% 63.7% 119 1.39x 5.420%
1.55 -- 1.59 ............ $ 3,156,965 79.9% 74.3% 59 1.55x 5.420%
2.30 -- 3.79 ............ $ 1,300,000 34.7% 32.0% 60 2.99x 4.960%
- -------------------------- ------------ ---- ---- --- ---- -----
$ 45,000,000 76.2% 67.2% 97 1.28X 5.496%
------------ ---- ---- --- ----- -----
- -------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-123
RANGE OF LTV RATIOS FOR ALL MORTGAGE LOANS AS OF THE CUT-OFF DATE
AGGREGATE % BY AVERAGE
NUMBER CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
RANGE OF LTV RATIOS (%) OF LOANS BALANCE POOL BALANCE BALANCE
- ---------------------------- ---------- ------------------ -------------- --------------
25.01 -- 30.00 ............. 2 $ 10,280,589 0.8% $ 5,140,294
30.01 -- 35.00 ............. 1 1,300,000 0.1 $ 1,300,000
35.01 -- 40.00 ............. 1 10,000,000 0.8 $ 10,000,000
40.01 -- 50.00 ............. 5 151,657,678 11.8 $ 30,331,536
50.01 -- 55.00 ............. 13 37,453,640 2.9 $ 2,881,049
55.01 -- 60.00 ............. 3 8,871,119 0.7 $ 2,957,040
60.01 -- 65.00 ............. 6 245,836,613 19.1 $ 40,972,769
65.01 -- 70.00 ............. 7 54,139,730 4.2 $ 7,734,247
70.01 -- 75.00 ............. 23 265,445,446 20.6 $ 11,541,106
75.01 -- 80.00 ............. 41 505,114,754 39.2 $ 12,319,872
-- --------------- -----
102 $ 1,290,099,569 100.0% $ 12,648,035
=== =============== =====
WTD. AVG.
STATED
REMAINING
HIGHEST WTD. AVG. WTD. AVG. TERM TO WTD. AVG. WTD. AVG.
CUT-OFF DATE CUT-OFF DATE LTV RATIO AT MATURITY DSC MORTGAGE
RANGE OF LTV RATIOS (%) BALANCE LTV RATIO MATURITY* (MOS.)* RATIO RATE
- ---------------------------- ---------------- -------------- -------------- ---------- ----------- ----------
25.01 -- 30.00 ............. $ 10,000,000 29.7% 26.0% 85 3.18x 5.688%
30.01 -- 35.00 ............. $ 1,300,000 34.7% 32.0% 60 2.99x 4.960%
35.01 -- 40.00 ............. $ 10,000,000 37.0% 37.0% 120 2.16x 5.450%
40.01 -- 50.00 ............. $ 100,000,000 46.4% 41.1% 121 2.58x 5.475%
50.01 -- 55.00 ............. $ 11,988,567 54.4% 51.7% 75 2.62x 5.444%
55.01 -- 60.00 ............. $ 4,584,248 56.8% 45.4% 97 1.96x 5.993%
60.01 -- 65.00 ............. $ 143,333,333 62.8% 56.6% 121 1.66x 5.383%
65.01 -- 70.00 ............. $ 13,770,919 68.8% 56.9% 101 1.42x 5.899%
70.01 -- 75.00 ............. $ 80,000,000 73.0% 65.1% 112 1.57x 5.588%
75.01 -- 80.00 ............. $ 105,000,000 78.1% 68.7% 104 1.31x 5.759%
$ 143,333,333 68.4% 60.7% 110 1.65X 5.613%
- -------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-124
RANGE OF LTV RATIOS FOR LOAN GROUP 1 MORTGAGE LOANS AS OF THE CUT-OFF DATE
AGGREGATE % BY AVERAGE
NUMBER CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
RANGE OF LTV RATIOS (%) OF LOANS BALANCE GROUP 1 BALANCE BALANCE
- ------------------------- ---------- ------------------ ----------------- --------------
25.01 -- 30.00 .......... 2 $ 10,280,589 1.0% $ 5,140,294
35.01 -- 40.00 .......... 1 10,000,000 1.0 $ 10,000,000
40.01 -- 50.00 .......... 4 149,910,189 14.4 $ 37,477,547
50.01 -- 55.00 .......... 13 37,453,640 3.6 $ 2,881,049
55.01 -- 60.00 .......... 3 8,871,119 0.9 $ 2,957,040
60.01 -- 65.00 .......... 6 245,836,613 23.7 $ 40,972,769
65.01 -- 70.00 .......... 7 54,139,730 5.2 $ 7,734,247
70.01 -- 75.00 .......... 18 171,028,482 16.5 $ 9,501,582
75.01 -- 80.00 .......... 25 350,221,280 33.7 $ 14,008,851
-- --------------- -----
79 $ 1,037,741,642 100.0% $ 13,135,970
== =============== =====
WTD. AVG.
STATED
REMAINING
HIGHEST WTD. AVG. WTD. AVG. TERM TO WTD. AVG. WTD. AVG.
CUT-OFF DATE CUT-OFF DATE LTV RATIO AT MATURITY DSC MORTGAGE
RANGE OF LTV RATIOS (%) BALANCE LTV RATIO MATURITY* (MOS.)* RATIO RATE
- ------------------------- ---------------- -------------- -------------- ---------- ----------- ----------
25.01 -- 30.00 .......... $ 10,000,000 29.7% 26.0% 85 3.18x 5.688%
35.01 -- 40.00 .......... $ 10,000,000 37.0% 37.0% 120 2.16x 5.450%
40.01 -- 50.00 .......... $ 100,000,000 46.5% 41.2% 120 2.60x 5.463%
50.01 -- 55.00 .......... $ 11,988,567 54.4% 51.7% 75 2.62x 5.444%
55.01 -- 60.00 .......... $ 4,584,248 56.8% 45.4% 97 1.96x 5.993%
60.01 -- 65.00 .......... $ 143,333,333 62.8% 56.6% 121 1.66x 5.383%
65.01 -- 70.00 .......... $ 13,770,919 68.8% 56.9% 101 1.42x 5.899%
70.01 -- 75.00 .......... $ 80,000,000 72.9% 66.0% 115 1.73x 5.583%
75.01 -- 80.00 .......... $ 105,000,000 77.8% 68.1% 110 1.32x 5.905%
$ 143,333,333 66.6% 59.1% 113 1.74X 5.642%
- -------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-125
RANGE OF LTV RATIOS FOR LOAN GROUP 2 MORTGAGE LOANS AS OF THE CUT-OFF DATE
AGGREGATE % BY AVERAGE
NUMBER CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
RANGE OF LTV RATIOS (%) OF LOANS BALANCE GROUP 2 BALANCE BALANCE
- ------------------------- ---------- ---------------- ----------------- --------------
30.01 -- 35.00 .......... 1 $ 1,300,000 0.5% $ 1,300,000
40.01 -- 50.00 .......... 1 1,747,489 0.7 $ 1,747,489
70.01 -- 75.00 .......... 5 94,416,964 37.4 $ 18,883,393
75.01 -- 80.00 .......... 16 154,893,474 61.4 $ 9,680,842
-- ------------- -----
23 $ 252,357,927 100.0% $ 10,972,084
== ============= =====
WTD. AVG.
STATED
REMAINING
HIGHEST WTD. AVG. WTD. AVG. TERM TO WTD. AVG. WTD. AVG.
CUT-OFF DATE CUT-OFF DATE LTV RATIO AT MATURITY DSC MORTGAGE
RANGE OF LTV RATIOS (%) BALANCE LTV RATIO MATURITY* (MOS.)* RATIO RATE
- ------------------------- -------------- -------------- -------------- ---------- ----------- ----------
30.01 -- 35.00 .......... $ 1,300,000 34.7% 32.0% 60 2.99x 4.960%
40.01 -- 50.00 .......... $ 1,747,489 42.7% 32.1% 178 1.23x 6.540%
70.01 -- 75.00 .......... $ 45,000,000 73.2% 63.4% 106 1.28x 5.597%
75.01 -- 80.00 .......... $ 21,500,000 78.7% 70.2% 91 1.27x 5.427%
$ 45,000,000 76.2% 67.2% 97 1.28X 5.496%
- -------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-126
RANGE OF LTV RATIOS FOR ALL MORTGAGE LOANS AS OF THE MATURITY DATE
AGGREGATE % BY AVERAGE
RANGE OF MATURITY DATE LTV NUMBER CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
RATIOS (%)* OF LOANS BALANCE POOL BALANCE BALANCE
- ------------------------------- ---------- ------------------ -------------- --------------
0.00 -- 5.00 ................ 5 $ 9,006,086 0.7% $ 1,801,217
20.01 -- 30.00 ................ 1 10,000,000 0.8 $ 10,000,000
30.01 -- 40.00 ................ 5 117,631,737 9.1 $ 23,526,347
40.01 -- 50.00 ................ 6 82,489,888 6.4 $ 13,748,315
50.01 -- 55.00 ................ 16 127,146,076 9.9 $ 7,946,630
55.01 -- 60.00 ................ 10 179,152,569 13.9 $ 17,915,257
60.01 -- 65.00 ................ 12 76,310,979 5.9 $ 6,359,248
65.01 -- 70.00 ................ 32 466,722,464 36.2 $ 14,585,077
70.01 -- 75.00 ................ 12 208,089,772 16.1 $ 17,340,814
75.01 -- 80.00 ................ 3 13,550,000 1.1 $ 4,516,667
--- --------------- -----
102 $ 1,290,099,569 100.0% $ 12,648,035
=== =============== =====
WTD. AVG.
STATED
REMAINING
HIGHEST WTD. AVG. WTD. AVG. TERM TO WTD. AVG. WTD. AVG.
RANGE OF MATURITY DATE LTV CUT-OFF DATE CUT-OFF DATE LTV RATIO AT MATURITY DSC MORTGAGE
RATIOS (%)* BALANCE LTV RATIO MATURITY* (MOS.)* RATIO RATE
- ------------------------------- ---------------- -------------- -------------- ---------- ----------- ----------
0.00 -- 5.00 ................ $ 4,066,964 67.7% 0.0% 206 1.24x 6.303%
20.01 -- 30.00 ................ $ 10,000,000 29.8% 26.7% 84 3.22x 5.620%
30.01 -- 40.00 ................ $ 100,000,000 45.2% 38.0% 120 2.07x 5.787%
40.01 -- 50.00 ................ $ 49,000,000 53.9% 47.0% 116 2.82x 5.578%
50.01 -- 55.00 ................ $ 80,000,000 60.1% 53.7% 113 2.08x 5.216%
55.01 -- 60.00 ................ $ 143,333,333 65.0% 58.9% 118 1.53x 5.485%
60.01 -- 65.00 ................ $ 13,318,521 72.8% 62.5% 112 1.38x 5.729%
65.01 -- 70.00 ................ $ 105,000,000 76.8% 66.9% 111 1.32x 5.808%
70.01 -- 75.00 ................ $ 80,000,000 76.4% 73.1% 89 1.61x 5.395%
75.01 -- 80.00 ................ $ 6,650,000 79.5% 75.9% 82 1.30x 5.240%
$ 143,333,333 68.4% 60.7% 110 1.65X 5.613%
- -------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-127
RANGE OF LTV RATIOS FOR LOAN GROUP 1 MORTGAGE LOANS AS OF THE MATURITY DATE
AGGREGATE % BY AVERAGE
RANGE OF MATURITY DATE LTV NUMBER CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
RATIOS (%)* OF LOANS BALANCE GROUP 1 BALANCE BALANCE
- ---------------------------- ---------- ------------------ ----------------- --------------
0.00 -- 5.00 ............. 4 $ 4,939,123 0.5% $ 1,234,781
20.01 -- 30.00 ............. 1 10,000,000 1.0 $ 10,000,000
30.01 -- 40.00 ............. 3 114,584,248 11.0 $ 38,194,749
40.01 -- 50.00 ............. 6 82,489,888 7.9 $ 13,748,315
50.01 -- 55.00 ............. 16 127,146,076 12.3 $ 7,946,630
55.01 -- 60.00 ............. 10 179,152,569 17.3 $ 17,915,257
60.01 -- 65.00 ............. 11 65,721,161 6.3 $ 5,974,651
65.01 -- 70.00 ............. 23 323,861,910 31.2 $ 14,080,953
70.01 -- 75.00 ............. 5 129,846,669 12.5 $ 25,969,334
-- --------------- -----
79 $ 1,037,741,642 100.0% $ 13,135,970
== =============== =====
WTD. AVG.
STATED
REMAINING
HIGHEST WTD. AVG. WTD. AVG. TERM TO WTD. AVG. WTD. AVG.
RANGE OF MATURITY DATE LTV CUT-OFF DATE CUT-OFF DATE LTV RATIO AT MATURITY DSC MORTGAGE
RATIOS (%)* BALANCE LTV RATIO MATURITY* (MOS.)* RATIO RATE
- ---------------------------- ---------------- -------------- -------------- ---------- ----------- ----------
0.00 -- 5.00 ............. $ 3,748,345 63.7% 0.0% 180 1.22x 6.322%
20.01 -- 30.00 ............. $ 10,000,000 29.8% 26.7% 84 3.22x 5.620%
30.01 -- 40.00 ............. $ 100,000,000 45.4% 38.2% 120 2.07x 5.785%
40.01 -- 50.00 ............. $ 49,000,000 53.9% 47.0% 116 2.82x 5.578%
50.01 -- 55.00 ............. $ 80,000,000 60.1% 53.7% 113 2.08x 5.216%
55.01 -- 60.00 ............. $ 143,333,333 65.0% 58.9% 118 1.53x 5.485%
60.01 -- 65.00 ............. $ 13,318,521 72.2% 62.4% 110 1.38x 5.779%
65.01 -- 70.00 ............. $ 105,000,000 77.4% 67.2% 114 1.33x 5.933%
70.01 -- 75.00 ............. $ 80,000,000 74.8% 73.4% 98 1.82x 5.367%
$ 143,333,333 66.6% 59.1% 113 1.74X 5.642%
- -------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-128
RANGE OF LTV RATIOS FOR LOAN GROUP 2 MORTGAGE LOANS AS OF THE MATURITY DATE
AGGREGATE % BY AVERAGE
RANGE OF MATURITY DATE LTV NUMBER CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
RATIOS (%)* OF LOANS BALANCE GROUP 2 BALANCE BALANCE
- ----------------------------- ---------- ---------------- ----------------- --------------
0.00 -- 5.00 .............. 1 $ 4,066,964 1.6% $ 4,066,964
30.01 -- 40.00 .............. 2 3,047,489 1.2 $ 1,523,745
60.01 -- 65.00 .............. 1 10,589,818 4.2 $ 10,589,818
65.01 -- 70.00 .............. 9 142,860,554 56.6 $ 15,873,395
70.01 -- 75.00 .............. 7 78,243,102 31.0 $ 11,177,586
75.01 -- 80.00 .............. 3 13,550,000 5.4 $ 4,516,667
-- ------------- -----
23 $ 252,357,927 100.0% $ 10,972,084
== ============= =====
WTD. AVG.
STATED
REMAINING
HIGHEST WTD. AVG. WTD. AVG. TERM TO WTD. AVG. WTD. AVG.
RANGE OF MATURITY DATE LTV CUT-OFF DATE CUT-OFF DATE LTV RATIO MATURITY DSC MORTGAGE
RATIOS (%)* BALANCE LTV RATIO AT MATURITY* (MOS.)* RATIO RATE
- ----------------------------- -------------- -------------- -------------- ---------- ----------- ----------
0.00 -- 5.00 .............. $ 4,066,964 72.6% 0.0% 239 1.27x 6.280%
30.01 -- 40.00 .............. $ 1,747,489 39.3% 32.0% 128 1.98x 5.866%
60.01 -- 65.00 .............. $ 10,589,818 76.4% 63.7% 119 1.39x 5.420%
65.01 -- 70.00 .............. $ 45,000,000 75.3% 66.3% 105 1.28x 5.525%
70.01 -- 75.00 .............. $ 19,500,000 78.9% 72.6% 75 1.25x 5.442%
75.01 -- 80.00 .............. $ 6,650,000 79.5% 75.9% 82 1.30x 5.240%
$ 45,000,000 76.2% 67.2% 97 1.28X 5.496%
- -------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-129
RANGE OF MORTGAGE RATES FOR ALL MORTGAGE LOANS AS OF THE CUT-OFF DATE
AGGREGATE % BY AVERAGE
NUMBER CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
RANGE OF MORTGAGE RATES (%) OF LOANS BALANCE POOL BALANCE BALANCE
- -------------------------------- ---------- ------------------ -------------- --------------
4.290 -- 5.249 ................. 21 $ 109,739,122 8.5% $ 5,225,672
5.250 -- 5.499 ................. 17 466,353,173 36.1 $ 27,432,540
5.500 -- 5.749 ................. 23 262,960,362 20.4 $ 11,433,059
5.750 -- 5.999 ................. 15 234,683,765 18.2 $ 15,645,584
6.000 -- 6.249 ................. 14 66,623,711 5.2 $ 4,758,836
6.250 -- 6.499 ................. 4 117,702,636 9.1 $ 29,425,659
6.500 -- 6.749 ................. 1 1,747,489 0.1 $ 1,747,489
7.000 -- 7.249 ................. 2 14,088,194 1.1 $ 7,044,097
7.250 -- 7.499 ................. 1 11,988,567 0.9 $ 11,988,567
8.000 -- 8.249 ................. 1 280,589 0.0 $ 280,589
8.250 -- 8.499 ................. 1 3,021,774 0.2 $ 3,021,774
8.500 -- 8.749 ................. 2 910,189 0.1 $ 455,094
-- --------------- -----
102 $ 1,290,099,569 100.0% $ 12,648,035
=== =============== =====
WTD. AVG.
STATED
REMAINING
HIGHEST WTD. AVG. WTD. AVG. TERM TO WTD. AVG. WTD. AVG.
CUT-OFF DATE CUT-OFF DATE LTV RATIO MATURITY DSC MORTGAGE
RANGE OF MORTGAGE RATES (%) BALANCE LTV RATIO AT MATURITY* (MOS.)* RATIO RATE
- -------------------------------- ---------------- -------------- -------------- ---------- ----------- ----------
4.290 -- 5.249 ................. $ 49,000,000 57.8% 56.5% 94 2.82x 4.844%
5.250 -- 5.499 ................. $ 143,333,333 68.4% 63.1% 110 1.65x 5.341%
5.500 -- 5.749 ................. $ 45,000,000 73.0% 63.4% 100 1.39x 5.627%
5.750 -- 5.999 ................. $ 100,000,000 64.1% 54.0% 119 1.66x 5.801%
6.000 -- 6.249 ................. $ 14,877,866 75.7% 64.0% 117 1.35x 6.087%
6.250 -- 6.499 ................. $ 105,000,000 75.5% 64.6% 122 1.31x 6.258%
6.500 -- 6.749 ................. $ 1,747,489 42.7% 32.1% 178 1.23x 6.540%
7.000 -- 7.249 ................. $ 9,503,946 65.6% 44.9% 119 1.60x 7.124%
7.250 -- 7.499 ................. $ 11,988,567 54.5% 46.9% 95 1.77x 7.400%
8.000 -- 8.249 ................. $ 280,589 28.1% 0.0% 123 1.87x 8.100%
8.250 -- 8.499 ................. $ 3,021,774 62.3% 57.8% 77 1.26x 8.450%
8.500 -- 8.749 ................. $ 459,631 45.8% 0.0% 150 1.21x 8.500%
$ 143,333,333 68.4% 60.7% 110 1.65X 5.613%
- -------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-130
RANGE OF MORTGAGE RATES FOR LOAN GROUP 1 MORTGAGE LOANS AS OF THE CUT-OFF DATE
AGGREGATE % BY AVERAGE
NUMBER CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
RANGE OF MORTGAGE RATES (%) OF LOANS BALANCE GROUP 1 BALANCE BALANCE
- ------------------------------ ---------- ------------------ ----------------- --------------
4.290 -- 5.249 ............... 16 $ 90,839,122 8.8% $ 5,677,445
5.250 -- 5.499 ............... 8 345,930,002 33.3 $ 43,241,250
5.500 -- 5.749 ............... 17 160,540,058 15.5 $ 9,443,533
5.750 -- 5.999 ............... 14 229,883,765 22.2 $ 16,420,269
6.000 -- 6.249 ............... 14 66,623,711 6.4 $ 4,758,836
6.250 -- 6.499 ............... 3 113,635,672 11.0 $ 37,878,557
7.000 -- 7.249 ............... 2 14,088,194 1.4 $ 7,044,097
7.250 -- 7.499 ............... 1 11,988,567 1.2 $ 11,988,567
8.000 -- 8.249 ............... 1 280,589 0.0 $ 280,589
8.250 -- 8.499 ............... 1 3,021,774 0.3 $ 3,021,774
8.500 -- 8.749 ............... 2 910,189 0.1 $ 455,094
- ------------------------------ -- --------------- ----- ------------
79 $ 1,037,741,642 100.0% $ 13,135,970
== =============== ===== ============
WTD. AVG.
STATED
REMAINING
HIGHEST WTD. AVG. WTD. AVG. TERM TO WTD. AVG. WTD. AVG.
CUT-OFF DATE CUT-OFF DATE LTV RATIO MATURITY DSC MORTGAGE
RANGE OF MORTGAGE RATES (%) BALANCE LTV RATIO AT MATURITY* (MOS.)* RATIO RATE
- ------------------------------ ---------------- -------------- -------------- ---------- ----------- ----------
4.290 -- 5.249 ............... $ 49,000,000 54.1% 53.2% 97 3.11x 4.765%
5.250 -- 5.499 ............... $ 143,333,333 65.3% 60.9% 118 1.77x 5.336%
5.500 -- 5.749 ............... $ 27,500,000 71.4% 60.9% 97 1.49x 5.613%
5.750 -- 5.999 ............... $ 100,000,000 63.8% 53.7% 119 1.67x 5.801%
6.000 -- 6.249 ............... $ 14,877,866 75.7% 64.0% 117 1.35x 6.087%
6.250 -- 6.499 ............... $ 105,000,000 75.6% 66.9% 118 1.32x 6.257%
7.000 -- 7.249 ............... $ 9,503,946 65.6% 44.9% 119 1.60x 7.124%
7.250 -- 7.499 ............... $ 11,988,567 54.5% 46.9% 95 1.77x 7.400%
8.000 -- 8.249 ............... $ 280,589 28.1% 0.0% 123 1.87x 8.100%
8.250 -- 8.499 ............... $ 3,021,774 62.3% 57.8% 77 1.26x 8.450%
8.500 -- 8.749 ............... $ 459,631 45.8% 0.0% 150 1.21x 8.500%
- ------------------------------- ------------- ---- ---- --- ---- -----
$ 143,333,333 66.6% 59.1% 113 1.74X 5.642%
============= ==== ==== === ==== =====
- -------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-131
RANGE OF MORTGAGE RATES FOR LOAN GROUP 2 MORTGAGE LOANS AS OF THE CUT-OFF DATE
AGGREGATE % BY AVERAGE
NUMBER CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
RANGE OF MORTGAGE RATES (%) OF LOANS BALANCE GROUP 2 BALANCE BALANCE
- ------------------------------ ---------- ---------------- ----------------- --------------
4.960 -- 5.249 ............... 5 $ 18,900,000 7.5% $ 3,780,000
5.250 -- 5.499 ............... 9 120,423,170 47.7 $ 13,380,352
5.500 -- 5.749 ............... 6 102,420,304 40.6 $ 17,070,051
5.750 - 5.999 ................ 1 4,800,000 1.9 $ 4,800,000
- ------------------------------ - ------------- ----- ------------
6.250 -- 6.499 ............... 1 4,066,964 1.6 $ 4,066,964
6.500 -- 6.749 ............... 1 1,747,489 0.7 $ 1,747,489
- ------------- ----- ------------
23 $ 252,357,927 100.0% $ 10,972,084
== ============= ===== ============
WTD. AVG.
STATED
REMAINING
HIGHEST WTD. AVG. WTD. AVG. TERM TO WTD. AVG. WTD. AVG.
CUT-OFF DATE CUT-OFF DATE LTV RATIO MATURITY DSC MORTGAGE
RANGE OF MORTGAGE RATES (%) BALANCE LTV RATIO AT MATURITY* (MOS.)* RATIO RATE
- ------------------------------ -------------- -------------- -------------- ---------- ----------- ----------
4.960 -- 5.249 ............... $ 6,650,000 76.1% 72.3% 80 1.42x 5.221%
5.250 -- 5.499 ............... $ 23,500,000 77.3% 69.2% 87 1.30x 5.355%
5.500 -- 5.749 ............... $ 45,000,000 75.4% 67.2% 104 1.25x 5.649%
5.750 - 5.999 ................ $ 4,800,000 80.0% 65.6% 118 1.25x 5.810%
- ------------------------------- ------------ ---- ---- --- ---- -----
6.250 -- 6.499 ............... $ 4,066,964 72.6% 0.0% 239 1.27x 6.280%
6.500 -- 6.749 ............... $ 1,747,489 42.7% 32.1% 178 1.23x 6.540%
------------ ---- ---- --- ---- -----
$ 45,000,000 76.2% 67.2% 97 1.28X 5.496%
============ ==== ==== === ==== =====
- -------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-132
RANGE OF ORIGINAL TERMS TO MATURITY OR ANTICIPATED REPAYMENT DATE
FOR ALL MORTGAGE LOANS AS OF THE CUT-OFF DATE
RANGE OF ORIGINAL TERMS TO AGGREGATE % BY AVERAGE
MATURITY OR ANTICIPATED NUMBER CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
REPAYMENT DATE (MONTHS) OF LOANS BALANCE POOL BALANCE BALANCE
- ---------------------------- ---------- ------------------ -------------- --------------
0 -- 60 ................. 19 $ 111,295,941 8.6% $ 5,857,681
61 -- 84 ................. 19 153,105,028 11.9 $ 8,058,159
85 -- 108 ................. 5 23,536,103 1.8 $ 4,707,221
109 -- 120 ................. 51 811,408,922 62.9 $ 15,909,979
121 -- 156 ................. 2 180,000,000 14.0 $ 90,000,000
169 -- 180 ................. 2 2,028,078 0.2 $ 1,014,039
181 -- 192 ................. 1 3,748,345 0.3 $ 3,748,345
193 -- 204 ................. 2 910,189 0.1 $ 455,094
229 -- 240 ................. 1 4,066,964 0.3 $ 4,066,964
-- --------------- -----
102 $ 1,290,099,569 100.0% $ 12,648,035
=== =============== =====
WTD. AVG.
STATED
REMAINING
RANGE OF ORIGINAL TERMS TO HIGHEST WTD. AVG. WTD. AVG. TERM TO WTD. AVG. WTD. AVG.
MATURITY OR ANTICIPATED CUT-OFF DATE CUT-OFF DATE LTV RATIO AT MATURITY DSC MORTGAGE
REPAYMENT DATE (MONTHS) BALANCE LTV RATIO MATURITY* (MOS.)* RATIO RATE
- ---------------------------- ---------------- -------------- -------------- ---------- ----------- ----------
0 -- 60 ................. $ 27,500,000 71.9% 68.4% 58 1.70x 5.263%
61 -- 84 ................. $ 23,500,000 71.8% 66.4% 81 1.51x 5.378%
85 -- 108 ................. $ 11,988,567 62.9% 53.8% 96 1.63x 6.580%
109 -- 120 ................. $ 143,333,333 71.1% 62.9% 119 1.60x 5.675%
121 -- 156 ................. $ 100,000,000 52.5% 45.2% 123 2.00x 5.582%
169 -- 180 ................. $ 1,747,489 40.7% 27.6% 170 1.32x 6.756%
181 -- 192 ................. $ 3,748,345 70.7% 0.0% 191 1.17x 5.660%
193 -- 204 ................. $ 459,631 45.8% 0.0% 150 1.21x 8.500%
229 -- 240 ................. $ 4,066,964 72.6% 0.0% 239 1.27x 6.280%
$ 143,333,333 68.4% 60.7% 110 1.65X 5.613%
- -------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
RANGE OF ORIGINAL TERMS TO MATURITY OR ANTICIPATED REPAYMENT DATE
FOR LOAN GROUP 1 MORTGAGE LOANS AS OF THE CUT-OFF DATE
RANGE OF ORIGINAL TERMS TO AGGREGATE % BY AVERAGE
MATURITY OR ANTICIPATED NUMBER CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
REPAYMENT DATE (MONTHS) OF LOANS BALANCE GROUP 1 BALANCE BALANCE
- ---------------------------- ---------- ------------------ ----------------- --------------
0 -- 60 ................. 14 $ 69,542,839 6.7% $ 4,967,346
61 -- 84 ................. 10 55,524,778 5.4 $ 5,552,478
85 -- 108 ................. 5 23,536,103 2.3 $ 4,707,221
109 -- 120 ................. 44 704,198,800 67.9 $ 16,004,518
121 -- 156 ................. 2 180,000,000 17.3 $ 90,000,000
169 -- 180 ................. 1 280,589 0.0 $ 280,589
181 -- 192 ................. 1 3,748,345 0.4 $ 3,748,345
193 -- 204 ................. 2 910,189 0.1 $ 455,094
-- --------------- -----
79 $ 1,037,741,642 100.0% $ 13,135,970
== =============== =====
WTD. AVG.
STATED
REMAINING
RANGE OF ORIGINAL TERMS TO HIGHEST WTD. AVG. WTD. AVG. TERM TO WTD. AVG. WTD. AVG.
MATURITY OR ANTICIPATED CUT-OFF DATE CUT-OFF DATE LTV RATIO AT MATURITY DSC MORTGAGE
REPAYMENT DATE (MONTHS) BALANCE LTV RATIO MATURITY* (MOS.)* RATIO RATE
- ---------------------------- ---------------- -------------- -------------- ---------- ----------- ----------
0 -- 60 ................. $ 27,500,000 69.4% 66.6% 58 1.93x 5.169%
61 -- 84 ................. $ 10,000,000 63.2% 58.9% 77 1.93x 5.380%
85 -- 108 ................. $ 11,988,567 62.9% 53.8% 96 1.63x 6.580%
109 -- 120 ................. $ 143,333,333 70.3% 62.5% 119 1.65x 5.688%
121 -- 156 ................. $ 100,000,000 52.5% 45.2% 123 2.00x 5.582%
169 -- 180 ................. $ 280,589 28.1% 0.0% 123 1.87x 8.100%
181 -- 192 ................. $ 3,748,345 70.7% 0.0% 191 1.17x 5.660%
193 -- 204 ................. $ 459,631 45.8% 0.0% 150 1.21x 8.500%
$ 143,333,333 66.6% 59.1% 113 1.74X 5.642%
- -------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-133
RANGE OF ORIGINAL TERMS TO MATURITY OR ANTICIPATED REPAYMENT DATE
FOR LOAN GROUP 2 MORTGAGE LOANS AS OF THE CUT-OFF DATE
RANGE OF ORIGINAL TERMS TO AGGREGATE % BY AVERAGE
MATURITY OR ANTICIPATED NUMBER CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
REPAYMENT DATE (MONTHS) OF LOANS BALANCE GROUP 2 BALANCE BALANCE
- ---------------------------- ---------- ---------------- ----------------- --------------
0 -- 60 ................. 5 $ 41,753,102 16.5% $ 8,350,620
61 -- 84 ................. 9 97,580,250 38.7 $ 10,842,250
109 -- 120 ................. 7 107,210,122 42.5 $ 15,315,732
169 -- 180 ................. 1 1,747,489 0.7 $ 1,747,489
229 -- 240 ................. 1 4,066,964 1.6 $ 4,066,964
-- ------------- -----
23 $ 252,357,927 100.0% $ 10,972,084
== ============= =====
WTD. AVG.
STATED
REMAINING
RANGE OF ORIGINAL TERMS TO HIGHEST WTD. AVG. WTD. AVG. TERM TO WTD. AVG. WTD. AVG.
MATURITY OR ANTICIPATED CUT-OFF DATE CUT-OFF DATE LTV RATIO AT MATURITY DSC MORTGAGE
REPAYMENT DATE (MONTHS) BALANCE LTV RATIO MATURITY* (MOS.)* RATIO RATE
- ---------------------------- -------------- -------------- -------------- ---------- ----------- ----------
0 -- 60 ................. $ 12,947,490 76.1% 71.4% 59 1.33x 5.418%
61 -- 84 ................. $ 23,500,000 76.7% 70.6% 83 1.28x 5.377%
109 -- 120 ................. $ 45,000,000 76.5% 65.6% 119 1.28x 5.588%
169 -- 180 ................. $ 1,747,489 42.7% 32.1% 178 1.23x 6.540%
229 -- 240 ................. $ 4,066,964 72.6% 0.0% 239 1.27x 6.280%
$ 45,000,000 76.2% 67.2% 97 1.28X 5.496%
- -------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
RANGE OF REMAINING TERMS TO MATURITY OR ANTICIPATED REPAYMENT DATE
FOR ALL MORTGAGE LOANS AS OF THE CUT-OFF DATE
RANGE OF REMAINING TERMS TO AGGREGATE % BY AVERAGE
MATURITY OR ANTICIPATED REPAYMENT NUMBER CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
DATE (MONTHS) OF LOANS BALANCE POOL BALANCE BALANCE
- ----------------------------------- ---------- ------------------ -------------- --------------
0 -- 60 ........................ 19 $ 111,295,941 8.6% $ 5,857,681
61 -- 84 ........................ 20 156,126,802 12.1 $ 7,806,340
85 -- 108 ........................ 5 23,536,103 1.8 $ 4,707,221
109 -- 120 ........................ 51 908,387,149 70.4 $ 17,811,513
121 -- 156 ........................ 4 81,190,778 6.3 $ 20,297,694
169 -- 180 ........................ 1 1,747,489 0.1 $ 1,747,489
181 -- 192 ........................ 1 3,748,345 0.3 $ 3,748,345
229 -- 240 ........................ 1 4,066,964 0.3 $ 4,066,964
--- --------------- -----
102 $ 1,290,099,569 100.0% $ 12,648,035
=== =============== =====
WTD. AVG.
STATED
REMAINING
RANGE OF REMAINING TERMS TO HIGHEST WTD. AVG. WTD. AVG. TERM TO WTD. AVG. WTD. AVG.
MATURITY OR ANTICIPATED REPAYMENT CUT-OFF DATE CUT-OFF DATE LTV RATIO AT MATURITY DSC MORTGAGE
DATE (MONTHS) BALANCE LTV RATIO MATURITY* (MOS.)* RATIO RATE
- ----------------------------------- ---------------- -------------- -------------- ---------- ----------- ----------
0 -- 60 ........................ $ 27,500,000 71.9% 68.4% 58 1.70x 5.263%
61 -- 84 ........................ $ 23,500,000 71.6% 66.2% 81 1.51x 5.437%
85 -- 108 ........................ $ 11,988,567 62.9% 53.8% 96 1.63x 6.580%
109 -- 120 ........................ $ 143,333,333 68.3% 60.2% 119 1.65x 5.675%
121 -- 156 ........................ $ 80,000,000 60.8% 53.0% 127 1.88x 5.405%
169 -- 180 ........................ $ 1,747,489 42.7% 32.1% 178 1.23x 6.540%
181 -- 192 ........................ $ 3,748,345 70.7% 0.0% 191 1.17x 5.660%
229 -- 240 ........................ $ 4,066,964 72.6% 0.0% 239 1.27x 6.280%
$ 143,333,333 68.4% 60.7% 110 1.65X 5.613%
- -------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-134
RANGE OF REMAINING TERMS TO MATURITY OR ANTICIPATED REPAYMENT DATE
FOR LOAN GROUP 1 MORTGAGE LOANS AS OF THE CUT-OFF DATE
RANGE OF REMAINING TERMS TO AGGREGATE % BY AVERAGE
MATURITY OR ANTICIPATED REPAYMENT NUMBER CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
DATE (MONTHS) OF LOANS BALANCE GROUP 1 BALANCE BALANCE
- ----------------------------------- ---------- ------------------ ----------------- --------------
0 -- 60 ........................ 14 $ 69,542,839 6.7% $ 4,967,346
61 -- 84 ........................ 11 58,546,552 5.6 $ 5,322,414
85 -- 108 ........................ 5 23,536,103 2.3 $ 4,707,221
109 -- 120 ........................ 44 801,177,027 77.2 $ 18,208,569
121 -- 156 ........................ 4 81,190,778 7.8 $ 20,297,694
181 -- 192 ........................ 1 3,748,345 0.4 $ 3,748,345
-- --------------- -----
79 $ 1,037,741,642 100.0% $ 13,135,970
== =============== =====
WTD. AVG.
STATED
REMAINING
RANGE OF REMAINING TERMS TO HIGHEST WTD. AVG. WTD. AVG. TERM TO WTD. AVG. WTD. AVG.
MATURITY OR ANTICIPATED REPAYMENT CUT-OFF DATE CUT-OFF DATE LTV RATIO AT MATURITY DSC MORTGAGE
DATE (MONTHS) BALANCE LTV RATIO MATURITY* (MOS.)* RATIO RATE
- ----------------------------------- ---------------- -------------- -------------- ---------- ----------- ----------
0 -- 60 ........................ $ 27,500,000 69.4% 66.6% 58 1.93x 5.169%
61 -- 84 ........................ $ 10,000,000 63.2% 58.9% 77 1.90x 5.538%
85 -- 108 ........................ $ 11,988,567 62.9% 53.8% 96 1.63x 6.580%
109 -- 120 ........................ $ 143,333,333 67.2% 59.5% 119 1.70x 5.686%
121 -- 156 ........................ $ 80,000,000 60.8% 53.0% 127 1.88x 5.405%
181 -- 192 ........................ $ 3,748,345 70.7% 0.0% 191 1.17x 5.660%
$ 143,333,333 66.6% 59.1% 113 1.74X 5.642%
- -------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
RANGE OF REMAINING TERMS TO MATURITY OR ANTICIPATED REPAYMENT DATE
FOR LOAN GROUP 2 MORTGAGE LOANS AS OF THE CUT-OFF DATE
RANGE OF REMAINING TERMS TO AGGREGATE % BY AVERAGE
MATURITY OR ANTICIPATED REPAYMENT NUMBER CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
DATE (MONTHS) OF LOANS BALANCE GROUP 2 BALANCE BALANCE
- ----------------------------------- ---------- ---------------- ----------------- --------------
0 -- 60 ........................ 5 $ 41,753,102 16.5% $ 8,350,620
61 -- 84 ........................ 9 97,580,250 38.7 $ 10,842,250
109 - 120 ......................... 7 107,210,122 42.5 $ 15,315,732
-- ------------- ----- ------------
169 -- 180 ........................ 1 1,747,489 0.7 $ 1,747,489
229 -- 240 ........................ 1 4,066,964 1.6 $ 4,066,964
-- ------------- -----
23 $ 252,357,927 100.0% $ 10,972,084
== ============= =====
WTD. AVG.
STATED
REMAINING
RANGE OF REMAINING TERMS TO HIGHEST WTD. AVG. WTD. AVG. TERM TO WTD. AVG. WTD. AVG.
MATURITY OR ANTICIPATED REPAYMENT CUT-OFF DATE CUT-OFF DATE LTV RATIO AT MATURITY DSC MORTGAGE
DATE (MONTHS) BALANCE LTV RATIO MATURITY* (MOS.)* RATIO RATE
- ----------------------------------- -------------- -------------- -------------- ---------- ----------- ----------
0 -- 60 ........................ $ 12,947,490 76.1% 71.4% 59 1.33x 5.418%
61 -- 84 ........................ $ 23,500,000 76.7% 70.6% 83 1.28x 5.377%
109 - 120 ......................... $ 45,000,000 76.5% 65.6% 119 1.28x 5.588%
------------ ---- ---- --- ---- -----
169 -- 180 ........................ $ 1,747,489 42.7% 32.1% 178 1.23x 6.540%
229 -- 240 ........................ $ 4,066,964 72.6% 0.0% 239 1.27x 6.280%
$ 45,000,000 76.2% 67.2% 97 1.28X 5.496%
- -------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-135
RANGE OF REMAINING AMORTIZATION TERMS FOR ALL MORTGAGE LOANS
AS OF THE CUT-OFF DATE
RANGE OF AGGREGATE % BY AVERAGE
REMAINING AMORTIZATION NUMBER CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
TERMS (MONTHS)(1) OF LOANS BALANCE POOL BALANCE BALANCE
- ------------------------ ---------- ------------------ -------------- --------------
121 -- 132 ............. 1 $ 280,589 0.0% $ 280,589
145 -- 180 ............. 2 910,189 0.1 $ 455,094
181 -- 192 ............. 1 3,748,345 0.3 $ 3,748,345
229 -- 264 ............. 5 29,147,709 2.3 $ 5,829,542
265 -- 300 ............. 9 35,915,512 2.8 $ 3,990,612
301 -- 348 ............. 4 188,010,728 14.6 $ 47,002,682
349 -- 360 ............. 65 867,336,247 67.2 $ 13,343,635
Interest only .......... 15 164,750,250 12.8 $ 10,983,350
--- --------------- -----
102 $ 1,290,099,569 100.0% $ 12,648,035
=== =============== =====
WTD. AVG.
STATED
REMAINING
RANGE OF HIGHEST WTD. AVG. WTD. AVG. TERM TO WTD. AVG. WTD. AVG.
REMAINING AMORTIZATION CUT-OFF DATE CUT-OFF DATE LTV RATIO AT MATURITY DSC MORTGAGE
TERMS (MONTHS)(1) BALANCE LTV RATIO MATURITY(2) (MOS.)(2) RATIO RATE
- ------------------------ ---------------- -------------- -------------- ----------- ----------- ----------
121 -- 132 ............. $ 280,589 28.1% 0.0% 123 1.87x 8.100%
145 -- 180 ............. $ 459,631 45.8% 0.0% 150 1.21x 8.500%
181 -- 192 ............. $ 3,748,345 70.7% 0.0% 191 1.17x 5.660%
229 -- 264 ............. $ 9,503,946 66.4% 37.6% 136 1.48x 6.451%
265 -- 300 ............. $ 11,988,567 67.8% 55.4% 108 1.48x 6.512%
301 -- 348 ............. $ 100,000,000 53.0% 45.5% 122 1.97x 5.636%
349 -- 360 ............. $ 143,333,333 73.4% 65.3% 106 1.39x 5.648%
Interest only .......... $ 80,000,000 60.7% 60.7% 111 2.72x 5.037%
$ 143,333,333 68.4% 60.7% 110 1.65X 5.613%
The weighted average remaining amortization term for all Mortgage Loans
(excluding non--amortizing loans) is 347 months.
- -------
(1) The remaining amortization term shown for any Mortgage Loan that is
interest-only for part of its term does not include the number of months
during which it is interest--only, but rather is the number of months
remaining at the end of such interest-only period.
(2) Calculated with respect to the Anticipated Repayment Date for ARD Loans.
RANGE OF REMAINING AMORTIZATION TERMS FOR LOAN GROUP 1 MORTGAGE LOANS
AS OF THE CUT-OFF DATE
RANGE OF AGGREGATE % BY AVERAGE
REMAINING AMORTIZATION NUMBER CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
TERMS (MONTHS)(1) OF LOANS BALANCE GROUP 1 BALANCE BALANCE
- ------------------------ ---------- ------------------ ----------------- --------------
121 -- 132 ............. 1 $ 280,589 0.0% $ 280,589
145 -- 180 ............. 2 910,189 0.1 $ 455,094
181 -- 192 ............. 1 3,748,345 0.4 $ 3,748,345
229 -- 264 ............. 4 25,080,746 2.4 $ 6,270,186
265 -- 300 ............. 8 31,115,512 3.0 $ 3,889,439
301 -- 348 ............. 4 188,010,728 18.1 $ 47,002,682
349 -- 360 ............. 44 623,845,284 60.1 $ 14,178,302
Interest only .......... 15 164,750,250 15.9 $ 10,983,350
-- --------------- -----
79 $ 1,037,741,642 100.0% $ 13,135,970
== =============== =====
WTD. AVG.
STATED
REMAINING
RANGE OF HIGHEST WTD. AVG. WTD. AVG. TERM TO WTD. AVG. WTD. AVG.
REMAINING AMORTIZATION CUT-OFF DATE CUT-OFF DATE LTV RATIO AT MATURITY DSC MORTGAGE
TERMS (MONTHS)(1) BALANCE LTV RATIO MATURITY(2) (MOS.)(2) RATIO RATE
- ------------------------ ---------------- -------------- -------------- ----------- ----------- ----------
121 -- 132 ............. $ 280,589 28.1% 0.0% 123 1.87x 8.100%
145 -- 180 ............. $ 459,631 45.8% 0.0% 150 1.21x 8.500%
181 -- 192 ............. $ 3,748,345 70.7% 0.0% 191 1.17x 5.660%
229 -- 264 ............. $ 9,503,946 65.4% 43.7% 119 1.51x 6.479%
265 -- 300 ............. $ 11,988,567 66.0% 53.8% 106 1.51x 6.620%
301 -- 348 ............. $ 100,000,000 53.0% 45.5% 122 1.97x 5.636%
349 -- 360 ............. $ 143,333,333 72.3% 64.1% 110 1.44x 5.715%
Interest only .......... $ 80,000,000 60.7% 60.7% 111 2.72x 5.037%
$ 143,333,333 66.6% 59.1% 113 1.74X 5.642%
The weighted average remaining amortization term for all Loan Group 1
Mortgage Loans (excluding non--amortizing loans) is 345 months.
- -------
(1) The remaining amortization term shown for any Mortgage Loan that is
interest-only for part of its term does not include the number of months
during which it is interest--only, but rather is the number of months
remaining at the end of such interest-only period.
(2) Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-136
RANGE OF REMAINING AMORTIZATION TERMS FOR LOAN GROUP 2 MORTGAGE LOANS
AS OF THE CUT-OFF DATE
RANGE OF AGGREGATE % BY AVERAGE
REMAINING AMORTIZATION NUMBER CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
TERMS (MONTHS)(1) OF LOANS BALANCE GROUP 2 BALANCE BALANCE
- ------------------------ ---------- ---------------- ----------------- --------------
229 -- 264 ............. 1 $ 4,066,964 1.6% $ 4,066,964
265 -- 300 ............. 1 4,800,000 1.9 $ 4,800,000
349 -- 360 ............. 21 243,490,964 96.5 $ 11,594,808
-- ------------- -----
23 $ 252,357,927 100.0% $ 10,972,084
== ============= =====
WTD. AVG.
STATED
REMAINING
RANGE OF HIGHEST WTD. AVG. WTD. AVG. TERM TO WTD. AVG. WTD. AVG.
REMAINING AMORTIZATION CUT-OFF DATE CUT-OFF DATE LTV RATIO AT MATURITY DSC MORTGAGE
TERMS (MONTHS)(1) BALANCE LTV RATIO MATURITY(2) (MOS.)(2) RATIO RATE
- ------------------------ -------------- -------------- -------------- ----------- ----------- ----------
229 -- 264 ............. $ 4,066,964 72.6% 0.0% 239 1.27x 6.280%
265 -- 300 ............. $ 4,800,000 80.0% 65.6% 118 1.25x 5.810%
349 -- 360 ............. $ 45,000,000 76.2% 68.4% 94 1.29x 5.477%
$ 45,000,000 76.2% 67.2% 97 1.28X 5.496%
The weighted average remaining amortization term for all Loan Group 2
Mortgage Loans (excluding non-amortizing loans) is 357 months.
- -------
(1) The remaining amortization term shown for any Mortgage Loan that is
interest-only for part of its term does not include the number of months
during which it is interest-only, but rather is the number of months
remaining at the end of such interest-only period.
(2) Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-137
AMORTIZATION TYPES FOR ALL MORTGAGE LOANS
AGGREGATE % BY AVERAGE
NUMBER CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
AMORTIZATION TYPES OF LOANS BALANCE POOL BALANCE BALANCE
- ----------------------------- ---------- ------------------ -------------- --------------
Interest-only, Amortizing
ARD(2) ..................... 14 $ 403,508,333 31.3% $ 28,822,024
Amortizing ARD .............. 31 291,708,634 22.6 $ 9,409,956
Interest-only, Amortizing
Balloon(2) ................. 8 235,070,000 18.2 $ 29,383,750
Amortizing Balloon .......... 29 186,056,266 14.4 $ 6,415,733
Interest-only ............... 4 145,100,000 11.2 $ 36,275,000
Interest-only, ARD .......... 11 19,650,250 1.5 $ 1,786,386
Fully Amortizing ............ 5 9,006,086 0.7 $ 1,801,217
--- --------------- -----
102 $ 1,290,099,569 100.0% $ 12,648,035
=== =============== =====
WTD. AVG.
STATED
REMAINING
HIGHEST WTD. AVG. WTD. AVG. TERM TO WTD. AVG. WTD. AVG.
CUT-OFF DATE CUT-OFF DATE LTV RATIO AT MATURITY DSC MORTGAGE
AMORTIZATION TYPES BALANCE LTV RATIO MATURITY(1) (MOS.)(1) RATIO RATE
- ----------------------------- ---------------- -------------- -------------- ----------- ----------- ----------
Interest-only, Amortizing
ARD(2) ..................... $ 143,333,333 64.2% 58.4% 107 1.59x 5.509%
Amortizing ARD .............. $ 30,350,000 74.4% 63.9% 103 1.42x 5.769%
Interest-only, Amortizing
Balloon(2) ................. $ 105,000,000 69.5% 61.7% 117 1.54x 5.769%
Amortizing Balloon .......... $ 23,558,899 73.9% 62.2% 113 1.36x 5.874%
Interest-only ............... $ 80,000,000 61.5% 61.5% 118 2.65x 5.139%
Interest-only, ARD .......... $ 3,349,500 54.8% 54.8% 58 3.18x 4.290%
Fully Amortizing ............ $ 4,066,964 67.7% 0.0% 206 1.24x 6.303%
$ 143,333,333 68.4% 60.7% 110 1.65X 5.613%
- -------
(1) Calculated with respect to the Anticipated Repayment Date for ARD Loans.
(2) These Mortgage Loans require payments of interest only for a period of 12
to 60 months from origination prior to the commencement of payments of
principal and interest.
S-138
AMORTIZATION TYPES FOR LOAN GROUP 1 MORTGAGE LOANS
AGGREGATE % BY AVERAGE
NUMBER CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
AMORTIZATION TYPES OF LOANS BALANCE GROUP 1 BALANCE BALANCE
- ----------------------------- ---------- ------------------ ----------------- --------------
Interest-only, Amortizing
ARD(2) ..................... 5 $ 284,558,333 27.4% $ 56,911,667
Amortizing ARD .............. 24 207,012,374 19.9 $ 8,625,516
Interest-only, Amortizing
Balloon(2) ................. 6 206,770,000 19.9 $ 34,461,667
Amortizing Balloon .......... 25 169,711,562 16.4 $ 6,788,462
Interest-only ............... 4 145,100,000 14.0 $ 36,275,000
Interest-only, ARD .......... 11 19,650,250 1.9 $ 1,786,386
Fully Amortizing ............ 4 4,939,123 0.5 $ 1,234,781
-- --------------- -----
79 $ 1,037,741,642 100.0% $ 13,135,970
== =============== =====
WTD. AVG.
STATED
REMAINING
HIGHEST WTD. AVG. WTD. AVG. TERM TO WTD. AVG. WTD. AVG.
CUT-OFF DATE CUT-OFF DATE LTV RATIO MATURITY DSC MORTGAGE
AMORTIZATION TYPES BALANCE LTV RATIO AT MATURITY(1) (MOS.)(1) RATIO RATE
- ----------------------------- ---------------- -------------- ---------------- ----------- ----------- ----------
Interest-only, Amortizing
ARD(2) ..................... $ 143,333,333 59.2% 53.8% 111 1.72x 5.486%
Amortizing ARD .............. $ 30,350,000 72.6% 61.9% 105 1.49x 5.915%
Interest-only, Amortizing
Balloon(2) ................. $ 105,000,000 69.1% 61.2% 121 1.57x 5.827%
Amortizing Balloon .......... $ 23,558,899 74.2% 62.0% 115 1.35x 5.910%
Interest-only ............... $ 80,000,000 61.5% 61.5% 118 2.65x 5.139%
Interest-only, ARD .......... $ 3,349,500 54.8% 54.8% 58 3.18x 4.290%
Fully Amortizing ............ $ 3,748,345 63.7% 0.0% 180 1.22x 6.322%
$ 143,333,333 66.6% 59.1% 113 1.74X 5.642%
- -------
(1) Calculated with respect to the Anticipated Repayment Date for ARD Loans.
(2) These Mortgage Loans require payments of interest only for a period of 12
to 60 months from origination prior to the commencement of payments of
principal and interest.
S-139
AMORTIZATION TYPES FOR LOAN GROUP 2 MORTGAGE LOANS
AGGREGATE % BY AVERAGE
NUMBER CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
AMORTIZATION TYPES OF LOANS BALANCE GROUP 2 BALANCE BALANCE
- ----------------------------- ---------- ---------------- ----------------- --------------
Interest-only, Amortizing
ARD(2) ..................... 9 $ 118,950,000 47.1% $ 13,216,667
Amortizing ARD .............. 7 84,696,260 33.6 $ 12,099,466
Interest-only, Amortizing
Balloon(2) ................. 2 28,300,000 11.2 $ 14,150,000
Amortizing Balloon .......... 4 16,344,704 6.5 $ 4,086,176
Fully Amortizing ............ 1 4,066,964 1.6 $ 4,066,964
-- ------------- -----
23 $ 252,357,927 100.0% $ 10,972,084
== ============= =====
WTD. AVG.
STATED
REMAINING
HIGHEST WTD. AVG. WTD. AVG. TERM TO WTD. AVG. WTD. AVG.
CUT-OFF DATE CUT-OFF DATE LTV RATIO AT MATURITY DSC MORTGAGE
AMORTIZATION TYPES BALANCE LTV RATIO MATURITY(1) (MOS.)(1) RATIO RATE
- ----------------------------- -------------- -------------- -------------- ----------- ----------- ----------
Interest-only, Amortizing
ARD(2) ..................... $ 45,000,000 76.0% 69.3% 96 1.26x 5.564%
Amortizing ARD .............. $ 21,500,000 79.0% 68.7% 97 1.27x 5.413%
Interest-only, Amortizing
Balloon(2) ................. $ 23,500,000 72.3% 65.5% 88 1.32x 5.345%
Amortizing Balloon .......... $ 10,140,250 71.2% 63.6% 87 1.46x 5.503%
Fully Amortizing ............ $ 4,066,964 72.6% 0.0% 239 1.27x 6.280%
$ 45,000,000 76.2% 67.2% 97 1.28X 5.496%
- -------
(1) Calculated with respect to the Anticipated Repayment Date for ARD Loans.
(2) These Mortgage Loans require payments of interest only for a period of 12
to 48 months from origination prior to the commencement of payments of
principal and interest.
S-140
RANGE OF OCCUPANCY RATES FOR ALL MORTGAGE LOANS
OTHER THAN LOANS SECURED BY HOSPITALITY PROPERTIES(1)
AGGREGATE % BY AVERAGE
NUMBER CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
RANGE OF OCCUPANCY RATES (%) OF LOANS BALANCE POOL BALANCE BALANCE
- --------------------------------- ---------- ------------------ -------------- ----------------
65.00 -- 69.99 ................ 1 $ 27,500,000 2.1% $ 27,500,000
70.00 -- 74.99 ................ 1 100,000,000 7.8 $ 100,000,000
75.00 -- 79.99 ................ 1 7,393,031 0.6 $ 7,393,031
80.00 -- 84.99 ................ 3 41,137,800 3.2 $ 13,712,600
85.00 -- 89.99 ................ 8 145,026,723 11.2 $ 18,128,340
90.00 -- 94.99 ................ 23 171,339,978 13.3 $ 7,449,564
95.00 -- 99.99 ................ 21 538,895,562 41.8 $ 25,661,693
100.00 -- 100.00 ................ 42 237,313,963 18.4 $ 5,650,332
--- --------------- ----
100 $ 1,268,607,056 98.3% $ 12,686,071
=== =============== ====
WTD. AVG.
STATED
REMAINING
HIGHEST WTD. AVG. WTD. AVG. TERM TO WTD. AVG. WTD. AVG.
CUT-OFF DATE CUT-OFF DATE LTV RATIO AT MATURITY DSC MORTGAGE
RANGE OF OCCUPANCY RATES (%) BALANCE LTV RATIO MATURITY(2) (MOS.)(2) RATIO RATE
- --------------------------------- ---------------- -------------- -------------- ----------- ----------- ----------
65.00 -- 69.99 ................ $ 27,500,000 76.4% 73.4% 58 1.44x 5.540%
70.00 -- 74.99 ................ $ 100,000,000 45.7% 38.3% 120 2.08x 5.760%
75.00 -- 79.99 ................ $ 7,393,031 75.4% 69.7% 63 1.36x 5.500%
80.00 -- 84.99 ................ $ 30,350,000 76.8% 64.8% 120 1.45x 5.842%
85.00 -- 89.99 ................ $ 80,000,000 74.8% 71.1% 109 1.72x 5.498%
90.00 -- 94.99 ................ $ 23,558,899 76.3% 67.6% 95 1.30x 5.597%
95.00 -- 99.99 ................ $ 143,333,333 69.4% 61.6% 117 1.60x 5.579%
100.00 -- 100.00 ................ $ 80,000,000 64.3% 55.4% 108 1.86x 5.532%
$ 143,333,333 68.6% 60.9% 110 1.65X 5.585%
- -------
(1) Occupancy rates were calculated based upon rent rolls made available to
the applicable Mortgage Loan Seller by the related borrowers as of the
rent roll date set forth on Annex A-1 to this prospectus supplement but
excludes 2 Mortgage Loans secured by a hospitality property representing
1.7% of the Cut-Off Date Pool Balance.
(2) Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-141
RANGE OF OCCUPANCY RATES FOR LOAN GROUP 1 MORTGAGE LOANS
OTHER THAN LOANS SECURED BY HOSPITALITY PROPERTIES(1)
AGGREGATE % BY AVERAGE
NUMBER CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
RANGE OF OCCUPANCY RATES (%) OF LOANS BALANCE GROUP 1 BALANCE BALANCE
- ------------------------------ ---------- ------------------ ----------------- ----------------
65.00 -- 69.99 ............. 1 $ 27,500,000 2.6% $ 27,500,000
70.00 -- 74.99 ............. 1 100,000,000 9.6 $ 100,000,000
75.00 -- 79.99 ............. 1 7,393,031 0.7 $ 7,393,031
80.00 -- 84.99 ............. 3 41,137,800 4.0 $ 13,712,600
85.00 -- 89.99 ............. 5 116,726,723 11.2 $ 23,345,345
90.00 -- 94.99 ............. 12 85,222,319 8.2 $ 7,101,860
95.00 -- 99.99 ............. 12 400,955,294 38.6 $ 33,412,941
100.00 -- 100.00 ............. 42 237,313,963 22.9 $ 5,650,332
-- --------------- ----
77 $ 1,016,249,129 97.9% $ 13,198,041
== =============== ====
WTD. AVG.
STATED
HIGHEST WTD. AVG. WTD. AVG. REMAINING WTD. AVG. WTD. AVG.
CUT-OFF DATE CUT-OFF DATE LTV RATIO AT TERM TO DSC MORTGAGE
RANGE OF OCCUPANCY RATES (%) BALANCE LTV RATIO MATURITY(2) MATURITY (MOS.)(2) RATIO RATE
- ------------------------------ ---------------- -------------- -------------- -------------------- ----------- ----------
65.00 -- 69.99 ............. $ 27,500,000 76.4% 73.4% 58 1.44x 5.540%
70.00 -- 74.99 ............. $ 100,000,000 45.7% 38.3% 120 2.08x 5.760%
75.00 -- 79.99 ............. $ 7,393,031 75.4% 69.7% 63 1.36x 5.500%
80.00 -- 84.99 ............. $ 30,350,000 76.8% 64.8% 120 1.45x 5.842%
85.00 -- 89.99 ............. $ 80,000,000 74.1% 70.9% 115 1.84x 5.501%
90.00 -- 94.99 ............. $ 23,558,899 75.1% 64.7% 113 1.29x 5.790%
95.00 -- 99.99 ............. $ 143,333,333 67.5% 60.7% 118 1.72x 5.587%
100.00 -- 100.00 ............. $ 80,000,000 64.3% 55.4% 108 1.86x 5.532%
$ 143,333,333 66.7% 59.3% 113 1.74X 5.607%
- -------
(1) Occupancy rates were calculated based upon rent rolls made available to
the applicable Mortgage Loan Seller by the related borrowers as of the
rent roll date set forth on Annex A-1 to this prospectus supplement but
excludes 2 Mortgage Loans secured by a hospitality property representing
2.1% of the Cut-Off Date Group 1 Balance.
(2) Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-142
RANGE OF OCCUPANCY RATES FOR LOAN GROUP 2 MORTGAGE LOANS
AGGREGATE % BY AVERAGE
NUMBER CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
RANGE OF OCCUPANCY RATES (%) OF LOANS BALANCE GROUP 2 BALANCE BALANCE
- ------------------------------ ---------- ---------------- ----------------- --------------
85.00 -- 89.99 ............. 3 $ 28,300,000 11.2% $ 9,433,333
90.00 -- 94.99 ............. 11 86,117,659 34.1 $ 7,828,878
95.00 -- 99.99 ............. 9 137,940,268 54.7 $ 15,326,696
-- ------------- -----
23 $ 252,357,927 100.0% $ 10,972,084
== ============= =====
WTD. AVG.
STATED
HIGHEST WTD. AVG. WTD. AVG. REMAINING WTD. AVG. WTD. AVG.
CUT-OFF DATE CUT-OFF DATE LTV RATIO AT TERM TO DSC MORTGAGE
RANGE OF OCCUPANCY RATES (%) BALANCE LTV RATIO MATURITY(*) MATURITY (MOS.)(*) RATIO RATE
- ------------------------------ -------------- -------------- -------------- -------------------- ----------- ----------
85.00 -- 89.99 ............. $ 19,500,000 77.8% 71.9% 83 1.24x 5.488%
90.00 -- 94.99 ............. $ 12,947,490 77.4% 70.6% 77 1.32x 5.406%
95.00 -- 99.99 ............. $ 45,000,000 75.1% 64.1% 113 1.27x 5.554%
$ 45,000,000 76.2% 67.2% 97 1.28X 5.496%
- -------
(*) Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-143
PERCENTAGE OF MORTGAGE POOL BY PREPAYMENT RESTRICTION(1)(2)(3)
PREPAYMENT RESTRICTION FEB-04 FEB-05 FEB-06 FEB-07 FEB-08
- ---------------------------- --------------- --------------- --------------- --------------- ---------------
Lockout .................... 100.00% 99.91% 39.67% 26.80% 0.00%
Defeasance ................. 0.00 0.00 58.57 71.46 98.26
Yield Maintenance .......... 0.00 0.09 1.75 1.75 1.74
Prepayment Premium ......... 0.00 0.00 0.00 0.00 0.00
Open ....................... 0.00 0.00 0.00 0.00 0.00
Total ...................... 100.00% 100.00% 100.00% 100.00% 100.00%
Total Beginning Balance as
of the Cut-Off Date (in
millions) ................. $1,290.10 $1,283.57 $1,275.36 $1,261.61 $1,246.80
Percent of Cut-Off Date Pool
Balance ................... 100.00% 99.49% 98.86% 97.79% 96.64%
PREPAYMENT RESTRICTION FEB-09 FEB-10 FEB-11 FEB-12 FEB-13 FEB-14
- ---------------------------- --------------- --------------- ------------- ------------- ------------- ------------
Lockout .................... 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Defeasance ................. 97.50 98.09 98.49 98.06 98.52 7.76
Yield Maintenance .......... 1.89 1.91 1.51 1.51 1.48 0.35
Prepayment Premium ......... 0.00 0.00 0.00 0.00 0.00 0.00
Open ....................... 0.61 0.00 0.00 0.43 0.00 91.89
Total ...................... 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Total Beginning Balance as
of the Cut-Off Date (in
millions) ................. $1,125.04 $1,090.61 $945.83 $912.87 $892.56 $ 76.69
Percent of Cut-Off Date Pool
Balance ................... 87.21% 84.54% 73.31% 70.76% 69.19% 5.94%
- -------
(1) Prepayment provisions in effect as a percentage of outstanding loan
balances as of the indicated date assuming no prepayments on the Mortgage
Loans (and assuming that an ARD Loan will be repaid in full on its
Anticipated Repayment Date), if any.
(2) As of the Cut-Off Date.
(3) Based upon the assumptions set forth in footnote (1) above, after
February 2014, the outstanding loan balances represent less than 5.94% of
the Cut-Off Date Pool Balance.
S-144
PERCENTAGE OF LOAN GROUP 1 BY PREPAYMENT RESTRICTION(1)(2)(3)
PREPAYMENT RESTRICTION FEB-04 FEB-05 FEB-06 FEB-07 FEB-08
- ------------------------------- --------------- --------------- --------------- --------------- ---------------
Lockout ....................... 100.00% 99.89% 28.38% 20.65% 0.00%
Defeasance .................... 0.00 0.00 69.44 77.18 97.85
Yield Maintenance ............. 0.00 0.11 2.18 2.17 2.15
Prepayment Premium ............ 0.00 0.00 0.00 0.00 0.00
Open .......................... 0.00 0.00 0.00 0.00 0.00
Total ......................... 100.00% 100.00% 100.00% 100.00% 100.00%
Total Beginning Balance as
of the Cut-Off Date (in
millions) .................... $1,037.74 $1,032.61 $1,026.34 $1,015.74 $1,004.48
Percent of Cut-Off Date Group 1
Balance ...................... 100.00% 99.51% 98.90% 97.88% 96.79%
PREPAYMENT RESTRICTION FEB-09 FEB-10 FEB-11 FEB-12 FEB-13 FEB-14
- ------------------------------- ------------- ------------- ------------- ------------- ------------- ------------
Lockout ....................... 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Defeasance .................... 96.96 97.67 98.31 97.82 98.33 2.48
Yield Maintenance ............. 2.29 2.33 1.69 1.69 1.67 0.37
Prepayment Premium ............ 0.00 0.00 0.00 0.00 0.00 0.00
Open .......................... 0.74 0.00 0.00 0.48 0.00 97.15
Total ......................... 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Total Beginning Balance as
of the Cut-Off Date (in
millions) .................... $925.66 $894.64 $843.21 $812.35 $794.25 $ 72.54
Percent of Cut-Off Date Group 1
Balance ...................... 89.20% 86.21% 81.25% 78.28% 76.54% 6.99%
- -------
(1) Prepayment provisions in effect as a percentage of outstanding loan
balances as of the indicated date assuming no prepayments on the Mortgage
Loans (and assuming that an ARD Loan will be repaid in full on its
Anticipated Repayment Date), if any.
(2) As of the Cut-Off Date.
(3) Based upon the assumptions set forth in footnote (1) above, after
February 2014, the outstanding loan balances represent less than 6.99% of
the Cut-Off Date Group 1 Balance.
S-145
PERCENTAGE OF LOAN GROUP 2 BY PREPAYMENT RESTRICTION(1)(2)(3)
PREPAYMENT RESTRICTION FEB-04 FEB-05 FEB-06 FEB-07 FEB-08
- ------------------------------- ------------ ------------ ------------- ------------- -------------
Lockout ....................... 100.00% 100.00% 86.21% 52.19% 0.00%
Defeasance .................... 0.00 0.00 13.79 47.81 100.00
Yield Maintenance ............. 0.00 0.00 0.00 0.00 0.00
Prepayment Premium ............ 0.00 0.00 0.00 0.00 0.00
Open .......................... 0.00 0.00 0.00 0.00 0.00
Total ......................... 100.00% 100.00% 100.00% 100.00% 100.00%
Total Beginning Balance as
of the Cut-Off Date (in
millions) .................... $252.36 $250.96 $249.02 $245.87 $242.32
Percent of Cut-Off Date Group 2
Balance ...................... 100.00% 99.45% 98.68% 97.43% 96.02%
PREPAYMENT RESTRICTION FEB-09 FEB-10 FEB-11 FEB-12 FEB-13 FEB-14
- ------------------------------- ------------- ------------- ------------- ------------- ------------- ------------
Lockout ....................... 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Defeasance .................... 100.00 100.00 100.00 100.00 100.00 100.00
Yield Maintenance ............. 0.00 0.00 0.00 0.00 0.00 0.00
Prepayment Premium ............ 0.00 0.00 0.00 0.00 0.00 0.00
Open .......................... 0.00 0.00 0.00 0.00 0.00 0.00
Total ......................... 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Total Beginning Balance as
of the Cut-Off Date (in
millions) .................... $199.38 $195.97 $102.62 $100.52 $ 98.31 $ 4.15
Percent of Cut-Off Date Group 2
Balance ...................... 79.01% 77.66% 40.67% 39.83% 38.96% 1.64%
- -------
(1) Prepayment provisions in effect as a percentage of outstanding loan
balances as of the indicated date assuming no prepayments on the Mortgage
Loans (and assuming that an ARD Loan will be repaid in full on its
Anticipated Repayment Date), if any.
(2) As of the Cut-Off Date.
(3) Based upon the assumptions set forth in footnote (1) above, after
February 2014, the outstanding loan balances represent less than 1.64% of
the Cut-Off Date Group 2 Balance.
S-146
TWENTY LARGEST MORTGAGE LOANS
The following table and summaries describe the twenty largest Mortgage
Loans or groups of cross-collateralized mortgage loans in the Mortgage Pool by
Cut-Off Date Balance:
NUMBER OF % OF
MORTGAGE % OF APPLICABLE
LOANS/ CUT-OFF CUT-OFF
MORTGAGE NUMBER OF CUT-OFF DATE DATE LOAN
LOAN MORTGAGED LOAN DATE POOL GROUP
LOAN NAME SELLER PROPERTIES GROUP BALANCE BALANCE BALANCE
- ------------------------------ ----------- ------------ ------- ---------------- --------- ------------
11 Madison Avenue ............ Wachovia 1/1 1 $ 143,333,333 11.1% 13.8%
Phillips Point Office
Building .................... Wachovia 1/1 1 105,000,000 8.1 10.1%
Starrett-Lehigh Building ..... Wachovia 1/1 1 100,000,000 7.8 9.6%
IBM Center ................... Wachovia 1/1 1 80,000,000 6.2 7.7%
North Riverside Park Mall..... Wachovia 1/1 1 80,000,000 6.2 7.7%
520 Eighth Avenue ............ Wachovia 1/1 1 49,000,000 3.8 4.7%
Villa Del Sol Apartments ..... Wachovia 1/1 2 45,000,000 3.5 17.8%
Pine Trail Square ............ Wachovia 1/1 1 30,350,000 2.4 2.9%
Pacific Center ............... Wachovia 1/1 1 27,500,000 2.1 2.6%
Bal Harbour Square ........... Wachovia 1/1 1 27,475,432 2.1 2.6%
----- ------------- ----
TOTAL: ....................... 10/10 $ 687,658,765 53.3%
===== ============= ====
Fairfax Corner-Building D..... Citigroup 1/1 1 $ 23,558,899 1.8% 2.3%
Indigo Creek Apartments ...... Artesia 1/1 2 23,500,000 1.8 9.3%
Sunrise Bay Apartments ....... Wachovia 1/1 2 21,500,000 1.7 8.5%
Cole Companies Portfolio...... Wachovia 11/11 1 19,650,250 1.5 1.9%
Caribbean Isle Apartments..... Wachovia 1/1 2 19,500,000 1.5 7.7%
Merritt Creek Farm
Shopping Center ............. Wachovia 1/1 1 18,384,629 1.4 1.8%
Flemington Mall .............. Wachovia 1/1 1 16,500,000 1.3 1.6%
Summit San Raphael
Apartments .................. Wachovia 1/1 2 15,000,000 1.2 5.9%
Festival Plaza ............... Citigroup 1/1 1 14,877,866 1.2 1.4%
840 North Broadway ........... Artesia 1/1 1 13,770,919 1.1 1.3%
----- ------------- ----
TOTAL: ....................... 20/20 $ 186,242,562 14.4%
===== ============= ====
TOTAL: ....................... 30/30 $ 873,901,327 67.7%
===== ============= ====
WEIGHTED
LOAN WEIGHTED AVERAGE WEIGHTED
BALANCE WEIGHTED AVERAGE LTV RATIO AVERAGE
PROPERTY PER SF/ AVERAGE CUT-OFF DATE AT MATURITY MORTGAGE
LOAN NAME TYPE UNIT DSCR LTV RATIO OR ARD RATE
- ------------------------------ ---------------------------- ----------- ---------- -------------- ------------- ------------
11 Madison Avenue ............ Office - CBD $ 191 1.55x 63.7% 59.0% 5.3043%
Phillips Point Office
Building .................... Office - CBD $ 249 1.32x 75.6% 67.4% 6.250%
Starrett-Lehigh Building ..... Office - CBD $ 69 2.08x 45.7% 38.3% 5.760%
IBM Center ................... Office - Suburban $ 102 1.89x 61.1% 53.8% 5.360%
North Riverside Park Mall..... Retail - Anchored $ 182 2.08x 73.4% 73.4% 5.320%
520 Eighth Avenue ............ Office - CBD $ 66 3.68x 48.0% 48.0% 4.800%
Villa Del Sol Apartments ..... Multifamily - Conventional $ 80,071 1.26x 75.0% 66.1% 5.730%
Pine Trail Square ............ Retail - Anchored $ 113 1.45x 78.2% 65.8% 5.760%
Pacific Center ............... Office - CBD $ 68 1.44x 76.4% 73.4% 5.540%
Bal Harbour Square ........... Retail - Anchored $ 198 1.27x 79.8% 67.1% 5.710%
TOTAL: ....................... 1.81X 65.1% 59.2% 5.561%
Fairfax Corner-Building D..... Office - Suburban $ 182 1.20x 79.1% 66.8% 5.820%
Indigo Creek Apartments ...... Multifamily - Conventional $ 57,598 1.33x 70.8% 65.5% 5.250%
Sunrise Bay Apartments ....... Multifamily - Conventional $ 68,690 1.32x 79.0% 65.6% 5.290%
Cole Companies Portfolio...... Retail - Various $ 128 3.18x 54.8% 54.8% 4.290%
Caribbean Isle Apartments..... Multifamily - Conventional $ 43,527 1.22x 77.4% 70.7% 5.600%
Merritt Creek Farm
Shopping Center ............. Retail - Anchored $ 72 1.28x 79.9% 67.8% 5.970%
Flemington Mall .............. Retail - Anchored $ 70 1.33x 79.7% 67.1% 5.750%
Summit San Raphael
Apartments .................. Multifamily - Conventional $ 67,568 1.25x 78.5% 72.8% 5.390%
Festival Plaza ............... Retail - Anchored $ 138 1.29x 79.9% 69.9% 6.064%
840 North Broadway ........... Office - Suburban $ 123 1.55x 69.7% 65.1% 5.540%
TOTAL: ....................... 1.50X 74.8% 66.4% 5.475%
TOTAL: ....................... 1.74X 67.2% 60.7% 5.543%
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11 Madison Avenue
The following table summarizes certain characteristics of the 11 Madison
Avenue Loan:
- ---------------------------------------------------------------
PROPERTY INFORMATION
Number of Mortgaged Real Properties ......... 1
Location (City, State) ...................... New York, NY
Property Type ............................... Office -- CBD
Size (SF) ................................... 2,256,552
Occupancy as of December 22, 2003 ........... 98.6%
Year Built / Year Renovated ................. 1932 / 1997
Appraisal Value ............................. $675,000,000
Underwritten Occupancy ...................... 98.0%
Underwritten Revenues ....................... $ 63,438,713
Underwritten Total Expenses ................. $ 18,543,090
Underwritten Net Operating Income
(NOI) ..................................... $ 44,895,623
Underwritten Net Cash Flow (NCF) ............ $ 44,558,893
- ---------------------------------------------------------------
- ---------------------------------------------------------------
MORTGAGE LOAN INFORMATION
Mortgage Loan Seller ......................... Wachovia
Cut-Off Date Balance ......................... $143,333,333
Percentage of Cut-Off Date Pool Balance ...... 11.1%
Cut-Off Date Loan Balance Per SF ............. $191
Number of Mortgage Loans ..................... 1
Type of Security(1) .......................... Fee
Mortgage Rate ................................ 5.3043%
Original Term to ARD / Amortization .......... 120 / 360
Remaining Term to ARD / Amortization ......... 119 / 360
Cut-Off Date LTV ............................. 63.7%
Maturity Date LTV ............................ 59.0%
Underwritten DSCR on NOI ..................... 1.57x
Underwritten DSCR on NCF ..................... 1.55x
Shadow Rating (S&P / Moody's)(2) ............. BBB / Baa2
- ---------------------------------------------------------------
(1) For purposes of the table above and similar breakdowns by category
elsewhere in this prospectus supplement, the borrower's interest in the
mortgaged property has been classified as a fee interest, as described
herein. The security for the 11 Madison Avenue Loan consists of the
borrower's interest in the IDA Premises under the IDA lease as well as
the borrower's fee interest in the remainder of the mortgaged property.
The fee interest in the IDA Premises is owned by IDA but will revert to
the borrower upon the termination of the IDA lease.
(2) S&P and Moody's have confirmed that the 11 Madison Avenue Loan has, in
the context of its inclusion in the trust, the credit characteristics
consistent with that of an obligation rated "BBB"/"Baa2", respectively.
The Loan. The 11 Madison Avenue Loan (the "11 Madison Avenue Loan")
represents a senior interest in a $515,000,000 mortgage loan (the "11 Madison
Avenue Whole Loan") which is evidenced by seven notes, three of which (the "11
Madison Avenue Pari Passu Loans") are paid pari passu with the 11 Madison
Avenue Loan and three of which (the "11 Madison Avenue Subordinate Loans") are
subordinate in payment priority to the 11 Madison Avenue Loan. The 11 Madison
Avenue Loan is secured primarily by a first priority mortgage on the 11 Madison
Avenue Borrower's fee and leasehold interest in the real property known as 11
Madison Avenue located in New York, New York (the "11 Madison Avenue Mortgaged
Property"). Originated on December 23, 2003, the 11 Madison Avenue Loan has an
outstanding principal balance as of the Cut-Off Date of $143,333,333 and the 11
Madison Avenue Whole Loan has an outstanding principal balance as of the
Cut-Off Date of $515,000,000. The 11 Madison Avenue Loan was made to 11 Madison
Avenue LLC (the "11 Madison Avenue Borrower"), which is a bankruptcy remote,
special purpose entity that is restricted by its organizational documents to
owning and operating the 11 Madison Avenue Mortgaged Property. Legal counsel to
the 11 Madison Avenue Borrower delivered a non-consolidation opinion in
connection with the origination of the 11 Madison Avenue Loan. Equity ownership
in the 11 Madison Avenue Borrower is held solely by 11 Madison Avenue Mezzanine
LLC (100%). The sponsor is Tamir Sapir, who is the managing member of 11
Madison Avenue Member LLC, the 100% equity owner of 11 Madison Avenue Mezzanine
LLC.
The 11 Madison Avenue Loan has a remaining term of 119 months to its
anticipated repayment date of January 11, 2014 (the "11 Madison Avenue
Anticipated Repayment Date") and a remaining term of 419 months until the final
maturity date of January 11, 2039 (the "11 Madison Avenue Final Maturity
Date"). The promissory note evidencing the 11 Madison Avenue Loan bears
interest at 5.3043% per annum (the "11 Madison Avenue Regular Interest Rate")
until the 11 Madison Avenue Anticipated Repayment Date and thereafter bears
interest at a per annum interest rate equal to the greater of (i) 7.3043% or
(ii) the 11 Madison Avenue Treasury Rate plus 2.000%. The "11 Madison Avenue
Treasury Rate" means, as of the 11 Madison Avenue Anticipated Repayment Date,
the average yield for "This Week" as reported by the Federal Reserve Board in
Federal Statistical Release H.15 (519) published during the second full week
preceding the 11 Madison Avenue Anticipated Repayment Date for instruments
having terms coterminus with the remaining term of the promissory note
evidencing the 11 Madison Avenue Loan. The anticipated repayment date and the
final maturity date of each of the 11 Madison Avenue Subordinate Loans and the
11 Madison Avenue Pari Passu Loans is the same as the 11 Madison Avenue
Anticipated Repayment Date and the 11 Madison Avenue Final Maturity Date,
respectively. The weighted average interest rate for the 11 Madison Avenue
Whole Loan is 5.970%. Subsequent to the 11 Madison Avenue Anticipated Repayment
Date, the interest
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rate for each of the 11 Madison Avenue Pari Passu Loans and each of the 11
Madison Avenue Subordinate Loans will be increased by the greater of 2.000% and
a rate of interest equal to the difference between (i) the 11 Madison Avenue
Treasury Rate plus 2.000% and (ii) the interest rate under the applicable 11
Madison Avenue Pari Passu Loan or 11 Madison Avenue Subordinate Loan.
On each payment date occurring up to and including the payment date
occurring in January 2009, the 11 Madison Avenue Borrower is required to make a
debt service payment to the mortgagee, which payments will be applied to
accrued and unpaid interest for the prior interest period. Thereafter, on each
payment date occurring up to but not including the 11 Madison Avenue
Anticipated Repayment Date, the 11 Madison Avenue Borrower is required to make
a debt service payment to the mortgagee (the "11 Madison Avenue Debt Service
Payment"), which payments will be applied first to accrued and unpaid interest
for the prior interest period and the balance to the outstanding principal
balance of the 11 Madison Avenue Loan. On the 11 Madison Avenue Anticipated
Repayment Date, and on each payment date thereafter up to and including the 11
Madison Avenue Final Maturity Date, the 11 Madison Avenue Borrower is required
to make a payment to the mortgagee in (a) an amount equal to the 11 Madison
Avenue Debt Service Payment and such payment shall be applied to interest for
the prior interest period at the 11 Madison Avenue Regular Interest Rate and
the balance applied to the outstanding principal amount of the 11 Madison
Avenue Loan and (b) an amount equal to the 11 Madison Avenue Net Cash Flow
After Debt Service for the preceding month, such payment to be applied to the
outstanding principal amount of the 11 Madison Avenue Loan. Interest accrued on
the outstanding principal amount of the 11 Madison Avenue Loan at the
applicable interest rate and not paid pursuant to the preceding sentence (the
"11 Madison Avenue Accrued Interest"), shall itself be added to the outstanding
principal balance and shall earn interest at the applicable interest rate, to
the extent permitted by law. "11 Madison Avenue Net Cash Flow After Debt
Service" for any period shall mean the amount obtained by subtracting the
monthly debt service payment amount for such period from 11 Madison Avenue Net
Cash Flow for such period. "11 Madison Avenue Net Cash Flow" for any period
shall mean the amount obtained by subtracting operating expenses, capital
expenditures and all other monthly reserves (as more particularly set forth in
the 11 Madison Avenue Loan documents) for such period from gross income from
operations for such period.
Prepayment. The terms of the 11 Madison Avenue Loan documents prohibit
voluntary prepayment prior to and including October 11, 2013 (the "11 Madison
Avenue Lockout Period"). Involuntary prepayments may result, however, from an
acceleration of the maturity date of the 11 Madison Avenue Loan following an
event of default under the 11 Madison Avenue Loan or from a casualty or
condemnation. Upon an involuntary prepayment occurring prior to the 11 Madison
Avenue Lockout Release Date (as defined below) due to an event of default under
the 11 Madison Avenue Loan, the 11 Madison Avenue Borrower will be obligated to
pay the greater of (i) 2.000% of the principal amount of the 11 Madison Avenue
Loan being prepaid or (ii) the 11 Madison Avenue Yield Maintenance Charge.
Notwithstanding the foregoing, provided no event of default exists under the 11
Madison Avenue Loan, the 11 Madison Avenue Borrower is not required to pay the
11 Madison Avenue Yield Maintenance Charge in connection with a prepayment
occurring solely as a result of the application of insurance proceeds or
condemnation awards pursuant to the terms of the 11 Madison Avenue Loan
documents. In addition to the amounts described above, if, during the first
loan year, the 11 Madison Avenue Borrower shall tender payment of an amount
sufficient to satisfy the 11 Madison Avenue Loan in whole or in part following
the occurrence and during the continuance of an event of default under the 11
Madison Avenue Loan, the 11 Madison Avenue Borrower shall, in addition to the
entire outstanding principal balance of the 11 Madison Avenue Loan, also pay to
the mortgagee a sum equal to 3.000% of the outstanding principal balance of the
11 Madison Avenue Loan.
"11 Madison Avenue Yield Maintenance Charge" shall mean the present value
of a series of payments each equal to the 11 Madison Avenue Payment
Differential and payable on each payment date over the remaining original term
of the promissory note evidencing the 11 Madison Avenue Loan and on the payment
date occurring three months prior to the 11 Madison Avenue Final Maturity Date,
discounted at the 11 Madison Avenue Reinvestment Yield for the number of months
remaining as of the date of such prepayment to each such payment date and the
payment date occurring two months prior to the 11 Madison Avenue Final Maturity
Date.
"11 Madison Avenue Payment Differential" shall mean an amount equal to (i)
the 11 Madison Avenue Regular Interest Rate less the 11 Madison Avenue
Reinvestment Yield, divided by (ii) twelve (12) and multiplied by (iii) the
outstanding principal balance of the 11 Madison Avenue Loan after application
of the 11 Madison Avenue Debt Service Payment Amount on the date of such
prepayment, provided that the 11 Madison Avenue Payment Differential shall in
no event be less than zero.
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"11 Madison Avenue Reinvestment Yield" shall mean an amount equal to the
lesser of (i) the yield on the U.S. Treasury issue (primary issue) with a
maturity date closest to the payment date occurring two months prior to the 11
Madison Avenue Final Maturity Date, or (ii) the yield on the U.S. Treasury
issue (primary issue) with a term equal to the remaining average life of the
indebtedness evidenced by the promissory note evidencing the 11 Madison Avenue
Loan with each such yield being based on the bid price for such issue as
published in the Wall Street Journal on the date that is fourteen days prior to
the date of such prepayment set forth in the notice of prepayment (or, if such
bid price is not published on that date, the next preceding date on which such
bid price is so published) and converted to a monthly compounded nominal yield.
Defeasance. The 11 Madison Avenue Mortgaged Property is subject to a
period of defeasance beginning two (2) years after the Closing Date ("11
Madison Avenue Release Date") and continuing through and including October 11,
2013 (the "11 Madison Avenue Lockout Release Date") with non-callable
obligations of the United States of America that provide for payments prior,
but as close as possible, to all successive monthly payment dates occurring
after the 11 Madison Avenue Release Date and, assuming the 11 Madison Avenue
Loan is paid in full, on the 11 Madison Avenue Final Maturity Date, with each
such payment being equal to or greater than the amount of the corresponding
installment of principal and interest required to be paid under the 11 Madison
Avenue Loan documents.
The 11 Madison Avenue Mortgaged Property. The 11 Madison Avenue Mortgaged
Property consists of the 11 Madison Avenue Borrower's fee and leasehold
interest in condominium units located in New York, New York. The property
contains 2,256,552 square feet of net rentable area. The largest tenant is
Credit Suisse First Boston LLC ("CSFB") occupying 1,921,459 square feet, or
approximately 85.2% of the net rentable area. The 11 Madison Avenue Mortgaged
Property serves as the World Headquarters of CSFB, a leading global investment
banking firm with more than 11,000 employees in the US. As of January 28, 2004,
CSFB was rated "Aa3" (Moody's), "A" (S&P) and "AA-" (Fitch). The majority of
the CSFB space expires in April 2017. There is a 389,344 square foot portion of
one of the CFSB leases that expires in April 2007. Notwithstanding the
foregoing, although 74.3% of CSFB's 1,921,459 square feet of net rentable area
is leased through April 30, 2017, CSFB does have the option to terminate up to
528,730 square feet (27.5% of CSFB's space and 23.4% of the 11 Madison Avenue
Mortgaged Property total space) after April 30, 2007 in its sole discretion.
However, CSFB must give at least 24 months notice of such termination (and such
notice is irrevocable) and must pay a termination fee equal to: (i) $1,216,677
plus the present value as of the date of payment of the rent increase remaining
to be paid by CSFB from and after the effective termination date discounted
from the due date of each installment of the rent increase remaining to be paid
from and after the effective termination date to such date on a monthly basis
using a 7.32% annual interest rate, if the termination is with respect to the
13th floor premises only, (ii) $335,138, plus the present value as of the date
of payment of the additional space rent increase remaining to be paid by CSFB
from and after the effective termination date discounted from the due date of
each installment of the additional space rent increase remaining to be paid
from and after the effective termination to such date on a monthly basis using
a 6.55% annual interest rate if the termination is in respect to the additional
space only and (iii) $1,551,815 plus the present value, as of the date of
payment, of the rent increase and the additional space rent increase remaining
to be paid by CSFB from and after the effective termination date discounted
from the due date of each installment of the rent increase and the additional
space rent increase remaining to be paid from and after the effective
termination date to such date on a monthly basis using a 7.32% annual interest
rate with respect to the rent increase and 6.55% annual interest rate with
respect to the additional space rent increase or (i) $9,395,305 if terminating
19th and 20th floors, (ii) $18,524,330, if terminating the 8th, 9th and 11th
floors or (iii) $27,919,635, if terminating entire premises. Pursuant to the
terms of the 11 Madison Avenue Loan documents, the lease termination payments
are required to be paid into a reserve controlled by the mortgagee to be used
for future TI/LC expenses and otherwise will be additional collateral for the
11 Madison Avenue Loan. In addition, the 11 Madison Avenue Loan documents
require that in the event CSFB exercises this option, the mortgagee will trap
100% of cash flow until the earlier to occur of: (i) such space being relet,
(ii) the date on which the lender determines that the debt service coverage is
1.20x or greater, and (iii) the date upon which an amount equal to the product
of $55 multiplied by the number of square feet to be vacated by CSFB minus any
lease cancellation, termination or surrender payments, if any, paid by CSFB in
connection with the termination, cancellation or surrender of all or a portion
of the Designated Lease has been deposited into the Designated Lease Reserve
Escrow Account. The portion of the 11 Madison Avenue Mortgaged Property leased
to CSFB (the "IDA Premises") is owned in fee by the New York City Industrial
Development Agency (the "IDA") which in turn leases its interest in the 11
Madison Avenue Mortgaged Property to the 11 Madison Avenue Borrower pursuant to
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a lease dated December 22, 1995 which has a term terminating upon the earlier
to occur of December 31, 2016 or reversion of fee title to the IDA Premises to
the 11 Madison Avenue Borrower. Rent due to the IDA under the IDA lease is
$10.00 which was paid upon execution of the IDA lease. Upon termination of the
IDA lease, whether by virtue of expiration of the terms thereof or for any
other reason, fee title to the IDA Premises automatically reverts to the 11
Madison Avenue Borrower.
Insurance. The 11 Madison Avenue Borrower, at its sole cost and expense,
is required to keep the 11 Madison Avenue Mortgaged Property insured against,
inter alia, loss or damage by fire and other risks under a comprehensive all
risk insurance policy (the "11 Madison Avenue Casualty Insurance Policy"), in
each case: (1) in an amount equal to at least 100% of the then insurable
replacement value of the 11 Madison Avenue Mortgaged Property; (2) containing
an agreed amount endorsement waiving all co-insurance provisions; and (3)
providing that such policy will contain an "Ordinance or Law Coverage" or
"Enforcement" endorsement if any of the improvements or the use of the 11
Madison Avenue Mortgaged Property will at any time constitute legal
nonconforming structures or uses.
All policies of insurance (the "11 Madison Avenue Insurance Policies") are
required to be issued by one or more financially sound and responsible
insurance companies with each having a claims paying ability rating and/or
financial strength rating, as applicable, of not less than "AA" by S&P, or such
lower claims paying ability rating and/or financial strength rating, as
applicable, as mortgagee shall in its sole and absolute discretion, consent to.
The 11 Madison Avenue Insurance Policies shall include a standard
non-contribution clause naming the Trustee on behalf of the Trust Fund as the
person or entity to which all payments made by that insurance company will be
paid.
Casualty. The 11 Madison Avenue Loan documents provide that if the 11
Madison Avenue Mortgaged Property is damaged or destroyed, in whole or in part,
by fire or other casualty, the 11 Madison Avenue Borrower must promptly proceed
with the repair or rebuilding of the improvements as nearly as possible
substantially to the condition the 11 Madison Avenue Mortgaged Property was in
immediately prior to such fire or other casualty (an "11 Madison Avenue
Restoration"). All plans and specifications required in connection with an 11
Madison Avenue Restoration that is reasonably expected to cost in excess of
$10,000,000 will be subject to prior review and acceptance by the mortgagee and
shall be performed under the supervision of an independent architect or
engineer selected by the 11 Madison Avenue Borrower and reasonably acceptable
to the mortgagee. Under certain circumstances, however, such as a default under
the 11 Madison Avenue Loan, insurance proceeds may be applied by the mortgagee
to the repayment of the 11 Madison Avenue Loan.
Condemnation. The 11 Madison Avenue Loan documents provide that, in the
event of a taking by any governmental authority through eminent domain or
otherwise, the proceeds of any condemnation award have been assigned to the
mortgagee and such condemnation proceeds are required to be applied in
accordance with the terms of the 11 Madison Avenue Loan documents. Upon
satisfaction by the 11 Madison Avenue Borrower of certain conditions, the
proceeds of the condemnation award must be made available for repair and
restoration of the 11 Madison Avenue Mortgaged Property. To the extent not
required to be disbursed by the mortgagee for the restoration of the 11 Madison
Avenue Mortgaged Property, any award or payment may be applied to the repayment
of the 11 Madison Avenue Loan whether or not then due and payable.
Transfer of the 11 Madison Avenue Mortgaged Property and Interest in the
11 Madison Avenue Borrower. The 11 Madison Avenue Loan documents provide that
the 11 Madison Avenue Borrower will not permit any sale, assignment,
conveyance, transfer or other disposition of, or any mortgage, lien or other
encumbrance (other than certain limited permitted encumbrances set forth in the
11 Madison Avenue Loan documents) on all, or any part, of the 11 Madison Avenue
Mortgaged Property. The 11 Madison Avenue Borrower, however, shall be permitted
to sell or convey (but not to mortgage or otherwise encumber) the 11 Madison
Avenue Mortgaged Property provided the 11 Madison Avenue Borrower satisfies
certain conditions (some of which are noted below) relating to assumption of
the 11 Madison Avenue Loan by a transferee (an "11 Madison Avenue Assumption"),
including: (i) the transferee (the "11 Madison Avenue Transferee") to whom the
11 Madison Avenue Mortgaged Property is sold or conveyed is a special purpose,
bankruptcy remote entity that satisfies the requirement of the 11 Madison
Avenue Loan documents, and the mortgagee receives a non-consolidation opinion
relating to the 11 Madison Avenue Transferee, in form and substance acceptable
to the mortgagee; (ii) immediately prior to such sale or conveyance, no default
or event of default shall exist; (iii) the 11 Madison Avenue Transferee shall
execute an assumption of all of the obligations of the 11 Madison Avenue
Borrower under the 11 Madison Avenue Loan documents and (iv) such sale or
conveyance is not construed so as to release the 11 Madison Avenue Borrower or
the guarantor of the 11 Madison Avenue Loan of any of their respective
obligations or liability under the 11 Madison Avenue Loan documents.
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The 11 Madison Avenue Loan documents provide that the 11 Madison Avenue
Borrower will not permit any sale, assignment, conveyance, transfer or other
disposition of, or grant or create any pledge, hypothecation, creation of a
security interest in or other encumbrance on, any of the direct or indirect
interests in the 11 Madison Avenue Borrower (any such event, an "11 Madison
Avenue Transfer"). A transfer or sale (but not a pledge, hypothecation,
security interest or other encumbrance) of any direct or indirect interest in
the 11 Madison Avenue Borrower is permitted provided the following conditions
are satisfied: (i) after giving effect to such transfer or sale, no less than
49% of the equity interests in the 11 Madison Avenue Borrower is owned,
directly or indirectly, by a person or persons who, as of the closing date of
the 11 Madison Avenue Loan owned 49% or more of the direct or indirect equity
interests in the 11 Madison Avenue Borrower and (ii) prior to any such transfer
or sale of direct interests in the 11 Madison Avenue Borrower, as a result of
either of which (and after giving effect to such transfer or sale), more than
49% of the direct or indirect interests in the 11 Madison Avenue Borrower shall
have been transferred to a person or entity not owning at least 49% of the
direct or indirect interests in the 11 Madison Avenue Borrower on the date of
closing of the 11 Madison Avenue Loan, the 11 Madison Avenue Borrower shall
deliver to the mortgagee a non-consolidation opinion with respect to the
proposed transfer or sale. In addition, subject to the terms of the 11 Madison
Avenue Loan documents, the 11 Madison Avenue Loan documents permit transfers or
sales (i) by Howard Michaels to Tamir Sapir and by and among Tamir Sapir, Alex
Sapir and David Werner and persons controlled by such persons which have an
interest in the 11 Madison Avenue Borrower as of the closing date of the 11
Madison Avenue Loan, (ii) made upon the death of a member, partner or
shareholder of the 11 Madison Avenue Borrower and (iii) made for estate
planning purposes.
Escrows.
(1) 11 Madison Avenue Tax and Insurance Reserve Account. The 11 Madison
Avenue Borrower is required to deposit on each payment date (A) an amount
equal to one-twelfth of the taxes the mortgagee reasonably estimates will
be payable during the next 12 months in order to accumulate with the
mortgagee sufficient funds to pay all such taxes at least 30 days prior to
their respective due dates and (B) one-twelfth of the insurance premiums
that the mortgagee estimates will be payable for the renewal of the
coverage afforded by the insurance policies required under the 11 Madison
Avenue Loan documents upon the expiration thereof in order to accumulate
with the mortgagee sufficient funds to pay all such insurance premiums at
least 30 days prior to the expiration of such policies.
(2) 11 Madison Avenue Replacement Reserve Account. The 11 Madison Avenue
Borrower shall deposit with the mortgagee on each payment date $18,804.60
to pay the cost of replacements and/or capital expenditures at the 11
Madison Avenue Mortgaged Property.
(3) 11 Madison Avenue Reletting Reserve Account. The 11 Madison Avenue
Borrower shall deposit on each monthly payment date an amount equal to (i)
$47,011.50 for the first through and including the thirty-sixth payment
dates, (ii) $141,034.50, for the thirty-seventh through and including the
seventy-second payment dates and (iii) thereafter, $94,023.00 to pay the
cost of tenant improvements and leasing commissions associated with the
reletting of the 11 Madison Avenue Mortgaged Property.
Lockbox Account. The 11 Madison Avenue Loan documents contain a hard cash
management system.
(a) The 11 Madison Avenue Borrower shall cause all rents to be deposited
into an account (the "11 Madison Avenue Lockbox Account") maintained with
Wachovia Bank, National Association (the "11 Madison Avenue Lockbox Bank")
in the name of the 11 Madison Avenue Borrower for the benefit of the
mortgagee. The 11 Madison Avenue Borrower shall cause all rents to be
deposited directly into the 11 Madison Avenue Lockbox Account. The
mortgagee shall have the sole dominion and control over the 11 Madison
Avenue Lockbox Account and the 11 Madison Avenue Borrower shall have no
rights to make withdrawals therefrom.
(b) On or before each payment date, the 11 Madison Avenue Lockbox Bank
shall allocate funds on deposit in the 11 Madison Avenue Lockbox Account
in the following order of priority and in amounts required under the 11
Madison Avenue Loan documents: (1) to the 11 Madison Avenue Tax and
Insurance Reserve Account; (2) to a subaccount in an amount sufficient to
pay the next monthly 11 Madison Avenue Debt Service Payment Amount; (3) to
the 11 Madison Avenue Replacement Reserve Account; (4) to the 11 Madison
Avenue Reletting Reserve Account; (5) but only during an O&M Operative
Period or a Designated Lease Curtailment Period, to a subaccount for the
payment of operating expenses and capital expenditures; (6) but only
during an O&M Operative Period or a Designated Lease Curtailment Period,
to a subaccount for the payment of
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extraordinary expenses approved by the mortgagee, if any; (7) but only
after the 11 Madison Avenue Anticipated Repayment Date, to the mortgagee to
be applied against the outstanding principal amount due under the
promissory note evidencing the 11 Madison Avenue Loan until such principal
amount is paid in full; (8) but only after the 11 Madison Avenue
Anticipated Repayment Date, to the mortgagee to be applied against 11
Madison Avenue Accrued Interest until such 11 Madison Avenue Accrued
Interest is paid in full; (9) but only during an O&M Operative Period,
commencing pursuant to clause (a)(i) of the definition thereof, to a
subaccount to be held by the mortgagee as additional security for the 11
Madison Avenue Loan; (10) but only during a Designated Lease Curtailment
Period, to a subaccount to be applied to pay the cost of tenant
improvements and leasing commissions associated with reletting space
currently demised to CSFB at the 11 Madison Avenue Mortgaged Property; and
(11) any excess amounts remaining in the 11 Madison Avenue Lockbox Account
(collectively, the "11 Madison Avenue Excess Funds") shall be handled or
disbursed as follows: (i) if an event of default exists under the 11
Madison Avenue Loan documents, the 11 Madison Avenue Excess Funds may be
applied by the mortgagee to the payment of amounts due under the 11 Madison
Avenue Loan in its sole and absolute discretion; and (ii) if no event of
default exists, all 11 Madison Avenue Excess Funds shall be disbursed to
the 11 Madison Avenue Borrower on the payment date, on the sixth day (or if
such day is not a business day, the next succeeding business day) and on
the twenty-second day (or if such day is not a business day, the next
succeeding business day) in such month; provided, however, that
notwithstanding the foregoing, in the event the 11 Madison Avenue Borrower
shall collect rents from any tenant more than one month in advance during
any month, such rents shall remain on deposit in the 11 Madison Avenue
Lockbox Account and shall not be released to the 11 Madison Avenue Borrower
until such time as the subaccounts have been funded in accordance with
clauses (1) through (11) for the immediately succeeding month.
"Designated Lease Curtailment Period" shall mean (a) the payment date
immediately succeeding the date, if any, that CSFB gives notice that it will
terminate the Designated Lease with respect to any portion of the space demised
thereunder and/or (b) if CSFB has not extended the term of that portion of the
Prime Lease which expires on April 30, 2007 (the "Tower Space"), the payment
date immediately succeeding the last day on which CSFB must give notice that it
will extend the term of the Prime Lease with respect to the Tower Space
(collectively, the "Vacate Date") pursuant to the terms of the Prime Lease and
any other space lease demising space to CSFB, other than space leases demising
retail space of less than 10,000 square feet (the "Designated Lease") and
terminating on the payment date next succeeding the earlier to occur of (a) the
date upon which the mortgagee determines that the debt service coverage is
1.20x or greater, (b) the date upon which an amount equal to the product of $55
multiplied by the number of square feet to be vacated by CSFB minus any lease
cancellation, termination or surrender payments, if any, paid by CSFB in
connection with the termination, cancellation or surrender of all or a portion
of the Designated Lease has been deposited into a subaccount of the 11 Madison
Avenue Lockbox Account (the "Designated Lease Reserve Escrow Account") and (c)
the date upon which all of the space at the 11 Madison Avenue Mortgaged
Property previously leased pursuant to the Designated Lease (the "Designated
Lease Space") is re-let pursuant to space leases approved by the mortgagee and
the mortgagee has received tenant estoppel certificates from the tenant leasing
space in the Designated Lease Space which indicate, among other things, that
the tenant under such space lease has been in occupancy for at least one full
calendar month and paid all rents due under the space lease without abatement,
suspension, deferment, diminution, reduction or other allowances for at least
one full calendar month.
"O&M Operative Period" shall mean the period of time (a) commencing upon
the earlier to occur of (i) the determination by the mortgagee that the debt
service coverage is less than 1.15x and (ii) the 11 Madison Avenue Anticipated
Repayment Date, and (b)(i) in the event that the O&M Operative Period has
commenced pursuant to clause (a)(i) above (but not pursuant to clauses (a)(ii)
above), terminating on the payment date next succeeding the date upon which the
mortgagee determines that the debt service coverage for two (2) consecutive
calendar quarters is equal to or greater than 1.15x. Debt service coverage, for
purposes of determining whether an O&M Operative Period exists, shall be tested
quarterly except, in each case, during the continuance of an O&M Operative
Period and during such time as the mortgagee, in its reasonable discretion
based on changes in circumstances, including, without limitation, (a) tenants
vacating the 11 Madison Avenue Mortgaged Property during the next two (2)
calendar quarters, (b) tenants becoming the subject of any proceeding or action
relating to their bankruptcy, reorganization or other arrangement pursuant to
the federal bankruptcy code or any similar federal or state law or tenants
being adjudicated bankrupt or insolvent unless such tenant's space lease has
been affirmed by the trustee in such proceeding or action and the bankruptcy
court has issued its final non-appealable confirmation order with respect to
such affirmation and (c) terminations of space leases, believes that the debt
service coverage may be less than 1.15x,
S-153
in which event the debt service coverage shall be tested monthly and shall be
calculated based upon information contained in the financial reports furnished
to the mortgagee pursuant to the provisions of the 11 Madison Avenue Loan
documents.
"Prime Lease" shall mean that certain lease to CSFB demising a portion of
the 11 Madison Avenue Mortgaged Property consisting of 1,173,693 square feet
located primarily on the 2nd through and including the 7th and 21st through and
including the 28th floors of the 11 Madison Avenue Mortgaged Property.
11 Madison Avenue Mortgaged Property Management. The 11 Madison Avenue
Mortgaged Property is currently managed by Cushman & Wakefield, Inc.
Additional Debt. The 11 Madison Avenue Loan documents prohibit the 11
Madison Avenue Borrower from incurring any additional debt, secured or
unsecured, except for trade and operational debt (collectively, "Trade Debt")
incurred in the ordinary course of business with trade creditors in amounts as
are normal and reasonable under the circumstances, provided such debt does not
exceed 2% of the outstanding principal balance of the 11 Madison Avenue Loan,
is not evidenced by a note, is incurred in the ordinary course of operation of
the 11 Madison Avenue Mortgaged Property and is paid prior to the 60th day
after the date incurred (unless the same is subject to good faith dispute by
the 11 Madison Avenue Borrower, in appropriate proceedings therefor, and for
which adequate reserves have been established.
Intercreditor Agreement. The holders of (a) the 11 Madison Avenue Loan,
(b) the 11 Madison Avenue Subordinate Loans and (c) the 11 Madison Avenue Pari
Passu Loans are party to an intercreditor and servicing agreement dated January
28, 2004 which sets forth the priority of payments and rights of such holders.
See "DESCRIPTION OF THE MORTGAGE POOL--Co-Lender Loans".
S-154
Phillips Point Office Building
The Loan. The Mortgage Loan ("Phillips Point Office Building Loan") is
secured by a first mortgage encumbering the borrower's fee interest in an
office building located in West Palm Beach, Florida. The Phillips Point Office
Building Loan represents approximately 8.1% of the Cut-Off Date Pool Balance.
The Phillips Point Office Building Loan was originated on December 8, 2003 and
has a principal balance as of the Cut-Off Date of $105,000,000. The Phillips
Point Office Building Loan provides for interest-only payments for the first 24
months of its term, and thereafter, fixed monthly payments of principal and
interest.
The Phillips Point Office Building Loan has a remaining term of 118 months
and matures on December 11, 2013. The Phillips Point Office Building Loan may
be prepaid on or after October 11, 2013 and permits defeasance with United
States government obligations beginning two years after the Closing Date.
The Borrower. The borrower is Phillips Point LLC, a special purpose
entity. Legal counsel to the borrower delivered a non-consolidation opinion in
connection with the origination of the Phillips Point Office Building Loan. The
sponsors are Benjamin Winter and Melvin Heller The Winter Organization is a
fourth generation family run private company that owns approximately 1.5
million square feet of commercial properties in New York City as well as over
500 apartments, and has expertise in real estate acquisition, management and
development, with in-house expertise in all facets of the running of the
business.
The Property. The Mortgaged Property is an approximately 421,650 square
foot office complex situated on approximately 4.2 acres. The Mortgaged Property
is located in West Palm Beach, Florida, within the West Palm Beach -- Boca
Raton, Florida metropolitan statistical area. As of September 22, 2003, the
occupancy rate for the Mortgaged Property securing the Phillips Point Office
Building Loan was approximately 96.0%.
The largest tenant is Gunster Yoakley & Stewart ("Gunster Yoakley"),
occupying approximately 52,719 square feet, or approximately 12.5% of the net
rentable area. Gunster Yoakley, founded in 1925, is one of Florida's oldest and
largest full-service law firms with approximately 130 attorneys, specializing
in corporate, private wealth, litigation and real estate matters. The Gunster
Yoakley lease expires in December 2013. The second largest tenant is Conopco
("Conopco"), a division of Unilever Group, occupying approximately 38,129
square feet, or approximately 9.0% of the net rentable area. The Unilever Group
is in the business of supplying fast moving consumer goods in foods, household
care and personal product categories. As of January 28, 2004, Unilever was
rated "A1" (Moody's), "A+" (S&P) and "A+" (Fitch). The Conopco lease expires in
April 2007. The third largest tenant is Greenberg Traurig, occupying
approximately 35,078 square feet, or approximately 8.3% of the net rentable
area. Founded in 1967, Greenberg Traurig provides legal services for clients
worldwide in areas such as business, corporate securities, information
technology and telecommunications, as well as entertainment. The firm has
approximately 900 lawyers in its 20 offices. The Greenberg Traurig lease
expires in May 2011.
The following table presents information relating to major tenants at the
Mortgaged Property:
% OF NET ACTUAL
RATINGS* NET RENTABLE RENTABLE RENT % OF ACTUAL DATE OF LEASE
TENANT MOODY'S/S&P/FITCH AREA (SF) AREA PSF ACTUAL RENT RENT EXPIRATION
- ----------------------------- ------------------- -------------- ---------- ----------- ------------- ------------- --------------
Gunster Yoakley ............. NR/NR/NR 52,719 12.5% $ 22.60 $1,191,692 11.8% December 2013
Conopco (Unilever) .......... A1/A+/A+ 38,129 9.0 $ 28.00 1,067,612 10.6 April 2007
Greenberg Traurig ........... NR/NR/NR 35,078 8.3 $ 25.56 896,541 8.9 May 2011
Steel Hector & Davis ........ NR/NR/NR 28,589 6.8 $ 24.10 688,995 6.8 November 2010
Smith Barney, Inc. .......... Aa1/AA-/AA+ 21,748 5.2 $ 21.40 465,407 4.6 October 2006
------ ---- ---------- ----
TOTAL ....................... 176,263 41.8% $4,310,247 42.8%
======= ==== ========== ====
- ----------
* Certain ratings are those of the parent company whether or not the parent
guarantees the lease.
S-155
The following table presents information relating to the lease rollover
schedule at the Mortgaged Property:
WA BASE CUMULATIVE
# OF LEASES RENT/SF TOTAL SF % OF TOTAL SF % OF SF % OF ACTUAL RENT CUMULATIVE % OF
YEAR ROLLING ROLLING ROLLING ROLLING* ROLLING* ROLLING* ACTUAL RENT ROLLING*
- -------------- ------------- ----------- ---------- --------------- ----------- ------------------ ---------------------
2004 ......... 6 $ 26.52 32,799 7.8% 7.8% 8.6% 8.6%
2005 ......... 2 $ 26.06 10,121 2.4% 10.2% 2.6% 11.3%
2006 ......... 10 $ 25.13 67,878 16.1% 26.3% 16.9% 28.2%
2007 ......... 6 $ 25.77 52,413 12.4% 38.7% 13.4% 41.6%
2008 ......... 1 $ 27.32 6,946 1.6% 40.4% 1.9% 43.5%
2009 ......... 1 $ 32.01 9,145 2.2% 42.5% 2.9% 46.4%
2010 ......... 2 $ 24.26 40,768 9.7% 52.2% 9.8% 56.2%
2011 ......... 7 $ 24.63 79,705 18.9% 71.1% 19.5% 75.7%
2012 ......... 1 $ 24.59 15,016 3.6% 74.7% 3.7% 79.4%
2013 ......... 6 $ 23.26 85,375 20.2% 94.9% 19.7% 99.1%
2014 ......... 1 $ 19.57 4,602 1.1% 96.0% 0.9% 100.0%
- ----------
* Calculated based on approximate square footage occupied by each tenant.
Escrows. The loan documents provide for certain escrows of real estate
taxes and provide for replacement reserves. In addition, the loan documents
require the borrower to deposit with the mortgagee a sum of $423,324 per year
for tenant improvements and leasing commissions. See Annex A-3 to this
prospectus supplement for information regarding escrow reserves.
Lock Box Account. All tenant payments due under the applicable tenant
leases are deposited into a mortgagee designated lock box account.
Management. Walters/Gottlieb Partners, Inc. is the property manager for
the Mortgaged Property securing the Phillips Point Office Building Loan.
S-156
Starrett-Lehigh Building
The Loan. The Mortgage Loan (the "Starrett-Lehigh Building Loan") is
secured by a first mortgage encumbering the borrower's fee interest in an
office building located in New York, New York. The Starrett-Lehigh Building
Loan represents approximately 7.8% of the Cut-Off Date Pool Balance. The
Starrett-Lehigh Building Loan was originated on January 2, 2004 and has a
principal balance as of the Cut-Off Date of $100,000,000. The Starrett-Lehigh
Building Loan, which is evidenced by a pari passu note dated January 2, 2004,
is a portion of a whole loan with an original principal balance of
$184,000,000. The other loans related to the Starrett-Lehigh Building Loan are
evidenced by two separate notes dated January 2, 2004, the "Starrett-Lehigh
Building Pari Passu Loan", with an original principal balance of $60,000,000
and the "Starrett-Lehigh Building Subordinate Loan", with an original principal
balance of $24,000,000. The Starrett-Lehigh Building Pari Passu Loan will not
be an asset of the Trust, while the Starrett-Lehigh Building Subordinate Loan
will be an asset of the trust, however, the Starrett-Lehigh Building Loan, this
Starrett-Lehigh Building Pari Passu Loan and the Starrett-Lehigh Building
Subordinate Loan will be governed by an intercreditor and servicing agreement,
and will be serviced pursuant to the terms of the pooling and servicing
agreement as described in this prospectus supplement under "DESCRIPTION OF THE
MORTGAGE POOL--Co-Lender Loans". The Starrett-Lehigh Building Loan provides for
interest-only payments for the first 24 months of its term, and thereafter,
fixed monthly payments of principal and interest.
The Starrett-Lehigh Building Loan has a remaining term of 120 months to
its anticipated repayment date of February 11, 2014. The Starrett-Lehigh
Building Loan may be prepaid on or after December 11, 2013, and permits
defeasance with United States government obligations beginning two years after
the Closing Date.
The Borrower. The borrower is 601 West Associates LLC, a special purpose
entity. Legal counsel to the borrower delivered a non-consolidation opinion in
connection with the origination of the Starrett-Lehigh Building Loan. The
sponsor is Mark Karasik, who has been actively involved in New York real estate
investment, ownership and management for nearly 25 years.
The Property. The Mortgaged Property is an approximately 2,319,634 square
foot office building situated on approximately 2.9 acres. The Mortgaged
property was constructed in 1931 and renovated in 2003. The Mortgaged Property
is located in New York, New York within the New York City metropolitan
statistical area. As of September 30, 2003, the occupancy rate for the
Mortgaged Property securing the Starrett-Lehigh Building Loan was approximately
74.3%.
The largest tenant is the US Customs Service ("US Customs Service")
occupying approximately 266,327 square feet, or approximately 11.5% of the net
rentable area. The US Customs Service is a division of the US Department of
Homeland Security charged with protecting the general welfare and security of
the United States by enforcing import and export restrictions and prohibitions.
The US Customs Service lease expires in October 2013. As of January 28, 2004,
the US Customs Service was rated "Aaa" (Moody's), "AAA" (S&P) and "AAA"
(Fitch). The second largest tenant is Martha Stewart Living Omnimedia, Inc.
("Omnimedia") occupying approximately 159,500 square feet, or approximately
6.9% of the net rentable area. Omnimedia creates content and domestic
merchandise for homemakers and other consumers. The company is comprised of
four business segments: Publishing, Television, Merchandising and
Internet/Direct Commerce, all of which function at the subject property. The
Omnimedia lease expires in December 2009. The third largest tenant is the
Federal Bureau of Investigation, ("FBI") occupying approximately 118,288 square
feet, or approximately 5.1% of the net rentable area. The FBI is the
investigative arm of the US Department of Justice. The agency's duties include
protecting the US from terrorist attacks, foreign intelligence operations,
cyber-based attacks and high-technology crimes, while combating public
corruption, protecting civil rights and supporting local law enforcement. As of
January 28, 2004, the FBI was rated "Aaa" (Moody's), "AAA" (S&P) and "AAA"
(Fitch). The FBI lease expires in October 2008.
S-157
The following table presents information relating to major tenants at the
Mortgaged Property:
NET % OF NET ACTUAL % OF
RATINGS* RENTABLE RENTABLE RENT ACTUAL DATE OF LEASE
TENANT MOODY'S/S&P/FITCH AREA (SF) AREA PSF ACTUAL RENT RENT EXPIRATION
- ----------------------------------- ------------------- ----------- ---------- ----------- ------------- ---------- --------------
US Customs Service ................ Aaa/AAA/AAA 266,327 11.5% $ 33.12 $ 8,821,279 23.5% October 2013
Omnimedia ......................... NR/NR/NR 159,500 6.9 $ 25.06 3,997,148 10.7 December 2009
FBI ............................... Aaa/AAA/AAA 118,288 5.1 $ 13.62 1,610,924 4.3 October 2008
Williams Communications ........... Caa3/NR/NR 99,320 4.3 $ 17.82 1,770,102 4.7 March 2015
Zurich American Insurance ......... NR/A+/NR 95,000 4.1 $ 32.39 3,076,920 8.2 May 2012
------- ---- ----------- ----
TOTAL ............................. 738,435 31.8% $19,276,373 51.4%
======= ==== =========== ====
- ----------
* Certain ratings are those of the parent company whether or not the parent
guarantees the lease.
The following table presents information relating to the lease rollover
schedule at the Mortgaged Property:
WA BASE CUMULATIVE % % OF ACTUAL CUMULATIVE % OF
# OF LEASES RENT/SF TOTAL SF % OF TOTAL OF SF RENT ACTUAL RENT
YEAR ROLLING ROLLING ROLLING SF ROLLING* ROLLING* ROLLING* ROLLING*
- -------------- ------------- ----------- ---------- ------------- -------------- ------------- ----------------
2004 ......... 14 $ 10.55 52,459 2.3% 2.3% 1.5% 1.5%
2005 ......... 11 $ 8.74 65,271 2.8% 5.1% 1.5% 3.0%
2006 ......... 8 $ 7.87 89,526 3.9% 8.9% 1.9% 4.9%
2007 ......... 14 $ 13.11 77,783 3.4% 12.3% 2.7% 7.6%
2008 ......... 15 $ 15.68 251,623 10.8% 23.1% 10.5% 18.1%
2009 ......... 21 $ 22.96 311,953 13.4% 36.6% 19.1% 37.2%
2010 ......... 5 $ 34.47 90,313 3.9% 40.5% 8.3% 45.5%
2011 ......... 6 $ 14.92 128,514 5.5% 46.0% 5.1% 50.6%
2012 ......... 7 $ 31.42 152,691 6.6% 52.6% 12.8% 63.4%
2013 ......... 8 $ 31.99 290,855 12.5% 65.1% 24.8% 88.2%
2014 ......... 1 $ 18.00 5,000 0.2% 65.4% 0.2% 88.5%
- ----------
* Calculated based on approximate square footage occupied by each tenant.
Escrows. The loan documents provide for certain escrows of real estate
taxes and insurance and provide for replacement reserves. In addition, the loan
documents require the borrower to deposit with the mortgagee (i) at the closing
of the Starrett-Lehigh Building loan, a sum of $7,000,000 and (ii) a sum of
$1,159,812 per year for tenant improvements and leasing commissions. See Annex
A-3 to this prospectus supplement for information regarding escrow reserves.
Lock Box Account. All tenant payments due under the applicable tenant
leases are deposited into a mortgagee designated lock box account.
Hyper-amortization. Commencing on the anticipated repayment date of
February 11, 2014, if the Starrett-Lehigh Building Loan is not paid in full, it
enters into a hyper-amortization period through February 11, 2028. The interest
rate applicable to the Starrett-Lehigh Building Loan during such
hyper-amortization period will increase to the greater of 2.0% over the
mortgage rate or 2.0% over the treasury rate, as specified in the loan
documents.
Mezzanine Debt. A mezzanine loan in the amount of $40 million was
originated on January 2, 2004. The mezzanine loan is held outside the trust and
is secured by a pledge of the equity interests in the borrower.
Management. 601 West Management Corp., an affiliate of the sponsor, is the
property manager for the Mortgaged Property securing the Starrett-Lehigh
Building Loan.
S-158
IBM Center
The Loan. The Mortgage Loan (the "IBM Center Loan") is secured by a first
mortgage encumbering the borrower's fee interest in an office building located
in Atlanta, Georgia. The IBM Center Loan represents approximately 6.2% of the
Cut-Off Date Pool Balance. The IBM Center Loan was originated on December 4,
2003 and has a principal balance as of the Cut-Off Date of $80,000,000. The IBM
Center Loan provides for interest-only payments for the first 24 months of the
loan term and the final 24 months of the loan term.
The IBM Center Loan has a remaining term of 127 months and matures on
September 11, 2014. The IBM Center Loan may be prepaid on or after March 11,
2014 and permits defeasance with United States government obligations beginning
two years after the Closing Date.
The Borrower. The borrower is Jamestown Northside, L.P., a special purpose
entity. Legal counsel to the borrower delivered a non-consolidation opinion in
connection with the origination of the IBM Center Loan. The sponsor is
Jamestown Companies. The Jamestown Companies provide real estate investment
services in the United States, principally for German investors. In 23
partnerships, Jamestown and its 21,000 investors have acquired $3.3 billion of
assets representing $1.6 billion of equity, totaling 11.5 million square feet
of office, retail and industrial space.
The Property. The Mortgaged Property is an approximately 784,700 square
foot office building situated on approximately 56.6 acres. The Mortgaged
Property was built in phases in 1978 and 1988. The Mortgaged Property is
located in Atlanta, Georgia, within the Atlanta, Georgia metropolitan
statistical area. As of December 12, 2003, the occupancy rate for the Mortgaged
Property securing the IBM Center Loan was approximately 100.0%.
The single tenant is International Business Machines ("IBM") occupying
approximately 784,700 square feet, or approximately 100.0% of the net rentable
area. The Mortgaged Property is the regional marketing headquarters for IBM in
the southeast. As of January 28, 2004, IBM was rated "A1" (Moody's), "A+"(S&P)
and "AA-"(Fitch). The IBM lease expires in September 2014.
The following table presents information relating to the major tenant at
the Mortgaged Property:
NET % OF NET % OF
RATINGS RENTABLE RENTABLE ACTUAL ACTUAL DATE OF LEASE
TENANT MOODY'S/S&P/FITCH AREA (SF) AREA RENT PSF ACTUAL RENT RENT EXPIRATION
- -------- ------------------- ----------- ---------- ---------- ------------- ----------- ---------------
IBM A1 / A+ / AA- 784,700 100.0% $ 13.44 $10,549,250 100.0% September 2014
The following table presents information relating to the lease rollover
schedule at the Mortgaged Property:
WA BASE CUMULATIVE %
# OF LEASES RENT/SF TOTAL SF % OF TOTAL SF CUMULATIVE % % OF ACTUAL OF ACTUAL RENT
YEAR ROLLING ROLLING ROLLING ROLLING* OF SF ROLLING* RENT ROLLING* ROLLING*
- ------ ------------- ----------- ---------- --------------- ---------------- --------------- ---------------
2014 1 $ 13.44 784,700 100.0% 100.0% 100.0% 100.0%
- ----------
* Calculated based on approximate square footage occupied by each tenant.
Escrows. The loan documents do not require escrows; however, IBM leases
the building absolute net with no landlord obligations. Commencing on April 11,
2008, and continuing through the term of the loan, the borrower is required to
deposit with the mortgagee a sum of $601,020 annually. In addition, IBM is
required to give two years notice of its intent not to renew its lease and in
the event that IBM should choose not to renew, the mortgagee has required a
100% trap of all cash flow for the final two years of the loan term. See Annex
A-3 to this prospectus supplement for information regarding escrow reserves.
Lock Box Account. All tenant payments due under the applicable tenant
leases are deposited into a mortgagee designated lock box account.
Management. Jamestown Management Corporation, an affiliate of the
borrower, is the property manager for the Mortgaged Property securing the IBM
Center Loan.
S-159
North Riverside Park Mall
The Loan. The Mortgage Loan (the "North Riverside Park Mall Loan") is
secured by a first mortgage encumbering the borrower's fee interest in a
regional mall located in North Riverside, Illinois. The North Riverside Park
Mall Loan represents approximately 6.2% of the Cut-Off Date Pool Balance. The
North Riverside Park Mall Loan was originated on January 16, 2004 and has a
principal balance as of the Cut-Off Date of $80,000,000. The North Riverside
Park Mall Loan provides for interest-only payments for the length of the loan
term.
The North Riverside Park Mall Loan has a remaining term of 120 months and
matures on February 11, 2014. The North Riverside Park Mall Loan may be prepaid
on or after December 11, 2013, and permits defeasance with United States
government obligations beginning two years after the Closing Date.
The Borrower. The borrower is North Riverside Park Associates, LLC, a
special-purpose entity. Legal counsel to the borrower delivered a
non-consolidation opinion in connection with the origination of the North
Riverside Park Mall Loan. The sponsors of the borrower are Jeffrey Feil and
Lloyd Goldman. Mr. Feil is the principal of the Feil Organization, a New
York-based real estate firm with ownership interests in approximately 8.5
million square feet of retail properties, 5 million square feet of office
properties, and 5,000 residential rental units. Mr. Goldman is the President of
BLDG Management Co., which owns approximately 20 million square feet of
commercial and industrial properties and 14,000 residential rental units.
The Property. The Mortgaged Property consists of approximately 440,421
square feet of space at a 1,067,435 square foot regional mall situated on
approximately 27.3 acres. The Mortgaged Property was constructed in 1974 and
renovated in 2001. The Mortgaged Property is located in North Riverside,
Illinois, within the Chicago, Illinois metropolitan statistical area. As of
January 8, 2004, the occupancy rate for the Mortgaged Property securing the
North Riverside Park Mall Loan was approximately 96.5%; however, excluding the
41,958 square feet T.J. Maxx has given notice it will vacate, the occupancy is
86.9%.
The anchor tenants at the Mortgaged Property are JC Penney, Sears, Roebuck
& Co., and Carson Pirie Scott (a Saks Inc. store). Each anchor owns its
respective premises and land, which are not part of the collateral. The largest
tenant which is part of the collateral is Plitt Theaters ("Plitt") occupying
approximately 30,000 square feet, or approximately 6.8% of the net rentable
area. The Plitt lease expires in January 2008. The second largest tenant is Old
Navy, occupying approximately 20,068 square feet, or approximately 4.6% of the
net rentable area. Old Navy, a subsidiary of The Gap, Inc. ("The Gap"), is a
global specialty retailer, which operates stores selling casual apparel,
personal care and other accessories for men, women and children. As of January
28, 2004, The Gap was rated "Ba3" (Moody's), "BB+" (S&P) and "BB-" (Fitch). The
Old Navy lease expires in February 2007. The third largest tenant is Lerner New
York & Co. ("Lerner"), occupying approximately 12,116 square feet, or
approximately 2.8% of the net rentable area. Lerner sells brand-name and
private-label fashions and accessories for women. The Lerner lease expires in
January 2004. Lerner has agreed to a one year extension of its lease; however,
in anticipation of finalizing terms on a longer term lease at the subject
property, this has not yet been executed.
S-160
The following table presents information relating to major tenants at the
Mortgaged Property:
NET % OF NET % OF
RATINGS* RENTABLE RENTABLE ACTUAL ACTUAL DATE OF LEASE
TENANT MOODY'S/S&P/FITCH AREA (SF) AREA RENT PSF ACTUAL RENT RENT EXPIRATION
- ------------------------------------- ------------------- ----------- ---------- ---------- ------------- -------- ---------------
JC Penney (Anchor owned, not
part of collateral) ................ Ba3/BB+/BB 248,709
Sears, Roebuck & Co. (Anchor
owned, not part of collateral) ..... Baa1/BBB/BBB+ 199,544
Carson Pirie Scott (Anchor
owned, not part of collateral) ..... Ba3/BB/BB- 180,588
Plitt Theaters ...................... NR/NR/NR 30,000 6.8% $ 13.67 $ 410,000 4.7% January 2008
Old Navy ............................ Ba3/BB+/BB- 20,068 4.6 $ 7.00 140,476 1.6 February 2007
Lerner New York & Co. ............... NR/NR/NR 12,116 2.8 $ 19.00 230,204 2.6 January 2004
Deb Shop ............................ NR/NR/NR 10,275 2.3 $ 11.08 113,847 1.3 January 2009
Humana Health Care
(outparcel) ........................ Baa3/BBB/BBB 10,000 2.3 $ 11.64 116,438 1.3 January 2011
Olive Garden (outparcel) ............ Baa1/BBB+/BBB+ 9,100 2.1 $ 10.90 99,188 1.1 January 2006
Bachrach ............................ NR/NR/NR 9,019 2.0 $ 12.53 113,015 1.3 January 2006
Gap ................................. Ba3/BB+/BB- 8,500 1.9 $ 20.00 170,000 1.9 September 2006
Lane Bryant ......................... B2/BB-/NR 8,450 1.9 $ 21.00 177,450 2.0 January 2005
------- ---- ---------- ----
TOTAL ............................... 117,528 26.7% $1,570,618 17.8%
======= ==== ========== ====
* Certain ratings are those of the parent company, whether or not the
parent guarantees the lease.
The following table presents information relating to the lease rollover
schedule at the Mortgaged Property:
CUMULATIVE
# OF WA BASE % OF CUMULATIVE % OF % OF
LEASES RENT/SF TOTAL SF TOTAL SF % OF ACTUAL RENT ACTUAL RENT
YEAR ROLLING ROLLING ROLLING ROLLING* SF ROLLING* ROLLING* ROLLING*
- -------------- --------- ----------- ---------- ---------- ------------- ------------- ------------
2004 ......... 25 $ 13.08 68,868 15.6% 15.6% 10.2% 10.2%
2005 ......... 11 $ 24.44 31,014 7.0% 22.7% 8.6% 18.8%
2006 ......... 17 $ 21.24 56,561 12.8% 35.5% 13.6% 32.5%
2007 ......... 10 $ 20.79 35,181 8.0% 43.5% 8.3% 40.8%
2008 ......... 11 $ 20.93 52,902 12.0% 55.5% 12.6% 53.3%
2009 ......... 11 $ 26.66 27,567 6.3% 61.8% 8.3% 61.7%
2010 ......... 3 $ 24.50 6,762 1.5% 63.3% 1.9% 63.5%
2011 ......... 14 $ 27.71 36,639 8.3% 71.6% 11.5% 75.1%
2012 ......... 10 $ 32.55 20,247 4.6% 76.2% 7.5% 82.5%
2013 ......... 10 $ 27.53 30,800 7.0% 83.2% 9.6% 92.2%
2014 ......... 5 $ 37.90 13,345 3.0% 86.3% 5.7% 97.9%
- ----------
* Calculated based on approximate square footage occupied by each tenant.
Escrows. The loan documents provide for escrows of real estate taxes and
provide for replacement reserves. In addition, the loan documents require the
borrower to deposit with the mortgagee (i) at the closing of the North
Riverside Park Mall Loan, a sum of $2,750,000 and (ii) a sum of $175,992 per
year for tenant improvements and leasing commissions. See Annex A-3 to this
prospectus supplement for information regarding escrow reserves.
Lock Box Account. All tenant payments due under the applicable tenant
leases are deposited into a mortgagee designated lock box account.
Management. Urban Retail Properties Co. is the property manager for the
Mortgaged Property securing the North Riverside Park Mall Loan.
S-161
520 Eighth Avenue
The Loan. The Mortgage Loan (the "520 Eighth Avenue Loan") is secured by a
first mortgage encumbering the borrower's fee interest in an urban office
building located in New York, New York. The 520 Eighth Avenue Loan represents
approximately 3.8% of the Cut-Off Date Pool Balance. The 520 Eighth Avenue Loan
was originated on January 30, 2004 and has a principal balance as of the
Cut-Off Date of $49,000,000. The 520 Eighth Avenue Loan provides for
interest-only payments for the length of the loan term.
The 520 Eighth Avenue Loan has a remaining term of 120 months and matures
on February 11, 2014. The 520 Eighth Avenue Loan may be prepaid on or after
December 11, 2013, and permits defeasance with United States government
obligations beginning two years after the Closing Date.
The Borrower. The borrowers are New 520 GSH, LLC, New 520 Triple Crown,
LLC, 38th and 8th LLC and New 520 8th LLC, each of which is a special purpose
entity and own the Mortgaged Property as tenants in common. Legal counsel to
the borrowers delivered a non-consolidation opinion in connection with the
origination of the 520 Eighth Avenue Loan. The sponsor of the borrower is
Jeffrey Gural, who is one of three principals owning Newmark & Company Real
Estate, Inc. ("Newmark"), which his father, Aaron Gural, acquired in 1952 and
sold to Jeffrey and Barry M. Gosin in 1978. Newmark manages or provides leasing
services on approximately 50 million square feet of office space in New York,
Connecticut, London, Los Angeles, New Jersey and Washington D.C.
The Property. The Mortgaged Property is comprised of three contiguous
buildings, 520 Eighth Avenue, 261 West 36th Street and 266 West 37th Street, in
the aggregate consisting of approximately 739,718 square feet of net rentable
area. The Mortgaged Property was constructed in 1926 and renovated in 2000. The
Mortgaged Property is located in New York, New York within the New York City
metropolitan statistical area. As of January 21, 2004, the occupancy rate for
the Mortgaged Property securing the 520 Eighth Avenue Loan was approximately
98.4%.
The largest tenant is the Mason Tenders District Council Welfare Fund
("MTDC") occupying 48,395 square feet, or approximately 6.5% of the net
rentable area. MTDC is an umbrella labor organization affiliated with six local
unions in the tri-state area. The organization claims over 15,000 members
involved in political and social labor action awareness campaigns on both the
national and local levels. The MTDC lease expires in February 2018. The second
largest tenant is Selfhelp Community Services Inc. ("Selfhelp") occupying
45,000 square feet, or approximately 6.1% of the net rentable area. Founded in
1936 and a member agency of the United Way, Selfhelp is one of the top family,
geriatric, and home hospice care agencies in New York City. The Selfhelp lease
expires in June 2011. The third largest tenant is G&G Shops Inc. ("G&G")
occupying 40,000 square feet, or approximately 5.4% of the net rentable area.
G&G is a nationwide retailer of teen and young adult women's fashions with over
500 stores located throughout the country. The G&G lease expires in January
2006.
The following table presents information relating to the major tenants at
the Mortgaged Property:
NET % OF NET % OF
RATINGS RENTABLE RENTABLE ACTUAL ACTUAL DATE OF LEASE
TENANT MOODY'S/S&P/FITCH AREA (SF) AREA RENT PSF ACTUAL RENT RENT EXPIRATION
- ------------------------------------- ------------------- ----------- ---------- ---------- ------------- -------- ----------------
Mason Tenders District Council
Welfare Fund ....................... NR/NR/NR 48,395 6.5% $ 23.46 $1,135,347 7.4% February 2018
Selfhelp Community Services Inc. .... NR/NR/NR 45,000 6.1 $ 28.72 1,292,400 8.4 June 2011
G&G Shops Inc. ...................... NR/NR/NR 40,000 5.4 $ 16.99 679,600 4.4 January 2006
Alliance of Resident Theatres ....... NR/NR/NR 32,000 4.3 $ 20.00 640,000 4.2 November 2022
Board of Jewish Education ........... NR/NR/NR 26,000 3.5 $ 19.78 514,280 3.3 July 2023
New York Spaces ..................... NR/NR/NR 25,977 3.5 $ 19.96 518,423 3.4 Multiple Spaces
------ ---- ---------- ----
TOTAL ............................... 217,372 29.4% $4,780,050 31.1%
======= ==== ========== ====
The following table presents information relating to the lease rollover
schedule at the Mortgaged Property:
S-162
# OF WA BASE % OF CUMULATIVE % CUMULATIVE % OF
ROLLING RENT/SF TOTAL SF TOTAL SF OF SF % OF ACTUAL RENT ACTUAL RENT
YEAR LEASES ROLLING ROLLING ROLLING* ROLLING* ROLLING* ROLLING*
- -------------- --------- ----------- ---------- ---------- -------------- ------------------ -----------------
2004 ......... 7 $ 32.18 16,228 2.2% 2.2% 3.4% 3.4%
2005 ......... 11 $ 11.14 44,151 6.0% 8.2% 3.2% 6.6%
2006 ......... 8 $ 17.41 69,322 9.4% 17.5% 7.9% 14.4%
2007 ......... 8 $ 29.34 18,259 2.5% 20.0% 3.5% 17.9%
2008 ......... 5 $ 10.50 61,122 8.3% 28.3% 4.2% 22.1%
2009 ......... 3 $ 17.45 25,250 3.4% 31.7% 2.9% 25.0%
2010 ......... 9 $ 21.30 76,573 10.4% 42.0% 10.6% 35.6%
2011 ......... 8 $ 29.32 127,516 17.2% 59.3% 24.3% 59.9%
2012 ......... 10 $ 24.95 59,083 8.0% 67.3% 9.6% 69.5%
2013 ......... 8 $ 18.47 66,402 9.0% 76.2% 8.0% 77.5%
2014 ......... 3 $ 18.67 25,570 3.5% 79.7% 3.1% 80.6%
- ----------
* Calculated based on approximate square footage occupied by each tenant.
Escrows. The loan documents provide for certain escrows of real estate
taxes and provide for replacement reserves. In addition, in the event the debt
service coverage ratio, as computed by the mortgagee, is less than 1.75x, the
borrower is required to deposit a sum of $60,000 monthly for tenant
improvements and leasing commissions. See Annex A-3 to this prospectus for
information regarding escrow reserves.
Lock Box Account. All tenant payments due under the applicable tenant
leases are deposited into a mortgagor designated lockbox account; however,
following an event of default under the loan documents, the borrower must
notify the tenants that any and all tenant payments due under the applicable
tenant leases shall be directly deposited into a mortgagee lock box account.
Management. Newmark & Company Real Estate, Inc., an affiliate of the
sponsor, is the property manager for the Mortgaged Property securing the 520
Eighth Avenue Loan.
S-163
Villa Del Sol Apartments
The Loan. The Mortgage Loan (the "Villa Del Sol Apartments Loan") is
secured by a first mortgage encumbering the borrower's fee interest in a 562
unit multifamily complex located in Santa Ana, California. The Villa Del Sol
Apartments Loan represents approximately 3.5% of the Cut-Off Date Pool Balance.
The Villa Del Sol Apartments Loan was originated on December 10, 2003 and has a
principal balance as of the Cut-Off Date of $45,000,000. The Villa Del Sol
Apartments Loan provides for interest-only payments for the first 24 months of
its term, and thereafter, fixed monthly payments of principal and interest.
The Villa Del Sol Apartments Loan has a remaining term of 118 months to
its anticipated repayment date of December 11, 2013. The Villa Del Sol
Apartments Loan may be prepaid on or after October 11, 2013, and permits
defeasance with United States government obligations beginning four years after
its first payment date.
The Borrower. The borrower is Advanced Group 94-55, a special purpose
entity. Legal counsel to the borrower delivered a non-consolidation opinion in
connection with the origination of the Villa Del Sol Apartments Loan. The
sponsors are Richard J. Julian and Dell G. Dohrman. Richard J. Julian is a
principal of Advanced Real Estate Services, Inc. ("Advanced"). Advanced was
formed in 1981 and specializes in the ownership and management of multifamily
properties. Mr. Dohrman's family has been developing and managing real estate
since 1946 under the names of DASCO Company and D&D Development.
The Property. The Mortgaged Property is a 562 unit garden-style apartment
complex consisting of 84 buildings situated on approximately 25 acres. The
Mortgaged Property was constructed in 1964 and renovated in 1994 and is located
in Santa Ana, California, within the Los Angeles-Riverside-Orange County
metropolitan statistical area. As of December 4, 2003, the occupancy rate for
the Mortgaged Property securing the Villa Del Sol Apartments Loan was
approximately 98.0%. The Mortgaged Property includes such amenities as 24-hour
security patrol, a full basketball court, two separate laundry room facilities,
eight soft story buildings with "tuck" parking at grade level and residences
above, three separate tot-lots, picnic areas with charcoal BBQ's, an on-site
leasing office and a community room called the "Reading Corner" consisting of
English as a second language classes, a computer room, a library and a
multi-use room.
The following table presents information relating to the unit
configuration of the Mortgaged Property:
APPROXIMATE APPROXIMATE % OF NET
NO. OF UNIT NET RENTABLE RENTABLE ASKING RENTAL
UNIT MIX UNITS SIZE (SF) AREA (SF) AREA (SF) RATE
- -------- -------- ------------- -------------- ----------- -------------------
1-BR/1-BA ...................... 151 633 95,583 20.3% $905
2-BR/1-BA ...................... 315 866 272,790 57.9 $1,105
2-BR/1.5-BA .................... 96 1,074 103,104 21.9 $1,250
--- ------- -----
TOTAL/WEIGHTED AVERAGE ......... 562 839 471,477 100.0% $1,082/1.29/SF
=== ======= =====
Escrows. The loan documents provide for certain escrows of real estate
taxes and insurance and provide for replacement reserves. See Annex A-3 to this
prospectus supplement for information regarding escrow reserves.
Lock Box Account. At any time during the term of the Villa Del Sol
Apartments Loan, (i) if the debt service coverage ratio, as computed by the
mortgagee, is less than 1.15x, (ii) upon the occurrence of an event of default
under the loan documents, or (iii) upon the anticipated repayment date of
December 11, 2013, the borrower must notify the tenants that any and all tenant
payments due under the applicable tenant leases shall be directly deposited
into a mortgagee designated lock box account.
Hyper-amortization. Commencing on the anticipated repayment date of
December 11, 2013, if the Villa Del Sol Apartments Loan is not repaid in full,
the Villa Del Sol Apartments Loan enters a hyper-amortization period through
December 11, 2023. The interest rate applicable to the Villa Del Sol Apartments
Loan during such hyper-amortization period will increase to the greater of 3.0%
over the mortgage rate or 3.0% over the treasury rate, as specified in the loan
documents.
Property Management. Advanced Real Estate Services, Inc., an affiliate of
one of the sponsors, is the property manager for the Mortgaged Property
securing the Villa Del Sol Apartments Loan.
S-164
Pine Trail Square
The Loan. The Mortgage Loan (the "Pine Trail Square Loan") is secured by a
first mortgage encumbering the borrower's fee and leasehold interest in an
anchored retail center located in West Palm Beach, Florida. The Pine Trail
Square Loan represents approximately 2.4% of the Cut-Off Date Pool Balance. The
Pine Trail Square Loan was originated on January 21, 2004 and has a principal
balance as of the Cut-Off Date of $30,350,000.
The Pine Trail Square Loan has a remaining term of 120 months to its
anticipated repayment date of February 11, 2014. The Pine Trail Square Loan may
be prepaid on or after October 11, 2013, and permits defeasance with United
States government obligations beginning four years after its first payment
date.
The Borrower. The borrower is Pine Trail Square, LLC, a special purpose
entity. Legal counsel to the borrower delivered a non-consolidation opinion in
connection with the origination of the Pine Trail Square Loan. The sponsor of
the borrowers is Joe Carosella. Retail Property Group ("RPG"), owned solely by
Joe Carosella, specializes in property development for chain store retailers.
Headquartered in East Fort Lauderdale, RPG properties encompass more than 1.0
million square feet of retail space.
The Property. The Mortgaged Property is an approximately 269,576 square
foot anchored retail center situated on approximately 27.0 acres. The Mortgaged
Property was constructed in 1980 and renovated in 2003. The Mortgaged Property
is located in West Palm Beach, Florida, within the West Palm Beach-Boca Raton,
Florida metropolitan statistical area. As of January 16, 2004, the occupancy
rate for the Mortgaged Property securing the Pine Trail Square Loan was
approximately 81.6%.
The largest tenant is Albertsons, Inc. ("Albertsons") occupying
approximately 54,000 square feet, or approximately 20.0% of the net rentable
area. Albertsons is a major retailer, operating nearly 2,300 stores in 31
states under names such as Albertsons, Acme Markets and Jewel. As of January
28, 2004, Albertsons was rated "Baa2" (Moody's), "BBB" (S&P) and "BBB" (Fitch).
The Albertsons lease expires in November 2011. The second largest tenant is LA
Fitness, occupying approximately 40,737 square feet, or approximately 15.1% of
the net rentable area. LA Fitness owns and operates Sports Clubs in California,
Arizona, Florida, Pennsylvania, New Jersey, New York, Connecticut and Georgia.
The LA Fitness lease expires in November 2017. The third largest tenant is
Marshalls ("Marshalls"), occupying approximately 30,336 square feet, or
approximately 11.3% of the net rentable area. Marshalls, a division of the TJX
Companies, Inc. sells brand-name family apparel, accessories, women's shoes,
domestics, giftware and jewelry at discount prices at more than 1,840 stores
nationwide. As of January 28, 2004, Marshalls was rated "A3" (Moody's) and "A"
(S&P). The Marshalls lease expires in January 2012.
The following table presents information relating to major tenants at the
Mortgaged Property:
% OF NET ACTUAL % OF
RATINGS* NET RENTABLE RENTABLE RENT ACTUAL ACTUAL DATE OF LEASE
TENANT MOODY'S/S&P/FITCH AREA (SF) AREA PSF RENT RENT EXPIRATION
- ----------------------------- ------------------- -------------- ---------- ---------- ------------- ---------- --------------
Albertsons .................. Baa2/BBB/BBB 54,000 20.0% $ 6.63 $ 358,020 12.0% November 2011
LA Fitness .................. NR/NR/NR 40,737 15.1 $ 17.18 700,000 23.5 November 2017
Marshalls ................... A3/A/NR 30,336 11.3 $ 7.10 215,386 7.2 January 2012
Petco ....................... NR/NR/NR 15,685 5.8 $ 17.25 270,566 9.1 August 2018
Goodwill Industries ......... NR/NR/NR 13,289 4.9 $ 22.00 292,358 9.8 December 2013
------ ---- ---------- ----
TOTAL ....................... 154,047 57.1% $1,836,330 61.6%
======= ==== ========== ====
* Certain ratings are those of the parent company whether or not the parent
guarantees the lease.
S-165
The following table presents information relating to the lease rollover
schedule at the Mortgaged Property:
CUMULATIVE
WA BASE CUMULATIVE % OF ACTUAL % OF ACTUAL
# OF LEASES RENT/SF TOTAL SF % OF TOTAL SF % OF SF RENT RENT
YEAR ROLLING ROLLING ROLLING ROLLING* ROLLING* ROLLING* ROLLING*
- -------------- ------------- ----------- ---------- --------------- ------------ ------------- ------------
2004 ......... 4 $ 13.73 13,095 4.9% 4.9% 6.0% 6.0%
2005 ......... 4 $ 17.17 19,463 7.2% 12.1% 11.2% 17.2%
2006 ......... 6 $ 18.91 13,968 5.2% 17.3% 8.9% 26.1%
2007 ......... 2 $ 17.17 2,788 1.0% 18.3% 1.6% 27.7%
2008 ......... 2 $ 16.53 7,126 2.6% 20.9% 3.9% 31.6%
2009 ......... 0 $ 0.00 0 0.0% 20.9% 0.0% 31.6%
2010 ......... 0 $ 0.00 0 0.0% 20.9% 0.0% 31.6%
2011 ......... 1 $ 6.63 54,000 20.0% 41.0% 12.0% 43.6%
2012 ......... 1 $ 7.10 30,336 11.3% 52.2% 7.2% 50.9%
2013 ......... 3 $ 21.87 22,651 8.4% 60.6% 16.6% 67.5%
2014 ......... 0 $ 0.00 0 0.0% 60.6% 0.0% 67.5%
- ----------
* Calculated based on approximate square footage occupied by each tenant.
Escrows. The loan documents provide for certain escrows of real estate
taxes and provide for replacement reserves. In addition, the loan documents
require the borrower to deposit with the mortgagee at the closing of the Pine
Trail Square Loan, a sum of $3,000,000 related to the vacant space at the
Mortgaged Property. The release of the escrow account shall occur when the
lender receives signed estoppels confirming that (i) the space has been leased
to new tenants approved by the lender, (ii) that such new tenants have taken
occupancy and are open for business, and (iii) all tenant improvement costs and
leasing commissions have been paid. In addition, the loan documents required
the borrower to deposit with the mortgagee at the closing of the Pine Trail
Square Loan, a sum of $97,052 for the space to be occupied by Goodwill
Industries in June 2004. Further, if Albertsons fails to exercise its option to
extend its lease expiring November 30, 2011, the borrower shall be required to
deposit $45,000 monthly for 12 months to fund a leasing reserve.
Furthermore the loan documents require the borrower to deposit with the
mortgagee at the closing of the Pine Trail Square Loan, a sum of $48,868
related to the prepayment of rent due under a ground lease for one of the
outparcels for the period from February 1, 2004 through February 28, 2005. In
addition, the borrower is required to deposit with the mortgagee a sum of
$3,824 monthly to fund the ground lease obligation. See Annex A-3 to this
prospectus supplement for information regarding escrow reserves.
Lock Box Account. At any time during the term of the Pine Trail Square
Loan upon the occurrence of an event of default by Albertsons, the failure by
Albertsons to exercise its option to extend its lease expiring November 30,
2011, or upon the anticipated repayment date of February 11, 2014, the borrower
must notify the tenants that any and all tenant payments due under the
applicable tenant leases shall be directly deposited into a mortgagee
designated lock box account.
Hyper-amortization. Commencing on the anticipated repayment date of
February 11, 2014, if the Pine Trail Square Loan is not repaid in full, the
Pine Trail Square Loan enters a hyper-amortization period through February 11,
2034. The interest rate applicable to the Pine Trail Square Loan during such
hyper-amortization period will increase to the greater of 2.0% over the
mortgage rate or 2.0% over the treasury rate, as specified in the loan
documents.
Management. Retail Property Group, Inc., an affiliate of the sponsor, is
the property manager for the Mortgaged Property securing the Pine Trail Square
Loan.
S-166
Pacific Center
The Loan. The Mortgage Loan (the "Pacific Center Loan") is secured by a
first mortgage encumbering the borrower's fee interest in an office building
located in Los Angeles, California. The Pacific Center Loan represents
approximately 2.1% of the Cut-Off Date Pool Balance. The Pacific Center Loan
was originated on December 4, 2003 and has a principal balance as of the
Cut-Off Date of $27,500,000. The Pacific Center Loan provides for interest-only
payments for the first 24 months of its term, and thereafter, fixed monthly
payments of principal and interest.
The Pacific Center Loan has a remaining term of 58 months to its
anticipated repayment date of December 11, 2008. The Pacific Center Loan may be
prepaid on or after July 11, 2008 and permits defeasance with United States
government obligations beginning two years after the Closing Date.
The Borrower. The borrowers are Holualoa Pacific Center Holding, LLC and
Holualoa Pacific Center Holding II, LLC. The borrowers are each special purpose
entities and own the Mortgaged Property as tenants in common. Legal counsel to
the borrowers delivered a non-consolidation opinion in connection with the
origination of the Pacific Center Loan. The sponsor is Holualoa Arizona, Inc.
The company was founded in 1994 by Mr. I. Michael Kasser and currently has a
portfolio that includes 2.3 million square feet of industrial space, 1.5
million square feet of office space, 900,000 square feet of retail space, 1,750
multifamily units and 255 acres.
The Property. The Mortgaged Property is an approximately 403,312 square
foot office building situated on approximately 1.8 acres. The Mortgaged
Property was constructed in 1916 and renovated in 1985. The Mortgaged Property
is located in Los Angeles, California, within the Los Angeles-Riverside-Orange
County metropolitan statistical area. As of November 24, 2003, the occupancy
rate for the Mortgaged Property securing the Pacific Center Loan was
approximately 69.6%.
The largest tenant is United Way, Inc. ("United Way") occupying
approximately 48,700 square feet, or approximately 12.1% of the net rentable
area. United Way is a not-for-profit organization that focuses on health and
human services causes. The United Way leases expire in August 2010, with the
exception of approximately 2,598 square feet of storage space, which is leased
on a month-to-month basis. The second largest tenant is Los Angeles County
Medical Association ("LACMA") occupying approximately 22,500 square feet, or
approximately 5.6% of the net rentable area. LACMA is an association formed to
protect physicians and influence politicians to improve healthcare. The LACMA
lease expires in December 2005. The third largest tenant is American Business
Bank ("ABB"), occupying approximately 22,452 square feet, or approximately 5.6%
of the net rentable area. ABB specializes in business banking whose products
include cash management, depository services, commercial lending and investment
services. ABB services clients in Southern California from Santa Barbara to San
Diego, principally through a system of couriers and supported by electronic
means. The ABB leases expire in January 2009, with approximately 548 square
feet of storage space leased on a month-to-month basis.
The following table presents information relating to major tenants at the
Mortgaged Property:
% OF NET % OF
RATINGS NET RENTABLE RENTABLE ACTUAL ACTUAL DATE OF LEASE
TENANT MOODY'S/S&P/FITCH AREA (SF) AREA RENT PSF ACTUAL RENT RENT EXPIRATION
- ---------------------------------- ------------------ ------------ -------- -------- ----------- ------ ---------------
United Way, Inc. ................. NR/NR/NR 48,700 12.1% $15.37 $ 748,617 15.0% Multiple Spaces
Los Angeles County Medical
Association ..................... NR/NR/NR 22,500 5.6 $13.00 292,500 5.8 December 2005
American Business Bank ........... NR/NR/NR 22,452 5.6 $19.31 433,504 8.7 Multiple Spaces
King Seafood Co. (d.b.a. The Water
Grill) .......................... NR/NR/NR 8,791 2.2 $33.85 297,532 5.6 March 2011
Corporate Builders, Inc. ......... NR/NR/NR 8,687 2.2 $16.00 138,992 2.8 July 2005
------ ---- ---------- ----
TOTAL ............................ 111,130 27.6% $1,911,146 37.9%
======= ==== ========== ====
The following table presents information relating to the lease rollover
schedule at the Mortgaged Property:
S-167
WA BASE CUMULATIVE % % OF ACTUAL CUMULATIVE % OF
# OF LEASES RENT/SF TOTAL SF % OF TOTAL OF SF RENT ACTUAL RENT
YEAR ROLLING ROLLING ROLLING SF ROLLING* ROLLING* ROLLING* ROLLING*
- -------------- ------------- ----------- ---------- ------------- -------------- ------------- -----------------
2004 ......... 70 $ 16.71 77,436 19.2% 19.2% 25.9% 25.9%
2005 ......... 22 $ 16.78 78,269 19.4% 38.6% 26.3% 52.3%
2006 ......... 8 $ 20.76 20,580 5.1% 43.7% 8.6% 60.8%
2007 ......... 1 $ 16.00 2,275 0.6% 44.3% 0.7% 61.6%
2008 ......... 5 $ 18.32 8,074 2.0% 46.3% 3.0% 64.5%
2009 ......... 3 $ 19.34 22,896 5.7% 52.0% 8.9% 73.4%
2010 ......... 1 $ 15.90 46,102 11.4% 63.4% 14.7% 88.1%
2011 ......... 2 $ 33.85 8,791 2.2% 65.6% 6.0% 94.1%
2012 ......... 0 $ 0.00 0 0.0% 65.6% 0.0% 94.1%
2013 ......... 0 $ 0.00 0 0.0% 65.6% 0.0% 94.1%
2014 ......... 0 $ 0.00 0 0.0% 65.6% 0.0% 94.1%
- ----------
* Calculated based on approximate square footage occupied by each tenant.
Escrows. The loan documents provide for certain escrows of real estate
taxes and insurance and provide for replacement reserves. In addition, the loan
documents require the borrower to deposit with the mortgagee at the closing of
the Pacific Center Loan, a sum of $4,000,000 at closing for tenant improvements
and leasing commissions costs. The borrower may use $2,000,000 for costs
associated with the renewal of the existing tenants and $2,000,000 for costs
associated with incremental leasing. Furthermore, the loan documents require
the borrower to deposit $480,000 at closing to be released upon the achievement
of certain base rent thresholds from tenants who are in place and paying rent
on leases with terms of more than 60 days remaining. See Annex A-3 to this
prospectus supplement for information regarding escrow reserves.
Lockbox. At any time during the term of the Pacific Center Loan upon the
occurrence of an event of default under the loan documents or upon the
anticipated repayment date of December 11, 2008, the borrower must notify the
tenants that any and all tenant payments due under the applicable tenant leases
shall be directly deposited into a mortgagee designated lock box account.
Hyper-amortization. Commencing on the anticipated repayment date of
December 11, 2008, if the Pacific Center Loan is not repaid in full, the
Pacific Center Loan enters a hyper-amortization period through December 11,
2013. The interest rate applicable to the Pacific Center Loan during such
hyper-amortization period will increase to the greater of 2.5% over the
mortgage rate or 2.5% over the treasury rate increasing annually by 0.25% and
subject to a maximum rate of 3.0% over the initial rate, as specified in the
loan documents.
Management. Crissman Commercial Services is the property manager for the
Mortgaged Property securing the Pacific Center Loan.
S-168
Bal Harbour Square
The Loan. The Mortgage Loan (the "Bal Harbour Square Loan") is secured by
a first mortgage encumbering the borrower's fee interest in an anchored retail
center located in Fort Lauderdale, Florida. The Bal Harbour Square Loan
represents approximately 2.1% of the Cut-Off Date Pool Balance. The Bal Harbour
Square Loan was originated on December 12, 2003 and has a principal balance as
of the Cut-Off Date of $27,475,432.
The Bal Harbour Square Loan has a remaining term of 119 months to its
anticipated repayment date of January 11, 2014. The Bal Harbour Square Loan may
be prepaid on or after September 11, 2013, and permits defeasance with United
States government obligations beginning four years after its first payment
date.
The Borrower. The borrowers are 19th Street Investors, Inc. and 19th
Street Investors, LLC, both special purpose entities. Legal counsel to the
borrowers delivered a non-consolidation opinion in connection with the
origination of the Bal Harbour Square Loan. The sponsor of the borrowers is Joe
Carosella, owner of Retail Property Group, which specializes in property
development for chain store retailers. Headquartered in East Fort Lauderdale,
Retail Property Group owns and manages approximately 1.0 million square feet of
retail space.
The Property. The Mortgaged Property is an approximately 138,594 square
foot anchored retail center situated on approximately 17.0 acres. The Mortgaged
Property was constructed in 1981 and renovated in 2001. The Mortgaged Property
is located in Fort Lauderdale, Florida, within the Miami-Fort Lauderdale
metropolitan statistical area. As of December 19, 2003, the occupancy rate for
the Mortgaged Property securing the Bal Harbour Square Loan was approximately
97.2%. The Bal Harbour Square Loan documents provide that the borrowers, under
certain specified circumstances, may demolish and rebuild any building on the
Mortgaged Property, with the payment of a construction deposit.
The largest tenant is Circuit City ("Circuit City") occupying
approximately 33,027 square feet, or approximately 23.8% of the net rentable
area. Circuit City operates over 626 Circuit City Superstores throughout the
United States that sell audio and video equipment, as well as personal
computers. The Circuit City lease expires in October 2021. The second largest
tenant is Linens 'n Things ("Linens 'n Things") occupying approximately 29,400
square feet, or approximately 21.2% of the net rentable area. Linens 'n Things
is a national retailer of home textiles, housewares and home accessories, such
as bath items and window treatments. The Linens 'n Things lease expires in
November 2005. The third largest tenant is CompUSA ("CompUSA"), occupying
approximately 17,000 square feet, or approximately 12.3% of the net rentable
area. CompUSA is a national retailer of personal computer-related products and
services. The CompUSA lease expires in October 2014.
The following table presents information relating to the major tenants at
the Mortgaged Property:
% OF NET % OF
RATINGS* NET RENTABLE RENTABLE ACTUAL ACTUAL DATE OF LEASE
TENANT MOODY'S/S&P/FITCH AREA (SF) AREA RENT PSF ACTUAL RENT RENT EXPIRATION
- ---------------------------- ------------------- -------------- ---------- ---------- ------------- ---------- --------------
Circuit City ............... NR/NR/NR 33,027 23.8% $ 25.50 $ 842,189 31.1% October 2021
Linens 'n Things ........... NR/NR/NR 29,400 21.2 $ 9.50 279,300 10.3 November 2005
CompUSA .................... NR/NR/NR 17,000 12.3 $ 20.00 340,000 12.6 October 2014
Rag Shop ................... NR/NR/NR 9,450 6.8 $ 10.58 99,981 3.7 October 2008
Pier 1 Imports ............. Ba2/BBB-/NR 8,840 6.4 $ 24.20 213,928 7.9 February 2008
Lone Star Steakhouse ....... NR/NR/NR 7,100 5.1 $ 14.08 100,000 3.7 October 2009
------ ---- ---------- ----
TOTAL ...................... 104,817 75.6% $1,875,397 69.3%
======= ==== ========== ====
- ---------
* Certain ratings are those of the parent company whether or not the parent
guarantees the lease.
S-169
The following table presents information relating to the lease rollover
schedule at the Mortgaged Property:
WA BASE CUMULATIVE % % OF ACTUAL CUMULATIVE % OF
# OF LEASES RENT/SF TOTAL SF % OF TOTAL OF SF RENT ACTUAL RENT
YEAR ROLLING ROLLING ROLLING SF ROLLING* ROLLING* ROLLING* ROLLING*
- ------------- ------------- --------- ---------- ------------- -------------- ------------- ----------------
2004......... 0 $ 0.00 0 0.0% 0.0% 0.0% 0.0%
2005......... 1 $ 9.50 29,400 21.2% 21.2% 10.3% 10.3%
2006......... 0 $ 0.00 0 0.0% 21.2% 0.0% 10.3%
2007......... 1 $ 23.00 4,688 3.4% 24.6% 4.0% 14.3%
2008......... 2 $ 17.16 18,290 13.2% 37.8% 11.6% 25.9%
2009......... 1 $ 14.08 7,100 5.1% 42.9% 3.7% 29.6%
2010......... 0 $ 0.00 0 0.0% 42.9% 0.0% 29.6%
2011......... 0 $ 0.00 0 0.0% 42.9% 0.0% 29.6%
2012......... 0 $ 0.00 0 0.0% 42.9% 0.0% 29.6%
2013......... 3 $ 25.44 13,959 10.1% 53.0% 13.1% 42.7%
2014......... 2 $ 21.21 22,431 16.2% 69.2% 17.6% 60.3%
- ---------
* Calculated based on approximate square footage occupied by each tenant.
Escrows. The loan documents provide for certain escrows of real estate
taxes and provide for replacement reserves. In addition, the loan documents
require the borrower to deposit with the mortgagee (i) at the closing of the
Bal Harbour Square Loan, a sum of $135,775 for Wine Spirits & More. This escrow
is to be held by the lender until either (i) a replacement tenant has been
found and signed to a lease at market rent ($25/SF) or (ii) the borrower has a
signed lease for the other two vacant bays in the center. See Annex A-3 to this
prospectus supplement for information regarding escrow reserves.
Lock Box Account. Upon the anticipated repayment date of January 11, 2014,
the borrower must notify the tenants that any and all tenant payments due under
the applicable tenant leases shall be directly deposited into a mortgagee
designated lock box account.
Hyper-amortization. Commencing on the anticipated repayment date of
January 11, 2014, if the Bal Harbour Square Loan is not repaid in full, the Bal
Harbour Square Loan enters a hyper-amortization period through January 11,
2034. The interest rate applicable to the Bal Harbour Square Loan during such
hyper-amortization period will increase to the greater of 2.0% over the
mortgage rate or 2.0% over the treasury rate, as specified in the loan
documents.
Management. Retail Property Group, Inc., an affiliate of the sponsor, is
the property manager for the Mortgaged Property securing the Bal Harbour Square
Loan.
S-170
Fairfax Corner-Building D
- ---------------------------------------------------------------
PROPERTY INFORMATION
Number of Mortgaged Real Properties ........ 1
Location (City, State) ..................... Fairfax, VA
Property Type .............................. Office --
Suburban
Size (SF) .................................. 129,107
Occupancy as of October 1, 2003 ............ 92.1%
Year Built / Year Renovated ................ 2002 / NA
Appraisal Value ............................ $29,800,000
Underwritten Occupancy ..................... 92.3%
Underwritten Revenues ...................... $3,320,707
Underwritten Total Expenses ................ $1,124,639
Underwritten Net Operating Income (NOI)..... $2,196,068
Underwritten Net Cash Flow (NCF) ........... $1,990,292
- ---------------------------------------------------------------
- ----------------------------------------------------------------
MORTGAGE LOAN INFORMATION
Mortgage Loan Seller ............................ Citigroup
Cut-Off Date Balance ............................ $23,558,899
Percentage of Cut-Off Date Pool Balance ......... 1.8%
Cut-off Date Loan Balance Per SF ................ $182
Number of Mortgage Loans ........................ 1
Type of Security ................................ Fee
Mortgage Rate ................................... 5.820%
Original Term / Amortization .................... 120 / 360
Remaining Term / Amortization ................... 118 / 358
Cut-Off Date LTV ................................ 79.1%
Maturity Date LTV ............................... 66.8%
Underwritten DSCR on NOI ........................ 1.32x
Underwritten DSCR on NCF ........................ 1.20x
- ----------------------------------------------------------------
The following table presents information relating to major tenants at the
Mortgaged Property:
NET % OF NET ACTUAL
RATINGS RENTABLE RENTABLE RENT % OF ACTUAL DATE OF LEASE
TENANT MOODY'S/S&P/FITCH AREA (SF) AREA PSF ACTUAL RENT RENT EXPIRATION
- -------------------------------- ------------------- ----------- ---------- ----------- ------------- ----------- ---------------
George Mason Mortgage LLC ...... NR/NR/NR 33,511 26.0% $28.78 $ 964,359 27.2% June 2007
C.C. Pace Systems, Inc. ........ NR/NR/NR 19,505 15.1 $24.00 468,120 13.2 September 2006
The Ryland Group Inc. .......... NR/NR/NR 14,332 11.1 $26.78 383,811 10.8 December 2007
Ruth's Chris Steak House ....... NR/NR/NR 9,780 7.6 $30.00 293,400 8.3 October 2012
Intercoastal Mortgage Company .. NR/NR/NR 7,774 6.0 $30.32 235,705 6.7 June 2007
------ ---- ---------- ----
TOTAL .......................... 84,902 65.8% $2,345,395 66.2%
====== ==== ========== ====
S-171
Indigo Creek Apartments
- ---------------------------------------------------------------
PROPERTY INFORMATION
Number of Mortgaged Real Properties..... 1
Location (City, State) ................. Glendale, AZ
Property Type .......................... Multifamily --
Conventional
Size (Units) ........................... 408
Occupancy as of October 28, 2003 ....... 96.1%
Year Built / Year Renovated ............ 1997 / NA
Appraisal Value ........................ $33,200,000
Underwritten Occupancy ................. 90.7%
Underwritten Revenues .................. $3,575,231
Underwritten Total Expenses ............ $1,414,133
Underwritten Net Operating Income
(NOI) ................................ $2,161,098
Underwritten Net Cash Flow (NCF) ....... $2,077,458
- ---------------------------------------------------------------
- ---------------------------------------------------------------
MORTGAGE LOAN INFORMATION
Mortgage Loan Seller ........................... Artesia
Cut-Off Date Balance ........................... $23,500,000
Percentage of Cut-Off Date Pool Balance ........ 1.8%
Cut-Off Date Loan Balance Per Unit ............. $57,598
Number of Mortgage Loans ....................... 1
Type of Security ............................... Fee
Mortgage Rate .................................. 5.250%
Original Term / Amortization ................... 84 / 360
Remaining Term / Amortization .................. 82 / 360
Cut-Off Date LTV ............................... 70.8%
Maturity Date LTV .............................. 65.5%
Underwritten DSCR on NOI ....................... 1.39x
Underwritten DSCR on NCF ....................... 1.33x
- ---------------------------------------------------------------
The following table presents information relating to the unit
configuration of the Mortgaged Property:
APPROXIMATE % OF NET
APPROXIMATE NET RENTABLE RENTABLE ASKING
UNIT MIX NO. OF UNITS UNIT SIZE (SF) AREA (SF) AREA (SF) RENTAL RANGE
- -------------------------------- -------------- ---------------- -------------- ----------- ------------------
1-BR/1-BA ...................... 120 763 91,608 22.8% $569-$799
2-BR/2-BA ...................... 216 1,048 226,440 56.5 $624-$899
3-BR/2-BA ...................... 72 1,154 83,088 20.7 $799-$980
--- ------- -----
TOTAL/WEIGHTED AVERAGE ......... 408 983 401,136 100.0% $751/$0.76/SF
=== ======= =====
S-172
Sunrise Bay Apartments
- ------------------------------------------------------------------
PROPERTY INFORMATION
Number of Mortgaged Real Properties .......... 1
Location (City, State) ....................... Galloway, NJ
Property Type ................................ Multifamily --
Conventional
Size (Units) ................................. 313
Occupancy as of January 9, 2004 .............. 99.7%
Year Built / Year Renovated .................. 1979 / NA
Appraisal Value .............................. $27,200,000
Underwritten Occupancy ....................... 95.0%
Underwritten Revenues ........................ $3,486,635
Underwritten Total Expenses .................. $1,526,920
Underwritten Net Operating Income $1,959,715
(NOI) .....................................
Underwritten Net Cash Flow (NCF) ............. $1,883,656
- ------------------------------------------------------------------
- ------------------------------------------------------------------
MORTGAGE LOAN INFORMATION
Mortgage Loan Seller ............................ Wachovia
Cut-Off Date Balance ............................ $21,500,000
Percentage of Cut-Off Date Pool Balance ......... 1.7%
Cut-Off Date Loan Balance Per Unit .............. $68,690
Number of Mortgage Loans ........................ 1
Type of Security ................................ Fee
Mortgage Rate ................................... 5.290%
Original Term to ARD / Amortization ............. 120 / 360
Remaining Term to ARD / Amortization ............ 120 / 360
Cut-Off Date LTV ................................ 79.0%
Maturity Date LTV ............................... 65.6%
Underwritten DSCR on NOI ........................ 1.37x
Underwritten DSCR on NCF ........................ 1.32x
- ------------------------------------------------------------------
The following table presents information relating to the unit
configuration of the Mortgaged Property:
APPROXIMATE % OF NET
APPROXIMATE NET RENTABLE RENTABLE
UNIT MIX NO. OF UNITS UNIT SIZE (SF) AREA (SF) AREA (SF) ASKING RENTAL RANGE
- -------------------------------- -------------- ---------------- -------------- ----------- --------------------
1-BR/1-BA ...................... 57 740 42,153 11.7% $ 634-$797
2-BR/1-BA ...................... 175 1,140 199,522 55.5 $ 875-$1106
3-BR/2-BA ...................... 81 1,459 118,162 32.8 $1040-$1196
--- ------- -----
TOTAL/WEIGHTED AVERAGE ......... 313 1,150 359,837 100.0% $983/$0.86/SF
=== ======= =====
S-173
Cole Companies Portfolio
- -------------------------------------------------------------------
PROPERTY INFORMATION
Number of Mortgaged Real Properties ........ 11
Location (City, State) ..................... Various
.......................................... Retail --
Property Type .............................. Various
Size (SF) .................................. 153,592
Occupancy as of Various Dates .............. 100.0%
.......................................... Various /
Year Built / Year Renovated ................ Various
Appraisal Value ............................ $35,895,000
Underwritten Occupancy ..................... 98.5%
Underwritten Revenues ...................... $2,786,431
Underwritten Total Expenses ................ $83,593
Underwritten Net Operating Income (NOI) .... $2,702,838
Underwritten Net Cash Flow (NCF) ........... $2,684,816
- -------------------------------------------------------------------
- -------------------------------------------------------------------
MORTGAGE LOAN INFORMATION
Mortgage Loan Seller ............................ Wachovia
Cut-Off Date Balance ............................ $19,650,250
Percentage of Cut-Off Date Pool Balance ......... 1.5%
Cut-Off Date Loan Balance Per SF ................ $128
Number of Mortgage Loans ........................ 11
Type of Security ................................ Fee
Mortgage Rate ................................... 4.290%
Original Term to ARD / Amortization ............. 60 / NA
Remaining Term to ARD / Amortization ............ 58 / NA
Cut-Off Date LTV ................................ 54.8%
Maturity Date LTV ............................... 54.8%
Underwritten DSCR on NOI ........................ 3.21x
Underwritten DSCR on NCF ........................ 3.18x
Shadow Rating (S&P/Moody's)* .................... BBB / Baa2
- -------------------------------------------------------------------
* S&P and Moody's have confirmed that the Cole Companies Portfolio has, in
the context of its inclusion in the trust, the credit characteristics
consistent with that of an obligation rated "BBB"/"Baa2", respectively.
The following table presents certain information relating to each of the
Mortgaged Properties:
NET % OF NET ACTUAL % OF
CUT-OFF DATE RATINGS* RENTABLE RENTABLE RENT ACTUAL ACTUAL DATE OF LEASE
PROPERTY LOAN BALANCE MOODY'S/S&P/FITCH AREA (SF) AREA PSF RENT RENT EXPIRATION
- -------- ------------ ----------------- --------- -------- ------ ------ ------ -------------
Walgreens - Seattle, WA ........ $ 3,349,500 Aa3/A+/NR 14,410 9.4% $ 31.71 $ 457,000 16.2% November 2062
Walgreens - Jacksonville, FL ... 2,510,750 Aa3/A+/NR 15,120 9.8 $ 23.54 356,000 12.6 September 2060
Walgreens - Saginaw, MI ........ 2,282,500 Aa3/A+/NR 15,120 9.8 $ 21.03 318,000 11.3 April 2061
Walgreens - La Marque, TX ...... 2,277,000 Aa3/A+/NR 15,120 9.8 $ 21.10 319,000 11.3 June 2060
CVS - Hamilton, OH ............. 1,787,500 A2/A/NR 11,180 7.3 $ 23.45 262,145 9.3 February 2019
Office Depot - London, KY ...... 1,680,000 Ba1/BBB-/NR 20,468 13.3 $ 12.95 265,061 9.4 September 2016
CVS - Mechanicville, NY ........ 1,290,000 A2/A/NR 10,125 6.6 $ 17.28 174,960 6.2 January 2018
Office Depot - Laurel, MS ...... 1,270,000 Ba1/BBB-/NR 20,515 13.4 $ 9.75 200,021 7.1 October 2017
Walgreens - Tulsa, OK .......... 1,215,500 Aa3/A+/NR 13,000 8.5 $ 13.50 175,500 6.2 December 2043
Walgreens - Broken Arrow, OK ... 1,127,500 Aa3/A+/NR 13,000 8.5 $ 12.50 162,500 5.8 October 2043
Payless Shoes Retail Building .. 860,000 Ba2/BB/NR 5,534 3.6 $ 22.73 125,788 4.5 November 2013
----------- ------ ----- ---------- -----
TOTAL .......................... $19,650,250 153,592 100.0% $2,815,975 100.0%
=========== ======= ===== ========== =====
* Certain ratings are those of the parent company whether or not the parent
company guarantees the lease.
S-174
Caribbean Isle Apartments
- -------------------------------------------------------------------
PROPERTY INFORMATION
Number of Mortgaged Real Properties ........ 1
Location (City, State) ..................... Kissimmee, FL
Property Type .............................. Multifamily --
Conventional
Size (Units) ............................... 448
Occupancy as of January 6, 2004 ............ 89.5%
Year Built / Year Renovated ................ 1990 / NA
Appraisal Value ............................ $25,200,000
Underwritten Occupancy ..................... 80.5%
Underwritten Revenues ...................... $3,197,482
Underwritten Total Expenses ................ $1,430,410
Underwritten Net Operating Income
(NOI) ................................... $1,767,072
Underwritten Net Cash Flow (NCF) ........... $1,636,346
- ----------------------------------------------------------------
- -------------------------------------------------------------------
MORTGAGE LOAN INFORMATION
Mortgage Loan Seller ....................... Wachovia
Cut-Off Date Balance ....................... $19,500,000
Percentage of Cut-Off Date Pool Balance .... 1.5%
Cut-Off Date Loan Balance Per Unit ......... $43,527
Number of Mortgage Loans ................... 1
Type of Security ........................... Fee
Mortgage Rate .............................. 5.600%
Original Term to ARD / Amortization ........ 84 / 360
Remaining Term to ARD / Amortization ....... 84 / 360
Cut-Off Date LTV ........................... 77.4%
Maturity Date LTV .......................... 70.7%
Underwritten DSCR on NOI ................... 1.32x
Underwritten DSCR on NCF ................... 1.22x
- --------------------------------------------------------------------
The following table presents information relating to the unit
configuration of the Mortgaged Property:
APPROXIMATE % OF NET
APPROXIMATE NET RENTABLE RENTABLE ASKING RENTAL
UNIT MIX NO. OF UNITS UNIT SIZE (SF) AREA (SF) AREA (SF) RANGE
- -------------------------------- -------------- ---------------- -------------- ----------- ------------------
1-BR/1-BA ...................... 296 682 201,980 57.0% $565-$770
2-BR/2-BA ...................... 152 1,004 152,608 43.0 $785-$845
--- ------- -----
TOTAL/WEIGHTED AVERAGE ......... 448 791 354,588 100.0% $689/$0.87/SF
=== ======= =====
S-175
Merritt Creek Farm Shopping Center
- ---------------------------------------------------------------------
PROPERTY INFORMATION
Number of Mortgaged Real Properties .......... 1
Location (City, State) ....................... Barboursville, WV
Property Type ................................ Retail -- Anchored
Size (SF) .................................... 256,953
Occupancy as of November 26, 2003 ............ 95.9%
Year Built / Year Renovated .................. 2002 / NA
Appraisal Value .............................. $23,000,000
Underwritten Occupancy ....................... 92.0%
Underwritten Revenues ........................ $2,188,898
Underwritten Total Expenses .................. $374,045
Underwritten Net Operating Income (NOI) ...... $1,814,853
Underwritten Net Cash Flow (NCF) ............. $1,688,847
- ---------------------------------------------------------------------
- ---------------------------------------------------------------------
MORTGAGE LOAN INFORMATION
Mortgage Loan Seller ....................... Wachovia
Cut-Off Date Balance ....................... $18,384,629
Percentage of Cut-Off Date Pool Balance .... 1.4%
Cut-Off Date Loan Balance Per SF ........... $72
Number of Mortgage Loans ................... 1
Type of Security ........................... Fee
Mortgage Rate .............................. 5.970%
Original Term to ARD / Amortization ........ 120 / 360
Remaining Term to ARD / Amortization ....... 119 / 359
Cut-Off Date LTV ........................... 79.9%
Maturity Date LTV .......................... 67.8%
Underwritten DSCR on NOI ................... 1.38x
Underwritten DSCR on NCF ................... 1.28x
- ---------------------------------------------------------------------
The following table presents information relating to the major tenants at
the Mortgaged Property:
NET % OF NET ACTUAL DATE OF
RATINGS* RENTABLE RENTABLE RENT % OF ACTUAL LEASE
TENANT MOODY'S/S&P/FITCH AREA (SF) AREA PSF ACTUAL RENT RENT EXPIRATION
- -------------------------- ------------------- ----------- ---------- ---------- ------------- ------------- --------------
Home Depot (ground lease) Aa3/AA/AA 121,039 47.1% $ 2.48 $ 300,000 15.6% January 2024
Marshalls ................ A3/A/NR 30,000 11.7 $ 8.50 255,000 13.2 August 2012
AC Moore ................. NR/NR/NR 21,306 8.3 $ 11.50 245,019 12.7 October 2012
Shoe Show of Rocky Mt. ... NR/NR/NR 10,075 3.9 $ 15.00 151,125 7.8 October 2007
Silver Dollar Stores, LLC NR/NR/NR 10,010 3.9 $ 12.00 120,120 6.2 November 2013
Dress Barn ............... NR/NR/NR 8,400 3.3 $ 11.06 92,940 4.8 August 2007
------- ---- ---------- ----
TOTAL ................... 200,830 78.2% $1,164,204 60.5%
======= ==== ========== ====
* Certain ratings are those of the parent company whether or not the parent
guarantees the lease.
S-176
Flemington Mall
- -------------------------------------------------------------------
PROPERTY INFORMATION
Number of Mortgaged Real
Properties ................................ 1
Location (City, State) ....................... Raritan, NJ
Property Type ................................ Retail -- Anchored
Size (SF) .................................... 234,129
Occupancy as of January 26, 2004 ............. 98.3%
Year Built / Year Renovated .................. 1975 / 2002
Appraisal Value .............................. $20,700,000
Underwritten Occupancy ....................... 95.0%
Underwritten Revenues ........................ $2,358,995
Underwritten Total Expenses .................. $639,726
Underwritten Net Operating Income
(NOI) ..................................... $1,719,269
Underwritten Net Cash Flow (NCF) ............. $1,532,701
- -------------------------------------------------------------------
- -------------------------------------------------------------------
MORTGAGE LOAN INFORMATION
Mortgage Loan Seller ......................... Wachovia
Cut-Off Date Balance ......................... $16,500,000
Percentage of Cut-Off Date Pool
Balance ................................... 1.3%
Cut-Off Date Loan Balance Per SF ............. $70
Number of Mortgage Loans ..................... 1
Type of Security ............................. Fee
Mortgage Rate ................................ 5.750%
Original Term / Amortization ................. 120 / 360
Remaining Term / Amortization ................ 120 / 360
Cut-Off Date LTV ............................. 79.7%
Maturity Date LTV ............................ 67.1%
Underwritten DSCR on NOI ..................... 1.49x
Underwritten DSCR on NCF ..................... 1.33x
- -------------------------------------------------------------------
The following table presents information relating to the major tenants at
the Mortgaged Property:
NET % OF NET ACTUAL % OF
RATINGS* RENTABLE RENTABLE RENT ACTUAL DATE OF LEASE
TENANT MOODY'S/S&P/FITCH AREA (SF) AREA PSF ACTUAL RENT RENT EXPIRATION
- ------------------------------- ------------------- ----------- ---------- ---------- ------------- ---------- --------------
Kohl's ........................ A3/A-/A 86,450 36.9% $ 5.00 $ 432,250 23.7% January 2024
Burlington Coat Factory ....... NR/NR/NR 75,525 32.3 $ 5.00 377,625 20.7 November 2008
Borders, Inc. ................. NR/NR/NR 23,384 10.0 $ 12.50 292,300 16.0 January 2019
Michael's Stores .............. NR/NR/NR 22,680 9.7 $ 10.50 238,140 13.0 February 2012
Brinker New Jersey, Inc.
(d/b/a Chile's) .............. Baa2/BBB/BBB+ 6,160 2.6 $ 20.00 123,200 6.7 October 2013
------ ---- ---------- ----
TOTAL ......................... 214,199 91.5% $1,463,515 80.1%
======= ==== ========== ====
* Certain ratings are those of the parent company whether or not the parent
guarantees the lease.
S-177
Summit San Raphael Apartments
- ----------------------------------------------------------------------
PROPERTY INFORMATION
Number of Mortgaged Real Properties .......... 1
Location (City, State) ....................... Dallas , TX
Property Type ................................ Multifamily --
Conventional
Size (Units) ................................. 222
Occupancy as of December 18, 2003 ............ 96.9%
Year Built / Year Renovated .................. 1998 / NA
Appraisal Value .............................. $19,100,000
Underwritten Occupancy ....................... 86.0%
Underwritten Revenues ........................ $2,323,537
Underwritten Total Expenses .................. $1,012,324
Underwritten Net Operating Income (NOI) ...... $1,311,213
Underwritten Net Cash Flow (NCF) ............. $1,264,371
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
MORTGAGE LOAN INFORMATION
Mortgage Loan Seller ......................... Wachovia
Cut-Off Date Balance ......................... $15,000,000
Percentage of Cut-Off Date Pool Balance ...... 1.2%
Cut-Off Date Loan Balance Per Unit ........... $67,568
Number of Mortgage Loans ..................... 1
Type of Security ............................. Fee
Mortgage Rate ................................ 5.390%
Original Term to ARD / Amortization .......... 84 / 360
Remaining Term to ARD / Amortization ......... 83 / 360
Cut-Off Date LTV ............................. 78.5%
Maturity Date LTV ............................ 72.8%
Underwritten DSCR on NOI ..................... 1.30x
Underwritten DSCR on NCF ..................... 1.25x
- ----------------------------------------------------------------------
The following table presents information relating to the unit
configuration of the Mortgaged Property:
APPROXIMATE % OF NET ASKING
APPROXIMATE NET RENTABLE RENTABLE AREA RENTAL
UNIT MIX NO. OF UNITS UNIT SIZE (SF) AREA (SF) (SF) RANGE
- -------------------------------- -------------- ---------------- -------------- --------------- --------------------
1-BR/1-BA ...................... 159 774 123,000 61.7% $817--$1,098
2-BR/2-BA ...................... 63 1,210 76,254 38.3 $1,192--$1,322
--- ------- -----
TOTAL/WEIGHTED AVERAGE ......... 222 898 199,254 100.0% $1,001/$1.11/SF
=== ======= =====
S-178
Festival Plaza
- ---------------------------------------------------------------------
PROPERTY INFORMATION
Number of Mortgaged Real Properties .......... 1
Location (City, State) ....................... Montgomery, AL
Retail --
Property Type ................................ Anchored
Size (SF) .................................... 108,118
Occupancy as of September 30, 2003 ........... 86.1%
Year Built / Year Renovated .................. 2000 / NA
Appraisal Value .............................. $18,100,000
Underwritten Occupancy ....................... 85.7%
Underwritten Revenues ........................ $1,920,582
Underwritten Total Expenses .................. $437,303
Underwritten Net Operating Income (NOI) ...... $1,483,279
Underwritten Net Cash Flow (NCF) ............. $1,393,600
- ---------------------------------------------------------------------
- ---------------------------------------------------------------------
MORTGAGE LOAN INFORMATION
Mortgage Loan Seller ..................... Citigroup
Cut-Off Date Balance ..................... $14,877,866
Percentage of Cut-Off Date Pool Balance .. 1.2%
Cut-Off Date Loan Balance Per SF ......... $138
Number of Mortgage Loans ................. 1
Type of Security ......................... Fee
Mortgage Rate ............................ 6.064%
Original Term / Amortization ............. 120 / 360
Remaining Term / Amortization ............ 119 / 359
Cut-Off Date LTV* ........................ 79.9%
Maturity Date LTV ........................ 69.9%
Underwritten DSCR on NOI ................. 1.38x
Underwritten DSCR on NCF ................. 1.29x
- ---------------------------------------------------------------------
- ---------
* For purposes of determining the LTV Ratios, such ratios were reduced by
taking into account amounts available under a letter of credit or in cash
reserves.
The following table presents information relating to major tenants at the
Mortgaged Property:
RATINGS NET % OF NET
MOODY'S/ RENTABLE RENTABLE ACTUAL % OF ACTUAL DATE OF LEASE
TENANT S&P/FITCH AREA (SF) AREA RENT PSF ACTUAL RENT RENT EXPIRATION
- -------------------------- ----------- ----------- ---------- ---------- ------------- ------------- --------------
Rave Motion Pictures ..... NR/NR/NR 58,916 54.5% $ 17.50 $1,031,030 54.6% December 2020
Mellow Mushroom .......... NR/NR/NR 4,000 3.7 $ 18.00 72,000 3.8 January 2017
Atlanta Bread ............ NR/NR/NR 3,867 3.6 $ 18.00 69,601 3.7 January 2014
Gazebo ................... NR/NR/NR 3,803 3.5 $ 12.00 45,636 2.4 February 2008
TJ Rileys, Inc. .......... NR/NR/NR 2,800 2.6 $ 20.00 56,000 3.0 January 2009
------ ---- ---------- ----
TOTAL .................... 73,386 67.9% $1,274,267 67.5%
====== ==== ========== ====
S-179
840 North Broadway
- ---------------------------------------------------------------------
PROPERTY INFORMATION
Number of Mortgaged Real Properties .......... 1
Location (City, State) ....................... Everett, WA
Property Type ................................ Office -- Suburban
Size (SF) .................................... 111,908
Occupancy as of September 30, 2003 ........... 100.0%
Year Built / Year Renovated .................. 1985 / 2002
Appraisal Value .............................. $19,750,000
Underwritten Occupancy ....................... 98.0%
Underwritten Revenues ........................ $1,960,434
Underwritten Total Expenses .................. $369,318
Underwritten Net Operating Income
(NOI) ...................................... $1,591,116
Underwritten Net Cash Flow (NCF) ............. $1,466,166
- ---------------------------------------------------------------------
- ---------------------------------------------------------------------
MORTGAGE LOAN INFORMATION
Mortgage Loan Seller ......................... Artesia
Cut-Off Date Balance ......................... $13,770,919
Percentage of Cut-Off Date Pool .............. 1.1%
Cut-Off Date Loan Balance Per SF ............. $123
Number of Mortgage Loans ..................... 1
Type of Security ............................. Fee
Mortgage Rate ................................ 5.540%
Original Term to ARD / Amortization .......... 60 / 360
Remaining Term to ARD / Amortization ......... 56 / 356
Cut-Off Date LTV ............................. 69.7%
Maturity Date LTV ............................ 65.1%
Underwritten DSCR on NOI ..................... 1.68x
Underwritten DSCR on NCF ..................... 1.55x
- ---------------------------------------------------------------------
The following table presents information relating to the single tenant at
the Mortgaged Property:
RATINGS NET
MOODY'S/ RENTABLE % OF NET ACTUAL RENT ACTUAL % OF ACTUAL DATE OF
TENANT S&P/FITCH AREA (SF) RENTABLE AREA PSF RENT RENT LEASE EXPIRATION
- ------ --------- --------- ------------- ----------- ------ ----------- ----------------
State of Washington Department of
General Administration ........... Aa1/AA/NR 111,908 100.00% $ 16.19 $1,811,708 100.0% June 2010
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THE MORTGAGE LOAN SELLERS
The Depositor will acquire the Mortgage Loans from the Mortgage Loan
Sellers on or prior to the Closing Date pursuant to separate mortgage loan
purchase agreements (each, a "Mortgage Loan Purchase Agreement" and together,
the "Mortgage Loan Purchase Agreements"). The Mortgage Loan Sellers originated
the Mortgage Loans as described above under "--Mortgage Loan History."
Sixty-three (63) of the Mortgage Loans (the "Wachovia Mortgage Loans"),
representing 82.9% of the Cut-Off Date Pool Balance (46 Mortgage Loans in Loan
Group 1 or 82.4% of the Cut-Off Date Group 1 Balance and 17 Mortgage Loans in
Loan Group 2 or 84.7% of the Cut-Off Date Group 2 Balance), were originated by
Wachovia Bank, National Association. Wachovia is a national banking association
whose principal offices are located in Charlotte, North Carolina. Wachovia's
business is subject to examination and regulation by federal banking
authorities and its primary federal bank regulatory authority is the Office of
the Comptroller of the Currency. Wachovia is a wholly-owned subsidiary of
Wachovia Corporation. As of September 30, 2003, Wachovia had total assets of
$389 billion. Wachovia is acting as the Master Servicer. Wachovia Capital
Markets, LLC is acting as an Underwriter for this transaction and is an
affiliate of Wachovia.
Twenty-seven (27) of the Mortgage Loans (the "Artesia Mortgage Loans"),
representing 9.4% of the Cut-Off Date Pool Balance (21 Mortgage Loans in Loan
Group 1 or 7.9% of the Cut-Off Date Group 1 Balance and 6 Mortgage Loans in
Loan Group 2 or 15.3% of the Cut-Off Date Group 2 Balance), were originated by
Artesia Mortgage Capital Corporation. Artesia is a Delaware corporation engaged
in the business of originating and securitizing U.S. commercial mortgage loans.
Its principal offices are located in the Seattle suburb of Issaquah,
Washington. It is a wholly-owned subsidiary of Dexia Bank which is rated "AA+"
by Fitch, "AA" by S&P and "Aa2" by Moody's. Dexia Bank is part of Dexia Group,
a diversified financial services firm located in Brussels, Belgium with a
balance sheet of 351 billion EUR ($368 billion) and a stock market
capitalization of approximately 14 billion EUR ($15 billion) as of December
2002.
Twelve (12) of the Mortgage Loans (the "Citigroup Mortgage Loans"),
representing 7.8% of the Cut-Off Date Pool Balance (12 Mortgage Loans in Loan
Group 1 or 9.7% of the Cut-Off Date Group 1 Balance), were originated by
Citigroup Global Markets Realty Corp., a New York corporation whose principal
offices are located in New York, New York that is primarily engaged in the
business of purchasing and originating commercial mortgage loans. Citigroup is
a subsidiary of Citigroup Financial Products, Inc. An affiliate of Citigroup,
Citigroup Global Markets Inc., is acting as an Underwriter for this
transaction.
Wachovia Bank, National Association has no obligation to repurchase or
substitute any of the Artesia Mortgage Loans or any of the Citigroup Mortgage
Loans, Artesia Mortgage Capital Corporation has no obligation to repurchase or
substitute any of the Wachovia Mortgage Loans or the Citigroup Mortgage Loans
and Citigroup Global Markets Realty Corp. has no obligation to repurchase or
substitute any of the Wachovia Mortgage Loans or the Artesia Mortgage Loans.
All information concerning the Wachovia Mortgage Loans contained herein or
used in the preparation of this prospectus supplement is as underwritten by
Wachovia Bank, National Association. All information concerning the Artesia
Mortgage Loans contained herein or used in the preparation of this prospectus
supplement is as underwritten by Artesia. All information concerning the
Citigroup Mortgage Loans contained herein or used in the preparation of this
prospectus supplement is as underwritten by Citigroup.
UNDERWRITING STANDARDS
General. Each Mortgage Loan Seller's commercial real estate finance or
commercial mortgage banking group has the authority, with the approval from the
appropriate credit committee, to originate fixed-rate, first lien mortgage
loans for securitization. Each Mortgage Loan Seller's commercial real estate
finance or commercial mortgage banking operation is staffed by real estate
professionals. Each Mortgage Loan Seller's loan underwriting group is an
integral component of the commercial real estate finance or commercial mortgage
banking group which also includes groups responsible for loan origination and
closing mortgage loans.
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Upon receipt of a loan application, the respective Mortgage Loan Seller's
loan underwriters commence an extensive review of the borrower's financial
condition and creditworthiness and the real estate which will secure the loan.
Loan Analysis. Generally, each Mortgage Loan Seller performs both a credit
analysis and collateral analysis with respect to a loan applicant and the real
estate that will secure the loan. In general, credit analysis of the borrower
and the real estate includes a review of historical financial statements,
including rent rolls (generally unaudited), third party credit reports,
judgment, lien, bankruptcy and pending litigation searches and, if applicable,
the loan payment history of the borrower. Each Mortgage Loan Seller typically
performs a qualitative analysis which incorporates independent credit checks
and published debt and equity information with respect to certain principals of
the borrower as well as the borrower itself. Borrowers are generally required
to be single-purpose entities although they are generally not required to be
structured to limit the possibility of becoming insolvent or bankrupt. The
collateral analysis typically includes an analysis of the historical property
operating statements, rent rolls, operating budgets, a projection of future
performance, if applicable, and a review of tenant leases. Each Mortgage Loan
Seller generally requires third party appraisals, as well as environmental and
building condition reports. Each report is reviewed for acceptability by a
staff member of the applicable Mortgage Loan Seller or a third party consultant
for compliance with program standards. Generally, the results of these reviews
are incorporated into the underwriting report. In some instances, one or more
provisions of the guidelines were waived or modified by the related Mortgage
Loan Seller where it was determined not to adversely affect the mortgage loans
originated by it in any material respect.
Loan Approval. Prior to commitment, all mortgage loans must be approved by
the applicable Mortgage Loan Seller's credit committee in accordance with its
credit policies.
Debt Service Coverage Ratio and LTV Ratio. Each Mortgage Loan Seller's
underwriting standards generally mandate minimum debt service coverage ratios
and maximum loan-to-value ratios. The debt service coverage ratio guidelines
are generally calculated based on net cash flow at the time of origination. In
addition, each Mortgage Loan Seller's underwriting guidelines generally permit
a maximum amortization period of 30 years. However, notwithstanding such
guidelines, in certain circumstances the actual debt service coverage ratios,
loan-to-value ratios and amortization periods for the mortgage loans originated
by such Mortgage Loan Seller may vary from these guidelines.
Escrow Requirements. Generally, each Mortgage Loan Seller requires most
borrowers to fund various escrows for taxes and insurance, capital expenses and
replacement reserves. Generally, the required escrows for mortgage loans
originated by each Mortgage Loan Seller are as follows:
o Taxes--Typically an initial deposit and monthly escrow deposits equal to
1/12th of the annual property taxes (based on the most recent property
assessment and the current millage rate) are required to provide the
Mortgage Loan Seller with sufficient funds to satisfy all taxes and
assessments. This escrow requirement may be sometimes waived.
o Insurance--If the property is insured under an individual policy (i.e.,
the property is not covered by a blanket policy), typically an initial
deposit and monthly escrow deposits equal to 1/12th of the annual
property insurance premium are required to provide the Mortgage Loan
Seller with sufficient funds to pay all insurance premiums. This escrow
may be sometimes waived.
o Replacement Reserves--Replacement reserves are generally calculated in
accordance with the expected useful life of the components of the
property during the term of the mortgage loan.
o Completion Repair/Environmental Remediation--Typically, a completion
repair or remediation reserve is required where an environmental or
engineering report suggests that such reserve is necessary. Upon funding
of the applicable Mortgage Loan, the Mortgage Loan Seller generally
requires that at least 110% of the estimated costs of repairs or
replacements be reserved and generally requires that repairs or
replacements be completed within a year after the funding of the
applicable Mortgage Loan.
o Tenant Improvement/Lease Commissions--In some cases, major tenants have
lease expirations within the Mortgage Loan term. To mitigate this risk,
special reserves may be required to be
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funded either at closing of the Mortgage Loan and/or during the Mortgage
Loan term to cover certain anticipated leasing commissions or tenant
improvement costs which might be associated with re-leasing the space
occupied by such tenants.
ASSIGNMENT OF THE MORTGAGE LOANS; REPURCHASES AND SUBSTITUTIONS
On the Closing Date, the Depositor will transfer the Mortgage Loans
(including the Starrett-Lehigh Building Subordinate Loan), without recourse, to
the Trustee for the benefit of the Certificateholders. In connection with such
transfer, the Depositor will require each Mortgage Loan Seller to deliver to
the Trustee or to a document custodian appointed by the Trustee (a
"Custodian"), among other things, the following documents with respect to each
Mortgage Loan (including the Starrett-Lehigh Building Subordinate Loan)
originated by the applicable Mortgage Loan Seller (the "Mortgage File"): (i)
the original Mortgage Note, endorsed on its face or by allonge attached
thereto, without recourse, to the order of the Trustee or in blank (or, if the
original Mortgage Note has been lost, an affidavit to such effect from the
applicable Mortgage Loan Seller or another prior holder, together with a copy
of the Mortgage Note); (ii) the original or a copy of the Mortgage, together
with an original or copy of any intervening assignments of the Mortgage, in
each case (unless not yet returned by the applicable recording office) with
evidence of recording indicated thereon or certified by the applicable
recorder's office; (iii) the original or a copy of any related assignment of
leases and of any intervening assignments thereof (if such item is a document
separate from the Mortgage), in each case (unless not yet returned by the
applicable recording office) with evidence of recording indicated thereon or
certified by the applicable recorder's office; (iv) an original assignment of
the Mortgage in favor of the Trustee or in blank and (subject to the completion
of certain missing recording information) in recordable form; (v) an original
assignment of any related assignment of leases (if such item is a document
separate from the Mortgage) in favor of the Trustee or in blank and (subject to
the completion of certain missing recording information) in recordable form;
(vi) the original assignment of all unrecorded documents relating to the
Mortgage Loan, if not already assigned pursuant to items (iv) or (v) above;
(vii) originals or copies of all modification, consolidation, assumption and
substitution agreements in those instances in which the terms or provisions of
the Mortgage or Mortgage Note have been modified or the Mortgage Loan has been
assumed or consolidated; (viii) the original or a copy of the policy or
certificate of lender's title insurance issued on the date of the origination
of such Mortgage Loan, or, if such policy has not been issued or located, an
irrevocable, binding commitment (which may be a marked version of the policy
that has been executed by an authorized representative of the title company or
an agreement to provide the same pursuant to binding escrow instructions
executed by an authorized representative of the title company) to issue such
title insurance policy; (ix) any filed copies (bearing evidence of filing) or
other evidence of filing satisfactory to the Trustee of any UCC financing
statements, related amendments and continuation statements in the possession of
the applicable Mortgage Loan Seller; (x) an original assignment in favor of the
Trustee of any financing statement executed and filed in favor of the
applicable Mortgage Loan Seller in the relevant jurisdiction; (xi) any
intercreditor agreement relating to permitted debt of the mortgagor; and (xii)
copies of any loan agreement, escrow agreement, security agreement or letter of
credit relating to a Mortgage Loan; and (xiii) the original or copy of any
ground lease, ground lessor estoppel, environmental insurance policy or
guaranty relating to a Mortgage Loan.
As provided in the Pooling and Servicing Agreement, the Trustee or a
Custodian on its behalf is required to review each Mortgage File within a
specified period following its receipt thereof. If any of the documents
described in the preceding paragraph is found during the course of such review
to be missing from any Mortgage File or defective, and in either case such
omission or defect materially and adversely affects the value of the applicable
Mortgage Loan or the interests of the Certificateholders therein, the
applicable Mortgage Loan Seller, if it does not deliver the document or cure
the defect (other than omissions solely due to a document not having been
returned by the related recording office) within a period of 90 days following
such Mortgage Loan Seller's receipt of notice thereof, will be obligated
pursuant to the applicable Mortgage Loan Purchase Agreement (the relevant
rights under which will be assigned by the Depositor to the Trustee) to (1)
repurchase the affected Mortgage Loan (including the Starrett-Lehigh Building
Subordinate Loan) within such 90-day period at a price (the "Purchase Price")
generally equal to the sum of (i) the unpaid principal balance of such Mortgage
Loan (including the Starrett-Lehigh Building Subordinate Loan), (ii) the unpaid
accrued interest on such Mortgage Loan
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(including the Starrett-Lehigh Building Subordinate Loan) (calculated at the
applicable Mortgage Rate) to but not including the Due Date in the Collection
Period in which the purchase is to occur and (iii) certain Additional Trust
Fund Expenses in respect of such Mortgage Loan, including but not limited to,
servicing expenses that are reimbursable to the Master Servicer, the Special
Servicer or the Trustee plus any interest thereon and on any related P&I
Advances or (2) other than with respect to the Starrett-Lehigh Building Loan,
substitute a Qualified Substitute Mortgage Loan for such Mortgage Loan and pay
the Master Servicer for deposit into the Certificate Account a shortfall amount
equal to the difference between the Purchase Price of the deleted Mortgage Loan
calculated as of the date of substitution and the Stated Principal Balance of
such Qualified Substitute Mortgage Loan as of the date of substitution (the
"Substitution Shortfall Amount"); provided that, unless the breach would cause
the Mortgage Loan not to be a qualified mortgage within the meaning of Section
860G(a)(3) of the Code, the applicable Mortgage Loan Seller will generally have
an additional 90-day period to deliver the document or cure the defect, as the
case may be, if it is diligently proceeding to effect such delivery or cure and
provided further, that no such document omission or defect (other than with
respect to the Mortgage Note, the Mortgage, the title insurance policy, the
ground lease or any letter of credit) will be considered to materially and
adversely affect the interests of the Certificateholders in, or the value of,
the affected Mortgage Loans unless the document with respect to which the
document omission or defect exists is required in connection with an imminent
enforcement of the mortgagee's rights or remedies under the related Mortgage
Loan, defending any claim asserted by any borrower or third party with respect
to the Mortgage Loan, establishing the validity or priority of any lien or any
collateral securing the Mortgage Loan or for any immediate significant
servicing obligation. The foregoing repurchase or substitution obligation
constitutes the sole remedy available to the Certificateholders and the Trustee
for any uncured failure to deliver, or any uncured defect in, a constituent
Mortgage Loan document. Each Mortgage Loan Seller is solely responsible for its
repurchase or substitution obligation, and such obligations will not be the
responsibility of the Depositor.
The Pooling and Servicing Agreement requires the Trustee promptly to cause
each of the assignments described in clauses (iv), (v) and (x) of the second
preceding paragraph to be submitted for recording or filing, as applicable, in
the appropriate public records. See "DESCRIPTION OF THE POOLING AND SERVICING
AGREEMENTS--Assignment of Mortgage Assets; Repurchases" in the prospectus.
A "Qualified Substitute Mortgage Loan" is a mortgage loan which must, on
the date of substitution: (i) have an outstanding Stated Principal Balance,
after application of all scheduled payments of principal and interest due
during or prior to the month of substitution, not in excess of the Stated
Principal Balance of the deleted Mortgage Loan as of the Due Date in the
calendar month during which the substitution occurs; (ii) have a Mortgage Rate
not less than the Mortgage Rate of the deleted Mortgage Loan; (iii) have the
same Due Date as the deleted Mortgage Loan; (iv) accrue interest on the same
basis as the deleted Mortgage Loan (for example, on the basis of a 360-day year
consisting of twelve 30-day months); (v) have a remaining term to stated
maturity not greater than, and not more than two years less than, the remaining
term to stated maturity of the deleted Mortgage Loan; (vi) have an original
loan-to-value ratio not higher than that of the deleted Mortgage Loan and a
current loan-to-value ratio not higher than the then-current loan-to-value
ratio of the deleted Mortgage Loan; (vii) comply as of the date of substitution
with all of the representations and warranties set forth in the applicable
Mortgage Loan Purchase Agreement; (viii) have an environmental report with
respect to the related Mortgaged Property which will be delivered as a part of
the related servicing file; (ix) have an original debt service coverage ratio
not less than the original debt service coverage ratio of the deleted Mortgage
Loan; (x) be determined by an opinion of counsel to be a "qualified replacement
mortgage" within the meaning of Section 860G(a)(4) of the Code; (xi) not have a
maturity date after the date two years prior to the Rated Final Distribution
Date; (xii) not be substituted for a deleted Mortgage Loan unless the Trustee
has received prior confirmation in writing by each Rating Agency that such
substitution will not result in the withdrawal, downgrade, or qualification of
the rating assigned by the Rating Agency to any Class of Certificates then
rated by the Rating Agency (the cost, if any, of obtaining such confirmation to
be paid by the applicable Mortgage Loan Seller); (xiii) have a date of
origination that is not more than 12 months prior to the date of substitution;
(xiv) have been approved by the Controlling Class Representative; provided that
a
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Controlling Class Representative has been elected and such approval of the
Controlling Class Representative may not be unreasonably withheld; (xv) not be
substituted for a deleted Mortgage Loan if it would result in the termination
of the REMIC status of any of the REMICs or the imposition of tax on any of the
REMICs other than a tax on income expressly permitted or contemplated to be
received by the terms of the Pooling and Servicing Agreement and (xvi) become a
part of the same Loan Group as the deleted Mortgage Loan. In the event that one
or more mortgage loans are substituted for one or more deleted Mortgage Loans,
then the amounts described in clause (i) shall be determined on the basis of
aggregate principal balances and the rates described in clause (ii) above and
the remaining term to stated maturity referred to in clause (v) above shall be
determined on a weighted average basis; provided, that no individual Mortgage
Loan shall have a Mortgage Rate, net of the related Administrative Cost Rate,
that is less than the highest Pass-Through Rate of any Class of Sequential Pay
Certificates then outstanding bearing a fixed rate. When a Qualified Substitute
Mortgage Loan is substituted for a deleted Mortgage Loan, the applicable
Mortgage Loan Seller will be required to certify that such Mortgage Loan meets
all of the requirements of the above definition and shall send such
certification to the Trustee.
REPRESENTATIONS AND WARRANTIES; REPURCHASES AND SUBSTITUTIONS
In each Mortgage Loan Purchase Agreement, the applicable Mortgage Loan
Seller has represented and warranted with respect to each Mortgage Loan
(subject to certain exceptions specified in each Mortgage Loan Purchase
Agreement), as of the Closing Date, or as of such other date specifically
provided in the representation and warranty, among other things, generally
that:
(i) the information set forth in the schedule of Mortgage Loans
attached to the applicable Mortgage Loan Purchase Agreement (which contains
certain of the information set forth in Annex A-1 to this prospectus
supplement) was true and correct in all material respects as of the Cut-Off
Date;
(ii) as of the date of its origination, such Mortgage Loan complied in
all material respects with, or was exempt from, all requirements of
federal, state or local law relating to the origination of such Mortgage
Loan;
(iii) immediately prior to the sale, transfer and assignment to the
Depositor, the applicable Mortgage Loan Seller had good and marketable
title to, and was the sole owner of, each Mortgage Loan, and is
transferring the Mortgage Loan free and clear of any and all liens,
pledges, charges or security interests of any nature encumbering such
Mortgage Loan;
(iv) the proceeds of such Mortgage Loan have been fully disbursed and
there is no requirement for future advances thereunder by the mortgagee;
(v) each related Mortgage Note, Mortgage, assignment of leases, if
any, and other agreements executed in connection with such Mortgage Loan is
the legal, valid and binding obligation of the related mortgagor (subject
to any nonrecourse provisions therein and any state anti-deficiency or
market value limit deficiency legislation), enforceable in accordance with
its terms, except (a) 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 provision 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 (b) as such enforcement may be limited by bankruptcy,
insolvency, receivership, reorganization, moratorium, redemption,
liquidation or other laws affecting the enforcement of creditors' rights
generally, and by general principles of equity (regardless of whether such
enforcement is considered in a proceeding in equity or at law);
(vi) as of the date of its origination, there was no valid offset,
defense, counterclaim, abatement or right to rescission with respect to any
of the related Mortgage Notes, Mortgage(s) or other agreements executed in
connection therewith, and, as of the Cut-Off Date, there was no valid
offset, defense, counterclaim or right to rescission with respect to such
Mortgage Note, Mortgage(s) or other agreements, except in each case, with
respect to the enforceability of any provisions requiring the payment of
default interest, late fees, additional interest, prepayment premiums or
yield maintenance charges;
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(vii) each related assignment of the Mortgage and assignment of
assignment of leases from the applicable Mortgage Loan Seller to the
Trustee constitutes the legal, valid and binding first priority assignment
from such Mortgage Loan Seller (subject to the customary limitations set
forth in (v) above);
(viii) the related Mortgage is a valid and enforceable first lien on
the related Mortgaged Property except for the exceptions set forth in
paragraph (v) above and (a) the lien of current real property taxes, ground
rents, water charges, sewer rents and assessments not yet due and payable,
(b) covenants, conditions and restrictions, rights of way, easements and
other matters of public record, none of which, individually or in the
aggregate, materially and adversely interferes with the current use of the
Mortgaged Property or the security intended to be provided by such Mortgage
or with the mortgagor's ability to pay its obligations under the Mortgage
Loan when they become due or materially and adversely affects the value of
the Mortgaged Property, (c) the exceptions (general and specific) and
exclusions set forth in the related title insurance policy or appearing of
record, none of which, individually or in the aggregate, materially
interferes with the current use of the Mortgaged Property or the security
intended to be provided by such Mortgage or with the mortgagor's ability to
pay its obligations under the Mortgage Loan when they become due or
materially and adversely affects the value of the Mortgaged Property, (d)
other matters to which like properties are commonly subject, none of which,
individually or in the aggregate, materially and adversely interferes with
the current use of the Mortgaged Property or the security intended to be
provided by such Mortgage or with the mortgagor's ability to pay its
obligations under the Mortgage Loan when they become due or materially and
adversely affects the value of the Mortgaged Property, (e) the right of
tenants (whether under ground leases, space leases or operating leases) at
the Mortgaged Property to remain following a foreclosure or similar
proceeding (provided that such tenants are performing under such leases)
and (f) if such Mortgage Loan is cross-collateralized with any other
Mortgage Loan, the lien of the Mortgage for such other Mortgage Loan, none
of which, individually or in the aggregate, materially and adversely
interferes with the current use of the Mortgaged Property or the security
intended to be provided by such Mortgage or with the mortgagor's ability to
pay its obligations under the Mortgage Loan when they become due or
materially and adversely affects the value of the Mortgaged Property;
(ix) all real estate taxes and governmental assessments, or
installments thereof, which would be a lien on the Mortgaged Property and
that prior to the Cut-Off Date have become delinquent in respect of the
related Mortgaged Property have been paid, or an escrow of funds in an
amount sufficient to cover such payments has been established;
(x) to the applicable Mortgage Loan Seller's actual knowledge as of
the Cut-Off Date, and to the applicable Mortgage Loan Seller's actual
knowledge based solely upon due diligence customarily performed with the
origination of comparable mortgage loans by the Mortgage Loan Seller, each
related Mortgaged Property was free and clear of any material damage (other
than deferred maintenance for which escrows were established at
origination) that would affect materially and adversely the value of such
Mortgaged Property as security for the Mortgage Loan and to the applicable
Mortgage Loan Seller's actual knowledge as of the Cut-Off Date there was no
proceeding pending for the total or partial condemnation of such Mortgaged
Property;
(xi) as of the date of its origination, all insurance coverage
required under each related Mortgage, which insurance covered such risks as
were customarily acceptable to prudent commercial and multifamily mortgage
lending institutions lending on the security of property comparable to the
related Mortgaged Property in the jurisdiction in which such Mortgaged
Property is located, and with respect to a fire and extended perils
insurance policy, was in an amount (subject to a customary deductible) at
least equal to the lesser of (a) the replacement cost of improvements
located on such Mortgaged Property, or (b) the initial principal balance of
the Mortgage Loan, and in any event, the amount necessary to prevent
operation of any co-insurance provisions, and was in full force and effect
with respect to each related Mortgaged Property;
(xii) as of the Cut-Off Date, the Mortgage Loan was 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 Scheduled Payment; and
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(xiii) one or more environmental site assessments, updates or
transaction screens thereof were performed by an environmental consulting
firm independent of the applicable Mortgage Loan Seller and the applicable
Mortgage Loan Seller's affiliates with respect to each related Mortgaged
Property during the 18-month period preceding the origination of the
related Mortgage Loan, and the applicable Mortgage Loan Seller, having made
no independent inquiry other than to review the report(s) prepared in
connection with the assessment(s) referenced herein, has no actual
knowledge and has received no notice of any material and adverse
environmental condition or circumstance affecting such Mortgaged Property
that was not disclosed in such report(s).
In the case of a breach of any of the representations and warranties in
any Mortgage Loan Purchase Agreement that materially and adversely affects the
value of a Mortgage Loan or the interests of the Certificateholders therein,
the applicable Mortgage Loan Seller, if it does not cure such breach within a
period of 90 days following its receipt of notice thereof, is obligated
pursuant to the applicable Mortgage Loan Purchase Agreement (the relevant
rights under which have been assigned by the Depositor to the Trustee) to
either substitute a Qualified Substitute Mortgage Loan and pay any Substitution
Shortfall Amount (other than with respect to the Starrett-Lehigh Building Loan)
or to repurchase the affected Mortgage Loan within such 90-day period at the
applicable Purchase Price; provided that, unless the breach would cause the
Mortgage Loan not to be a qualified mortgage within the meaning of Section
860G(a)(3) of the Code, the applicable Mortgage Loan Seller generally has an
additional 90-day period to cure such breach if it is diligently proceeding
with such cure. Each Mortgage Loan Seller is solely responsible for its
repurchase or substitution obligation, and such obligations will not be the
responsibility of the Depositor.
The foregoing substitution or repurchase obligation constitutes the sole
remedy available to the Certificateholders and the Trustee for any uncured
breach of any Mortgage Loan Seller's representations and warranties regarding
its Mortgage Loans. There can be no assurance that the applicable Mortgage Loan
Seller will have the financial resources to repurchase any Mortgage Loan at any
particular time. Each Mortgage Loan Seller is the sole warranting party in
respect of the Mortgage Loans sold by such Mortgage Loan Seller to the
Depositor, and none of the Depositor nor any of such party's affiliates (except
with respect to Wachovia Bank, National Association in its capacity as a
Mortgage Loan Seller) will be obligated to substitute or repurchase any such
affected Mortgage Loan in connection with a breach of a Mortgage Loan Seller's
representations and warranties if such Mortgage Loan Seller defaults on its
obligation to do so.
REPURCHASE OR SUBSTITUTION OF CROSS-COLLATERALIZED MORTGAGE LOANS
If (i) any Mortgage Loan is required to be repurchased or substituted for
in the manner described above in "--Assignment of the Mortgage Loans;
Repurchases and Substitutions" or "--Representations and Warranties;
Repurchases and Substitutions," (ii) such Mortgage Loan is cross-collateralized
and cross-defaulted with one or more other Mortgage Loans (each, a "Crossed
Loan" and, collectively, a "Crossed Group"), and (iii) the applicable document
omission or defect (a "Defect") or breach of a representation and warranty (a
"Breach") does not constitute a Defect or Breach, as the case may be, as to
each other Crossed Loan in such Crossed Group (without regard to this
paragraph), then the applicable Defect or Breach, as the case may be, will be
deemed to constitute a Defect or Breach, as the case may be, as to any other
Crossed Loan in the Crossed Group for purposes of this paragraph, and the
related Mortgage Loan Seller will be required to repurchase or substitute for
such other Crossed Loan(s) in the related Crossed Group as provided above in
"--Assignment of the Mortgage Loans; Repurchases and Substitutions" or
"--Representations and Warranties; Repurchases and Substitutions" unless: (i)
the debt service coverage ratio for all of the remaining Crossed Loans for the
four calendar quarters immediately preceding the repurchase or substitution is
not less than the debt service coverage ratio for all such related Crossed
Loans, including the affected Crossed Loan, for the four calendar quarters
immediately preceding the repurchase or substitution, (ii) the loan-to-value
ratio for any of the remaining related Crossed Loans, determined at the time of
repurchase or substitution is not greater than the loan-to-value ratio for all
such related Crossed Loans, including the affected Crossed Loan, determined at
the time of repurchase or substitution, and (iii) the Trustee receives an
opinion of counsel to the effect that such repurchase or substitution is
permitted by the REMIC provisions. In the event that the remaining Crossed
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Loans satisfy the aforementioned criteria, the Mortgage Loan Seller may elect
either to repurchase or substitute for only the affected Crossed Loan as to
which the related Breach or Defect exists or to repurchase or substitute for
all of the Crossed Loans in the related Crossed Group.
To the extent that the related Mortgage Loan Seller repurchases or
substitutes for an affected Crossed Loan as described in the immediately
preceding paragraph while the Trustee continues to hold any related Crossed
Loans, the related Mortgage Loan Seller and the Depositor have agreed in the
related Mortgage Loan Purchase Agreement to forbear from enforcing any remedies
against the other's Primary Collateral (as defined below), but each is
permitted to exercise remedies against the Primary Collateral securing its
respective affected Crossed Loans, including, with respect to the Trustee, the
Primary Collateral securing Mortgage Loans still held by the Trustee, so long
as such exercise does not materially impair the ability of the other party to
exercise its remedies against its Primary Collateral. If the exercise of
remedies by one party would materially impair the ability of the other party to
exercise its remedies with respect to the Primary Collateral securing the
Crossed Loans held by such party, then both parties have agreed in the related
Mortgage Loan Purchase Agreement to forbear from exercising such remedies until
the loan documents evidencing and securing the relevant Mortgage Loans can be
modified in a manner that complies with the Mortgage Loan Purchase Agreement to
remove the threat of material impairment as a result of the exercise of
remedies. "Primary Collateral" means the Mortgaged Property directly securing a
Crossed Loan and excluding any property as to which the related lien may only
be foreclosed upon by virtue of the cross collateralization features of such
loans.
CHANGES IN MORTGAGE POOL CHARACTERISTICS
The descriptions in this prospectus supplement of the Mortgage Loans and
the Mortgaged Properties are based upon the Mortgage Pool as it is expected to
be constituted as of the close of business on the Closing Date, assuming that
(i) all scheduled principal and interest payments due on or before the Cut-Off
Date will be made, and (ii) there will be no principal prepayments on or before
the Cut-Off Date. Prior to the issuance of the Certificates, Mortgage Loans may
be removed from the Mortgage Pool as a result of prepayments, delinquencies,
incomplete documentation or otherwise, if the Depositor or the applicable
Mortgage Loan Seller deems such removal necessary, appropriate or desirable. A
limited number of other mortgage loans may be included in the Mortgage Pool
prior to the issuance of the Certificates, unless including such mortgage loans
would materially alter the characteristics of the Mortgage Pool as described in
this prospectus supplement. The Depositor believes that the information set
forth in this prospectus supplement will be representative of the
characteristics of the Mortgage Pool as it will be constituted at the time the
Certificates are issued, although the range of Mortgage Rates and maturities as
well as other characteristics of the Mortgage Loans described in this
prospectus supplement may vary.
A Current Report on Form 8-K (the "Form 8-K") will be available to
purchasers of the Offered Certificates on or shortly after the Closing Date and
will be filed, together with the Pooling and Servicing Agreement, with the
Securities and Exchange Commission within fifteen days after the initial
issuance of the Offered Certificates.
SERVICING OF THE MORTGAGE LOANS
GENERAL
The Master Servicer and the Special Servicer, either directly or through
sub-servicers, are required to service and administer the Mortgage Loans for
the benefit of the Certificateholders, and the Companion Loans, for the holder
of such Companion Loans, 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 respective Mortgage Loans and,
if applicable, the Companion Loans, to the extent consistent with the
foregoing, (a) in the same manner in which, and with the same care, skill,
prudence and diligence with which, the Master Servicer or the Special Servicer,
as the case may be, generally services and administers similar mortgage loans
with similar borrowers (i) for other third-parties, giving due consideration to
customary and usual standards of practice of prudent institutional commercial
mortgage lenders servicing their own loans, or (ii) held in its own portfolio,
whichever standard is higher,
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(b) with a view to the maximization of the recovery on such Mortgage Loans on a
net present value basis and the best interests of the Certificateholders and
the trust or, if a Co-Lender Loan and its related Companion Loan(s) (a "Loan
Pair") are involved with a view towards the maximization of recovery on such
Loan Pair to the Certificateholders and the holder of the related Companion
Loan and the Trust Fund (as a collective whole, taking into account that the
Subordinate Companion Loans are subordinate to the related Mortgage Loans and
that the Pari Passu Companion Loans are pari passu in right of entitlement to
payment to the related Mortgage Loan to the extent set forth in the related
Intercreditor Agreement), and (c) without regard to (i) any relationship that
the Master Servicer or the Special Servicer, as the case may be, or any
affiliate thereof, may have with the related borrower, the Mortgage Loan
Sellers or any other party to the Pooling and Servicing Agreement or any
affiliate thereof; (ii) the ownership of any Certificate or Companion Loan by
the Master Servicer or the Special Servicer, as the case may be, or by any
affiliate thereof; (iii) the right of the Master Servicer or the Special
Servicer, as the case may be, to receive compensation or other fees for its
services rendered pursuant to the Pooling and Servicing Agreement; (iv) the
obligation of the Master Servicer to make Advances (as defined in this
prospectus supplement); (v) the ownership, servicing or management by the
Master Servicer or the Special Servicer or any affiliate thereof for others of
any other mortgage loans or real property; (vi) any obligation of the Master
Servicer, or any affiliate thereof, to repurchase or substitute a Mortgage Loan
as a Mortgage Loan Seller; (vii) any obligation of the Master Servicer or any
affiliate thereof to cure a breach of a representation and warranty with
respect to a Mortgage Loan; and (viii) any debt the Master Servicer or Special
Servicer or any affiliate of either has extended to any obligor or any
affiliate thereof on a Mortgage Note (the foregoing referred to as the
"Servicing Standard").
The Master Servicer and the Special Servicer may appoint sub-servicers
with respect to the Mortgage Loans; provided that the Master Servicer and the
Special Servicer will remain obligated under the Pooling and Servicing
Agreement for the servicing of the Mortgage Loans. SL Green Funding LLC will be
appointed as a sub-servicer for the Special Servicer with respect to the 11
Madison Avenue Loan on or before the Closing Date. The Trust Fund will not be
responsible for any fees owed to any sub-servicer retained by the Master
Servicer or the Special Servicer. Each sub-servicer retained thereby will be
reimbursed by the Master Servicer or the Special Servicer, as the case may be,
for certain expenditures which it makes, generally to the same extent the
Master Servicer or Special Servicer would be reimbursed under the Pooling and
Servicing Agreement.
Set forth below, following the subsection captioned "--The Master Servicer
and the Special Servicer," is a description of certain pertinent provisions of
the Pooling and Servicing Agreement relating to the servicing of the Mortgage
Loans and the Companion Loans. Reference is also made to the prospectus, in
particular to the section captioned "DESCRIPTION OF THE POOLING AND SERVICING
AGREEMENTS," for important information in addition to that set forth in this
prospectus supplement regarding the terms and conditions of the Pooling and
Servicing Agreement as they relate to the rights and obligations of the Master
Servicer and Special Servicer thereunder. The Special Servicer generally has
all of the rights to indemnity and reimbursement, and limitations on liability,
that the Master Servicer is described as having in the accompanying prospectus
and certain additional rights to indemnity as provided in the Pooling and
Servicing Agreement relating to actions taken at the direction of the
Controlling Class Representative (and, in certain circumstances, the holder of
a Subordinate Companion Loan) and the Special Servicer rather than the Master
Servicer will perform the servicing duties described in the prospectus with
respect to Specially Serviced Mortgage Loans and REO Properties (each as
described in this prospectus supplement). In addition to the circumstances for
resignation of the Master Servicer set forth in the accompanying prospectus,
the Master Servicer and the Special Servicer each has the right to resign at
any other time provided that (i) a willing successor thereto has been found,
(ii) each of the Rating Agencies confirms in writing that the successor's
appointment will not result in a withdrawal, qualification or downgrade of any
rating or ratings assigned to any class of Certificates, (iii) the resigning
party pays all costs and expenses in connection with such transfer, and (iv)
the successor accepts appointment prior to the effectiveness of such
resignation. See "DESCRIPTION OF THE POOLING AND SERVICING AGREEMENTS--Certain
Matters Regarding the Master Servicer and the Depositor" in the accompanying
prospectus.
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THE MASTER SERVICER AND THE SPECIAL SERVICER
Wachovia Bank, National Association, in its capacity as Master Servicer
under the Pooling and Servicing Agreement (in such capacity, the "Master
Servicer"), will be responsible for servicing the Mortgage Loans (other than
Specially Serviced Mortgage Loans and REO Properties). In addition, Wachovia
Bank, National Association will act as the Special Servicer for the 11 Madison
Avenue Loan. Although the Master Servicer will be authorized to employ agents,
including sub-servicers, to directly service or specially service the Mortgage
Loans for which it will be responsible, the Master Servicer will remain liable
for its servicing obligations under the Pooling and Servicing Agreement.
Wachovia Bank, National Association is a wholly owned subsidiary of
Wachovia Corporation, and is our affiliate, one of the Mortgage Loan Sellers, a
Special Servicer and an affiliate of one of the Underwriters. In addition, it
is anticipated that Wachovia Bank, National Association or one of its
affiliates will initially be the holder of all or a portion of the Class SL
Certificates. In addition it is anticipated that Wachovia Bank, National
Association (or an affiliated entity) will be the holder of the 11 Madison
Avenue Pari Passu Loans, one of the 11 Madison Avenue Subordinate Loans and the
Starrett-Lehigh Building Pari Passu Loan. Wachovia Bank, National Association's
principal servicing offices are located at NC 1075, 8739 Research Drive URP4,
Charlotte, North Carolina 28262.
As of December 31, 2003, Wachovia Bank, National Association and its
affiliates were responsible for master or primary servicing approximately
10,015 commercial and multifamily loans, totaling approximately $88.6 billion
in aggregate outstanding principal amounts, including loans securitized in
mortgage-backed securitization transactions.
The information set forth in this prospectus supplement concerning
Wachovia Bank, National Association has been provided by Wachovia Bank,
National Association, and neither the Depositor nor the Underwriters make any
representation or warranty as to the accuracy or completeness of such
information. Wachovia Bank, National Association (apart from its obligations as
a Mortgage Loan Seller and except for the information in the two preceding
paragraphs under this heading) will make no representations as to the validity
or sufficiency of the Pooling and Servicing Agreement, the Certificates, the
Mortgage Loans, this prospectus supplement or related documents.
Initially, the "Special Servicer" will be (i) Lennar Partners, Inc. with
respect to the Mortgage Loans other than the 11 Madison Avenue Loan, and (ii)
Wachovia Bank, National Association with respect to the 11 Madison Avenue Loan.
References to the Special Servicer herein are references to the Special
Servicer for an applicable Mortgage Loan as the context requires.
Lennar Partners, Inc., a Florida corporation, is a subsidiary of LNR
Property Corporation ("LNR"). The principal executive offices of Lennar
Partners, Inc. 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 and management business
and engage principally in (i) acquiring, developing, managing and repositioning
commercial and multifamily residential real estate properties; (ii) acquiring
(often in partnership with financial institutions or real estate funds) and
managing portfolios of mortgage loans and other real estate assets, (iii)
investing in unrated and non-investment grade rated commercial mortgaged-backed
securities as to which LNR has the right to be special servicer, and (iv)
making high yielding real estate related loans and equity investments. Lennar
Partners, Inc. has regional offices located across the country in Florida,
Georgia, Oregon and California. As of November 30, 2003, Lennar Partners, Inc.
and its affiliates were managing a portfolio which included an original count
of over 15,200 assets in most states with an original face value of over $101
billion, most of which are commercial real estate assets. Included in this
managed portfolio are $99 billion of commercial real estate assets representing
112 securitization transactions, for which Lennar Partners, Inc. is servicer or
special servicer.
Each Special Servicer and their respective affiliates own and are in the
business of acquiring assets similar in type to the assets of the Trust Fund.
Accordingly, the assets of either Special Servicer and its affiliates may,
depending upon the particular circumstances including the nature and location
of such assets, compete with the Mortgaged Properties for tenants, purchasers,
financing and so forth.
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The information set forth herein regarding Lennar Partners, Inc. has been
provided by Lennar Partners, Inc. and neither the Depositor nor any Underwriter
makes any representation or warranty as to the accuracy or completeness of such
information.
The Pooling and Servicing Agreement permits the holder (or holders) of the
majority of the Voting Rights allocated to the Controlling Class to replace the
Special Servicer and to select a representative (the "Controlling Class
Representative") who may advise the Special Servicer and whose approval is
required for certain actions by the Special Servicer under certain
circumstances; provided, however, so long as a Starrett-Lehigh Building Control
Appraisal Period has not occurred and is continuing, the Starrett-Lehigh
Building Representative will have the ability to exercise the rights of the
Controlling Class and the Controlling Class Representative with respect to the
Starrett-Lehigh Building Whole Loan. The Controlling Class Representative is
selected by holders of Certificates representing more than 50% of the
Certificate Balance of the Controlling Class. See "--The Controlling Class
Representative" in this prospectus supplement. Such holder (or holders) will be
required to pay all out-of-pocket costs related to the transfer of servicing if
the Special Servicer is replaced other than due to an Event of Default,
including without limitation, any costs relating to Rating Agency confirmation
and legal fees associated with the transfer. The "Controlling Class" is the
Class of Sequential Pay Certificates, (a) which bears the latest alphabetical
Class designation and (b) the Certificate Balance of which is (i) greater than
25% of its original Certificate Balance and (ii) equal to or greater than 1.0%
of the sum of the original Certificate Balances of all the Sequential Pay
Certificates; provided, however, that if no Class of Sequential Pay
Certificates satisfies clause (b) above, the Controlling Class shall be the
outstanding Class of Certificates (other than the Class SL, Class Z-I, Class
Z-II, Class Z-III, Class R-I, Class R-II, Class X-C or Class X-P Certificates)
bearing the latest alphabetical Class designation. The Class A-1, Class A-2
Certificates, Class A-3 Certificates and Class A-4 Certificates will be treated
as one Class for determining the Controlling Class.
The Pooling and Servicing Agreement permits, so long as a Starrett-Lehigh
Building Control Appraisal Period has not occured and is continuing, the holder
(or holders) of the majority of the Voting Rights allocated to the Class SL
Certificates to replace the Special Servicer with respect to the
Starrett-Lehigh Building Whole Loan and to select a representative (the
"Starrett-Lehigh Building Representative") who may advise the Special Servicer
and whose approval is required for certain actions by the Special Servicer with
respect to the Starrett-Lehigh Building Whole Loan under certain circumstances.
See "--The Controlling Class Representative" in this prospectus supplement.
Such holder (or holders) will be required to pay all out-of-pocket costs
related to the transfer of servicing if the Special Servicer is replaced other
than due to an Event of Default, including without limitation, any costs
relating to Rating Agency confirmation and legal fees associated with the
transfer. See "DESCRIPTION OF THE CERTIFICATES--Voting Rights" in this
prospectus supplement and the accompanying prospectus.
Any replacement of a Special Servicer will be subject to, among other
things, (i) the delivery of notice of the proposed replacement to the Rating
Agencies and receipt of written confirmation from the Rating Agencies that the
replacement will not result in a qualification, downgrade or withdrawal of any
of the then-current ratings assigned to the Certificates, and (ii) the written
agreement of the successor Special Servicer to be bound by the terms and
conditions of the Pooling and Servicing Agreement. See "DESCRIPTION OF THE
CERTIFICATES--Voting Rights" in this prospectus supplement and the accompanying
prospectus.
Notwithstanding anything to the contrary contained in this section, if an
event of default on the part of the Master Servicer affects only the
Starrett-Lehigh Building Pari Passu Loan, the Master Servicer may not be
terminated but, at the direction of the Trustee (acting at the direction of
certain holders of the Starrett-Lehigh Building Pari Passu Loan or the
Starrett-Lehigh Building Representative with respect to the Starrett-Lehigh
Building Subordinate Loan, as applicable), must appoint a sub-servicer that
will be responsible for servicing the Starrett-Lehigh Building Loan.
The Special Servicer is responsible for servicing and administering any
Mortgage Loan or Companion Loan as to which (a) the related mortgagor has (i)
failed to make when due any Balloon Payment unless the Master Servicer has, on
or prior to the due date of such Balloon Payment, received written evidence
from an institutional lender of such lender's binding commitment to refinance
such
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Mortgage Loan or Companion Loan within 60 days after the due date of such
Balloon Payment (provided that if such refinancing does not occur during such
time specified in the commitment, a Servicing Transfer Event will be deemed to
have occurred), or (ii) failed to make when due any Periodic Payment (other
than a Balloon Payment), and such failure has continued unremedied for 60 days;
(b) the Master Servicer or the Special Servicer (in the case of the Special
Servicer, with the consent of the Controlling Class Representative) has
determined, in its good faith reasonable judgment and in accordance with the
Servicing Standard, based on communications with the related mortgagor, that a
default in making a Periodic Payment (including a Balloon Payment) or any other
default under the applicable loan documents that would (with respect to such
other default) materially impair the value of the Mortgaged Property as
security for the Mortgage Loan and, if applicable, Companion Loan or otherwise
would materially adversely affect the interests of Certificateholders 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 likely to occur
and is likely to remain unremedied for at least 60 days; (c) there shall have
occurred a default (other than as described in clause (a) above and, in certain
circumstances, the failure to maintain insurance for terrorist or similar
attacks or for other risks required by the mortgage loan documents to be
insured against pursuant to the terms of the Pooling and Servicing Agreement)
that the Master Servicer or the Special Servicer shall have determined, in its
good faith and reasonable judgment and in accordance with the Servicing
Standard, materially impairs the value of the Mortgaged Property as security
for the Mortgage Loan and, if applicable, Companion Loan or otherwise
materially adversely affects the interests of Certificateholders and that
continues 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 gives rise to an acceleration right without any grace
period shall be deemed to have a grace period equal to zero); (d) a decree or
order under any bankruptcy, insolvency or similar law shall have been entered
against the related borrower and such decree or order shall have remained in
force, undischarged, undismissed or unstayed for a period of 60 days; (e) the
related borrower shall consent to the appointment of a conservator or receiver
or liquidator in any insolvency or similar proceedings of or relating to such
related borrower or of or relating to all or substantially all of its property;
(f) the related borrower shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for the
benefit of its creditors, or voluntarily suspend payment of its obligations; or
(g) the Master Servicer shall have received notice of the commencement of
foreclosure or similar proceedings with respect to the related Mortgaged
Property (each event described in clauses (a) through (g) above, a "Servicing
Transfer Event").
In general, as long as the related Co-Lender Loan is owned by the trust,
each Companion Loan will be serviced and administered under the Pooling and
Servicing Agreement as if it were a Mortgage Loan and the holder of the related
promissory note were a Certificateholder. If a Companion Loan becomes specially
serviced, then the related Co-Lender Loan will become a Specially Serviced
Mortgage Loan. If a Co-Lender Loan becomes a Specially Serviced Mortgage Loan,
then the related Companion Loan will become a Specially Serviced Mortgage Loan.
If any amounts due under a Co-Lender Loan or the related Subordinate
Companion Loan(s) are accelerated after an event of default under the
applicable Mortgage Loan documents, the holder of the related Subordinate
Companion Loan will be entitled to purchase the related Mortgage Loan at the
price described under "DESCRIPTION OF THE MORTGAGE POOL--Co-Lender Loans" in
this prospectus supplement.
If a Servicing Transfer Event occurs with respect to any Mortgage Loan or
a related Companion Loan, the Master Servicer is in general required to
transfer its servicing responsibilities with respect to such Mortgage Loan
(including the Starrett-Lehigh Building Whole Loan) and Companion Loan to the
Special Servicer. Notwithstanding such transfer, the Master Servicer will
continue to receive payments on such Mortgage Loan and/or Companion Loan
(including amounts collected by the Special Servicer), to make certain
calculations with respect to such Mortgage Loan and Companion Loan, and to make
remittances (including, if necessary, P&I Advances) and prepare certain reports
to the Trustee with respect to such Mortgage Loan (including the
Starrett-Lehigh Building Whole Loan). If title to the related
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Mortgaged Property is acquired by the Trust Fund (upon acquisition, an "REO
Property"), whether through foreclosure, deed in lieu of foreclosure or
otherwise, the Special Servicer will continue to be responsible for the
management thereof. Mortgage Loans (including, with respect to interest
advances, the Starrett-Lehigh Building Subordinated Loan) and Companion Loans
serviced by the Special Servicer are referred to in this prospectus supplement
as "Specially Serviced Mortgage Loans" and, together with any REO Properties,
constitute "Specially Serviced Trust Fund Assets." The Master Servicer has no
responsibility for the Special Servicer's performance of its duties under the
Pooling and Servicing Agreement.
A Mortgage Loan (including the Starrett-Lehigh Building Whole Loan) will
cease to be a Specially Serviced Mortgage Loan (and will become a "Corrected
Mortgage Loan" as to which the Master Servicer will re-assume servicing
responsibilities):
(a) with respect to the circumstances described in clause (a) of the
definition of Servicing Transfer Event, when the related borrower has made
three consecutive full and timely Periodic Payments under the terms of
such Mortgage Loan (as such terms may be changed or modified in connection
with a bankruptcy or similar proceeding involving the related borrower or
by reason of a modification, waiver or amendment granted or agreed to by
the Special Servicer);
(b) with respect to any of the circumstances described in clauses (b),
(d), (e) and (f) of the definition of Servicing Transfer Event, when such
circumstances cease to exist in the good faith, reasonable judgment of the
Special Servicer, but, with respect to any bankruptcy or insolvency
proceedings described in clauses (d), (e) and (f) no later than the entry
of an order or decree dismissing such proceeding;
(c) with respect to the circumstances described in clause (c) of the
definition of Servicing Transfer Event, when such default is cured; and
(d) with respect to the circumstances described in clause (g) of the
definition of Servicing Transfer Event, when such proceedings are
terminated;
so long as at that time no other Servicing Transfer Event then exists and
provided no additional default is foreseeable in the reasonable good faith
judgment of the Special Servicer.
SERVICING AND OTHER COMPENSATION AND PAYMENT OF EXPENSES
The principal compensation to be paid to the Master Servicer in respect of
its servicing activities is the Master Servicing Fee. The "Master Servicing
Fee" is payable monthly on a loan-by-loan basis from amounts received in
respect of interest on each Mortgage Loan (including the Starrett-Lehigh
Building Whole Loan) including each Specially Serviced Mortgage Loan, and from
REO Revenue with respect to each REO Mortgage Loan, is calculated on the basis
of a 360-day year consisting of twelve 30-day months, accrues at the related
Master Servicing Fee Rate and is computed on the basis of the same principal
amount respecting which any related interest payment due on the Mortgage Loan
is computed. The "Master Servicing Fee Rate" is a per annum rate ranging from
0.0400% to 0.1000%. As of the Cut-Off Date the weighted average Master
Servicing Fee Rate will be approximately 0.0419% per annum. The Master Servicer
will not be entitled to receive a separate fee with respect to a Companion Loan
unless such fee is expressly set forth in the related Intercreditor Agreement.
Otherwise, all references in this Section to "Mortgage Loans" will include the
Companion Loans.
If a borrower prepays a Mortgage Loan on a date that is prior to its Due
Date in any Collection Period, the amount of interest (net of related Master
Servicing Fees and, if applicable, Additional Interest) that accrues on the
Mortgage Loan during such Collection Period will be less (such shortfall, a
"Prepayment Interest Shortfall") than the amount of interest (net of related
Master Servicing Fees and, if applicable, Additional Interest and without
regard to any Prepayment Premium or Yield Maintenance Charge actually
collected) that would have accrued on the Mortgage Loan through its Due Date.
If such a principal prepayment occurs during any Collection Period after the
Due Date for such Mortgage Loan in such Collection Period, the amount of
interest (net of related Master Servicing Fees) that accrues and is collected
on the Mortgage Loans during such Collection Period will exceed (such excess, a
"Prepayment Interest Excess") the amount of interest (net of related Master
Servicing Fees, and without regard to any
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Prepayment Premium or Yield Maintenance Charge actually collected) that would
have been collected on the Mortgage Loan during such Collection Period if the
borrower had not prepaid. Any Prepayment Interest Excesses collected will be
paid to the Master Servicer as additional servicing compensation. However, with
respect to each Distribution Date, the Master Servicer is required to deposit
into the Certificate Account (such deposit, a "Compensating Interest Payment"),
without any right of reimbursement therefor, with respect to each Mortgage Loan
(other than a Specially Serviced Mortgage Loan and other than any Mortgage Loan
on which the Special Servicer has waived a prepayment restriction), that was
subject to a voluntary principal prepayment during the most recently ended
Collection Period creating a Prepayment Interest Shortfall, an amount equal to
the lesser of (i) the sum of (a) the Master Servicing Fee (up to a Master
Servicing Fee Rate of 0.02% per annum) received by the Master Servicer during
such Collection Period on such Mortgage Loan and (b) investment income earned
by the Master Servicer on the related principal prepayment during the most
recently ended Collection Period, and (ii) the amount of the related Prepayment
Interest Shortfall. Compensating Interest Payments will not cover shortfalls in
Mortgage Loan interest accruals that result from any liquidation of a defaulted
Mortgage Loan, or of any REO Property acquired in respect thereof, that occurs
during a Collection Period prior to the related Due Date therein or involuntary
prepayments. For purposes of this paragraph, the term Mortgage Loan includes
the Starrett-Lehigh Building Subordinate Loan.
The principal compensation to be paid to the Special Servicer in respect
of its special servicing activities is the Special Servicing Fee (together with
the Master Servicing Fee, the "Servicing Fees") and, under the circumstances
described in this prospectus supplement, Liquidation Fees and Workout Fees. The
"Special Servicing Fee" is calculated on the basis of a 360-day year consisting
of twelve 30-day months, accrues at a rate (the "Special Servicing Fee Rate")
equal to 0.25% per annum and is computed on the basis of the same principal
amount respecting which any related interest payment due on such Specially
Serviced Mortgage Loan or REO Mortgage Loan (including, in either case, the
Starrett-Lehigh Building Subordinate Loan), as the case may be. However, earned
Special Servicing Fees are payable out of general collections on the Mortgage
Loans then on deposit in the Certificate Account. The Special Servicing Fee
with respect to any Specially Serviced Mortgage Loan (or REO Mortgage Loan)
(including, in either case, the Starrett-Lehigh Building Subordinate Loan) will
cease to accrue if such loan (or the related REO Property) is liquidated or if
such loan becomes a Corrected Mortgage Loan. The Special Servicer is entitled
to a "Liquidation Fee" with respect to each Specially Serviced Trust Fund
Asset, which Liquidation Fee generally will be in an amount equal to 1.00% of
all amounts received in respect of such Mortgage Loan or the related REO
Property, as applicable, payable by withdrawal from such amounts on deposit in
the Certificate Account. However, no Liquidation Fee will be payable in
connection with, or out of, insurance proceeds, condemnation proceeds or
liquidation proceeds resulting from the purchase of any Specially Serviced
Trust Fund Asset (i) by a Mortgage Loan Seller (as described under "DESCRIPTION
OF THE MORTGAGE POOL--Assignment of the Mortgage Loans; Repurchases and
Substitutions" and "--Representations and Warranties; Repurchases and
Substitutions" in this prospectus supplement) if purchased within the required
time period set forth in the related Mortgage Loan Purchase Agreement, (ii) by
the Master Servicer, the Special Servicer or the Majority Subordinate
Certificateholder as described under "DESCRIPTION OF THE
CERTIFICATES--Termination" in this prospectus supplement or (iii) in certain
other limited circumstances, including in connection with the purchase of the
Co-Lender Loans as described under "DESCRIPTION OF THE MORTGAGE POOL--Co-Lender
Loans" in this prospectus supplement or in connection with the purchase of the
Starrett-Lehigh Building Loan by the controlling holder of the Class SL
Certificates. The Special Servicer also is entitled to a "Workout Fee" with
respect to each Corrected Mortgage Loan, which is generally equal to 1.00% of
all payments of interest and principal received on such Mortgage Loan for so
long as it remains a Corrected Mortgage Loan, payable by withdrawal from such
amounts on deposit in the Certificate Account. If the Special Servicer is
terminated or resigns, it will retain the right to receive any and all Workout
Fees payable with respect to any Mortgage Loan that became a Corrected Mortgage
Loan during the period that it acted as Special Servicer and remained a
Corrected Mortgage Loan at the time of its termination or resignation or if the
Special Servicer resolved the circumstances and/or conditions (including by way
of a modification of the related Mortgage Loan documents) causing the Mortgage
Loan to be a Specially Serviced Mortgage Loan, but the Mortgage Loan had not as
of the time the Special Servicer is terminated or resigns become a Corrected
Mortgage Loan because the related
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borrower had not made three consecutive monthly debt service payments and
subsequently becomes a Corrected Mortgage Loan as a result of making such three
consecutive payments. The successor Special Servicer will not be entitled to
any portion of those Workout Fees.
As additional servicing compensation, the Master Servicer or the Special
Servicer is entitled to retain all modification fees, assumption fees,
defeasance fees, assumption application fees, late payment charges and default
interest (to the extent not used to offset interest on Advances, Additional
Trust Fund Expenses and the cost of property inspections as provided in the
Pooling and Servicing Agreement) and Prepayment Interest Excesses collected
from borrowers on Mortgage Loans. In addition, to the extent the Master
Servicer or the Special Servicer receives late payment charges or default
interest on a Mortgage Loan for which interest on Advances or Additional Trust
Fund Expenses related to such Mortgage Loan have been paid during the 12-month
period immediately preceding the receipt of such late payment charges or
default interest and not previously reimbursed to the Trust Fund, such late
payment charges or default interest will be used to reimburse the Trust Fund
for such payment of interest or Additional Trust Fund Expenses. In addition,
each of the Master Servicer and the Special Servicer is authorized to invest or
direct the investment of funds held in those accounts maintained by it that
relate to the Mortgage Loans or REO Properties (including, in either case, the
Starrett-Lehigh Building Subordinate Loan), as the case may be, in certain
short-term United States government securities and certain other permitted
investment grade obligations, and the Master Servicer and the Special Servicer
each will be entitled to retain any interest or other income earned on such
funds held in those accounts maintained by it, but shall be required to cover
any losses on investments of funds held in those accounts maintained by it,
from its own funds without any right to reimbursement, except in certain
limited circumstances described in the Pooling and Servicing Agreement.
Each of the Master Servicer and Special Servicer is, in general, required
to pay all ordinary expenses incurred by it in connection with its servicing
activities under the Pooling and Servicing Agreement, including the fees of any
sub-servicers retained by it, and is not entitled to reimbursement therefor
except as expressly provided in the Pooling and Servicing Agreement. However,
each of the Master Servicer and Special Servicer is permitted to pay certain of
such expenses (including certain expenses incurred as a result of a Mortgage
Loan default) directly out of the Certificate Account and at times without
regard to the Mortgage Loan with respect to which such expenses were incurred.
See "DESCRIPTION OF THE CERTIFICATES--Distributions" in this prospectus
supplement and "DESCRIPTION OF THE POOLING AND SERVICING
AGREEMENTS--Certificate Account" and "--Servicing Compensation and Payment of
Expenses" in the prospectus.
As and to the extent described in this prospectus supplement under
"DESCRIPTION OF THE CERTIFICATES--P&I Advances," each of the Master Servicer
and the Trustee is entitled to receive interest, at the Reimbursement Rate, on
any reimbursable servicing expenses incurred by it. Such interest will compound
annually and will be paid, contemporaneously with the reimbursement of the
related servicing expense, first out of late payment charges and default
interest received on the related Mortgage Loan during the Collection Period in
which such reimbursement is made and then from general collections on the
Mortgage Loans then on deposit in the Certificate Account. In addition, to the
extent the Master Servicer receives late payment charges or default interest on
a Mortgage Loan for which interest on servicing expenses related to such
Mortgage Loan has been paid from general collections on deposit in the
Certificate Account during the preceding 12-month period and not previously
reimbursed, such late payment charges or default interest will be used to
reimburse the Trust Fund for such payment of interest.
MODIFICATIONS, WAIVERS AND AMENDMENTS
The Pooling and Servicing Agreement permits the Special Servicer (subject,
with respect to the Co-Lender Loans, to certain rights of the holders of the
related Companion Loans) to modify, waive or amend any term of any Mortgage
Loan if (a) it determines, in accordance with the Servicing Standard that it is
appropriate to do so and the Special Servicer determines that such
modification, waiver or amendment is not "significant" within the meaning of
Treasury Regulations Section 1.860G-2(b), and (b) except as described in the
following paragraph, such modification, waiver or amendment, will not (i)
affect the amount or timing of any related payments of principal, interest or
other amount (including
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Prepayment Premiums and Yield Maintenance Charges) payable under the Mortgage
Loan, (ii) affect the obligation of the related borrower to pay a Prepayment
Premium or Yield Maintenance Charge or permit a principal prepayment during the
applicable Lockout Period, (iii) except as expressly provided by the related
Mortgage or in connection with a material adverse environmental condition at
the related Mortgaged Property, result in a release of the lien of the related
Mortgage on any material portion of such Mortgaged Property without a
corresponding principal prepayment in an amount not less than the fair market
value of the property released, (iv) if such Mortgage Loan is equal to or in
excess of 5% of the then aggregate current principal balances of all Mortgage
Loans or $35,000,000 (or $25,000,000 with respect to Moody's), or is one of the
ten largest Mortgage Loans by Stated Principal Balance as of such date, permit
the transfer of (A) the related Mortgaged Property or any interest therein or
(B) equity interests in the related borrower or an equity owner of the borrower
that would result, in the aggregate during the term of the related Mortgage
Loan, in a transfer greater than 49% of the total interest in the borrower
and/or any equity owner of the borrower or a transfer of voting control in the
borrower or an equity owner of the borrower without the prior written
confirmation from each Rating Agency (as applicable) that such change will not
result in the qualification, downgrade or withdrawal of the ratings then
assigned to the Certificates, (v) allow any additional lien on the related
Mortgaged Property if such Mortgage Loan is equal to or in excess of 2% of the
then aggregate current principal balances of the Mortgage Loans or $20,000,000,
is one of the ten largest Mortgage Loans by Stated Principal Balance as of such
date, or with respect to S&P only, has an aggregate LTV that is equal to or
greater than 85% or has an aggregate DSCR that is less than 1.2x, without the
prior written confirmation from each Rating Agency (as applicable) that such
change will not result in the qualification, downgrade or withdrawal of the
ratings then assigned to the Certificates, or (vi) in the good faith,
reasonable judgment of the Special Servicer, materially impair the security for
the Mortgage Loan or reduce the likelihood of timely payment of amounts due
thereon.
Notwithstanding clause (b) of the preceding paragraph and, with respect to
the Co-Lender Loans, subject to certain rights of the holders of any related
Companion Loan, the Special Servicer may (i) reduce the amounts owing under any
Specially Serviced Mortgage Loan by forgiving principal, accrued interest
and/or any Prepayment Premium or Yield Maintenance Charge, (ii) reduce the
amount of the Periodic Payment on any Specially Serviced Mortgage Loan,
including by way of a reduction in the related Mortgage Rate, (iii) forbear in
the enforcement of any right granted under any Mortgage Note or Mortgage
relating to a Specially Serviced Mortgage Loan, (iv) extend the maturity date
of any Specially Serviced Mortgage Loan, and/or (v) accept a principal
prepayment during any Lockout Period; provided that (x) the related borrower is
in default with respect to the Specially Serviced Mortgage Loan or, in the
reasonable, good faith judgment of the Special Servicer, such default by the
borrower is reasonably foreseeable, (y) in the reasonable, good faith judgment
of the Special Servicer, such modification, would increase the recovery to
Certificateholders on a net present value basis in accordance with the
Servicing Standard and (z) such modification, waiver or amendment does not
result in a tax being imposed on the Trust Fund or cause any REMIC relating to
the assets of the Trust Fund to fail to qualify as a REMIC at any time the
Certificates are outstanding. In no event, however, is the Special Servicer
permitted to (i) extend the maturity date of a Mortgage Loan beyond a date that
is two years prior to the Rated Final Distribution Date, (ii) reduce the
Mortgage Rate of a Mortgage Loan to less than the lesser of (a) the original
Mortgage Rate of such Mortgage Loan, (b) the highest Pass-Through Rate of any
Class of Certificates (other than any Class X-C or Class X-P Certificates) then
outstanding, or (c) a rate below the then prevailing interest rate for
comparable loans, as determined by the Special Servicer, (iii) if the Mortgage
Loan is secured by a ground lease (and not also by the corresponding fee simple
interest), extend the maturity date of such Mortgage Loan beyond a date which
is 20 years prior to the expiration of the term of such ground lease or (iv)
defer interest due on any Mortgage Loan in excess of 10% of the Stated
Principal Balance of such Mortgage Loan or defer the collection of interest on
any Mortgage Loan without accruing interest on such deferred interest at a rate
at least equal to the Mortgage Rate of such Mortgage Loan. The Special Servicer
will have the ability, subject to the servicing standard described under
"--General" above, to modify Mortgage Loans with respect to which default is
reasonably foreseeable, but which are not yet in default.
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The Special Servicer is required to notify the Trustee, the Master
Servicer, the Controlling Class Representative, the Rating Agencies, with
respect to the Starrett-Lehigh Building Loan, the Starrett-Lehigh Building
Representative and the holder of the Starrett-Lehigh Building Pari Passu Loan
and, with respect to the Co-Lender Loans, the holders of the related Companion
Loan, of any material modification, waiver or amendment of any term of any
Specially Serviced Mortgage Loan, and to deliver to the Trustee or the related
Custodian (with a copy to the Master Servicer), for deposit in the related
Mortgage File, an original counterpart of the agreement related to such
modification, waiver or amendment, promptly (and in any event within ten
business days) following the execution thereof. Copies of each agreement
whereby any such modification, waiver or amendment of any term of any Specially
Serviced Mortgage Loan is effected are required to be available for review
during normal business hours at the offices of the Special Servicer. See
"DESCRIPTION OF THE CERTIFICATES--Reports to Certificateholders; Available
Information" in this prospectus supplement.
For any Mortgage Loan other than a Specially Serviced Mortgage Loan and
subject to the rights of the Special Servicer, the Master Servicer is
responsible for any request by a borrower for the consent to modify, waive or
amend certain terms as specified in the Pooling and Servicing Agreement,
including, without limitation, (i) approving certain leasing activity, (ii)
approving certain substitute property managers, (iii) approving certain waivers
regarding the timing or need to audit certain financial statements, (iv)
approving certain modifications in connection with a defeasance permitted by
the terms of the applicable mortgage loan documents, and (v) approving certain
consents with respect to right-of-ways and easements and consents to
subordination of the related Mortgage Loan to such easements or right-of-ways.
Any modification, extension, waiver or amendment of the payment terms of
the Co-Lender Loan will be required to be structured so as to be consistent
with the allocation and payment priorities in the related loan documents and
the related Intercreditor Agreement, such that neither the trust as holder of
the Co-Lender Loans and the Starrett-Lehigh Building Subordinate Loan, nor the
holder of the related Pari Passu Companion Loans gains a priority over the
other such holder that is not reflected in the related loan documents and the
related Intercreditor Agreement.
Further, to the extent consistent with the Servicing Standard, taking into
account the subordinate position of the Starrett-Lehigh Building Subordinate
Loan, no waiver, reduction or deferral of any amounts due on the Starrett-
Lehigh Building Loan will be permitted to be effected prior to the waiver,
reduction or deferral of the entire corresponding item in respect of the
Starrett-Lehigh Building Subordinate Loan and no reduction of the mortgage
interest rate of the Starrett-Lehigh Building Loan will be permitted to be
effected prior to the reduction of the mortgage interest rate of the
Starrett-Lehigh Building Subordinate Loan to the maximum extent possible.
THE CONTROLLING CLASS REPRESENTATIVE
Subject to the succeeding paragraphs, the Controlling Class Representative
is entitled to advise the Special Servicer with respect to the following
actions of the Special Servicer and, the Special Servicer is not permitted to
take any of the following actions as to which the Controlling Class
Representative, has objected in writing within ten business days of being
notified thereof (provided that if such written objection has not been received
by the Special Servicer within such ten business day period, then the
Controlling Class Representative's approval will be deemed to have been given):
(i) any foreclosure upon or comparable conversion (which may include
acquisitions of an REO Property) of the ownership of properties securing
such of the Specially Serviced Mortgage Loans as come into and continue in
default;
(ii) any modification or waiver of any term of the related Mortgage
Loan Documents of a Mortgage Loan that relates to the Maturity Date,
Mortgage Rate, principal balance, amortization term, payment frequency or
any provision requiring the payment of a Prepayment Premium or Yield
Maintenance Charge (other than a modification consisting of the extension
of the maturity date of a Mortgage Loan for one year or less);
(iii) any proposed sale of an REO Property (other than in connection
with the termination of the Trust Fund as described under "DESCRIPTION OF
THE CERTIFICATES--Termination" in
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this prospectus supplement or pursuant to a Purchase Option as described
below under "--Defaulted Mortgage Loans; REO Properties; Purchase Option");
(iv) any determination to bring an REO Property into compliance with
applicable environmental laws or to otherwise address hazardous materials
located at an REO Property;
(v) any acceptance of substitute or additional collateral for a
Mortgage Loan unless required by the underlying loan documents;
(vi) any waiver of a "due-on-sale" or "due-on-encumbrance" clause;
(vii) any acceptance of an assumption agreement releasing a borrower
from liability under a Mortgage Loan;
(viii) with respect to the Starrett-Lehigh Building Whole Loan, any
acceptance of a discounted payoff;
(ix) with respect to the Starrett-Lehigh Building Whole Loan, any
renewal or replacement of the then existing insurance policies to the
extent that such renewal or replacement policy does not comply with the
terms of the mortgage loan documents or any waiver, modification or
amendment of any insurance requirements under the related mortgage loan
documents;
(x) with respect to the Starrett-Lehigh Building Whole Loan, any
approval of a material capital expenditure;
(xi) with respect to the Starrett-Lehigh Building Whole Loan, any
replacement of the property manager; and
(xii) with respect to the Starrett-Lehigh Building Whole Loan, any
adoption or approval of a plan in bankruptcy of the related borrower.
In addition, the Controlling Class Representative may direct the Special
Servicer to take, or to refrain from taking, such other actions as the
Controlling Class Representative may deem advisable or as to which provision is
otherwise made in the Pooling and Servicing Agreement; provided that no such
direction and no objection contemplated by the prior paragraph may (i) require
or cause the Special Servicer to violate any REMIC provisions, any provision of
the Pooling and Servicing Agreement or applicable law, including the Special
Servicer's obligation to act in accordance with the Servicing Standard, or (ii)
expose the Master Servicer, the Special Servicer, the Trust Fund or the Trustee
to liability, or materially expand the scope of the Special Servicer or its
responsibilities under the Pooling and Servicing Agreement or cause the Special
Servicer to act or fail to act in a manner which, in the reasonable judgment of
the Special Servicer, is not in the best interests of the Certificateholders.
LNR Property Corporation will be the initial Controlling Class Representative.
Notwithstanding the foregoing, the holders of the 11 Madison Avenue
Subordinate Loans will have the right to direct and/or consent to certain
actions of the Master Servicer and the Special Servicer with respect to the 11
Madison Avenue Whole Loan and the Controlling Class and the Controlling Class
Representative will not have the consent and advice rights described herein.
Generally, the holder of the most subordinate 11 Madison Avenue Subordinate
Loan then outstanding will be entitled to such rights, but only so long as the
unpaid principal amount of such 11 Madison Avenue Subordinate Loan, net of any
existing related Appraisal Reduction Amount with respect to (i) the 11 Madison
Avenue Senior Loans; (ii) any 11 Madison Avenue Subordinate Loans that are
senior in right of payment to such 11 Madison Avenue Subordinate Loan and (iii)
such 11 Madison Avenue Subordinate Loan (calculated as if the loans were a
single mortgage loan), is greater than 25% of the original unpaid principal
amount of such 11 Madison Avenue Subordinate Loan. Such rights include (i) the
Special Servicer and/or the Master Servicer will be required to consult with
the holder of the 11 Madison Avenue Subordinate Loan or its designee in
connection with (A) any adoption or implementation of a business plan submitted
by the borrower with respect to the Mortgaged Property; (B) the execution or
renewal of any lease; (C) the release of any escrow, held in conjunction with
the 11 Madison Avenue Whole Loan to the borrower not expressly required by the
terms of the loan documents or under applicable law; (D) alterations on the
Mortgaged Property; (E) material changes in any ancillary loan documents; or
(F) the waiver of any
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notice provisions related to prepayment; (ii) the Special Servicer and/or the
Master Servicer will be required to consult with the holder of such 11 Madison
Avenue Subordinate Loan or its designee (A) upon the occurrence of any event of
default under the 11 Madison Avenue Whole Loan and to consider alternative
actions recommended by the holder of such 11 Madison Avenue Subordinate Loan or
its designee, (B) with respect to any determination that a sweep period exists
under the related cash management agreement, and (C) at any time (whether or
not an event of default has occurred) with respect to proposals to take any
significant action with respect to the 11 Madison Avenue Whole Loan or the
Mortgaged Property and to consider alternative actions recommended by such 11
Madison Avenue Subordinate Loan or its designee, and (iii) such holder of the
11 Madison Avenue Subordinate Loan or its designee will be entitled to exercise
rights and powers with respect to the 11 Madison Avenue Whole Loan that are the
same as or similar to those of the Controlling Class Representative described
above with respect to the actions described in clauses (i) through (vii) above
and the following additional actions: (A) any modification or waiver of a
monetary term of the loan and any modification of, or waiver with respect to,
the loan that would result in the extension of the maturity date or extended
maturity date thereof, a reduction in the interest rate borne thereby or the
monthly debt service payment or extension fee payable thereon or a deferral or
a forgiveness of interest on or principal of the loan or a modification or
waiver of any other monetary term of the loan relating to the timing or amount
of any payment of principal or interest (other than default interest) or any
other material sums due and payable under the loan documents or a modification
or waiver of any provision of the loan which restricts the borrower or its
equity owners from incurring additional indebtedness, any consent to the
placement of additional liens encumbering the Mortgaged Property or the
ownership interests in borrower or to the incurring of additional indebtedness
at any level or tier of ownership, or any modification or waiver with respect
to the obligation to deposit or maintain reserves or escrows or to the amounts
required to be deposited therein or any establishment of additional material
reserves not expressly provided for in the loan documents, (B) any modification
of, or waiver with respect to, the loan that would result in a discounted
pay-off of the loan, (C) commencement or termination of any foreclosure upon or
comparable conversion of the ownership of the Mortgaged Property or any
acquisition of the Mortgaged Property by deed-in-lieu of foreclosure or
otherwise, (D) any sale of the Mortgaged Property or any material portion
thereof (other than pursuant to a purchase option contained in the loan
documents or in the Pooling and Servicing Agreement) or, except, as
specifically permitted in the loan documents, the transfer of any direct or
indirect interest in borrower or any sale of the loan (other than pursuant to a
purchase option contained in the loan documents or in the Pooling and Servicing
Agreement), (E) any action to bring the Mortgaged Property or REO Property into
compliance with any laws relating to hazardous materials, (F) any substitution
or release of collateral for the loan (other than in accordance with the terms
of, or upon satisfaction of, the loan), (G) any release of the borrower or any
guarantor from liability with respect to the loan, (H) any substitution of the
bank holding the central account, unless such bank agrees in writing (x) to
comply with the terms of Section 3(b)(i)(E) and (y) of the Intercreditor
Agreement to provide to co-lender copies of the weekly reconciliation required
to be prepared thereunder, (I) any determination (x) not to enforce 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 borrower) or (y) to permit an
assumption of the loan, (J) any material changes to or waivers of any of the
insurance requirements, (K) any release of funds from the curtailment reserve
escrow account or the designated lease reserve escrow account for the
application of same to the repayment of the debt; provided, however, that (x)
the operating advisor shall not have the right to consent to any such release
after the occurrence of an event of default (unless such co-lender is
continuously curing in accordance with Section 7 of the Intercreditor
Agreement) and during the continuance thereof, and (y) the operating advisor
shall be required to consent to the release of such funds and the application
of same to the repayment of the debt, if lead lender delivers to the operating
advisor a letter from any single Rating Agency stating that the failure to
release funds from the curtailment reserve sub-account and to apply same to the
repayment of the debt will result in the downgrading, withdrawal or
qualification of any Class of Certificates, (L) any determination to apply loss
proceeds to the payment of the debt and with respect to the approval of any
architects, contractors, plans and specifications or other material approvals
which lender may give or withhold, (M) any incurrence of additional debt by the
borrower or any mezzanine financing by any beneficial owner of the borrower,
and (N) the voting on any plan of reorganization,
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restructuring or similar plan in the bankruptcy of the borrower. However, to
the extent no 11 Madison Avenue Subordinate Loan is greater than the threshold
described above, the holders of a majority (by then outstanding principal
balance) of the 11 Madison Avenue Senior Loans, will be entitled to exercise
rights and powers of the Controlling Class Representative and the Controlling
Class with respect to the 11 Madison Avenue Whole Loan. In the event that the
Controlling Class Representative and the holders of the 11 Madison Avenue Pari
Passu Loans (or if such loans have been securitized, a representative appointed
by the controlling class of such securitization(s)) give conflicting consents
or directions to the Master Servicer or the Special Servicer, as applicable, no
such consent or direction is agreed to by the holders of a majority (by then
outstanding principal balance) of the 11 Madison Avenue Senior Loans, and the
directions given by the Controlling Class Representative satisfy the Servicing
Standard, the Master Servicer or the Special Servicer, as applicable, will be
required to follow the directions of the Controlling Class Representative. See
"DESCRIPTION OF THE MORTGAGE POOL--Co-Lender Loans--11 Madison Avenue
Loan--Servicing Provisions of the 11 Madison Avenue Intercreditor Agreement" in
this prospectus supplement.
So long as a Starrett-Lehigh Building Control Appraisal Period has not
occurred and is continuing, the holders of the Class SL Certificates and the
Starrett-Lehigh Building Representative will have the ability to exercise the
rights of the Controlling Class and the Controlling Class Representative with
respect to the Starrett-Lehigh Building Whole Loan. Upon the occurrence and
continuance of a Starrett-Lehigh Building Control Appraisal Period, the holders
of a majority (by then outstanding principal balance) of the Starrett-Lehigh
Building Senior Loans will be entitled to exercise rights and powers of the
Controlling Class Representative and the Controlling Class with respect to the
Starrett-Lehigh Building Whole Loan, but in the event that the Controlling
Class Representative and the holder of the Starrett-Lehigh Building Pari Passu
Loan (or if such loan has been securitized, a representative appointed by the
controlling class of that securitization) give conflicting consents or
directions to the Master Servicer or the Special Servicer, as applicable,
neither such party represents greater than a majority (by then outstanding
principal balance) of the Starrett-Lehigh Building Senior Loans, and the
directions given by the Controlling Class Representative satisfy the Servicing
Standard, the Master Servicer or the Special Servicer, as applicable, will be
required to follow the directions of the Controlling Class Representative. See
"DESCRIPTION OF THE MORTGAGE POOL--Co-Lender Loans--Starrett-Lehigh Building
Loan--Servicing Provisions of the Starrett-Lehigh Building Intercreditor
Agreement" in this prospectus supplement.
Notwithstanding the foregoing, the holder of the Cedarbrook Apartments
Subordinate Loan may exercise certain approval rights relating to a
modification of the Cedarbrook Apartments Subordinate Loan that materially and
adversely affects the holder of the Cedarbrook Apartments Subordinate Loan
prior to the expiration of the related repurchase period. Furthermore, the
holder of the Cedarbrook Apartments Subordinate Loan may exercise certain
approval rights relating to a modification of the Cedarbrook Apartments Loan or
the Cedarbrook Apartment Loan that materially and adversely affects the holder
of the Cedarbrook Apartment Subordinate Loan and certain other matters related
to Defaulted Lease Claims. See "DESCRIPTION OF THE MORTGAGE POOL--Co-Lender
Loans--Cedarbrook Apartments Loan--Servicing Provisions of the Cedarbrook
Apartments Intercreditor Agreement" in this prospectus supplement.
Limitation on Liability of the Controlling Class Representative. The
Controlling Class Representative will not have any liability to the
Certificateholders 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 the Controlling Class
Representative 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. By its acceptance of a Certificate, each Certificateholder confirms
its understanding that the Controlling Class Representative may take actions
that favor the interests of one or more Classes of the Certificates over other
Classes of the Certificates, and that the Controlling Class Representative may
have special relationships and interests that conflict with those of holders of
some Classes of the Certificates; and, absent willful misfeasance, bad faith or
negligence on the part of the Controlling Class Representative, each
Certificateholder agrees to take no action against the Controlling Class
Representative or any of its
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respective officers, directors, employees, principals or agents as a result of
such a special relationship or conflict. The Starrett-Lehigh Building
Representative and the holder of an 11 Madison Avenue Subordinate Loan or their
respective designees, in connection with exercising the rights and powers
described above with respect to the Starrett-Lehigh Building Whole Loan and the
11 Madison Avenue Whole Loan, respectively, will be entitled to substantially
the same limitations to which the Controlling Class Representative is entitled.
DEFAULTED MORTGAGE LOANS; REO PROPERTIES; PURCHASE OPTION
The Pooling and Servicing Agreement contains provisions requiring, within
60 days after a 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 (i) that
is delinquent sixty days or more with respect to a Periodic Payment (not
including the Balloon Payment) or (ii) that is delinquent in respect of its
Balloon Payment unless the Master Servicer has, on or prior to the due date of
such Balloon Payment, received written evidence from an institutional lender of
such lender's binding commitment to refinance such Mortgage Loan within 60 days
after the due date of such Balloon Payment (provided that if such refinancing
does not occur during such time specified in the commitment, the related
Mortgage Loan will immediately become a Defaulted Mortgage Loan), 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 related Mortgage and Mortgage Note or
(iii) as to which the Master Servicer or Special Servicer has, by written
notice to the related mortgagor, accelerated the maturity of the indebtedness
evidenced by the related Mortgage Note. The Special Servicer will be permitted
to change, from time to time, 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; provided, however, that
the Special Servicer will update its determination of the fair value of a
Defaulted Mortgage Loan at least once every 90 days.
In the event a Mortgage Loan becomes a Defaulted Mortgage Loan (subject
to, in certain instances, the rights of subordinated secured creditors to
purchase the related Mortgage Loan and in the case of the Starrett-Lehigh
Building Loan, subject to (i) the right of the controlling holder of the Class
SL Certificates to purchase the Starrett-Lehigh Building Loan), the Majority
Subordinate Certificateholder will have an assignable option to purchase (the
"Purchase Option") the Defaulted Mortgage Loan from the Trust Fund 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 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. If the Purchase Option is not exercised by the Majority
Subordinate Certificateholder or any assignee thereof within 60 days of a
Mortgage Loan becoming a Defaulted Mortgage Loan, then the Majority Subordinate
Certificateholder shall assign the Purchase Option to the Special Servicer for
fifteen days. If the Purchase Option is not exercised by the Special Servicer
or its assignee within such fifteen day period, then the Purchase Option shall
revert to the Majority Subordinate Certificateholder.
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, consistent with the servicing standard
described under "--General" above, but the Special Servicer generally 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 mortgagor's
cure of all defaults on the Defaulted Mortgage Loan, (ii) the acquisition on
behalf of the Trust Fund of title to the related Mortgaged Property by
foreclosure or deed in lieu of foreclosure or (iii) the modification or pay-off
(full or discounted) of the Defaulted Mortgage Loan in connection with a
workout. 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 the Purchase Option.
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If (a) the 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 Majority Subordinate Certificateholder, the
Special Servicer, 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 Trustee will be required to determine if the
Option Price represents a fair price for the Defaulted Mortgage Loan. In making
such determination, the Trustee will be entitled to rely on the most recent
appraisal of the related Mortgaged Property that was prepared in accordance
with the terms of the Pooling and Servicing Agreement and may rely upon the
opinion and report of an independent third party in making such determination,
the cost of which will be advanced by the Master Servicer.
If title to any Mortgaged Property is acquired by the Trustee on behalf of
the Certificateholders pursuant to foreclosure proceedings instituted by the
Special Servicer or otherwise, the Special Servicer, after notice to the
Controlling Class Representative, (shall use its reasonable best efforts to
sell any REO Property as soon as practicable in accordance with the Servicing
Standard but prior to the end of the third calendar year following the year of
acquisition, unless (i) the Internal Revenue Service grants an extension of
time to sell such property (an "REO Extension") or (ii) it obtains an opinion
of counsel generally to the effect that the holding of the property for more
than three years after the end of the calendar year in which it was acquired
will not result in the imposition of a tax on the Trust Fund or cause any REMIC
relating to the assets of the Trust Fund to fail to qualify as a REMIC under
the Code. If the Special Servicer on behalf of the Trustee has not received an
Extension or such opinion of counsel and the Special Servicer is not able to
sell such REO Property within the period specified above, or if an REO
Extension has been granted and the Special Servicer is unable to sell such REO
Property within the extended time period, the Special Servicer shall auction
the property pursuant to the auction procedure set forth below.
The Special Servicer shall give the Controlling Class Representative, the
Master Servicer and the Trustee not less than five days' prior written notice
of its intention to sell any such REO Property, and shall auction the REO
Property to the highest bidder (which may be the Special Servicer) in
accordance with the Servicing Standard; provided, however, that the Master
Servicer, Special Servicer, Majority Subordinate Certificateholder, any
independent contractor engaged by the Master Servicer or the Special Servicer
pursuant to the Pooling and Servicing Agreement (or any officer or affiliate
thereof) shall not be permitted to purchase the REO Property at a price less
than the outstanding principal balance of such Mortgage Loan as of the date of
purchase, plus all accrued but unpaid interest and related fees and expenses,
except in limited circumstances set forth in the Pooling and Servicing
Agreement; and provided, further, that if the Special Servicer intends to bid
on any REO Property, (i) the Special Servicer shall notify the Trustee of such
intent, (ii) the Trustee shall promptly obtain, at the expense of the trust an
appraisal of such REO Property (or internal valuation in accordance with the
procedures specified in the Pooling and Servicing Agreement) and (iii) the
Special Servicer shall not bid less than the greater of (x) the fair market
value set forth in such appraisal (or internal valuation) or (y) the
outstanding principal balance of such Mortgage Loan, plus all accrued but
unpaid interest and related fees and expenses.
Subject to the REMIC provisions, the Special Servicer shall act on behalf
of the trust in negotiating and taking any other action necessary or
appropriate in connection with the sale of any REO Property or the exercise of
the Purchase Option, including the collection of all amounts payable in
connection therewith. Notwithstanding anything to the contrary herein, neither
the Trustee, in its individual capacity, nor any of its affiliates may bid for
any REO Property or purchase any Defaulted Mortgage Loan. Any sale of a
Defaulted Mortgage Loan (pursuant to the Purchase Option) or REO Property shall
be without recourse to, or representation or warranty by, the Trustee, the
Depositor, any Mortgage Loan Seller, the Special Servicer, the Master Servicer
or the trust. Notwithstanding the foregoing, nothing herein shall limit the
liability of the Master Servicer, the Special Servicer or the Trustee to the
trust and the Certificateholders for failure to perform its duties in
accordance with the Pooling and Servicing Agreement. None of the Special
Servicer, the Master Servicer, the Depositor or the Trustee shall have any
liability to the trust or any Certificateholder with respect to the price at
which a Defaulted Mortgage Loan is sold if the sale is consummated in
accordance with the terms of the Pooling and Servicing Agreement.
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The proceeds of any sale after deduction of the expenses of such sale incurred
in connection therewith shall be deposited within one business day in the
Certificate Account.
INSPECTIONS; COLLECTION OF OPERATING INFORMATION
The Special Servicer is required to perform or cause to be performed a
physical inspection of a Mortgaged Property as soon as practicable after the
related Mortgage Loan becomes a Specially Serviced Mortgage Loan or the related
debt service coverage ratio is below 1.00x; the expense of which will be
payable first, out of penalty interest and late payment charges otherwise
payable to the Special Servicer, and received in the Collection Period during
which such inspection related expenses were incurred, then at the trust Fund's
expense. In addition, beginning in 2004, with respect to each Mortgaged
Property securing a Mortgage Loan with a principal balance (or allocated loan
amount) at the time of such inspection of more than or equal to $2,000,000, the
Master Servicer (with respect to each such Mortgaged Property securing a
Mortgage Loan other than a Specially Serviced Mortgage Loan) and the Special
Servicer (with respect to each Mortgaged Property securing a Specially Serviced
Mortgage Loan) is required at its expense to inspect or cause to be inspected
the Mortgaged Property every calendar year and with respect to each Mortgaged
Property securing a Mortgage Loan with a principal balance (or allocated loan
amount) at the time of such inspection of less than $2,000,000 once every other
calendar year; provided that the Master Servicer is not obligated to inspect
any Mortgaged Property that has been inspected by the Special Servicer in the
previous 6 months. The Special Servicer and the Master Servicer each will be
required to prepare a written report of each such inspection performed by it
that describes the condition of the Mortgaged Property and that specifies the
existence with respect thereto of any sale, transfer or abandonment or any
material change in its condition or value.
The Special Servicer or the Master Servicer is also required consistent
with the Servicing Standard to collect from the related borrower and review the
quarterly and annual operating statements of each Mortgaged Property and to
cause annual operating statements to be prepared for each REO Property.
Generally, the Mortgage Loans require the related borrower to deliver an annual
property operating statement. However, there can be no assurance that any
operating statements required to be delivered will in fact be delivered, nor is
the Master Servicer or Special Servicer likely to have any practical means of
compelling such delivery in the case of an otherwise performing Mortgage Loan.
Copies of the inspection reports and operating statements referred to
above are required to be available for review by Certificateholders during
normal business hours at the offices of the Special Servicer or the Master
Servicer, as applicable. See "DESCRIPTION OF THE CERTIFICATES--Reports to
Certificateholders; Available Information" in this prospectus supplement.
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DESCRIPTION OF THE CERTIFICATES
GENERAL
The Wachovia Bank Commercial Mortgage Trust, Commercial Mortgage
Pass-Through Certificates, Series 2004-C10 (the "Certificates") will be issued
pursuant to a Pooling and Servicing Agreement, dated as of February 1, 2004
among the Depositor, the Master Servicer, the Special Servicer and the Trustee
(the "Pooling and Servicing Agreement"). The Certificates represent in the
aggregate the entire beneficial ownership interest in a trust fund (the "Trust
Fund") consisting primarily of: (i) the Mortgage Loans (including the
Starrett-Lehigh Building Subordinate Loan) and all payments and other
collections in respect of such loans received or applicable to periods after
the applicable Cut-Off Date (exclusive of payments of principal and interest
due, and principal prepayments received, on or before the Cut-Off Date); (ii)
any REO Property acquired on behalf of the Trust Fund; (iii) such funds or
assets as from time to time are deposited in the Certificate Account, the
Distribution Account, the Class SL Distribution Account, the REO Accounts, the
Additional Interest Account, the Gain on Sale Reserve Account and the Interest
Reserve Account (see "DESCRIPTION OF THE POOLING AND SERVICING
AGREEMENTS--Certificate Account" in the prospectus); and (iv) certain rights of
the Depositor under each Mortgage Loan Purchase Agreement relating to Mortgage
Loan document delivery requirements and the representations and warranties of
the Mortgage Loan Sellers regarding the Mortgage Loans.
The Certificates consist of the following classes (each, a "Class")
designated as: (i) the Class A-1, Class A-2, Class A-3, Class A-4 and Class
A-1A Certificates (collectively, the "Class A Certificates"); (ii) 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" and, together with the Class A Certificates, the
"Sequential Pay Certificates"); (iii) the Class X-C and Class X-P Certificates
(collectively, the "Class X Certificates" and collectively with the Sequential
Pay Certificates, the "REMIC Regular Certificates"); (iv) the Class R-I and
Class R-II Certificates (collectively, the "REMIC Residual Certificates"); (v)
the Class SL Certificates (the "Class SL Certificates") and (vi) the Class Z-I,
Class Z-II and Class Z-III Certificates (collectively, the "Class Z
Certificates"). The Class SL Certificates will be entitled to receive
distributions only from collections on the Starrett-Lehigh Building Subordinate
Loan in accordance with the Starrett-Lehigh Building Intercreditor Agreement
and the Pooling and Servicing Agreement and will not be supported by any
Mortgage Loan.
Only the Class A-1, Class A-2, Class A-3, Class A-4, Class B, Class C,
Class D and Class E Certificates (collectively, the "Offered Certificates") are
offered hereby. The Class A-1A, Class F, Class G, Class H, Class J, Class K,
Class L, Class M, Class N, Class O, Class P, Class X-C, Class X-P and Class SL
Certificates (collectively, the "Non-Offered Certificates"), the Class Z-I,
Class Z-II and Class Z-III Certificates and the REMIC Residual Certificates
have not been registered under the Securities Act and are not offered hereby.
Accordingly, information in this prospectus supplement regarding the terms of
the Non-Offered Certificates, the Class Z Certificates and the REMIC Residual
Certificates is provided solely because of its potential relevance to a
prospective purchaser of an Offered Certificate.
REGISTRATION AND DENOMINATIONS
The Offered Certificates will be made available in book-entry format
through the facilities of The Depository Trust Company ("DTC"). The Class A-1,
Class A-2, Class A-3, Class A-4, Class B, Class C, Class D and Class E
Certificates will be offered in denominations of not less than $10,000 actual
principal amount and in integral multiples of $1 in excess thereof.
The holders of Offered Certificates may hold their Certificates through
DTC (in the United States) or Clearstream Banking, societe anonyme,
("Clearstream") or Euroclear Bank S.A./N.V., as operator (the "Euroclear
Operator") of the Euroclear System (the "Euroclear System") (in Europe) if they
are participants of such respective system ("Participants"), 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 and Euroclear names on the books of their respective
depositaries (collectively, the "Depositaries") which in turn will hold such
positions in customers' securities accounts in the
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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.
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, the Euroclear
Operator or Clearstream, as the case may be, will then deliver instructions to
the Depositary to take action to effect final settlement on its behalf.
Because of time-zone differences, it is possible that credits of
securities in Clearstream or the Euroclear Operator 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 the Euroclear Operator 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 due to
time zone differences may be available in the relevant Clearstream or the
Euroclear Operator 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 Trustee through
the Participants who in turn will receive them from DTC. Similarly, reports
distributed to Certificateholders pursuant to the Pooling and Servicing
Agreement and requests for the consent of Certificateholders will be delivered
to beneficial owners only through DTC, the Euroclear Operator, Clearstream and
their respective Participants. Under a book-entry format, holders of Offered
Certificates may experience some delay in their receipt of payments, reports
and notices, since such payments, reports and notices will be forwarded by the
Trustee to Cede & Co., as nominee for DTC. DTC will forward such payments,
reports and notices to its Participants, which thereafter will forward them to
Indirect Participants, Clearstream, the Euroclear Operator or holders of
Offered Certificates, as applicable.
Under the rules, regulations and procedures creating and affecting DTC and
its operations (the "Rules"), DTC is required to make book-entry transfers of
Offered Certificates among Participants on whose behalf it acts with respect to
the Offered Certificates and to receive and transmit distributions of principal
of, and interest on, the Offered Certificates. Participants and Indirect
Participants with which the holders of Offered Certificates have accounts with
respect to the Offered Certificates similarly are required to make book-entry
transfers and receive and transmit such payments on behalf of their respective
holders of Offered Certificates. Accordingly, although the holders of Offered
Certificates will not possess the Offered Certificates, the Rules provide a
mechanism by which Participants will receive payments on Offered Certificates
and will be able to transfer their interest.
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Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a holder of
Offered Certificates to pledge such Certificates to persons or entities that do
not participate in the DTC system, or to otherwise act with respect to such
Certificates, may be limited due to the lack of a physical certificate for such
Certificates.
DTC has advised the Depositor that it will take any action permitted to be
taken by a holder of an Offered Certificate under the Pooling and Servicing
Agreement only at the direction of one or more Participants to whose accounts
with DTC the Offered Certificates are credited. DTC may take conflicting
actions with respect to other undivided interests to the extent that such
actions are taken on behalf of Participants whose holdings include such
undivided interests.
Except as required by law, none of the Depositor, the Underwriters, the
Master Servicer nor the Trustee will have any liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests in the Offered Certificates held by Cede & Co., as nominee for DTC,
or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
Clearstream is a limited liability company (a societe anonyme) organized
under the laws of Luxembourg. 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.
The Euroclear System was created in 1968 to hold securities for
participants of Euroclear ("Euroclear Participants") and to clear and settle
transactions between Euroclear Participants through simultaneous electronic
book-entry delivery against payment. The Euroclear System is owned by
Euroclear.
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.
The information in this prospectus supplement concerning DTC, Clearstream
or the Euroclear Operator and their book-entry systems has been obtained from
sources believed to be reliable, but neither the Depositor nor any of the
Underwriters takes any responsibility for the accuracy or completeness thereof.
CERTIFICATE BALANCES AND NOTIONAL AMOUNT
Subject to a permitted variance of plus or minus 5.0%, the respective
Classes of Sequential Pay Certificates will have the Certificate Balances
representing the approximate percentage of the Cut-Off Date Pool Balance as set
forth in the following table:
PERCENTAGE OF
CLOSING DATE CUT-OFF DATE
CLASS OF CERTIFICATES CERTIFICATE BALANCE POOL BALANCE
- ----------------------------------------------- --------------------- --------------
Class A-1 Certificates ........................ $ 67,117,000 5.202%
Class A-2 Certificates ........................ $104,012,000 8.062%
Class A-3 Certificates ........................ $ 71,285,000 5.526%
Class A-4 Certificates ........................ $579,236,000 44.899%
Class B Certificates .......................... $ 38,703,000 3.000%
Class C Certificates .......................... $ 16,127,000 1.250%
Class D Certificates .......................... $ 32,252,000 2.500%
Class E Certificates .......................... $ 16,126,000 1.250%
Non-Offered Certificates (other than Class X-C,
Class X-P and Class SL Certificates) ......... $365,241,569 28.311%
The "Certificate Balance" of any Class of Sequential Pay Certificates
outstanding at any time represents the maximum amount that the holders thereof
are entitled to receive as distributions allocable
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to principal from the cash flow on the Mortgage Loans and the other assets in
the Trust Fund. The Certificate Balance of each Class of Sequential Pay
Certificates will be reduced on each Distribution Date by any distributions of
principal actually made on such Class of Certificates on such Distribution
Date, and further by any Realized Losses and Additional Trust Fund Expenses
actually allocated to such Class of Certificates on such Distribution Date.
The Class X-C and Class X-P Certificates do not have Certificate Balances,
but represent the right to receive the distributions of interest in amounts
equal to the aggregate interest accrued on the applicable notional amount
(each, a "Notional Amount") of the related Class of Class X-C and Class X-P
Certificates. On each Distribution Date, the Notional Amount of the Class X-C
Certificates generally will be equal to the aggregate outstanding Certificate
Balances of the Sequential Pay Certificates on such Distribution Date. The
initial Notional Amount of the Class X-C Certificates will equal approximately
$1,290,099,569 (subject to a permitted variance of plus or minus 5.0%).
The Notional Amount of the Class X-P Certificates will generally equal:
(1) until the Distribution Date in August 2004, the sum of (a) the lesser
of $64,927,000 and the Certificate Balance of the Class A-1
Certificates, (b) the lesser of $251,760,000 and the Certificate
Balance of the Class A-1A Certificates and (c) the aggregate
Certificate Balances of the 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 and
Class K Certificates;
(2) after the Distribution Date in August 2004 through and including the
Distribution Date in February 2005, the sum of (a) the lesser of
$62,404,000 and the Certificate Balance of the Class A-1 Certificates,
(b) the lesser of $251,070,000 and the Certificate Balance of the
Class A-1A Certificates and (c) the aggregate Certificate Balances of
the 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 and Class K Certificates;
(3) after the Distribution Date in February 2005 through and including
the Distribution Date in August 2005, the sum of (a) the lesser of
$42,539,000 and the Certificate Balance of the Class A-1 Certificates,
(b) the lesser of $246,085,000 and the Certificate Balance of the
Class A-1A Certificates and (c) the aggregate Certificate Balances of
the 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 and Class K Certificates;
(4) after the Distribution Date in August 2005 through and including the
Distribution Date in February 2006, the sum of (a) the lesser of
$19,049,000 and the Certificate Balance of the Class A-1 Certificates,
(b) the lesser of $240,372,000 and the Certificate Balance of the
Class A-1A Certificates and (c) the aggregate Certificate Balances of
the 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 and Class K Certificates;
(5) after the Distribution Date in February 2006 through and including
the Distribution Date in August 2006, the sum of (a) the lesser of
$98,958,000 and the Certificate Balance of the Class A-2 Certificates,
(b) the lesser of $234,262,000 and the Certificate Balance of the
Class A-1A Certificates and (c) the aggregate Certificate Balances of
the Class A-3, Class A-4, Class B, Class C, Class D, Class E, Class F,
Class G, Class H, Class J and Class K Certificates;
(6) after the Distribution Date in August 2006 through and including the
Distribution Date in February 2007, the sum of (a) the lesser of
$75,887,000 and the Certificate Balance of the Class A-2 Certificates,
(b) the lesser of $228,421,000 and the Certificate Balance of the
Class A-1A Certificates, (c) the aggregate Certificate Balances of the
Class A-3, Class A-4, Class B, Class C, Class D, Class E, Class F,
Class G and Class H Certificates and (d) the lesser of $11,030,000 and
the Certificate Balance of the Class J Certificates;
(7) after the Distribution Date in February 2007 through and including
the Distribution Date in August 2007, the sum of (a) the lesser of
$53,194,000 and the Certificate Balance of the Class A-2 Certificates,
(b) the lesser of $222,587,000 and the Certificate Balance of the
Class A-1A Certificates, (c) the aggregate Certificate Balances of the
Class A-3, Class A-4, Class B, Class C, Class D, Class E, Class F and
Class G Certificates and (d) the lesser of $16,717,000 and the
Certificate Balance of the Class H Certificates;
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(8) after the Distribution Date in August 2007 through and including the
Distribution Date in February 2008, the sum of (a) the lesser of
$31,428,000 and the Certificate Balance of the Class A-2 Certificates,
(b) the lesser of $216,996,000 and the Certificate Balance of the
Class A-1A Certificates, (c) the aggregate Certificate Balances of the
Class A-3, Class A-4, Class B, Class C, Class D, Class E, Class F and
Class G Certificates and (d) the lesser of $5,095,000 and the
Certificate Balance of the Class H Certificates;
(9) after the Distribution Date in February 2008 through and including
the Distribution Date in August 2008, the sum of (a) the lesser of
$60,395,000 and the Certificate Balance of the Class A-3 Certificates,
(b) the lesser of $211,454,000 and the Certificate Balance of the
Class A-1A Certificates, (c) the aggregate Certificate Balances of the
Class A-4, Class B, Class C, Class D, Class E and Class F Certificates
and (d) the lesser of $8,404,000 and the Certificate Balance of the
Class G Certificates;
(10) after the Distribution Date in August 2008 through and including the
Distribution Date in February 2009, the sum of (a) the lesser of
$8,204,000 and the Certificate Balance of the Class A-3 Certificates,
(b) the lesser of $175,394,000 and the Certificate Balance of the Class
A-1A Certificates, (c) the aggregate Certificate Balances of the Class
A-4, Class B, Class C, Class D and Class E Certificates and (d) the
lesser of $17,095,000 and the Certificate Balance of the Class F
Certificates;
(11) after the Distribution Date in February 2009 through and including the
Distribution Date in August 2009, the sum of (a) the lesser of
$562,594,000 and the Certificate Balance of the Class A-4 Certificates,
(b) the lesser of $171,001,000 and the Certificate Balance of the Class
A-1A Certificates, (c) the aggregate Certificate Balances of the Class
B, Class C, Class D and Class E Certificates and (d) the lesser of
$7,601,000 and the Certificate Balance of the Class F Certificates;
(12) after the Distribution Date in August 2009 through and including the
Distribution Date in February 2010, the sum of (a) the lesser of
$536,232,000 and the Certificate Balance of the Class A-4 Certificates,
(b) the lesser of $166,805,000 and the Certificate Balance of the Class
A-1A Certificates, (c) the aggregate Certificate Balances of the Class
B, Class C and Class D Certificates and (d) the lesser of $14,636,000
and the Certificate Balance of the Class E Certificates;
(13) after the Distribution Date in February 2010 through and including the
Distribution Date in August 2010, the sum of (a) the lesser of
$513,019,000 and the Certificate Balance of the Class A-4 Certificates,
(b) the lesser of $162,662,000 and the Certificate Balance of the Class
A-1A Certificates, (c) the aggregate Certificate Balances of the Class
B, Class C and Class D Certificates and (d) the lesser of $5,950,000
and the Certificate Balance of the Class E Certificates;
(14) after the Distribution Date in August 2010 through and including the
Distribution Date in February 2011, the sum of (a) the lesser of
$474,880,000 and the Certificate Balance of the Class A-4, (b) the
lesser of $96,431,000 and the Certificate Balance of the Class A-1A
Certificates, (c) the aggregate Certificate Balances of the Class B and
Class C Certificates and (d) the lesser of $29,967,000 and the
Certificate Balance of the Class D Certificates;
(15) after the Distribution Date in February 2011, $0.
The initial Notional Amount of the Class X-P Certificates will be
$1,246,996,000.
The Certificate Balance of any Class of Sequential Pay Certificates may be
increased by the amount, if any, of Certificate Deferred Interest added to such
Class Certificate Balance. With respect to any Mortgage Loan as to which the
Mortgage Rate has been reduced through a modification on any Distribution Date,
"Mortgage Deferred Interest" is the amount by which (a) interest accrued at
such reduced rate is less than (b) the amount of interest that would have
accrued on such Mortgage Loan at the Mortgage Rate before such reduction, to
the extent such amount has been added to the outstanding principal balance of
such Mortgage Loan. On each Distribution Date the amount of interest
distributable to a Class of Sequential Pay Certificates will be reduced by the
amount of Mortgage Deferred Interest allocable to such Class (any such amount,
"Certificate Deferred Interest"), such allocation being in reverse alphabetical
order (except with respect to the Class A-1, Class A-2, Class A-3, Class A-4
and Class
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A-1A Certificates, which amounts shall be applied pro rata (based on remaining
Class Certificate Balances) to such Classes). Certificate Deferred Interest on
the Class SL Certificates will be equal to the Starrett-Lehigh Building
Subordinate Loan's share of Mortgage Deferred Interest on the Starrett-Lehigh
Building Whole Loan, allocated pursuant to the terms of the Pooling and
Servicing Agreement and the Starrett-Lehigh Building Intercreditor Agreement.
The Certificate Balance of each Class of Sequential Pay Certificates to which
Certificate Deferred Interest has been so allocated on a Distribution Date will
be increased by the amount of Certificate Deferred Interest. Any increase in
the Certificate Balance of a Class of Sequential Pay Certificates will result
in an increase in the Notional Amount of the Class X-C Certificates, and to the
extent there is an increase in the Certificate Balance of the 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 and Class K Certificates and subject to the limits described in the
description of the Notional Amount of the Class X-P Certificates above, the
Class X-P Certificates.
The REMIC Residual Certificates do not have Certificate Balances or
Notional Amounts, but represent the right to receive on each Distribution Date
any portion of the Available Distribution Amount and Class SL Available
Distribution Amount (each as defined below) for such date that remains after
the required distributions have been made on all the REMIC Regular Certificates
and the Class SL Certificates, as applicable. It is not anticipated that any
such portion of the Available Distribution Amount will result in more than a de
minimis distribution to the REMIC Residual Certificates.
The Class Z Certificates do not have Certificate Balances or Notional
Amounts, but represent the right to receive on each Distribution Date any
amounts of Additional Interest received in the related Collection Period.
PASS-THROUGH RATES
The Pass-Through Rate applicable to the Class A-1, Class A-2, Class A-3,
Class A-4, Class B, Class C, Class D and Class E Certificates for each
Distribution Date will equal the respective fixed rate per annum set forth on
the front cover of this prospectus supplement. Each of the Class X-C Components
and the Class X-P Components will be deemed to have a Pass-Through Rate equal
to the Pass-Through Rate on the related Class of Certificates.
The Pass-Through Rate applicable to the Class X-C Certificates for the
initial Distribution Date will equal approximately 0.0514% per annum.
The Pass-Through Rate applicable to the Class X-C Certificates for each
subsequent Distribution Date will equal the weighted average of the respective
Class X-C Strip Rates, at which interest accrues from time to time on the
respective components (the "Class X-C Components") of the Class X-C
Certificates outstanding immediately prior to such Distribution Date (weighted
on the basis of the outstanding balances of those Class X-C Components
immediately prior to the Distribution Date). Each Class X-C Component will be
comprised of all or a designated portion of the Certificate Balance of one of
the Classes of Sequential Pay Certificates. In general, the Certificate Balance
of each Class of Sequential Pay Certificates will constitute a separate Class
X-C Component. However, if a portion, but not all, of the Certificate Balance
of any particular Class of Sequential Pay Certificates is identified under
"--Certificate Balances and Notional Amount" above as being part of the
Notional Amount of the Class X-P Certificates immediately prior to any
Distribution Date, then the identified portion of the Certificate Balance will
also represent one or more separate Class X-C Components for purposes of
calculating the Pass-Through Rate of the Class X-C Certificates, and the
remaining portion of the Certificate Balance will represent one or more other
separate Class X-C Components for purposes of calculating the Pass-Through Rate
of the Class X-C Certificates. For each Distribution Date through and including
the Distribution Date in February 2011, the "Class X-C Strip Rate" for each
Class X-C Component will be calculated as follows:
(1) if such Class X-C Component consists of the entire Certificate
Balance of any Class of Sequential Pay Certificates, and if the
Certificate Balance does not, in whole or in part, also constitute a
Class X-P Component immediately prior to the Distribution Date, then
the applicable Class X-C Strip Rate will equal the excess, if any, of
(a) the Weighted Average Net Mortgage Rate for the Distribution Date,
over (b) the Pass-Through Rate in effect for the Distribution Date for
the applicable Class of Sequential Pay Certificates;
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(2) if such Class X-C Component consists of a designated portion (but not
all) of the Certificate Balance of any Class of Sequential Pay
Certificates, and if the designated portion of the Certificate Balance
does not also constitute a Class X-P Component immediately prior to
the Distribution Date, then the applicable Class X-C Strip Rate will
equal the excess, if any, of (a) the Weighted Average Net Mortgage
Rate for the Distribution Date, over (b) the Pass-Through Rate in
effect for the Distribution Date for the applicable Class of
Sequential Pay Certificates;
(3) if such Class X-C Component consists of a designated portion (but not
all) of the Certificate Balance of any Class of Sequential Pay
Certificates, and if the designated portion of the Certificate Balance
also constitutes a Class X-P Component immediately prior to the
Distribution Date, then the applicable Class X-C Strip Rate will equal
the excess, if any, of (a) the Weighted Average Net Mortgage Rate for
the Distribution Date, over (b) the sum of (i) the Class X-P Strip
Rate for the applicable Class X-P Component, and (ii) the Pass-Through
Rate in effect for the Distribution Date for the applicable Class of
Sequential Pay Certificates; and
(4) if such Class X-C Component consists of the entire Certificate
Balance of any Class of Sequential Pay Certificates, and if the
Certificate Balance also constitutes, in its entirety, a Class X-P
Component immediately prior to such Distribution Date, then the
applicable Class X-C Strip Rate will equal the excess, if any, of (a)
the Weighted Average Net Mortgage Rate for the Distribution Date, over
(b) the sum of (i) the Class X-P Strip Rate for the applicable Class
X-P Component, and (ii) the Pass-Through Rate in effect for the
Distribution Date for the applicable Class of Sequential Pay
Certificates.
For each Distribution Date after the Distribution Date in February 2011,
the entire Certificate Balance of each Class of Sequential Pay Certificates
will constitute one or more separate Class X-C Components, and the applicable
Class X-C Strip Rate with respect to each such Class X-C Component for each
Distribution Date will equal the excess, if any, of (a) the Weighted Average
Net Mortgage Rate for the Distribution Date, over (b) the Pass-Through Rate in
effect for the Distribution Date for the Class of Sequential Pay Certificates.
The Pass-Through Rate applicable to the Class X-P Certificates for the
initial Distribution Date will equal approximately 1.0250% per annum.
The Pass-Through Rate applicable to the Class X-P Certificates for each
subsequent Distribution Date will equal the weighted average of the respective
Class X-P Strip Rates, at which interest accrues from time to time on the
respective components (the "Class X-P Components") of the Class X-P
Certificates outstanding immediately prior to such Distribution Date (weighted
on the basis of the balances of those Class X-P Components immediately prior to
the Distribution Date). Each Class X-P Component will be comprised of all or a
designated portion of the Certificate Balance of a specified Class of
Sequential Pay Certificates. If all or a designated portion of the Certificate
Balance of any Class of Sequential Pay Certificates is identified under
"--Certificate Balances and Notional Amount" above as being part of the
Notional Amount of the Class X-P Certificates immediately prior to any
Distribution Date, then that Certificate Balance (or designated portion
thereof) will represent one or more separate Class X-P Components for purposes
of calculating the Pass-Through Rate of the Class X-P Certificates. For each
Distribution Date through and including the Distribution Date in February 2011,
the "Class X-P Strip Rate" for each Class X-P Component will equal (x) the
lesser of (1) the Weighted Average Net Mortgage Rate for such Distribution
Date, and (2) the reference rate specified on Annex C to this prospectus
supplement for such Distribution Date minus 0.03% per annum, minus (y) the
Pass-Through Rate for such Component (but in no event will any Class X-P Strip
Rate be less than zero).
After the Distribution Date in February 2011, the Class X-P Certificates
will cease to accrue interest and will have a 0% Pass-Through Rate.
In the case of each Class of REMIC Regular Certificates and the Class SL
Certificates interest at the applicable Pass-Through Rate will be payable
monthly on each Distribution Date and will accrue during each Interest Accrual
Period on the Certificate Balance (or, in the case of the Class X-C and Class
X-P Certificates, the respective Notional Amount) of such Class of Certificates
immediately following the Distribution Date in such Interest Accrual Period
(after giving effect to all distributions of principal made
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on such Distribution Date). Interest on each Class of REMIC Regular
Certificates and the Class SL Certificates will be calculated on the basis of a
360-day year consisting of twelve 30-day months. With respect to any Class of
REMIC Regular Certificates and the Class SL Certificates and any Distribution
Date, the "Interest Accrual Period" will be the preceding calendar month which
will be deemed to consist of 30 days.
The Class Z Certificates will not have a Pass-Through Rate or be entitled
to distributions in respect of interest other than Additional Interest.
The "Weighted Average Net Mortgage Rate" for each Distribution Date is the
weighted average of the Net Mortgage Rates for the Mortgage Loans (excluding
the Starrett-Lehigh Building Subordinate Loan) as of the commencement of the
related Collection Period, weighted on the basis of their respective Stated
Principal Balances immediately following the preceding Distribution Date;
provided that, for the purpose of determining the Weighted Average Net Mortgage
Rate only, if the Mortgage Rate for any Mortgage Loan has been modified in
connection with a bankruptcy or similar proceeding involving the related
borrower or a modification, waiver or amendment granted or agreed to by the
Special Servicer, the Weighted Average Net Mortgage Rate for such Mortgage Loan
will be calculated without regard to such event. The "Net Mortgage Rate" for
each Mortgage Loan (excluding the Starrett-Lehigh Building Subordinate Loan)
will generally equal (x) the Mortgage Rate in effect for such Mortgage Loan as
of the Cut-Off Date, minus (y) the applicable Administrative Cost Rate for such
Mortgage Loan. Notwithstanding the foregoing, because no Mortgage Loan, other
than 5 Mortgage Loans (loan numbers 28, 49, 100, 101 and 102), accrues interest
on the basis of a 360-day year consisting of twelve 30-day months (which is the
basis on which interest accrues in respect of the REMIC Regular Certificates),
then, solely for purposes of calculating the Weighted Average Net Mortgage Rate
for each Distribution Date, the Mortgage Rate of each Mortgage Loan, other than
the 5 Mortgage Loans, representing 1.4% of the Cut-Off Date Pool Balance (1.8%
of the Cut-Off Date Group 1 Balance), which accrues interest on a 30/360 basis,
in effect during any calendar month will be deemed to be the annualized rate at
which interest would have to accrue in respect of such loan on a 30/360 basis
in order to derive the aggregate amount of interest (other than default
interest) actually accrued in respect of such loan during such calendar month;
provided, however, that, the Mortgage Rate in effect during (a) December of
each year that does not immediately precede a leap year, and January of each
year will be the per annum rate stated in the related Mortgage Note unless the
final Distribution Date occurs in January or February immediately following
such December or January and (b) in February of each year will be determined
inclusive of the one day of interest retained from the immediately preceding
January and, if applicable, December. The "Stated Principal Balance" of each
Mortgage Loan outstanding at any time will generally be an amount equal to the
principal balance thereof as of the Cut-Off Date, (a) reduced on each
Distribution Date (to not less than zero) by (i) the portion of the Principal
Distribution Amount for that date which is attributable to such Mortgage Loan
and (ii) the principal portion of any Realized Loss incurred in respect of such
Mortgage Loan (with respect to the Starrett-Lehigh Building Whole Loan,
excluding the Starrett-Lehigh Building Subordinate Loan) during the related
Collection Period and (b) increased on each Distribution Date by any Mortgage
Deferred Interest added to the principal balance of such Mortgage Loan (with
respect to the Starrett-Lehigh Building Whole Loan, excluding the
Starrett-Lehigh Building Subordinate Loan) on such Distribution Date. The
Stated Principal Balance of a Mortgage Loan may also be reduced in connection
with any forced reduction of the actual unpaid principal balance thereof
imposed by a court presiding over a bankruptcy proceeding in which the related
borrower is a debtor. In addition, to the extent that principal from general
collections is used to reimburse nonrecoverable Advances, and such amount has
not been included as part of the Principal Distribution Amount, such amount
shall continue to be deemed to be distributable for purposes of calculating the
Stated Principal Balance. Notwithstanding the foregoing, if any Mortgage Loan
is paid in full, liquidated or otherwise removed from the Trust Fund,
commencing as of the first Distribution Date following the Collection Period
during which such event occurred, the Stated Principal Balance of such Mortgage
Loan will be zero. With respect to any Companion Loan on any date of
determination, the Stated Principal Balance shall equal the unpaid principal
balance of such Companion Loan.
The "Collection Period" for each Distribution Date is the period that
begins on the 12th day in the month immediately preceding the month in which
such Distribution Date occurs (or the day after the
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applicable Cut-Off Date in the case of the first Collection Period) and ends on
and includes the 11th day in the same month as such Distribution Date.
Notwithstanding the foregoing, in the event that the last day of a Collection
Period is not a business day, any payments received with respect to the
Mortgage Loans relating to such Collection Period on the business day
immediately following such day will be deemed to have been received during such
Collection Period and not during any other Collection Period. The
"Determination Date" will be, for any Distribution Date, the 11th day of each
month, or if such 11th day is not a business day, the next succeeding business
day, commencing in March 2004.
DISTRIBUTIONS
General. Except as described below with respect to the Class SL
Certificates, distributions on the Certificates are made by the Trustee, to the
extent of the Available Distribution Amount, on the fourth business day
following the related Determination Date (each, a "Distribution Date"). Except
as described below, all such distributions will be made to the persons in whose
names the Certificates are registered (the "Certificateholders") at the close
of business on the last business day of the month preceding the month in which
the related Distribution Date occurs and shall be made by wire transfer of
immediately available funds, if such Certificateholder shall have provided
wiring instructions no less than five business days prior to such record date,
or otherwise by check mailed to the address of such Certificateholder as it
appears in the Certificate register. The final distribution on any Certificate
(determined without regard to any possible future reimbursement of any Realized
Loss or Additional Trust Fund Expense previously allocated to such Certificate)
will be made only upon presentation and surrender of such Certificate at the
location that will be specified in a notice of the pendency of such final
distribution. All distributions made with respect to a Class of Certificates
will be allocated pro rata among the outstanding Certificates of such Class
based on their respective percentage interests in such Class. The first
Distribution Date on which investors in the Offered Certificates may receive
distributions will be the Distribution Date occurring in March 2004.
The Available Distribution Amount. The aggregate amount available for
distributions of interest and principal to Certificateholders (other than Class
R-I, Class R-II, Class SL, Class Z-I, Class Z-II and Class Z-III
Certificateholders) on each Distribution Date (the "Available Distribution
Amount") will, in general, equal the sum of the following amounts:
(a) the total amount of all cash received on or in respect of the
Mortgage Loans and any REO Properties by the Master Servicer as of the
close of business on the last day of the related Collection Period (or, in
the event that the Collection Period is deemed to end on the business day
prior to the Distribution Date, amounts collected by or on behalf of the
Master Servicer as of 3:00 p.m. New York City time) and not previously
distributed with respect to the Certificates or applied for any other
permitted purpose, exclusive of any portion thereof that represents one or
more of the following:
(i) any Periodic Payments collected but due on a Due Date after the
related Collection Period;
(ii) any Prepayment Premiums and Yield Maintenance Charges;
(iii) all amounts in the Certificate Account that are payable or
reimbursable to any person other than the Certificateholders,
including any Servicing Fees and Trustee Fees on the Mortgage Loans;
(iv) any amounts deposited in the Certificate Account in error;
(v) any Additional Interest on the ARD Loans (which is separately
distributed to the Class Z-I, Class Z-II and Class Z-III
Certificates);
(vi) if such Distribution Date occurs during February of any year
or during January of any year that is not a leap year, the Interest
Reserve Amounts with respect to the Mortgage Loans to be deposited in
the Interest Reserve Account and held for future distribution; and
(vii) any amounts distributable to the Class SL Certificates in
respect of the Starrett- Lehigh Building Subordinate Loan as described
below under "--Application of Class SL Available Distribution Amount";
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(b) all P&I Advances made by the Master Servicer or the Trustee with
respect to such Distribution Date (other than any P&I Advance made on the
Starrett-Lehigh Building Subordinate Loan);
(c) any Compensating Interest Payment made by the Master Servicer to
cover the aggregate of any Prepayment Interest Shortfalls experienced
during the related Collection Period (other than any Compensating Interest
Payment made on any Companion Loan); and
(d) if such Distribution Date occurs during March of any year or if
such Distribution Date is the final Distribution Date and occurs in
February or, if such year is not a leap year, in January, the aggregate of
the Interest Reserve Amounts then on deposit in the Interest Reserve
Account in respect of each Mortgage Loan.
See "SERVICING OF THE MORTGAGE LOANS--Servicing and Other Compensation and
Payment of Expenses" and "--P&I Advances" in this prospectus supplement, and
"DESCRIPTION OF THE POOLING AND SERVICING AGREEMENTS--Certificate Account" in
the accompanying prospectus.
Any Prepayment Premiums or Yield Maintenance Charges actually collected
will be distributed separately from the Available Distribution Amount. See
"--Distributions--Allocation of Prepayment Premiums and Yield Maintenance
Charges" in this prospectus supplement.
All amounts received by the trust with respect to any Co-Lender Loan,
including the Starrett-Lehigh Building Whole Loan will be applied to amounts
due and owing under the related loan (including for principal and accrued and
unpaid interest) in accordance with the express provisions of the related loan
documents, the related Intercreditor Agreement and the Pooling and Servicing
Agreement.
The Class SL Available Distribution Amount. The aggregate amount available
for distributions of interest and principal to the holders of the Class SL
Certificates on each Distribution Date (the "Class SL Available Distribution
Amount") will, in general, equal the sum of the following amounts:
(a) the total amount of all cash received on or in respect of the
Starrett-Lehigh Building Subordinate Loan by the Master Servicer as of the
close of business on the last day of the related Collection Period (or, in
the event that the Collection Period is deemed to end on the business day
prior to the Distribution Date, amounts collected by or on behalf of the
Master Servicer as of 3:00 p.m. New York City time) and payable to the
holder of the Starrett-Lehigh Building Subordinate Loan in accordance with
the terms of the Starrett-Lehigh Building Intercreditor Agreement and not
previously distributed with respect to the Class SL Certificates or
applied for any other permitted purpose, exclusive of any portion thereof
that represents one or more of the following:
(i) any Periodic Payments on the Starrett-Lehigh Building
Subordinate Loan collected but due on a Due Date after the related
Collection Period;
(ii) all amounts in the Certificate Account that are payable or
reimbursable to any person other than the holders of the Class SL
Certificates, including any Servicing Fees and Trustee Fees on the
Starrett-Lehigh Building Subordinate Loan;
(iii) any amounts deposited in the Certificate Account in error;
and
(iv) if such Distribution Date occurs during February of any year
or during January of any year that is not a leap year, the Interest
Reserve Amounts with respect to the Starrett- Lehigh Building
Subordinate Loan to be deposited in the Interest Reserve Account and
held for future distribution;
(b) all P&I Advances of interest made by the Master Servicer or the
Trustee with respect to such Distribution Date made on the Starrett-Lehigh
Building Subordinate Loan;
(c) any Compensating Interest Payment made by the Master Servicer to
cover the aggregate of any Prepayment Interest Shortfalls experienced
during the related Collection Period made on the Starrett-Lehigh Building
Subordinate Loan; and
(d) if such Distribution Date occurs during March of any year or if
such Distribution Date is the final Distribution Date and occurs in
February or, if such year is not a leap year, in January, the
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aggregate of the Interest Reserve Amounts then on deposit in the Interest
Reserve Account in respect of the Starrett-Lehigh Building Subordinate
Loan.
Interest Reserve Account. The Master Servicer 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, there will be withdrawn from the Certificate
Account and deposited to the Interest Reserve Account in respect of each
Mortgage Loan (including the Starrett-Lehigh Building Subordinate Loan) (the
"Interest Reserve Loans") which accrues interest on an Actual/360 Basis an
amount equal to two day's interest at the related Mortgage Rate on its Stated
Principal Balance, as of the Due Date in the month in which such Distribution
Date occurs, to the extent a Periodic Payment or P&I Advance is timely made in
respect thereof for such Due Date (all amounts so deposited in any consecutive
January (if applicable) and February in respect of each Interest Reserve Loan,
the "Interest Reserve Amount"). With respect to each Distribution Date
occurring in March, or in the event the final Distribution Date occurs in
February or, if such year is not a leap year, in January, there will be
withdrawn from the Interest Reserve Account the amounts deposited from the
immediately preceding February and, if applicable, January, and such withdrawn
amount is to be included as part of the Available Distribution Amount for such
Distribution Date. For the first Distribution Date following the Closing Date,
the Interest Reserve Amount will include one (1) day of interest at the related
Mortgage Rate for each Interest Reserve Loan deposited into the Interest
Reserve Account by the applicable Mortgage Loan Seller on or before the Closing
Date.
Distribution Account. The Paying Agent will establish and will maintain a
"Distribution Account" in the name of the Paying Agent on behalf of the Trustee
for the benefit of the Certificateholders and will maintain the Distribution
Account as an eligible account pursuant to the terms of the Pooling and
Servicing Agreement. Funds on deposit in the Distribution Account, to the
extent of the Available Distribution Amount (and the Class SL Available
Distribution Amount with respect to the Class SL Certificates), will be used to
make distributions on the Certificates. Funds in the Distribution Account will
not be invested.
Gain on Sale Reserve Account. The Paying Agent will establish and will
maintain a "Gain on Sale Reserve Account" in the name of the Paying Agent on
behalf of the Trustee for the benefit of the Certificateholders. To the extent
that gains realized on sales of Mortgaged Properties, if any, are not used to
offset Realized Losses previously allocated to the Certificates, such gains
will be held and applied to offset future Realized Losses, if any.
Additional Interest Account. The Trustee will establish and will maintain
an "Additional Interest Account" in the name of the Trustee for the benefit of
the holders of the Class Z-I, Class Z-II, Class Z-III and Class SL
Certificates. Prior to the applicable Distribution Date, an amount equal to the
Additional Interest received during the related Collection Period will be
deposited into the Additional Interest Account.
Application of the Available Distribution Amount. On each Distribution
Date, the Trustee will (except as otherwise described under "--Termination"
below) apply amounts on deposit in the Distribution Account (other than amounts
payable on such date in respect of the Class SL Certificates), in the following
order of priority to the extent of the Available Distribution Amount:
(1) concurrently, to distributions of interest (i) from the portion of the
Available Distribution Amount for such Distribution Date attributable
to Mortgage Loans in Loan Group 1, to the holders of the Class A-1
Certificates, Class A-2 Certificates, Class A-3 Certificates and Class
A-4 Certificates pro rata, in accordance with the respective amounts
of Distributable Certificate Interest in respect of such Classes of
Certificates on such Distribution Date, in an amount equal to all
Distributable Certificate Interest in respect of such Classes of
Certificates for such Distribution Date and, to the extent not
previously paid, for all prior Distribution Dates, (ii) from the
portion of the Available Distribution Amount for such Distribution
Date attributable to Mortgage Loans in Loan Group 2, to the holders of
the Class A-1A Certificates in an amount equal to all Distributable
Certificate Interest in respect of such Class of Certificates for such
Distribution Date and, to the extent not previously paid, for all
prior Distribution Dates, and
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(iii) from the entire Available Distribution Amount for such
Distribution Date relating to the entire Mortgage Pool, to the holders
of the Class X-C Certificates and Class X-P Certificates, pro rata, in
accordance with the respective amounts of Distributable Certificate
Interest in respect of such Classes of Certificates on such
Distribution Date, in an amount equal to all Distributable Certificate
Interest in respect of such Class of Certificates for such
Distribution Date and, to the extent not previously paid, for all
prior Distribution Dates; provided, however, on any Distribution Date
where the Available Distribution Amount (or applicable portion
thereof) is not sufficient to make distributions in full to the
related Classes of Certificates as described above, the Available
Distribution Amount will allocated among the above Classes of
Certificates without regard to Loan Group, pro rata, in accordance
with the respective amounts of Distributable Certificate Interest in
respect of such Classes of Certificates on such Distribution Date, in
an amount equal to all Distributable Certificate Interest in respect
of each such Class of Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(2) to distributions of principal to the holders of the Class A-1
Certificates in an amount (not to exceed the then outstanding
Certificate Balance of the Class A-1 Certificates) equal to the Loan
Group 1 Principal Distribution Amount for such Distribution Date and,
after the Class A-1A Certificates have been retired, the Loan Group 2
Principal Distribution Amount remaining after payments to the Class
A-1A Certificates have been made on such Distribution Date;
(3) after the Class A-1 Certificates have been retired, to distributions
of principal to the holders of the Class A-2 Certificates in an amount
(not to exceed the then outstanding Certificate Balance of the Class
A-2 Certificates) equal to the Loan Group 1 Principal Distribution
Amount for such Distribution Date and, after the Class A-1A
Certificates have been retired, the Loan Group 2 Principal
Distribution Amount remaining after payments to the Class A-1A
Certificates have been made on such Distribution Date, in each case
less any portion thereof distributed in respect of the Class A-1
Certificates on such Distribution Date;
(4) after the Class A-1 Certificates and Class A-2 Certificates have been
retired, to distributions of principal to the holders of the Class A-3
Certificates in an amount (not to exceed the then outstanding
Certificate Balance of the Class A-3 Certificates) equal to the Loan
Group 1 Principal Distribution Amount for such Distribution Date and,
after the Class A-1A Certificates have been retired, the Loan Group 2
Principal Distribution Amount remaining after payments to the Class
A-1A Certificates have been made on such Distribution Date, in each
case less any portion thereof distributed in respect of the Class A-1
Certificates or Class A-2 Certificates on such Distribution Date;
(5) after the Class A-1 Certificates, Class A-2 Certificates and Class A-3
Certificates have been retired, to distributions of principal to the
holders of the Class A-4 Certificates in an amount (not to exceed the
then outstanding Certificate Balance of the Class A-4 Certificates)
equal to the Loan Group 1 Principal Distribution Amount for such
Distribution Date and, after the Class A-1A Certificates have been
retired, the Loan Group 2 Principal Distribution Amount remaining
after payments to the Class A-1A Certificates have been made on such
Distribution Date, in each case less any portion thereof distributed
in respect of the Class A-1 Certificates, Class A-2 Certificates or
Class A-3 Certificates on such Distribution Date;
(6) to distributions of principal to the holders of the Class A-1A
Certificates in an amount (not to exceed the then outstanding
Certificate Balance of the Class A-1A Certificate) equal to the Loan
Group 2 Principal Distribution Amount for such Distribution and, after
the Class A-4 Certificates have been retired, the Loan Group 1
Principal Distribution Amount remaining after payments to the Class
A-4 Certificates have been made on such Distribution Date;
(7) to distributions to the holders of the Class A-1 Certificates, Class
A-2 Certificates, Class A-3 Certificates, Class A-4 Certificates and
Class A-1A Certificates, pro rata, in accordance with the respective
amounts of Realized Losses and Additional Trust Fund Expenses, if any,
previously
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allocated to such Classes of Certificates and for which no
reimbursement has previously been received, to reimburse such holders
for all such Realized Losses and Additional Trust Fund Expenses, if
any;
(8) to distributions of interest to the holders of the Class B
Certificates in an amount equal to all Distributable Certificate
Interest in respect of such Class of Certificates for such
Distribution Date and, to the extent not previously paid, for all
prior Distribution Dates;
(9) after the Class A-1 Certificates, Class A-2 Certificates, Class A-3
Certificates, Class A-4 Certificates and Class A-1A Certificates have
been retired, to distributions of principal to the holders of the
Class B Certificates in an amount (not to exceed the then outstanding
Certificate Balance of the Class B Certificates) equal to the
Principal Distribution Amount for such Distribution Date, less any
portion thereof distributed in respect of the Class A-1 Certificates,
Class A-2 Certificates, Class A-3 Certificates, Class A-4 Certificates
and/or Class A-1A Certificates on such Distribution Date;
(10) to distributions to the holders of the Class B Certificates to
reimburse such holders for all Realized Losses and Additional Trust
Fund Expenses, if any, previously allocated to such Class of
Certificates and for which no reimbursement has previously been
received;
(11) to distributions of interest to the holders of the Class C
Certificates in an amount equal to all Distributable Certificate
Interest in respect of such Class of Certificates for such
Distribution Date and, to the extent not previously paid, for all
prior Distribution Dates;
(12) after all Classes of Certificates with an earlier alphabetical and
numerical designation have been retired, to distributions of principal
to the holders of the Class C Certificates in an amount (not to exceed
the then outstanding Certificate Balance of the Class C Certificates)
equal to the Principal Distribution Amount for such Distribution Date,
less any portion thereof distributed in respect of all Classes of
Certificates with an earlier alphabetical and numerical designation on
such Distribution Date;
(13) to distributions to the holders of the Class C Certificates to
reimburse such holders for all Realized Losses and Additional Trust
Fund Expenses, if any, previously allocated to such Class of
Certificates and for which no reimbursement has previously been
received;
(14) to distributions of interest to the holders of the Class D
Certificates in an amount equal to all Distributable Certificate
Interest in respect of such Class of Certificates for such
Distribution Date and, to the extent not previously paid, for all
prior Distribution Dates;
(15) after all Classes of Certificates with an earlier alphabetical and
numerical designation have been retired, to distributions of principal
to the holders of the Class D Certificates in an amount (not to exceed
the then outstanding Certificate Balance of the Class D Certificates)
equal to the Principal Distribution Amount for such Distribution Date,
less any portion thereof distributed in respect of all Classes of
Certificates with an earlier alphabetical and numerical designation on
such Distribution Date;
(16) to distributions to the holders of the Class D Certificates to
reimburse such holders for all Realized Losses and Additional Trust
Fund Expenses, if any, previously allocated to such Class of
Certificates and for which no reimbursement has previously been
received;
(17) to distributions of interest to the holders of the Class E
Certificates in an amount equal to all Distributable Certificate
Interest in respect of such Class of Certificates for such
Distribution Date and, to the extent not previously paid, for all
prior Distribution Dates;
(18) after all Classes of Certificates with an earlier alphabetical and
numerical designation have been retired, to distributions of principal
to the holders of the Class E Certificates in an amount (not to exceed
the then outstanding Certificate Balance of the Class E Certificates)
equal to the Principal Distribution Amount for such Distribution Date,
less any portion thereof distributed in respect of all Classes of
Certificates with an earlier alphabetical and numerical designation on
such Distribution Date;
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(19) to distributions to the holders of the Class E Certificates to
reimburse such holders for all Realized Losses and Additional Trust
Fund Expenses, if any, previously allocated to such Class of
Certificates and for which no reimbursement has previously been
received;
(20) to distributions of interest to the holders of the Class F
Certificates in an amount equal to all Distributable Certificate
Interest in respect of such Class of Certificates for such
Distribution Date and, to the extent not previously paid, for all
prior Distribution Dates;
(21) after all Classes of Certificates with an earlier alphabetical and
numerical designation have been retired, to distributions of principal
to the holders of the Class F Certificates in an amount (not to exceed
the then outstanding Certificate Balance of the Class F Certificates)
equal to the Principal Distribution Amount for such Distribution Date,
less any portion thereof distributed in respect of all Classes of
Certificates with an earlier alphabetical and numerical designation on
such Distribution Date;
(22) to distributions to the holders of the Class F Certificates to
reimburse such holders for all Realized Losses and Additional Trust
Fund Expenses, if any, previously allocated to such Class of
Certificates and for which no reimbursement has previously been
received;
(23) to distributions of interest to the holders of the Class G
Certificates in an amount equal to all Distributable Certificate
Interest in respect of such Class of Certificates for such
Distribution Date and, to the extent not previously paid, for all
prior Distribution Dates;
(24) after all Classes of Certificates with an earlier alphabetical and
numerical designation have been retired, to distributions of principal
to the holders of the Class G Certificates in an amount (not to exceed
the then outstanding Certificate Balance of the Class G Certificates)
equal to the Principal Distribution Amount for such Distribution Date,
less any portion thereof distributed in respect of all Classes of
Certificates with an earlier alphabetical and numerical designation on
such Distribution Date;
(25) to distributions to the holders of the Class G Certificates to
reimburse such holders for all Realized Losses and Additional Trust
Fund Expenses, if any, previously allocated to such Class of
Certificates and for which no reimbursement has previously been
received;
(26) to distributions of interest to the holders of the Class H
Certificates in an amount equal to all Distributable Certificate
Interest in respect of such Class of Certificates for such
Distribution Date and, to the extent not previously paid, for all
prior Distribution Dates;
(27) after all Classes of Certificates with an earlier alphabetical and
numerical designation have been retired, to distributions of principal
to the holders of the Class H Certificates in an amount (not to exceed
the then outstanding Certificate Balance of the Class H Certificates)
equal to the Principal Distribution Amount for such Distribution Date,
less any portion thereof distributed in respect of all Classes of
Certificates with an earlier alphabetical and numerical designation on
such Distribution Date;
(28) to distributions to the holders of the Class H Certificates to
reimburse such holders for all Realized Losses and Additional Trust
Fund Expenses, if any, previously allocated to such Class of
Certificates and for which no reimbursement has previously been
received;
(29) to distributions of interest to the holders of the Class J
Certificates in an amount equal to all Distributable Certificate
Interest in respect of such Class of Certificates for such
Distribution Date and, to the extent not previously paid, for all
prior Distribution Dates;
(30) after all Classes of Certificates with an earlier alphabetical and
numerical designation have been retired, to distributions of principal
to the holders of the Class J Certificates in an amount (not to exceed
the then outstanding Certificate Balance of the Class J Certificates)
equal to the Principal Distribution Amount for such Distribution Date,
less any portion thereof distributed in respect of all Classes of
Certificates with an earlier alphabetical and numerical designation on
such Distribution Date;
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(31) to distributions to the holders of the Class J Certificates to
reimburse such holders for all Realized Losses and Additional Trust
Fund Expenses, if any, previously allocated to such Class of
Certificates and for which no reimbursement has previously been
received;
(32) to distributions of interest to the holders of the Class K
Certificates in an amount equal to all Distributable Certificate
Interest in respect of such Class of Certificates for such
Distribution Date and, to the extent not previously paid, for all
prior Distribution Dates;
(33) after all Classes of Certificates with an earlier alphabetical and
numerical designation have been retired, to distributions of principal
to the holders of the Class K Certificates in an amount (not to exceed
the then outstanding Certificate Balance of the Class K Certificates)
equal to the Principal Distribution Amount for such Distribution Date,
less any portion thereof distributed in respect of all Classes of
Certificates with an earlier alphabetical and numerical designation on
such Distribution Date;
(34) to distributions to the holders of the Class K Certificates to
reimburse such holders for all Realized Losses and Additional Trust
Fund Expenses, if any, previously allocated to such Class of
Certificates and for which no reimbursement has previously been
received;
(35) to distributions of interest to the holders of the Class L
Certificates in an amount equal to all Distributable Certificate
Interest in respect of such Class of Certificates for such
Distribution Date and, to the extent not previously paid, for all
prior Distribution Dates;
(36) after all Classes of Certificates with an earlier alphabetical and
numerical designation have been retired, to distributions of principal
to the holders of the Class L Certificates in an amount (not to exceed
the then outstanding Certificate Balance of the Class L Certificates)
equal to the Principal Distribution Amount for such Distribution Date,
less any portion thereof distributed in respect of all Classes of
Certificates with an earlier alphabetical and numerical designation on
such Distribution Date;
(37) to distributions to the holders of the Class L Certificates to
reimburse such holders for all Realized Losses and Additional Trust
Fund Expenses, if any, previously allocated to such Class of
Certificates and for which no reimbursement has previously been
received;
(38) to distributions of interest to the holders of the Class M
Certificates in an amount equal to all Distributable Certificate
Interest in respect of such Class of Certificates for such
Distribution Date and, to the extent not previously paid, for all
prior Distribution Dates;
(39) after all Classes of Certificates with an earlier alphabetical and
numerical designation have been retired, to distributions of principal
to the holders of the Class M Certificates in an amount (not to exceed
the then outstanding Certificate Balance of the Class M Certificates)
equal to the Principal Distribution Amount for such Distribution Date,
less any portion thereof distributed in respect of all Classes of
Certificates with an earlier alphabetical and numerical designation on
such Distribution Date;
(40) to distributions to the holders of the Class M Certificates to
reimburse such holders for all Realized Losses and Additional Trust
Fund Expenses, if any, previously allocated to such Class of
Certificates and for which no reimbursement has previously been
received;
(41) to distributions of interest to the holders of the Class N
Certificates in an amount equal to all Distributable Certificate
Interest in respect of such Class of Certificates for such
Distribution Date and, to the extent not previously paid, for all
prior Distribution Dates;
(42) after all Classes of Certificates with an earlier alphabetical and
numerical designation have been retired, to distributions of principal
to the holders of the Class N Certificates in an amount (not to exceed
the then outstanding Certificate Balance of the Class N Certificates)
equal to the Principal Distribution Amount for such Distribution Date,
less any portion thereof distributed in respect of all Classes of
Certificates with an earlier alphabetical and numerical designation on
such Distribution Date;
(43) to distributions to the holders of the Class N Certificates to
reimburse such holders for all Realized Losses and Additional Trust
Fund Expenses, if any, previously allocated to such Class of
Certificates and for which no reimbursement has previously been
received;
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(44) to distributions of interest to the holders of the Class O
Certificates in an amount equal to all Distributable Certificate
Interest in respect of such Class of Certificates for such
Distribution Date and, to the extent not previously paid, for all
prior Distribution Dates;
(45) after all Classes of Certificates with an earlier alphabetical and
numerical designation have been retired, to distributions of principal
to the holders of the Class O Certificates in an amount (not to exceed
the then outstanding Certificate Balance of the Class O Certificates)
equal to the Principal Distribution Amount for such Distribution Date,
less any portion thereof distributed in respect of all Classes of
Certificates with an earlier alphabetical and numerical designation on
such Distribution Date;
(46) to distributions to the holders of the Class O Certificates to
reimburse such holders for all Realized Losses and Additional Trust
Fund Expenses, if any, previously allocated to such Class of
Certificates and for which no reimbursement has previously been
received;
(47) to distributions of interest to the holders of the Class P
Certificates in an amount equal to all Distributable Certificate
Interest in respect of such Class of Certificates for such
Distribution Date and, to the extent not previously paid, for all
prior Distribution Dates;
(48) after all Classes of Certificates with an earlier alphabetical and
numerical designation have been retired, to distributions of principal
to the holders of the Class P Certificates in an amount (not to exceed
the then outstanding Certificate Balance of the Class P Certificates)
equal to the Principal Distribution Amount for such Distribution Date,
less any portion thereof distributed in respect of all Classes of
Certificates with an earlier alphabetical and numerical designation on
such Distribution Date;
(49) to distributions to the holders of the Class P Certificates to
reimburse such holders for all Realized Losses and Additional Trust
Fund Expenses, if any, previously allocated to such Class of
Certificates and for which no reimbursement has previously been
received; and
(50) to distributions to the holders of the REMIC Residual Certificates in
an amount equal to the balance, if any, of the Available Distribution
Amount remaining after the distributions to be made on such
Distribution Date as described in clauses (1) through (49) above;
provided that, on each Distribution Date, if any, after the aggregate of the
Certificate Balances of the Subordinate Certificates has been reduced to zero
as a result of the allocations of Realized Losses and Additional Trust Fund
Expenses, and in any event on the final Distribution Date in connection with a
termination of the Trust Fund (see "DESCRIPTION OF THE
CERTIFICATES--Termination" in this prospectus supplement), the payments of
principal to be made as contemplated by clauses (2), (3), (4), (5) and (6)
above with respect to the Class A-1 Certificates, Class A-2 Certificates, Class
A-3 Certificates, Class A-4 Certificates and Class A-1A Certificates will be so
made to the holders of the respective Classes of such Certificates which remain
outstanding up to an amount equal to, and pro rata as between such Classes in
accordance with, the respective then outstanding Certificate Balances of such
Classes of Certificates and without regard to the Principal Distribution Amount
for such date.
Application of Class SL Available Distribution Amount. The Class SL
Certificates will only be entitled to distributions from amounts collected on
the Starrett-Lehigh Building Subordinate Loan. On each Distribution Date, the
Trustee will (except as otherwise described under "--Termination" below) apply
amounts on deposit in the Class SL Distribution Account in the following order
of priority to the extent of the Class SL Available Distribution Amount:
(1) to distributions of interest to the holders of the Class SL
Certificates in accordance with the amount of Class SL Distributable
Certificate Interest in respect of such Class, in an amount equal to
all Class SL Distributable Certificate Interest for such Distribution
Date and, to the extent not previously paid, for all prior
Distribution Dates;
(2) to distributions of principal to the holders of the Class SL
Certificates in an amount equal to the Class SL Principal Distribution
Amount for such Distribution Date;
(3) to distributions to the holders of the Class SL Certificates to
reimburse such holders for all Realized Losses and Additional Trust
Fund Expenses, if any, previously allocated to such Class of
Certificates and for which no reimbursement has previously been
received; and
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(4) to distributions to the holders of the REMIC Residual Certificates in
an amount equal to the balance, if any, of the Class SL Available
Distribution Amount remaining after the distributions to be made on
such Distribution Date as described in clauses (1) through (3) above.
Amounts payable on any Distribution Date which are part of the Class SL
Available Distribution Amount will not be available to make distributions on
the REMIC Regular Certificates.
Distributable Certificate Interest. The "Distributable Certificate
Interest" in respect of each Class of REMIC Regular Certificates for each
Distribution Date equals the Accrued Certificate Interest in respect of such
Class of Certificates for such Distribution Date, reduced (other than in the
case of the Class X-C and Class X-P Certificates) (to not less than zero) by
(i) such Class's allocable share (calculated as described below) of the
aggregate of any Prepayment Interest Shortfalls resulting from voluntary
principal prepayments made on the Mortgage Loans during the related Collection
Period that are not covered by the Master Servicer's Compensating Interest
Payment for such Distribution Date (the aggregate of such Prepayment Interest
Shortfalls that are not so covered, as to such Distribution Date, the "Net
Aggregate Prepayment Interest Shortfall") and (ii) any Certificate Deferred
Interest allocated to such Class of REMIC Regular Certificates. The "Class SL
Distributable Certificate Interest" in respect of the Class SL Certificates for
each Distribution Date equals the Accrued Certificate Interest in respect of
the Class SL Certificates for such Distribution Date, reduced (to not less than
zero) by (i) the Class SL's allocable share (calculated as described below) of
the aggregate of any Prepayment Interest Shortfalls resulting from voluntary
principal prepayments made on the Starrett-Lehigh Building Subordinate Loan
during the related Collection Period that are not covered by the Master
Servicer's Compensating Interest Payment for such Distribution Date and (ii)
any Mortgage Deferred Interest allocated to the Class SL Certificates in
respect of the Starrett-Lehigh Building Subordinate Loan.
The "Accrued Certificate Interest" in respect of each Class of Sequential
Pay Certificates and the Class SL Certificates for each Distribution Date will
equal one month's interest at the Pass-Through Rate applicable to such Class of
Certificates for such Distribution Date accrued for the related Interest
Accrual Period on the related Certificate Balance outstanding immediately prior
to such Distribution Date. The "Accrued Certificate Interest" in respect of the
Class X-C and Class X-P Certificates for any Distribution Date will equal the
amount of one month's interest at the related Pass-Through Rate on the Notional
Amount of the Class X-C or Class X-P Certificates, as the case may be,
outstanding immediately prior to such Distribution Date. Accrued Certificate
Interest will be calculated on a 30/360 basis.
The portion of the Net Aggregate Prepayment Interest Shortfall for any
Distribution Date that is allocable to each Class of REMIC Regular Certificates
(other than the Class X-C and Class X-P Certificates) will equal the product of
(a) such Net Aggregate Prepayment Interest Shortfall, multiplied by (b) a
fraction, the numerator of which is equal to the Accrued Certificate Interest
in respect of such Class of Certificates for such Distribution Date, and the
denominator of which is equal to the aggregate Accrued Certificate Interest in
respect of all Classes of REMIC Regular Certificates (other than the Class X-C
and Class X-P Certificates) for such Distribution Date.
Any such Prepayment Interest Shortfalls allocated to the Senior
Certificates, to the extent not covered by the Master Servicer's Compensating
Interest Payment for such Distribution Date, will reduce the Distributable
Certificate Interest as described above.
With respect to each of the 11 Madison Avenue Loan and the Starrett-Lehigh
Building Loan and each related Pari Passu Companion Loan, prepayment interest
shortfalls will be allocated pro rata between the related pari passu promissory
notes based on their outstanding principal balances. The portion of such
shortfall allocated to the related Mortgage Loans, net of amounts payable by
the Master Servicer, will be included in the Net Aggregate Prepayment Interest
Shortfall.
With respect to the Co-Lender Loans, Prepayment Interest Shortfalls will
be allocated first to the promissory note related to the related Subordinate
Companion Loan and second to the promissory note related to the related
Co-Lender Loan. The portion of such shortfall allocated to the Co-Lender Loans,
net of amounts payable by the Master Servicer, will be included in the Net
Aggregate Prepayment Interest Shortfall. Because of this allocation, a
Prepayment Interest Shortfall with respect to the Starrett-Lehigh Building Loan
will be allocated first to the Class SL Certificates and then any unallocated
portion will be included in Net Aggregate Prepayment Interest Shortfall.
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Principal Distribution Amount. So long as both the Class A-4 and Class
A-1A Certificates remain outstanding, the Principal Distribution Amount for
each Distribution Date will be calculated on a Loan Group by Loan Group basis
(the "Loan Group 1 Principal Distribution Amount" and "Loan Group 2 Principal
Distribution Amount", respectively). On each Distribution Date after the
Certificate Balances of either the Class A-4 or Class A-1A Certificates have
been reduced to zero, a single Principal Distribution Amount will be calculated
in the aggregate for both Loan Groups. The "Principal Distribution Amount" for
each Distribution Date with respect to a Loan Group or the Mortgage Pool will
generally equal the aggregate of the following (without duplication) to the
extent paid by the related borrower during the related Collection Period or
advanced by the Master Servicer or the Trustee, as applicable, but exclusive of
amounts payable to the Class SL Certificates in respect of principal of the
Starrett-Lehigh Building Subordinate Loan:
(a) the aggregate of the principal portions of all Scheduled Payments
(other than Balloon Payments) and of any Assumed Scheduled Payments due or
deemed due, on or in respect of the Mortgage Loans in such Loan Group or
the Mortgage Pool, as applicable, for their respective Due Dates occurring
during the related Collection Period, to the extent not previously paid by
the related borrower or advanced by the Master Servicer or Trustee, as
applicable, prior to such Collection Period;
(b) the aggregate of all principal prepayments received on the Mortgage
Loans in such Loan Group or the Mortgage Pool, as applicable, during the
related Collection Period;
(c) with respect to any Mortgage Loan in such Loan Group or the
Mortgage Pool, as applicable, as to which the related stated maturity date
occurred during or prior to the related Collection Period, any payment of
principal made by or on behalf of the related borrower during the related
Collection Period (including any Balloon Payment), net of any portion of
such payment that represents a recovery of the principal portion of any
Scheduled Payment (other than a Balloon Payment) due, or the principal
portion of any Assumed Scheduled Payment deemed due, in respect of such
Mortgage Loan on a Due Date during or prior to the related Collection
Period and not previously recovered;
(d) the aggregate of the principal portion of all liquidation proceeds,
insurance proceeds, condemnation awards and proceeds of repurchases of
Mortgage Loans in such Loan Group or the Mortgage Pool, as applicable, and
Substitution Shortfall Amounts with respect to Mortgage Loans in such Loan
Group or the Mortgage Pool, as applicable, and, to the extent not
otherwise included in clause (a), (b) or (c) above, payments and other
amounts that were received on or in respect of Mortgage Loans in such Loan
Group or the Mortgage Pool, as applicable, during the related Collection
Period and that were identified and applied by the Master Servicer as
recoveries of principal, in each case net of any portion of such amounts
that represents a recovery of the principal portion of any Scheduled
Payment (other than a Balloon Payment) due, or of the principal portion of
any Assumed Scheduled Payment deemed due, in respect of the related
Mortgage Loan on a Due Date during or prior to the related Collection
Period and not previously recovered; and
(e) if such Distribution Date is subsequent to the initial Distribution
Date, the excess, if any, of the Loan Group 1 Principal Distribution
Amount, the Loan Group 2 Principal Distribution Amount and the Principal
Distribution Amount, as the case may be, for the immediately preceding
Distribution Date, over the aggregate distributions of principal made on
the Certificates on such immediately preceding Distribution Date.
provided that the Principal Distribution Amount for any Distribution Date shall
be reduced by the amount of any reimbursements of nonrecoverable Advances plus
interest on such nonrecoverable Advances that are paid or reimbursed from
principal collections on the Mortgage Loans in a period during which such
principal collections would have otherwise been included in the Principal
Distribution Amount for such Distribution Date (provided, further, if any of
the amounts that were reimbursed from principal collections on the Mortgage
Loans are subsequently recovered on the related Mortgage Loan, such recovery
will increase the Principal Distribution Amount for the Distribution Date
related to the period in which such recovery occurs.)
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Notwithstanding the foregoing, unless otherwise noted, where Principal
Distribution Amount is used in this prospectus supplement without specific
reference to any Loan Group, it refers to the Principal Distribution Amount
with respect to the entire Mortgage Pool.
Class SL Principal Distribution Amount. The "Class SL Principal
Distribution Amount" for each Distribution Date will generally equal the
aggregate of the following (without duplication) to the extent paid by the
borrower under the Starrett-Lehigh Building Subordinate Loan during the related
Collection Period:
(a) the aggregate of the principal portions of all Scheduled Payments
(other than Balloon Payments) and of any Assumed Scheduled Payments due or
deemed due, on or in respect of the Starrett-Lehigh Building Subordinate
Loan for its Due Date occurring during the related Collection Period, to
the extent not previously paid by the related borrower or advanced by the
Master Servicer or Trustee, as applicable, prior to such Collection
Period;
(b) the aggregate of all principal prepayments received on the
Starrett-Lehigh Building Subordinate Loan during the related Collection
Period;
(c) if the stated maturity date of the Starrett-Lehigh Building
Subordinate Loan occurred during or prior to the related Collection
Period, any payment of principal made by or on behalf of the borrower
during the related Collection Period (including any Balloon Payment), net
of any portion of such payment that represents a recovery of the principal
portion of any Scheduled Payment (other than a Balloon Payment) due, or
the principal portion of any Assumed Scheduled Payment deemed due, in
respect of the Starrett-Lehigh Building Subordinate Loan on a Due Date
during or prior to the related Collection Period and not previously
recovered;
(d) the aggregate of the principal portion of all liquidation proceeds,
insurance proceeds, condemnation awards and proceeds of repurchases of the
Starrett-Lehigh Building Subordinate Loan and, to the extent not otherwise
included in clause (a), (b) or (c) above, payments and other amounts that
were received on or in respect of the Starrett-Lehigh Building Subordinate
Loan during the related Collection Period that were identified and applied
by the Master Servicer as recoveries of principal, in each case net of any
portion of such amounts that represents a recovery of the principal
portion of any Scheduled Payment (other than a Balloon Payment) due, or of
the principal portion of any Assumed Scheduled Payment deemed due, in
respect of the Starrett-Lehigh Building Subordinate Loan on a Due Date
during or prior to the related Collection Period and not previously
recovered; and
(e) if such Distribution Date is subsequent to the initial Distribution
Date, the excess, if any, of the Class SL Principal Distribution Amount
for the immediately preceding Distribution Date, over the aggregate
distributions of principal made on the Class SL Certificates on such
immediately preceding Distribution Date.
provided that the Class SL Principal Distribution Amount for any Distribution
Date shall be reduced by the amount of any reimbursements of nonrecoverable
Advances plus interest on such nonrecoverable Advances that are paid or
reimbursed from principal collections on the Starrett-Lehigh Building
Subordinate Loan in a period during which such principal collections would have
otherwise been included in the Class SL Principal Distribution Amount for such
Distribution Date (provided, further, if any of the amounts that were
reimbursed from principal collections on the Starrett-Lehigh Building
Subordinate Loan are subsequently recovered, such recovery will increase the
Class SL Principal Distribution Amount for the Distribution Date related to the
period in which such recovery occurs).
The "Scheduled Payment" due on any Mortgage Loan on any related Due Date
is the amount of the Periodic Payment (including Balloon Payments) that is or
would have been, as the case may be, due thereon on such date, without regard
to any waiver, modification or amendment of such Mortgage Loan granted or
agreed to by the Special Servicer or otherwise resulting from a bankruptcy or
similar proceeding involving the related borrower, without regard to the
accrual of Additional Interest on or the application of any Excess Cash Flow to
pay principal on an ARD Loan, without regard to any acceleration of principal
by reason of default, and with the assumption that each prior Scheduled Payment
has been made in a timely manner. The "Assumed Scheduled Payment" is an amount
deemed due (i) on any
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Balloon Loan that is delinquent in respect of its Balloon Payment beyond the
first Determination Date that follows its stated maturity date and (ii) on an
REO Mortgage Loan. The Assumed Scheduled Payment deemed due on any such Balloon
Loan on its stated maturity date and on each successive related Due Date that
it remains or is deemed to remain outstanding will equal the Scheduled Payment
that would have been due thereon on such date if the related Balloon Payment
had not come due but rather such Mortgage Loan had continued to amortize in
accordance with such loan's amortization schedule, if any, and to accrue
interest at the Mortgage Rate in effect as of the Closing Date. The Assumed
Scheduled Payment deemed due on any REO Mortgage Loan on each Due Date that the
related REO Property remains part of the Trust Fund will equal the Scheduled
Payment that would have been due in respect of such Mortgage Loan on such Due
Date had it remained outstanding (or, if such Mortgage Loan was a Balloon Loan
and such Due Date coincides with or follows what had been its stated maturity
date, the Assumed Scheduled Payment that would have been deemed due in respect
of such Mortgage Loan on such Due Date had it remained outstanding).
Distributions of the Principal Distribution Amount (or the Class SL
Principal Distribution Amount with respect to the Class SL Certificates) will
constitute the only distributions of principal on the Certificates.
Reimbursements of previously allocated Realized Losses and Additional Trust
Fund Expenses will not constitute distributions of principal for any purpose
and will not result in an additional reduction in the Certificate Balance of
the Class of Certificates in respect of which any such reimbursement is made.
Treatment of REO Properties. Notwithstanding that any Mortgaged Property
may be acquired as part of the Trust Fund through foreclosure, deed in lieu of
foreclosure or otherwise, the related Mortgage Loan will be treated, for
purposes of determining (i) distributions on the Certificates, (ii) allocations
of Realized Losses and Additional Trust Fund Expenses to the Certificates, and
(iii) the amount of Trustee Fees and Servicing Fees payable under the Pooling
and Servicing Agreement, as having remained outstanding until such REO Property
is liquidated. In connection therewith, operating revenues and other proceeds
derived from such REO Property (net of related operating costs) will be
"applied" by the Master Servicer as principal, interest and other amounts that
would have been "due" on such Mortgage Loan, and the Master Servicer will be
required to make P&I Advances in respect of such Mortgage Loan, in all cases as
if such Mortgage Loan had remained outstanding. References to "Mortgage Loan"
or "Mortgage Loans" in the definitions of "Principal Distribution Amount" and
"Weighted Average Net Mortgage Rate" are intended to include any Mortgage Loan
as to which the related Mortgaged Property has become an REO Property (an "REO
Mortgage Loan").
Allocation of Prepayment Premiums and Yield Maintenance Charges. In the
event a borrower is required to pay any Prepayment Premium or Yield Maintenance
Charge, the amount of such payments actually collected (and, in the case of a
Co-Lender Loan, payable with respect to the related Mortgage Loan pursuant to
the related Intercreditor Agreement) will be distributed in respect of the
Offered Certificates and the Class A-1A, Class F, Class G and Class H
Certificates as set forth below. "Yield Maintenance Charges" are fees paid or
payable, as the context requires, as a result of a prepayment of principal on a
Mortgage Loan, which fees have been calculated (based on Scheduled Payments on
such Mortgage Loan) to compensate the holder of the Mortgage for reinvestment
losses based on the value of a discount rate at or near the time of prepayment.
Any other fees paid or payable, as the context requires, as a result of a
prepayment of principal on a Mortgage Loan, which are calculated based upon a
specified percentage (which may decline over time) of the amount prepaid are
considered "Prepayment Premiums."
Any Prepayment Premiums or Yield Maintenance Charges collected on a
Mortgage Loan during the related Collection Period will be distributed as
follows: on each Distribution Date and with respect to the collection of any
Prepayment Premiums or Yield Maintenance Charges on the Mortgage Loans, the
holders of each Class of Offered Certificates and the Class A-1A, Class F,
Class G and Class H Certificates then entitled to distributions of principal
with respect to the related Loan Group on such Distribution Date will be
entitled to an amount of Prepayment Premiums or Yield Maintenance Charges equal
to the product of (a) the amount of such Prepayment Premiums or Yield
Maintenance Charges; (b) a fraction (which in no event may be greater than
one), the numerator of which is equal to the excess, if any, of the
Pass-Through Rate of such Class of Certificates over the relevant Discount Rate
(as defined below), and
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the denominator of which is equal to the excess, if any, of the Mortgage Rate
of the prepaid Mortgage Loan over the relevant Discount Rate; and (c) a
fraction, the numerator of which is equal to the amount of principal
distributable on such Class of Certificates on such Distribution Date, and the
denominator of which is the Principal Distribution Amount for such Distribution
Date. If there is more than one such Class of Certificates entitled to
distributions of principal with respect to the related Loan Group on any
particular Distribution Date on which a Prepayment Premium or Yield Maintenance
Charge is distributable, the aggregate amount of such Prepayment Premium or
Yield Maintenance Charge will be allocated among all such Classes up to, and on
a pro rata basis in accordance with, their respective entitlements thereto in
accordance with, the first sentence of this paragraph. The portion, if any, of
the Prepayment Premiums or Yield Maintenance Charges remaining after any such
payments described above will be distributed as follows: (a) on or before the
Distribution Date in February 2011, 85% to the holders of the Class X-C
Certificates and 15% to the holders of the Class X-P Certificates, and (b)
thereafter, 100% to the holders of the Class X-C Certificates. Any Prepayment
Premiums or Yield Maintenance Charges related to the Starrett-Lehigh Building
Subordinate Loan will be distributed to the holders of the Class SL
Certificates.
The "Discount Rate" applicable to any Class of Offered Certificates and
the Class A-1A, Class F, Class G and Class H Certificates will equal the yield
(when compounded monthly) on the US Treasury issue with a maturity date closest
to the maturity date for the prepaid Mortgage Loan or REO Mortgage Loan. In the
event that there are two or more such U.S. Treasury issues (a) with the same
coupon, the issue with the lowest yield will be utilized, and (b) with maturity
dates equally close to the maturity date for the prepaid Mortgage Loan or REO
Mortgage Loan, the issue with the earliest maturity date will be utilized.
For an example of the foregoing allocation of Prepayment Premiums and
Yield Maintenance Charges, see "SUMMARY OF PROSPECTUS SUPPLEMENT" in this
prospectus supplement. The Depositor makes no representation as to the
enforceability of the provision of any Mortgage Note requiring the payment of a
Prepayment Premium or Yield Maintenance Charge, or of the collectability of any
Prepayment Premium or Yield Maintenance Charge. See "DESCRIPTION OF THE
MORTGAGE POOL--Certain Terms and Conditions of the Mortgage Loans--Prepayment
Provisions" in this prospectus supplement.
Distributions of Additional Interest. On each Distribution Date, any
Additional Interest collected on an ARD Loan (and, with respect to any
Co-Lender Loan, payable on the related Mortgage Loan pursuant to the terms of
the related Intercreditor Agreement) during the related Collection Period will
be distributed to, in the case of Additional Interest collected on a Wachovia
Mortgage Loan (other than the Starrett-Lehigh Building Subordinate Loan), all
the holders of the Class Z-I Certificates, in the case of Additional Interest
collected on an Artesia Mortgage Loan, all the holders of the Class Z-II
Certificates, in the case of Additional Interest collected on a Citigroup
Mortgage Loan, all the holders of the Class Z-III Certificates and, in the case
of Additional Interest collected on the Starrett-Lehigh Building Subordinate
Loan, to the holders of the Class SL Certificates. There can be no assurance
that any Additional Interest will be collected on the ARD Loans.
SUBORDINATION; ALLOCATION OF LOSSES AND CERTAIN EXPENSES
The rights of holders of the Subordinate Certificates to receive
distributions of amounts collected or advanced on the Mortgage Loans will be
subordinated, to the extent described in this prospectus supplement, to the
rights of holders of the Class A, Class X-C and Class X-P Certificates and each
other such Class of Subordinate Certificates, if any, with an earlier
alphabetical Class designation. The Class SL Certificates will represent
interests in, and will be payable only out of payments, advances and other
collections on, the Starrett-Lehigh Building Subordinate Loan. The rights of
the holders of the Class SL Certificates to receive distributions of amounts
collected or advanced on the Starrett-Lehigh Building Subordinate Loan will be
subordinated, to the extent provided in the Pooling and Servicing Agreement and
the Starrett-Lehigh Building Intercreditor Agreement, to the rights of the
holders of the Senior Certificates and the Subordinate Certificates. This
subordination provided by the Subordinate Certificates and, to the extent
provided herein, the Class SL Certificates, is intended to enhance the
likelihood of timely receipt by the holders of the Class A, Class X-C and Class
X-P Certificates of the full amount of
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Distributable Certificate Interest payable in respect of such Classes of
Certificates on each Distribution Date, and the ultimate receipt by the holders
of each Class of the Class A Certificates of principal in an amount equal to
the entire related Certificate Balance. Similarly, but to decreasing degrees,
this subordination is also intended to enhance the likelihood of timely receipt
by the holders of the Class B, Class C, Class D and Class E Certificates of the
full amount of Distributable Certificate Interest payable in respect of such
Classes of Certificates on each Distribution Date, and the ultimate receipt by
the holders of such Certificates of, in the case of each such Class thereof,
principal equal to the entire related Certificate Balance. The protection
afforded (a) to the holders of the Class E Certificates by means of the
subordination of the Non-Offered Certificates (other than the Class A-1A, Class
X-C and Class X-P Certificates) and, to the extent provided herein, the Class
SL Certificates, (b) to the holders of the Class D Certificates by means of the
subordination of the Class E and the Non-Offered Certificates (other than the
Class A-1A, Class X-C and Class X-P Certificates) and, to the extent provided
herein, the Class SL Certificates, (c) to the holders of the Class C
Certificates by means of the subordination of the Class D, Class E and the
Non-Offered Certificates (other than the Class A-1A, Class X-C and Class X-P
Certificates) and, to the extent provided herein, the Class SL Certificates,
(d) to the holders of the Class B Certificates by means of the subordination of
the Class C, Class D, Class E and the Non-Offered Certificates (other than the
Class A-1A, Class X-C and Class X-P Certificates) and, to the extent provided
herein, the Class SL Certificates, and (e) to the holders of the Class A, Class
X-C and Class X-P Certificates by means of the subordination of the Subordinate
Certificates and, to the extent provided herein, the Class SL Certificates,
will be accomplished by (i) the application of the Available Distribution
Amount on each Distribution Date in accordance with the order of priority
described under "--Distributions--Application of the Available Distribution
Amount" above and (ii) by the allocation of Realized Losses and Additional
Trust Fund Expenses as described below. Until the first Distribution Date after
the aggregate of the Certificate Balances of the Subordinate Certificates has
been reduced to zero, the Class A-4 Certificates will receive principal
payments only after the Certificate Balance of each of the Class A-1, Class A-2
and Class A-3 Certificates have been reduced to zero, the Class A-3
Certificates will receive principal payments only after the Certificate Balance
of each of the Class A-1 and Class A-2 Certificates have been reduced to zero,
and the Class A-2 Certificates will receive principal payments only after the
Certificate Balance of the Class A-1 Certificates has been reduced to zero.
However, after the Distribution Date on which the Certificate Balances of the
Subordinate Certificates have been reduced to zero, the Class A-1, Class A-2,
Class A-3 and Class A-4 Certificates, to the extent such Certificates remain
outstanding, will bear shortfalls in collections and losses incurred in respect
of the Mortgage Loans pro rata in respect of distributions of principal and
then the Class A-1, Class A-2, Class A-3, Class A-4, Class A-1A, Class X-C and
Class X-P Certificates, to the extent such Certificates remain outstanding,
will bear such shortfalls pro rata in respect of distributions of interest. No
other form of credit support will be available for the benefit of the holders
of the Offered Certificates.
Allocation to the Class A-1, Class A-2, Class A-3, Class A-4 and Class
A-1A Certificates (unless the aggregate Certificate Balance of each Class of
Subordinate Certificates has been reduced to zero, first to the Class A-1
Certificates until the Certificate Balance thereof has been reduced to zero,
then to the Class A-2 Certificates until the Certificate Balance thereof has
been reduced to zero, then to the Class A-3 Certificates until the Certificate
Balance thereof has been reduced to zero, then to the Class A-4 Certificates
until the Certificate Balance thereof has been reduced to zero, and then to the
Class A-1A Certificates until the Certificate Balance thereof has been reduced
to zero), for so long as they are outstanding, of the entire Principal
Distribution Amount with respect to the related Loan Group for each
Distribution Date will have the effect of reducing the aggregate Certificate
Balance of the Class A-1, Class A-2, Class A-3, Class A-4 and Class A-1A
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 such Class A-1, Class A-2, Class
A-3, Class A-4 and Class A-1A Certificates, the percentage interest in the
Trust Fund evidenced by such Class A-1, Class A-2, Class A-3, Class A-4 and
Class A-1A 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 such Class A-1, Class A-2, Class A-3,
Class A-4 and Class A-1A Certificates by the Subordinate Certificates.
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On each Distribution Date, following all distributions on the Certificates
to be made on such date, the aggregate of all Realized Losses and Additional
Trust Fund Expenses related to all Mortgage Loans (without regard to Loan
Groups), that have been incurred since the Cut-Off Date through the end of the
related Collection Period and that have not previously been allocated as
described below will be allocated among the respective Classes of Sequential
Pay Certificates and, to the extent applicable, the Class SL Certificates (in
each case in reduction of their respective Certificate Balances) as follows,
but in the aggregate only to the extent that the aggregate Certificate Balance
of all Classes of Sequential Pay Certificates remaining outstanding after
giving effect to the distributions on such Distribution Date exceeds the
aggregate Stated Principal Balance of the Mortgage Pool that will be
outstanding immediately following such Distribution Date: first, to the Class P
Certificates, until the remaining Certificate Balance of such Class of
Certificates is reduced to zero; second, to the Class O Certificates, until the
remaining Certificate Balance of such Class of Certificates is reduced to zero;
third, to the Class N Certificates, until the remaining Certificate Balance of
such Class of Certificates is reduced to zero; fourth, to the Class M
Certificates, until the remaining Certificate Balance of such Class of
Certificates is reduced to zero; fifth, to the Class L Certificates, until the
remaining Certificate Balance of such Class of Certificates is reduced to zero;
sixth, to the Class K Certificates, until the remaining Certificate Balance of
such Class of Certificates is reduced to zero; seventh, to the Class J
Certificates, until the remaining Certificate Balance of such Class of
Certificates is reduced to zero; eighth, to the Class H Certificates, until the
remaining Certificate Balance of such Class of Certificates is reduced to zero;
ninth, to the Class G Certificates, until the remaining Certificate Balance of
such Class of Certificates is reduced to zero; tenth, to the Class F
Certificates, until the remaining Certificate Balance of such Class of
Certificates is reduced to zero; eleventh, to the Class E Certificates, until
the remaining Certificate Balance of such Class of Certificates is reduced to
zero; twelfth, to the Class D Certificates, until the remaining Certificate
Balance of such Class of Certificates is reduced to zero; thirteenth, to the
Class C Certificates, until the remaining Certificate Balance of such Class of
Certificates is reduced to zero; fourteenth, to the Class B Certificates, until
the remaining Certificate Balance of such Class of Certificates is reduced to
zero; and, last, to the Class A-1 Certificates, the Class A-2 Certificates, the
Class A-3 Certificates, the Class A-4 Certificates and the Class A-1A
Certificates, pro rata, in proportion to their respective outstanding
Certificate Balances, until the remaining Certificate Balances of such Classes
of Certificates are reduced to zero. Realized Losses and Additional Trust Fund
Expenses with respect to the Starrett-Lehigh Building Whole Loan will first be
allocated to the Starrett-Lehigh Building Subordinate Loan, and therefore the
Class SL Certificates, and then pro rata to the Starrett-Lehigh Building Senior
Loans and therefore to the holders of the Classes of Sequential Pay
Certificates. See "DESCRIPTION OF THE MORTGAGE POOL--Co-Lender Loans" in this
prospectus supplement.
"Realized Losses" are losses arising from the inability to collect all
amounts due and owing under any defaulted Mortgage Loan (and with respect to
the Class SL Certificates, the Starrett-Lehigh Building Subordinate Loan),
including by reason of the fraud or bankruptcy of the borrower or a casualty of
any nature at the related Mortgaged Property, to the extent not covered by
insurance. The Realized Loss in respect of a liquidated Mortgage Loan (or
related REO Property) is an amount generally equal to the excess, if any, of
(a) the outstanding principal balance of such Mortgage Loan as of the date of
liquidation, together with (i) all accrued and unpaid interest thereon to but
not including the Due Date in the Collection Period in which the liquidation
occurred (exclusive of any related default interest in excess of the Mortgage
Rate, Additional Interest, Prepayment Premium or Yield Maintenance Charges) and
(ii) certain related unreimbursed servicing expenses, (including any
unreimbursed interest on any Advances), over (b) the aggregate amount of
liquidation proceeds, if any, recovered in connection with such liquidation. If
any portion of the debt due under a Mortgage Loan (and with respect to the
Class SL Certificates, the Starrett-Lehigh Building Subordinate Loan) (other
than Additional Interest and default interest in excess of the Mortgage Rate)
is forgiven, whether in connection with a modification, waiver or amendment
granted or agreed to by the Special Servicer or in connection with the
bankruptcy or similar proceeding involving the related borrower, the amount so
forgiven also will be treated as a Realized Loss. The Realized Loss in respect
of a Mortgage Loan (and with respect to the Class SL Certificates, the
Starrett-Lehigh Building Subordinate Loan) for which a Final Recovery
Determination has been made includes nonrecoverable Advances (including
interest on such nonrecoverable Advances) to the extent
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amounts have been paid from the Principal Distribution Amount (or the Class SL
Principal Distribution Amount with respect to the Class SL Certificates)
pursuant to the Pooling and Servicing Agreement.
"Additional Trust Fund Expenses" include, among other things, (i) any
Special Servicing Fees, Liquidation Fees or Workout Fees paid to the Special
Servicer, (ii) any interest paid to the Master Servicer, and/or the Trustee in
respect of unreimbursed Advances (to the extent not otherwise offset by penalty
interest and late payment charges) and amounts payable to the Special Servicer
in connection with certain inspections of Mortgaged Properties required
pursuant to the Pooling and Servicing Agreement (to the extent not otherwise
offset by penalty interest and late payment charges otherwise payable to the
Special Servicer and received in the Collection Period during which such
inspection related expenses were incurred) and (iii) any of certain
unanticipated expenses of the Trust Fund, including certain indemnities and
reimbursements to the Trustee of the type described under "DESCRIPTION OF THE
POOLING AND SERVICING AGREEMENTS--Certain Matters Regarding the Trustee" in the
prospectus, certain indemnities and reimbursements to the Master Servicer, the
Special Servicer and the Depositor of the type described under "DESCRIPTION OF
THE POOLING AND SERVICING AGREEMENTS--Certain Matters Regarding the Master
Servicer and the Depositor" in the prospectus (the Special Servicer having the
same rights to indemnity and reimbursement as described thereunder with respect
to the Master Servicer), certain Rating Agency fees to the extent such fees are
not paid by any other party and certain federal, state and local taxes and
certain tax related expenses, payable from the assets of the Trust Fund and
described under "MATERIAL FEDERAL INCOME TAX CONSEQUENCES--Taxation of Owners
of REMIC Residual Certificates--Prohibited Transactions Tax and Other Taxes" in
the prospectus and "SERVICING OF THE MORTGAGE LOANS--Defaulted Mortgage Loans;
REO Properties; Purchase Option" in this prospectus supplement. Additional
Trust Fund Expenses will reduce amounts payable to Certificateholders and,
subject to the distribution priorities described above, may result in a loss on
one or more Classes of Offered Certificates.
P&I ADVANCES
On or about each Distribution Date, the Master Servicer is obligated,
subject to the recoverability determination described in the next paragraph, to
make advances (each, a "P&I Advance") out of its own funds or, subject to the
replacement thereof as provided in the Pooling and Servicing Agreement, from
funds held in the Certificate Account that are not required to be distributed
to Certificateholders (or paid to any other Person pursuant to the Pooling and
Servicing Agreement) on such Distribution Date, in an amount that is generally
equal to the aggregate of all Periodic Payments (other than Balloon Payments)
(including interest payments on the Starrett-Lehigh Building Subordinate Loan;
provided that with respect to any P&I Advance on the Starrett-Lehigh Building
Subordinate Loan any P&I Advance will include scheduled payments of interest of
such Periodic Payment, but not the principal portion) and any Assumed Scheduled
Payments, net of related Master Servicing Fees, in respect of the Mortgage
Loans and the Starrett-Lehigh Building Subordinate Loan and any REO Loans
during the related Collection Period, in each case to the extent such amount
was not paid by or on behalf of the related borrower or otherwise collected (or
previously advanced by the Master Servicer) as of the close of business on the
last day of the Collection Period. P&I 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 insure
against losses. The Master Servicer's obligations to make P&I Advances in
respect of any Mortgage Loan (including on the Starrett-Lehigh Building
Subordinate Loan), subject to the recoverability determination, will continue
until liquidation of such Mortgage Loan or disposition of any REO Property
acquired in respect thereof. However, if the Periodic Payment on any Mortgage
Loan (or the Starrett Lehigh Subordinate Loan) has been reduced in connection
with a bankruptcy or similar proceeding or a modification, waiver or amendment
granted or agreed to by the Special Servicer, the Master Servicer will be
required to advance only the amount of the reduced Periodic Payment (net of
related Servicing Fees) in respect of subsequent delinquencies. In addition, if
it is determined that an Appraisal Reduction Amount exists with respect to any
Required Appraisal Loan (as defined below), then, with respect to the
Distribution Date immediately following the date of such determination and with
respect to each subsequent Distribution Date for so long as such Appraisal
Reduction Amount exists, the Master Servicer will be required in the event of
subsequent delinquencies to advance in respect of such Mortgage Loan only an
amount equal to the sum of (i) the amount of the interest portion of the P&I
Advance that would
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otherwise be required without regard to this sentence, minus the product of (a)
such Appraisal Reduction Amount and (b) the per annum Pass-Through Rate (i.e.,
for any month, one twelfth of the Pass-Through Rate) applicable to the Class of
Certificates, to which such Appraisal Reduction Amount is allocated as
described in "--Appraisal Reductions" below and (ii) the amount of the
principal portion of the P&I Advance that would otherwise be required without
regard to this sentence. Pursuant to the terms of the Pooling and Servicing
Agreement, if the Master Servicer fails to make a P&I Advance required to be
made, the Trustee shall then be required to make such P&I Advance, in such
case, subject to the recoverability standard described below. Neither the
Master Servicer nor Trustee will be required to make a P&I Advance or any other
advance for any Balloon Payments, default interest, late payment charges,
Prepayment Premiums, Yield Maintenance Charges or Additional Interest. Neither
the Master Servicer nor the Trustee will be required to make a P&I Advance with
respect to any Companion Loan (except the Starrett-Lehigh Building Subordinate
Loan).
The Master Servicer (or the Trustee) is entitled to recover any P&I
Advance made out of its own funds from any amounts collected in respect of the
Mortgage Loan (including the Starrett-Lehigh Building Whole Loan) (net of
related Master Servicing Fees with respect to collections of interest and net
of related Liquidation Fees and Workout Fees with respect to collections of
principal) as to which such P&I Advance was made whether such amounts are
collected in the form of late payments, insurance and condemnation proceeds or
liquidation proceeds, or any other recovery of the related Mortgage Loan or REO
Property ("Related Proceeds"). Neither the Master Servicer nor the Trustee is
obligated to make any P&I Advance that it determines in accordance with the
Servicing Standard (in the case of the Master Servicer) or its good faith
business judgment (in the case of the Trustee), would, if made, not be
recoverable from Related Proceeds (a "Nonrecoverable P&I Advance"), and the
Master Servicer (or the Trustee) is entitled to recover, from general funds on
deposit in the Certificate Account, any P&I Advance made that it later
determines to be a Nonrecoverable P&I Advance plus interest at the
Reimbursement Rate. See "DESCRIPTION OF THE CERTIFICATES--Advances in Respect
of Delinquencies" and "DESCRIPTION OF THE POOLING AND SERVICING
AGREEMENTS--Certificate Account" in the prospectus.
In connection with the recovery by the Master Servicer or the Trustee of
any P&I Advance made by it or the recovery by the Master Servicer or the
Trustee of any reimbursable servicing expense (which may include
non-recoverable advances to the extent deemed to be in the best interest of the
Certificateholders) incurred by it (each such P&I Advance or servicing expense,
an "Advance"), the Master Servicer or the Trustee, as applicable, is entitled
to be paid interest compounded annually at a per annum rate equal to the
Reimbursement Rate. Such interest will be paid contemporaneously with the
reimbursement of the related Advance first out of late payment charges and
default interest received on the related Mortgage Loan (including the
Starrett-Lehigh Building Subordinate Loan) during the Collection Period in
which such reimbursement is made and then from general collections on the
Mortgage Loans (including the Starrett-Lehigh Building Subordinate Loan) then
on deposit in the Certificate Account; provided, however, that no P&I Advance
shall accrue interest until after the expiration of any applicable grace period
for the related Periodic Payment. In addition, to the extent the Master
Servicer receives late payment charges or default interest on a Mortgage Loan
for which interest on Advances related to such Mortgage Loan has been paid from
general collections on deposit in the Certificate Account and not previously
reimbursed to the Trust Fund, such late payment charges or default interest
will be used to reimburse the Trust Fund for such payment of interest. The
"Reimbursement Rate" is equal to the "prime rate" published in the "Money
Rates" Section of The Wall Street Journal, as such "prime rate" may change from
time to time, accrued on the amount of such Advance from the date made to but
not including the date of reimbursement. To the extent not offset or covered by
amounts otherwise payable on the Non-Offered Certificates, interest accrued on
outstanding Advances will result in a reduction in amounts payable on the
Offered Certificates, subject to the distribution priorities described in this
prospectus supplement.
Upon a determination that a previously made Advance is not recoverable,
instead of obtaining reimbursement out of general collections immediately, the
Master Servicer, or the Trustee, as applicable, may, in its sole discretion,
elect to obtain reimbursement for such nonrecoverable Advance over time (not to
exceed 6 months or such longer period of time as agreed to by the Master
Servicer and the Controlling
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Class Representative, each in its sole discretion) and the unreimbursed portion
of such Advance will accrue interest at the prime rate. At any time after such
a determination to obtain reimbursement over time, the Master Servicer or the
Trustee, as applicable, may, in its sole discretion, decide to obtain
reimbursement immediately. The fact that a decision to recover such
nonrecoverable Advances over time, or not to do so, benefits some Classes of
Certificateholders to the detriment of other Classes shall not, with respect to
the Master Servicer, constitute a violation of the Servicing Standard and/or
with respect to the Trustee, constitute a violation of any fiduciary duty to
Certificateholders or contractual duty under the Pooling and Servicing
Agreement.
If the Master Servicer or the Trustee, as applicable, reimburses itself
out of general collections on the Mortgage Pool for any Advance that it has
determined is not recoverable out of collections on the related Mortgage Loan
(or the Starrett-Lehigh Building Subordinate Loan, if applicable), then that
Advance (together with accrued interest thereon) will be deemed, to the fullest
extent permitted pursuant to the terms of the Pooling and Servicing Agreement,
to be reimbursed first out of the Principal Distribution Amount otherwise
distributable on the Certificates (prior to being deemed reimbursed out of
payments and other collections of interest on the underlying Mortgage Loans
otherwise distributable on the Certificates), thereby reducing the Principal
Distribution Amount of the Certificates. To the extent any Advance is
determined to be nonrecoverable, the Advance is reimbursed out of the Principal
Distribution Amount as described above and the item for which the Advance was
originally made is subsequently collected from payments or other collections on
the related Mortgage Loan, then the Principal Distribution Amount for the
Distribution Date corresponding to the Collection Period in which this item was
recovered will be increased by the lesser of (a) the amount of the item and (b)
any previous reduction in the Principal Distribution Amount for a prior
Distribution Date pursuant to this paragraph.
Amounts in respect of the Starrett-Lehigh Building Subordinate Loan are
not avaliable for distributions on the Offered Certificates, nor are they
available for the reimbursement of nonrecoverable Advances of principal and
interest unrelated to the Starrett-Lehigh Building Whole Loan on the Offered
Certificates. If an Advance by the Master Servicer (or Trustee, if applicable)
on the Starrett-Lehigh Building Subordinated Loan becomes a nonrecoverable
Advance and the Master Servicer (or Trustee, if applicable) is unable to
recover such amounts from amounts available for distribution on the Class SL
Certificates, the Master Servicer (or Trustee, if applicable) will be permitted
to recover a nonrecoverable Advance (including interest thereon) from the
assets of the trust available for distribution on the Offered Certificates.
APPRAISAL REDUCTIONS
Upon the earliest of the date (each such date, a "Required Appraisal
Date") that (1) any Mortgage Loan (including the Starrett-Lehigh Building Whole
Loan) is 60 days delinquent in respect of any Periodic Payments, (2) any REO
Property is acquired on behalf of the Trust Fund in respect of any Mortgage
Loan (including the Starrett-Lehigh Building Whole Loan), (3) any Mortgage Loan
(including the Starrett-Lehigh Building Whole Loan) has been modified by the
Special Servicer to reduce the amount of any Periodic Payment, other than a
Balloon Payment, (4) a receiver is appointed and continues in such capacity in
respect of the Mortgaged Property securing any Mortgage Loan (including the
Starrett-Lehigh Building Whole Loan), (5) a borrower with respect to any
Mortgage Loan (including the Starrett-Lehigh Building Whole Loan) becomes
subject to any bankruptcy proceeding or (6) a Balloon Payment with respect to
any Mortgage Loan (including the Starrett-Lehigh Building Whole Loan) has not
been paid on its scheduled maturity date unless the Master Servicer has, on or
prior to the due date of such Balloon Payment, received written evidence from
an institutional lender of such lender's binding commitment to refinance such
Mortgage Loan within 60 days after the due date of such Balloon Payment
(provided that if such refinancing does not occur during the time specified in
the commitment, the related Mortgage Loan will immediately become a Required
Appraisal Loan) (each such Mortgage Loan (including the Starrett-Lehigh
Building Whole Loan), including an REO Mortgage Loan, a "Required Appraisal
Loan"), the Special Servicer is required to obtain (within 60 days of the
applicable Required Appraisal Date) an appraisal of the related Mortgaged
Property prepared in accordance with 12 CFR Section 225.62 and conducted in
accordance with the standards of the Appraisal Institute by a Qualified
Appraiser (or with respect to any Mortgage Loan with an outstanding principal
balance less than $2
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million, an internal valuation performed by the Special Servicer), unless such
an appraisal had previously been obtained within the prior twelve months. A
"Qualified Appraiser" is an independent appraiser, selected by the Special
Servicer or the Master Servicer, that is a member in good standing of the
Appraisal Institute, and that, if the state in which the subject Mortgaged
Property is located certifies or licenses appraisers, is certified or licensed
in such state, and in each such case, who has a minimum of five years
experience in the subject property type and market. The cost of such appraisal
will be advanced by the Master Servicer, subject to the Master Servicer's right
to be reimbursed therefor out of Related Proceeds or, if not reimbursable
therefrom, out of general funds on deposit in the Certificate Account. As a
result of any such appraisal, it may be determined that an "Appraisal Reduction
Amount" exists with respect to the related Required Appraisal Loan, such
determination to be made by the Master Servicer as described below. The
Appraisal Reduction Amount for any Required Appraisal Loan will equal the
excess, if any, of (a) the sum (without duplication), as of the first
Determination Date immediately succeeding the Master Servicer's obtaining
knowledge of the occurrence of the Required Appraisal Date if no new appraisal
is required or the date on which the appraisal or internal valuation, if
applicable, is obtained and each Determination Date thereafter so long as the
related Mortgage Loan remains a Required Appraisal Loan, of (i) the Stated
Principal Balance of such Required Appraisal Loan, (ii) to the extent not
previously advanced by or on behalf of the Master Servicer or the Trustee, all
unpaid interest on the Required Appraisal Loan through the most recent Due Date
prior to such Determination Date at a per annum rate equal to the related Net
Mortgage Rate (exclusive of any portion thereof that constitutes Additional
Interest), (iii) all accrued but unpaid Servicing Fees and all accrued but
unpaid Additional Trust Fund Expenses in respect of such Required Appraisal
Loan, (iv) all related unreimbursed Advances (plus accrued interest thereon)
made by or on behalf of the Master Servicer, the Special Servicer or the
Trustee with respect to such Required Appraisal Loan and (v) all currently due
and unpaid real estate taxes and reserves owed for improvements and
assessments, insurance premiums, and, if applicable, ground rents in respect of
the related Mortgaged Property, over (b) an amount equal to the sum of (i) all
escrows, reserves and letters of credit held for the purposes of reserves
(provided such letters of credit may be drawn upon for reserve purposes under
the related Mortgage Loan documents) held with respect to such Required
Appraisal Loan, plus (ii) 90% of the appraised value (net of any prior liens
and estimated liquidation expenses) of the related Mortgaged Property as
determined by such appraisal. If the Special Servicer has not obtained a new
appraisal (or performed an internal valuation, if applicable) within the time
limit described above, the Appraisal Reduction Amount for the related Mortgage
Loan will equal 25% of the principal balance of such Mortgage Loan, to be
adjusted upon receipt of the new appraisal (or internal valuation, if
applicable).
As a result of calculating an Appraisal Reduction Amount with respect to a
Mortgage Loan, the P&I Advance for such Mortgage Loan for the related
Distribution Date will be reduced, which will have the effect of reducing the
amount of interest available for distribution to the Subordinate Certificates
in reverse alphabetical order of the Classes. See "--P&I Advances" above. For
the purpose of calculating P&I Advances only, the aggregate Appraisal Reduction
Amounts will be allocated to the Certificate Balance of each Class of
Sequential Pay Certificates in reverse alphabetical order. The Starrett-Lehigh
Building 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 the Starrett-Lehigh Building Whole Loan will be applied first to the
Starrett-Lehigh Building Subordinate Loan. Any Appraisal Reduction Amount in
respect of the Starrett-Lehigh Building Whole Loan that exceeds the aggregate
balance of the Starrett-Lehigh Building Subordinate Loan will be allocated to
the Starrett-Lehigh Building Loan and the Starrett-Lehigh Building Pari Passu
Loan, pro rata.
REPORTS TO CERTIFICATEHOLDERS; AVAILABLE INFORMATION
Trustee Reports. Based solely on information provided in monthly reports
prepared by the Master Servicer and the Special Servicer (and subject to the
limitations with respect thereto) and delivered to the Trustee, the Trustee is
required to provide or make available either electronically (on the Trustee's
internet website initially located at www.ctslink.com/cmbs) or by first class
mail on each Distribution Date to each Certificateholder and the
Starrett-Lehigh Building Representative:
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(a) A statement (a "Distribution Date Statement"), substantially in the
form of Annex B to this prospectus supplement, setting forth, among other
things, for each Distribution Date:
(i) the amount of the distribution to the holders of each Class of
REMIC Regular Certificates and the Class SL Certificates in reduction
of the Certificate Balance thereof;
(ii) the amount of the distribution to the holders of each Class of
REMIC Regular Certificates and the Class SL Certificates allocable to
Distributable Certificate Interest;
(iii) the amount of the distribution to the holders of each Class of
REMIC Regular Certificates and the Class SL Certificates allocable to
Prepayment Premiums and Yield Maintenance Charges;
(iv) the amount of the distribution to the holders of each Class of
REMIC Regular Certificates and the Class SL Certificates in
reimbursement of previously allocated Realized Losses and Additional
Trust Fund Expenses;
(v) the Available Distribution Amount for such Distribution Date;
(vi) (a) the aggregate amount of P&I Advances made in respect of such
Distribution Date with respect to the Mortgage Pool and each Loan
Group; and (b) the aggregate amount of servicing advances with respect
to each Loan Group as of the close of business on the related
Determination Date;
(vii) the aggregate unpaid principal balance of the Mortgage Pool and
each Loan Group outstanding as of the close of business on the related
Determination Date;
(viii) the aggregate Stated Principal Balance of the Mortgage Pool
and each Loan Group outstanding immediately before and immediately
after such Distribution Date;
(ix) the number, aggregate unpaid principal balance, weighted average
remaining term to maturity or Anticipated Repayment Date and weighted
average Mortgage Rate of the Mortgage Loans in the Mortgage Pool and
each Loan Group as of the close of business on the related
Determination Date;
(x) the number and aggregate Stated Principal Balance (immediately
after such Distribution Date) (and with respect to each delinquent
Mortgage Loan, a brief description of the reason for delinquency, if
known by the Master Servicer or Special Servicer, as applicable) of
Mortgage Loans (a) delinquent 30-59 days, (b) delinquent 60-89 days,
(c) delinquent 90 days or more, and (d) as to which foreclosure
proceedings have been commenced;
(xi) as to each Mortgage Loan referred to in the preceding clause (x)
above: (a) the loan number thereof, (b) the Stated Principal Balance
thereof immediately following such Distribution Date and (c) a brief
description of any loan modification;
(xii) with respect to any Mortgage Loan as to which a liquidation
event occurred during the related Collection Period (other than a
payment in full), (a) the loan number thereof, (b) the aggregate of all
liquidation proceeds and other amounts received in connection with such
liquidation event (separately identifying the portion thereof allocable
to distributions on the Certificates), and (c) the amount of any
Realized Loss in connection with such liquidation event;
(xiii) with respect to any REO Property included in the Trust Fund as
to which the Special Servicer has determined, in accordance with
accepted servicing standards, that all payments or recoveries with
respect to such property have been ultimately recovered (a "Final
Recovery Determination") was made during the related Collection Period,
(a) the loan number of the related Mortgage Loan, (b) the aggregate of
all liquidation proceeds and other amounts received in connection with
such Final Recovery Determination (separately identifying the portion
thereof allocable to distributions on the Certificates), and (c) the
amount of any Realized Loss in respect of the related REO Property in
connection with such Final Recovery Determination;
(xiv) the Accrued Certificate Interest in respect of each Class of
REMIC Regular Certificates and the Class SL Certificates for such
Distribution Date;
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(xv) any unpaid Distributable Certificate Interest (or Class SL
Distributable Certificate Interest) in respect of each Class of REMIC
Regular Certificates and the Class SL Certificates after giving effect
to the distributions made on such Distribution Date;
(xvi) the Pass-Through Rate for each Class of REMIC Regular
Certificates and the Class SL Certificates for such Distribution Date;
(xvii) the Principal Distribution Amount, the Loan Group 1 Principal
Distribution Amount and the Loan Group 2 Principal Distribution Amount
for such Distribution Date (and, in the case of any principal
prepayment or other unscheduled collection of principal received during
the related Collection Period, the loan number for the related Mortgage
Loan and the amount of such prepayment or other collection of
principal);
(xviii) the aggregate of all Realized Losses incurred during the
related Collection Period and all Additional Trust Fund Expenses
incurred during the related Collection Period;
(xix) the aggregate of all Realized Losses and Additional Trust Fund
Expenses that were allocated to each Class on such Distribution Date;
(xx) the Certificate Balance of each Class of REMIC Regular
Certificates and the Class SL Certificates (other than the Class X-C
and Class X-P Certificates) and the Notional Amount of the Class X-C
and Class X-P Certificates immediately before and immediately after
such Distribution Date, separately identifying any reduction therein
due to the allocation of Realized Losses and Additional Trust Fund
Expenses on such Distribution Date;
(xxi) the certificate factor for each Class of REMIC Regular
Certificates immediately following such Distribution Date;
(xxii) the aggregate amount of interest on P&I Advances paid to the
Master Servicer or the Trustee with respect to the Mortgage Pool and
each Loan Group during the related Collection Period;
(xxiii) the aggregate amount of interest on servicing advances paid
to the Master Servicer, the Special Servicer and the Trustee with
respect to the Mortgage Pool and each Loan Group during the related
Collection Period;
(xxiv) the aggregate amount of servicing fees and Trustee Fees paid
to the Master Servicer, the Special Servicer and the Trustee, as
applicable, during the related Collection Period;
(xxv) the loan number for each Required Appraisal Loan and any
related Appraisal Reduction Amount as of the related Determination
Date;
(xxvi) the original and then-current credit support levels for each
Class of REMIC Regular Certificates;
(xxvii) the original and then-current ratings for each Class of REMIC
Regular Certificates and the Class SL Certificates;
(xxviii) the aggregate amount of Prepayment Premiums and Yield
Maintenance Charges with respect to the Mortgage Pool and each Loan
Group collected during the related Collection Period;
(xxix) the amounts, if any, actually distributed with respect to the
Class SL Certificates, Class R-I Certificates, Class R-II Certificates,
Class Z-I Certificates, Class Z-II Certificates and Class Z-III
Certificates on such Distribution Date; and
(xxx) the value of any REO Property included in the Trust Fund at the
end of the Collection Period, based on the most recent appraisal or
valuation.
(b) A "CMSA Loan Periodic Update File" and a "CMSA Property File" (in
electronic form and substance as provided by the Master Servicer and/or
the Special Servicer) setting forth certain information (with respect to
CMSA Loan Periodic Update File, as of the related Determination Date) with
respect to the Mortgage Loans and the Mortgaged Properties, respectively.
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(c) A "CMSA Collateral Summary File" and a "CMSA Bond File" setting
forth certain information with respect to the Mortgage Loans and the
Certificates, respectively.
The Master Servicer and/or the Special Servicer is required to deliver (in
electronic format acceptable to the Trustee and the Master Servicer) to the
Trustee prior to each Distribution Date, and the Trustee is required to provide
or make available electronically or by first class mail to each
Certificateholder, the Depositor, the Underwriters and each Rating Agency on
each Distribution Date, the following reports:
(a) CMSA Delinquent Loan Status Report;
(b) CMSA Historical Loan Modification and Corrected Mortgage Loan
Report;
(c) CMSA Historical Liquidation Report;
(d) CMSA REO Status Report;
(e) CMSA Servicer Watch List/Portfolio Review Guidelines;
(f) CMSA Operating Statement Analysis Report;
(g) CMSA NOI Adjustment Worksheet;
(h) CMSA Comparative Financial Status Report;
(i) CMSA Loan Level Reserve/LOC Report; and
(j) An "Updated Collection Report" identifying each mortgage loan with
respect to which the Master Servicer received a Periodic Payment or
principal prepayment after the Determination Date and before the business
day immediately preceding the Distribution Date for the related month.
Each of the reports referenced as CMSA reports will be in the form
prescribed in the standard Commercial Mortgage Securities Association ("CMSA")
investor reporting package. Forms of these reports are available at the CMSA's
website located at www.cmbs.org.
The reports identified in clauses (a), (b), (c), (d), (i) and (j) above
are referred to in this prospectus supplement as the "Unrestricted Servicer
Reports," and the reports identified in clauses (e), (f), (g) and (h) above are
referred to in this prospectus supplement as the "Restricted Servicer Reports."
In addition, within a reasonable period of time after the end of each
calendar year, the Trustee is required to send to each person who at any time
during the calendar year was a Certificateholder of record, a report
summarizing on an annual basis (if appropriate) certain items provided to
Certificateholders in the monthly Distribution Date Statements and such other
information as may be required to enable such Certificateholders to prepare
their federal income tax returns. Such information is required to include the
amount of original issue discount accrued on each Class of Certificates and
information regarding the expenses of the Trust Fund. Such requirements shall
be deemed to be satisfied to the extent such information is provided pursuant
to applicable requirements of the Code in force from time to time.
The information that pertains to Specially Serviced Trust Fund Assets
reflected in reports will be based solely upon the reports delivered by the
Special Servicer or the Master Servicer to the Trustee prior to related
Distribution Date. Absent manifest error, none of the Master Servicer, the
Special Servicer or the Trustee will be responsible for the accuracy or
completeness of any information supplied to it by a mortgagor or third party
that is included in any reports, statements, materials or information prepared
or provided by the Master Servicer, the Special Servicer or the Trustee, as
applicable.
Book-Entry Certificates. Until such time as definitive Offered
Certificates are issued in respect of the Book-Entry Certificates, the
foregoing information will be available to the holders of the Book-Entry
Certificates only to the extent it is forwarded by or otherwise available
through DTC and its Participants. Any beneficial owner of a Book-Entry
Certificate who does not receive information through DTC or its Participants
may request that the Trustee reports be mailed directly to it by written
request to the Trustee (accompanied by evidence of such beneficial ownership)
at the Corporate Trust Office of the Trustee. The manner in which notices and
other communications are conveyed by DTC to its Participants, and by its
Participants to the holders of the Book-Entry Certificates, will be governed by
arrangements among them,
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subject to any statutory or regulatory requirements as may be in effect from
time to time. The Master Servicer, the Special Servicer, the Trustee and the
Depositor are required to recognize as Certificateholders only those persons in
whose names the Certificates are registered on the books and records of the
Certificate Registrar.
Information Available Electronically. On or prior to each Distribution
Date, the Trustee will make available to the general public via its internet
website initially located at "www.ctslink.com/cmbs," (i) the related
Distribution Date Statement, (ii) the CMSA Loan Periodic Update File, CMSA Loan
Setup File, CMSA Bond File and CMSA Collateral Summary File, (iii) the
Unrestricted Servicer Reports, (iv) as a convenience for the general public
(and not in furtherance of the distribution thereof under the securities laws),
the prospectus supplement, the accompanying prospectus and the Pooling and
Servicing Agreement, and (v) any other items at the request of the Depositor.
In addition, on or prior to each Distribution Date, the Trustee will make
available via its internet website, on a restricted basis, (i) the Restricted
Servicer Reports and (ii) the CMSA Property File. The Trustee shall provide
access to such restricted reports, upon receipt of a certification in the form
attached to the Pooling and Servicing Agreement, to Certificate Owners and
prospective transferees, and upon request to any other Privileged Person, and
to any other person upon the direction of the Depositor.
The Trustee and Master Servicer make no representations or warranties as
to the accuracy or completeness of any report, document or other information
made available on its internet website and assumes no responsibility therefor.
In addition, the Trustee and the Master Servicer may disclaim responsibility
for any information distributed by the Trustee or the Master Servicer, as the
case may be, for which it is not the original source.
The Master Servicer may make available each month via the Master
Servicer's internet website, initially located at "www.wachovia.com," (i) to
any interested party, the Unrestricted Servicer Reports, the CMSA Loan Setup
File and the CMSA Loan Periodic Update File, and (ii) to any Privileged Person,
with the use of a password provided by the Master Servicer to such Privileged
Person, the Restricted Servicer Reports and the CMSA Property File. For
assistance with the Master Servicer's internet website, investors may call
(800) 326-1334.
"Privileged Person" means any Certificateholder or any person identified
to the Trustee or the Master Servicer, as applicable, as a prospective
transferee of an Offered Certificate or any interests therein (that, with
respect to any such holder or Certificate Owner or prospective transferee, has
provided to the Trustee or the Master Servicer, as applicable, a certification
in the form attached to the Pooling and Servicing Agreement), any Rating
Agency, the Mortgage Loan Sellers, any holder of a Companion Loan, the
Depositor and its designees, the Underwriters or any party to the Pooling and
Servicing Agreement and the Starrett-Lehigh Building Representative.
In connection with providing access to the Trustee's internet website or
the Master Servicer's internet website, the Trustee or the Master Servicer, as
applicable, may require registration and the acceptance of a disclaimer.
Neither the Trustee nor the Master Servicer shall be liable for the
dissemination of information in accordance with the Pooling and Servicing
Agreement.
Other Information. The Pooling and Servicing Agreement requires that the
Master Servicer or the Special Servicer make available at its offices primarily
responsible for administration of the Trust Fund, during normal business hours,
or send the requesting party at the expense of such requesting party, for
review by any holder or Certificate Owner owning an Offered Certificate or an
interest therein or any person identified by the Trustee to the Master Servicer
or Special Servicer, as the case may be, as a prospective transferee of an
Offered Certificate or an interest therein, originals or copies of, among other
things, the following items: (a) the Pooling and Servicing Agreement and any
amendments thereto, (b) all Distribution Date Statements delivered to holders
of the relevant Class of Offered Certificates since the Closing Date, (c) all
officer's certificates delivered by the Master Servicer since the Closing Date
as described under "DESCRIPTION OF THE POOLING AND SERVICING AGREEMENTS--
Evidence as to Compliance" in the prospectus, (d) all accountants' reports
delivered with respect to the Master Servicer since the Closing Date as
described under "DESCRIPTION OF THE POOLING AND SERVICING AGREEMENTS--Evidence
as to Compliance" in the prospectus, (e) the most recent
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property inspection report prepared by or on behalf of the Master Servicer in
respect of each Mortgaged Property, (f) the most recent Mortgaged Property
annual operating statements and rent roll, if any, collected by or on behalf of
the Master Servicer, (g) any and all modifications, waivers and amendments of
the terms of a Mortgage Loan entered into by the Special Servicer, (h) the
Mortgage File relating to each Mortgage Loan, and (i) any and all officers'
certificates and other evidence prepared by the Master Servicer or the Special
Servicer to support its determination that any Advance was or, if made, would
not be recoverable from Related Proceeds. Copies of any and all of the
foregoing items will be available from the Master Servicer or Special Servicer,
as the case may be, upon request; however, the Master Servicer or Special
Servicer, as the case may be, will be permitted to require (other than from the
Rating Agencies) a certification from the person seeking such information
(covering among other matters, confidentiality) and payment of a sum sufficient
to cover the reasonable costs and expenses of providing such information to
Certificateholders, Certificate Owners and their prospective transferees,
including, without limitation, copy charges and reasonable fees for employee
time and for space.
ASSUMED FINAL DISTRIBUTION DATE; RATED FINAL DISTRIBUTION DATE
The "Assumed Final Distribution Date" with respect to any Class of REMIC
Regular Certificates and the Class SL Certificates is the Distribution Date on
which the Certificate Balance of such Class of Certificates would be reduced to
zero based on the assumption that no Mortgage Loan is voluntarily prepaid prior
to its stated maturity date (except for the ARD Loans which are assumed to be
paid in full on their respective Anticipated Repayment Dates) and otherwise
based on the "Table Assumptions" set forth under "YIELD AND MATURITY
CONSIDERATIONS--Weighted Average Life" in this prospectus supplement, which
Distribution Date shall in each case be as follows:
ASSUMED FINAL
CLASS DESIGNATION DISTRIBUTION DATE
- --------------------- ------------------
Class A-1 ......... December 15, 2008
Class A-2 ......... December 15, 2010
Class A-3 ......... February 15, 2013
Class A-4 ......... February 15, 2014
Class B ........... February 15, 2014
Class C ........... February 15, 2014
Class D ........... February 15, 2014
Class E ........... February 15, 2014
THE ASSUMED FINAL DISTRIBUTION DATES SET FORTH ABOVE WERE CALCULATED
WITHOUT REGARD TO ANY DELAYS IN THE COLLECTION OF BALLOON PAYMENTS AND WITHOUT
REGARD TO A REASONABLE LIQUIDATION TIME WITH RESPECT TO ANY MORTGAGE LOANS THAT
MAY BE DELINQUENT. ACCORDINGLY, IN THE EVENT OF DEFAULTS ON THE MORTGAGE LOANS,
THE ACTUAL FINAL DISTRIBUTION DATE FOR ONE OR MORE CLASSES OF THE OFFERED
CERTIFICATES MAY BE LATER, AND COULD BE SUBSTANTIALLY LATER, THAN THE RELATED
ASSUMED FINAL DISTRIBUTION DATE(S).
In addition, the Assumed Final Distribution Dates set forth above were
calculated on the basis of a 0% CPR (as defined in this prospectus supplement)
(except that it is assumed that the ARD Loans pay their respective principal
balances on their related Anticipated Repayment Dates) and no losses on the
Mortgage Loans. Because the rate of principal payments (including prepayments)
on the Mortgage Loans can be expected to exceed the scheduled rate of principal
payments, and could exceed such scheduled rate by a substantial amount, and
because losses may occur in respect of the Mortgage Loans, the actual final
Distribution Date for one or more Classes of the Offered Certificates may be
earlier, and could be substantially earlier, than the related Assumed Final
Distribution Date(s). The rate of principal payments (including prepayments) on
the Mortgage Loans will depend on the characteristics of the Mortgage Loans, as
well as on the prevailing level of interest rates and other economic factors,
and no assurance can be given as to actual principal payment experience.
Finally, the Assumed Final Distribution Dates were calculated assuming there
would not be an early termination of the Trust Fund. See "YIELD AND MATURITY
CONSIDERATIONS" and "DESCRIPTION OF THE MORTGAGE POOL" in this prospectus
supplement and "YIELD CONSIDERATIONS" and "DESCRIPTION OF THE TRUST FUNDS" in
the accompanying prospectus.
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The "Rated Final Distribution Date" with respect to each Class of Offered
Certificates is the Distribution Date in February 2041, the first Distribution
Date that follows the second anniversary of the end of the amortization term
for the Mortgage Loan that, as of the Cut-Off Date, has the longest remaining
amortization term. The rating assigned by a Rating Agency to any Class of
Offered Certificates entitled to receive distributions in respect of principal
reflects an assessment of the likelihood that Certificateholders of such Class
will receive, on or before the Rated Final Distribution Date, all principal
distributions to which they are entitled. See "RATINGS" in this prospectus
supplement.
VOTING RIGHTS
At all times during the term of the Pooling and Servicing Agreement, 100%
of the voting rights for the Certificates (the "Voting Rights") will be
allocated among the respective Classes of Certificates as follows: (i) 4% in
the aggregate in the case of the Class X Certificates (allocated, pro rata,
between the Classes of Class X Certificates based on Notional Amount) and (ii)
in the case of any other Class of Certificates (including the Class SL
Certificates), a percentage equal to the product of 96% and a fraction, the
numerator of which is equal to the aggregate Certificate Balance of such Class
of Certificates (as adjusted by treating any Appraisal Reduction Amount as a
Realized Loss solely for the purposes of adjusting Voting Rights) and the
denominator of which is equal to the aggregate Certificate Balances of all
Classes of Certificates (including the Class SL Certificates), determined as of
the Distribution Date immediately preceding such time; provided, however, that
the treatment of any Appraisal Reduction Amount as a Realized Loss shall not
reduce the Certificate Balances of any Class for the purpose of determining the
Controlling Class, the Controlling Class Representative or the Majority
Subordinate Certificateholder. The holders of the Class R-I, Class R-II, Class
Z-I Class Z-II Certificates and Class Z-III Certificates will not be entitled
to any Voting Rights. Voting Rights allocated to a Class of Certificates will
be allocated among the related Certificateholders in proportion to the
percentage interests in such Class evidenced by their respective Certificates.
The Class A-1, Class A-2, Class A-3, Class A-4 and Class A-1A Certificates will
be treated as one Class for determining the Controlling Class. In addition, if
either the Master Servicer or the Special Servicer is the holder of any
Sequential Pay Certificate, neither of the Master Servicer or Special Servicer,
in its capacity as a Certificateholder, will have Voting Rights with respect to
matters concerning compensation affecting the Master Servicer or the Special
Servicer. See "DESCRIPTION OF THE CERTIFICATES--Voting Rights" in the
prospectus.
TERMINATION
The obligations created by the Pooling and Servicing Agreement will
terminate following the earlier of (i) the final payment (or advance in respect
thereof) or other liquidation of the last Mortgage Loan or REO Property
(including the Starrett-Lehigh Building Subordinate Loan) subject thereto, and
(ii) the purchase of all of the Mortgage Loans (including the Starrett-Lehigh
Building Subordinate Loan) and all of the REO Properties, if any, remaining in
the Trust Fund by the Master Servicer, the Special Servicer, which for purposes
of this subsection shall include Lennar Partners, Inc. only (including with
respect to the 11 Madison Avenue Loan) or any single Certificateholder (so long
as such Certificateholder is not an affiliate of the Depositor or a Mortgage
Loan Seller) that is entitled to greater than 50% of the Voting Rights
allocated to the Class of Sequential Pay Certificates with the latest
alphabetical Class designation then outstanding (or if no Certificateholder is
entitled to greater than 50% of the Voting Rights of such Class, the
Certificateholder with the largest percentage of Voting Rights allocated to
such Class) (the "Majority Subordinate Certificateholder") and distribution or
provision for distribution thereof to the Certificateholders. Written notice of
termination of the Pooling and Servicing Agreement will be given to each
Certificateholder, and the final distribution will be made only upon surrender
and cancellation of the Certificates at the office of the Trustee or other
registrar for the Certificates or at such other location as may be specified in
such notice of termination.
Any such purchase by the Master Servicer, the Special Servicer or the
Majority Subordinate Certificateholder of all the Mortgage Loans and all of the
REO Properties, if any, remaining in the Trust Fund is required to be made at a
price equal to (i) the aggregate Purchase Price of all the Mortgage Loans
(other than REO Mortgage Loans) then included in the Trust Fund, plus (ii) the
fair market value of all REO Properties then included in the Trust Fund, as
determined by an independent appraiser selected by the Master Servicer and
approved by the Trustee (which may be less than the Purchase Price for the
corresponding REO Loan), minus (iii) if the purchaser is the Master Servicer,
the aggregate of amounts
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payable or reimbursable to the Master Servicer under the Pooling and Servicing
Agreement. Such purchase will effect early retirement of the then outstanding
Offered Certificates, but the right of the Master Servicer, the Special
Servicer or the Majority Subordinate Certificateholder to effect such purchase
is subject to the requirement that the aggregate principal balance of the
Mortgage Loans (including the Starrett-Lehigh Building Subordinate Loan) is
less than 1% of the Cut-Off Date Pool Balance.
The purchase price paid in connection with the purchase of all Mortgage
Loans and REO Properties remaining in the Trust Fund, exclusive of any portion
thereof payable or reimbursable to any person other than the
Certificateholders, will constitute part of the Available Distribution Amount
for the final Distribution Date. The Available Distribution Amount for the
final Distribution Date will be distributed by the Trustee generally as
described under "--Distributions--Application of the Available Distribution
Amount" in this prospectus supplement except that the distributions of
principal on any Class of Sequential Pay Certificates described thereunder will
be made, subject to available funds and the distribution priorities described
thereunder, in an amount equal to the entire Certificate Balance of such Class
remaining outstanding.
THE TRUSTEE
Wells Fargo Bank, N.A. ("Wells Fargo") is acting as Trustee pursuant to
the Pooling and Servicing Agreement. Wells Fargo, a direct, wholly owned
subsidiary of Wells Fargo & Company, is a national banking association and is
engaged in a wide range of activities typical of a national bank. Wells Fargo
maintains an office and conducts certificate transfer services at Wells Fargo
Center, Sixth and Marquette, Minneapolis, Minnesota 55479. Wells Fargo also
maintains an office and conducts trustee and securities administration services
in Columbia, Maryland. Its address there is 9062 Old Annapolis Road, Columbia,
Maryland 21045-1951. Certificateholders and other interested parties should
direct their inquiries to Wells Fargo CMBS Customer Service office. The
telephone number is (301) 815-6600. See "DESCRIPTION OF THE POOLING AND
SERVICING AGREEMENTS--The Trustee," "--Duties of the Trustee," "--Certain
Matters Regarding the Trustee" and "--Resignation and Removal of the Trustee"
in the accompanying prospectus. As compensation for its services, the Trustee
will be entitled to receive monthly, from general funds on deposit in the
Distribution Account, the Trustee Fee. The "Trustee Fee" for each Mortgage Loan
and REO Loan for any Distribution Date equals one month's interest for the most
recently ended calendar month (calculated on the basis of a 360-day year
consisting of twelve 30-day months), accrued at the Trustee Fee rate on the
Stated Principal Balance of such Mortgage Loan or REO Loan, as the case may be,
outstanding immediately following the prior Distribution Date (or, in the case
of the initial Distribution Date, as of the Closing Date). The Trustee Fee rate
is a per annum rate set forth in the Pooling and Servicing Agreement. In
addition, the Trustee will be entitled to recover from the Trust Fund all
reasonable unanticipated expenses and disbursements incurred or made by the
Trustee in accordance with any of the provisions of the Pooling and Servicing
Agreement, but not including expenses incurred in the ordinary course of
performing its duties as Trustee under the Pooling and Servicing Agreement, and
not including any such expense, disbursement or advance as may arise from its
willful misconduct, negligence or bad faith.
The Trustee is also authorized to invest or direct the investment of funds
held in the Distribution Account and the Additional Interest Account maintained
by it that relate to the Mortgage Loans or REO Properties, as the case may be,
in certain short-term United States government securities and certain other
permitted investment grade obligations, and the Trustee will be entitled to
retain any interest or other income earned on such funds held in those accounts
maintained by it, but shall be required to cover any losses on investments of
funds held in those accounts maintained by it, from its own funds without any
right to reimbursement, except in certain limited circumstances described in
the Pooling and Servicing Agreement. The Trustee will not be entitled to any
fee with respect to the Starrett-Lehigh Building Subordinate Loan or any
Companion Loan.
The Trustee also has certain duties with respect to REMIC administration
(in such capacity, the "REMIC Administrator"). See "MATERIAL FEDERAL INCOME TAX
CONSEQUENCES--Taxation of Owners of REMIC Residual Certificates--Reporting and
Other Administrative Matters" in the prospectus.
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YIELD AND MATURITY CONSIDERATIONS
YIELD CONSIDERATIONS
General. The yield on any Offered Certificate will depend on, among other
things, (a) the price at which such Certificate is purchased by an investor and
(b) the rate, timing and amount of distributions on such Certificate. The rate,
timing and amount of distributions on any Offered Certificate will in turn
depend on, among other things, (i) the Pass-Through Rate for such Certificate,
(ii) the rate and timing of principal payments (including principal
prepayments) and other principal collections on the Mortgage Loans and the
extent to which such amounts are to be applied in reduction of the Certificate
Balance, (iii) the rate, timing and severity of Realized Losses and Additional
Trust Fund Expenses and the extent to which such losses and expenses are
allocable in reduction of the Certificate Balance, and (iv) the timing and
severity of any Net Aggregate Prepayment Interest Shortfalls and the extent to
which such shortfalls allocable are in reduction of the Distributable
Certificate Interest payable on the related Class.
Rate and Timing of Principal Payment. The yield to holders of any Offered
Certificates purchased at a discount or premium will be affected by the rate
and timing of principal payments made in reduction of the Certificate Balance
of any Class of Sequential Pay Certificates. As described in this prospectus
supplement, the Loan Group 1 Principal Distribution Amount (and, after the
Class A-1A Certificates have been retired, any remaining Loan Group 2 Principal
Distribution Amount) for each Distribution Date will generally be distributable
first in respect of the Class A-1 Certificates until the Certificate Balance
thereof has been reduced to zero, then, to the Class A-2 Certificates until the
Certificate Balance thereof has been reduced to zero, then, to the Class A-3
Certificates until the Certificate Balance thereof has been reduced to zero,
and then, to the Class A-4 Certificates until the Certificate Balance thereof
has been reduced to zero. The Loan Group 2 Principal Distribution Amount (and,
after the Class A-4 Certificates have been retired, any remaining Loan Group 1
Principal Distribution Amount) for each Distribution Date will generally be
distributable first to the Class A-1A Certificates. After those distributions,
the remaining Principal Distribution Amount with respect to the Mortgage Pool
will generally be distributable entirely in respect of the Class B
Certificates, the Class C Certificates, the Class D Certificates and the Class
E Certificates, in that order, in each case until the Certificate Balance of
such Class of Certificates is reduced to zero. Thereafter, the remaining
Principal Distribution Amount with respect to the Mortgage Pool will generally
be distributable in respect of the Non-Offered Certificates (other than the
Class A-1A, Class X-C, Class X-P and Class SL Certificates), in that order, in
each case until the Certificate Balance of such Class of Certificates is
reduced to zero. Consequently, the rate and timing of principal payments that
are distributed or otherwise result in reduction of the Certificate Balance of
any Class of Offered Certificates, will be directly related to the rate and
timing of principal payments on or in respect of the Mortgage Loans, which will
in turn be affected by the amortization schedules thereof, the dates on which
Balloon Payments are due, any extension of maturity dates by the Master
Servicer or the Special Servicer, 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 Fund). Furthermore, because the
amount of principal that will be distributed to the Class A-1, Class A-2, Class
A-3, Class A-4 and Class A-1A Certificates will generally be based upon the
particular Loan Group that the related Mortgage Loan is deemed to be in, the
yield on the Class A-1, Class A-2, Class A-3 and Class A-4 Certificates will be
particularly sensitive to prepayments on Mortgage Loans in Loan Group 1 and the
yield on the Class A-1A Certificates will be particularly sensitive to
prepayments on Mortgage Loans in Loan Group 2. In addition, although the
borrowers under ARD Loans may have certain incentives to repay ARD Loans on
their Anticipated Repayment Dates, there can be no assurance that the related
borrowers will be able to repay the ARD Loans on their Anticipated Repayment
Date. The failure of a borrower to repay the ARD Loans on their Anticipated
Repayment Dates will not be an event of default under the terms of the ARD
Loans, and pursuant to the terms of the Pooling and Servicing Agreement,
neither the Master Servicer nor the Special Servicer will be permitted to take
any enforcement action with respect to a borrower's failure to pay Additional
Interest or principal in excess of the principal component of the constant
Periodic Payment, other than requests for collection, until the scheduled
maturity of the ARD
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Loans; provided, that the Master Servicer or the Special Servicer, as the case
may be, may take action to enforce the Trust Fund's right to apply Excess Cash
Flow to principal in accordance with the terms of the ARD Loans' documents.
In addition, if the Master Servicer or the Trustee, as applicable,
reimburses itself out of general collections on the Mortgage Pool for any
Advance that it has determined is not recoverable out of collections on the
related Mortgage Loan, then that Advance (together with accrued interest
thereon) will be deemed, to the fullest extent permitted, to be reimbursed
first out of the Principal Distribution Amount otherwise distributable on the
Certificates (prior to being deemed reimbursed out of payments and other
collections of interest on the underlying Mortgage Loans otherwise
distributable on the Certificates), thereby reducing the Principal Distribution
Amount of the Offered Certificates. Any such reduction in the amount
distributed as principal of the Certificates may adversely affect the weighted
average lives and yields to maturity of one or more Classes of Certificates
and, after a Final Recovery Determination has been made, will create Realized
Losses.
Prepayments and, assuming the respective stated maturity dates therefor
have not occurred, liquidations and purchases of the Mortgage Loans, will
result in distributions on the Certificates of amounts that would otherwise be
distributed over the remaining terms of the Mortgage Loans. Defaults on the
Mortgage Loans, including the Starrett-Lehigh Building Subordinate Loan,
particularly at or near their stated maturity dates, may result in significant
delays in payments of principal on such Mortgage Loans (and, accordingly, on
the Offered Certificates that are Sequential Pay Certificates) while work-outs
are negotiated or foreclosures are completed. See "SERVICING OF THE MORTGAGE
LOANS--Modifications, Waivers and Amendments" in this prospectus supplement and
"DESCRIPTION OF THE POOLING AND SERVICING AGREEMENTS--Realization Upon
Defaulted Mortgage Loans" and "CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS AND
LEASES--Foreclosure" in the prospectus.
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 when, and to
what degree, payments of principal on the Mortgage Loans (and which of the Loan
Groups such Mortgage Loan is deemed to be in) with respect to the Class A-1,
Class A-2, Class A-3, Class A-4 and Class A-1A Certificates in turn are
distributed or otherwise result in reduction of the Certificate Balance of such
Certificates. An investor should consider, in the case of any Offered
Certificate purchased at a discount, the risk that a slower than anticipated
rate of principal payments on the Mortgage Loans or the Starrett-Lehigh
Building Subordinate Loan with respect to the Class SL Certificates 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. In
general, the earlier a payment of principal on the Mortgage Loans or the
Starrett-Lehigh Building Subordinate Loan with respect to the Class SL
Certificates is distributed or otherwise results in reduction of the principal
balance of 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 the Mortgage Loans or
the Starrett-Lehigh Building Subordinate Loan with respect to the Class SL
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 such principal payments.
Because the rate of principal payments on the Mortgage Loans will depend on
future events and a variety of factors (as described more fully below), no
assurance can be given as to such rate or the rate of principal prepayments in
particular. 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.
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, with the exception of any Net Aggregate
Prepayment Interest Shortfalls, generally be borne by the holders of the
respective Classes of Sequential Pay Certificates to the extent of amounts
otherwise distributable in respect of such Certificates, in reverse
alphabetical order of their Class designations (and, with respect to the
Starrett-Lehigh Building Whole
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Loan, first by the holders of the Class SL Certificates, and then by the
holders of the respective Classes of Sequential Pay Certificates to the extent
of amounts otherwise distributable in respect of such Certificates, in reverse
alphabetical order of their Class designations). Realized Losses and Additional
Trust Fund Expenses will be allocated, as and to the extent described in this
prospectus supplement to the holders of the respective Classes of Sequential
Pay Certificates other than the Class A-1, Class A-2, Class A-3, Class A-4 and
Class A-1A Certificates (in reduction of the Certificate Balance of each such
Class), in reverse alphabetical order of their Class designations (and, with
respect to the Starrett-Lehigh Building Loan, first by the holders of the Class
SL Certificates, and then by the holders of the respective Classes of
Sequential Pay Certificates, other than the Class A-1, Class A-2, Class A-3,
Class A-4 and Class A-1A Certificates, to the extent of amounts otherwise
distributable in respect of such Certificates, in reverse alphabetical order of
their Class designations). In the event of a reduction of the Certificate
Balances of all such Classes of Certificates, such losses and shortfalls will
then be borne, pro rata, by the Class A-1, Class A-2, Class A-3, Class A-4 and
Class A-1A Certificates (and the Class X-C and Class X-P Certificates with
respect to shortfalls of interest). As more fully described under "DESCRIPTION
OF THE CERTIFICATES--Distributions--Distributable Certificate Interest," in
this prospectus supplement, Net Aggregate Prepayment Interest Shortfalls will
generally be borne by the respective Classes of REMIC Regular Certificates
(other than the Class X-C and Class X-P Certificates) on a pro rata basis.
Certain Relevant Factors. The rate and timing of principal payments and
defaults and the severity of losses on the Mortgage Loans may be affected by a
number of factors, including, without limitation, prevailing interest rates,
the terms of the Mortgage Loans (for example, due-on-sale clauses, Lockout
Periods, provisions requiring the payment of Prepayment Premiums, Yield
Maintenance Charges and amortization terms that require Balloon Payments), the
demographics and relative economic vitality of the areas in which the Mortgaged
Properties are located and the general supply and demand for rental units,
hotel/motel guest rooms, health care facility beds, mobile home park pads or
comparable commercial space, as applicable, in such areas, the quality of
management of the Mortgaged Properties, the servicing of the Mortgage Loans,
possible changes in tax laws and other opportunities for investment. See "RISK
FACTORS--The Mortgage Loans" and "DESCRIPTION OF THE MORTGAGE POOL" in this
prospectus supplement and "YIELD CONSIDERATIONS--Prepayment Considerations" in
the accompanying prospectus.
The rate of prepayment on the Mortgage Pool is likely to be affected by
prevailing market interest rates for mortgage loans of a comparable type, term
and risk level. When the prevailing market interest rate is below a mortgage
interest rate, the related borrower may have an incentive to refinance its
mortgage loan. As of the Cut-Off Date, all of the Mortgage Loans may be prepaid
at any time after the expiration of any applicable Lockout Period and/or any
period when the holder of a Mortgage may require a borrower to pledge
Defeasance Collateral in lieu of prepaying the related Mortgage Loan (a
"Required Defeasance Period"), subject, in some cases, to the payment of a
Prepayment Premium or a Yield Maintenance Charge. A requirement that a
prepayment be accompanied by a Prepayment Premium or Yield Maintenance Charge
may not provide a sufficient economic disincentive to deter a borrower from
refinancing at a more favorable interest rate.
Depending on prevailing market interest rates, the outlook for market
interest rates and economic conditions generally, some borrowers may sell or
refinance Mortgaged Properties in order to realize their equity therein, to
meet cash flow needs or to make other investments. In addition, some borrowers
may be motivated by federal and state tax laws (which are subject to change) to
sell Mortgaged Properties prior to the exhaustion of tax depreciation benefits.
The Depositor makes no representation as to the particular factors that
will affect the rate and timing of prepayments and defaults on the Mortgage
Loans, as to the relative importance of such factors, as to the percentage of
the principal balance of the Mortgage Loans that will be prepaid or as to
whether a default will have occurred as of any date or as to the overall rate
of prepayment or default on the Mortgage Loans.
Delay in Payment of Distributions. Because monthly distributions will not
be made to Certificateholders until a date that is scheduled to be up to 15
days following the Due Dates for the Mortgage Loans during the related
Collection Period, the effective yield to the holders of the Offered
Certificates will be
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lower than 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 Distributable Certificate Interest. As described under "DESCRIPTION
OF THE CERTIFICATES--Distributions--Application of the Available Distribution
Amount" in this prospectus supplement, if the portion of the Available
Distribution Amount distributable in respect of interest on any Class of
Offered Certificates on any Distribution Date is less than the Distributable
Certificate Interest then payable for 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.
Optional Termination. Any optional termination of the Trust Fund would
have an effect similar to a prepayment in full of the Mortgage Loans (without,
however, the payment of any Prepayment Premiums or Yield Maintenance Charges)
and, as a result, investors in any Certificates purchased at a premium might
not fully recoup their initial investment. See "DESCRIPTION OF THE
CERTIFICATES--Termination" in this prospectus supplement.
WEIGHTED AVERAGE LIFE
The weighted average life of any Class A-1, Class A-2, Class A-3, Class
A-4, Class B, Class C, Class D and Class E Certificate refers to the average
amount of time that will elapse from the assumed Closing Date until each dollar
allocable to principal of such Certificate is distributed to the investor. The
weighted average life of any such Offered Certificate will be influenced by,
among other things, the rate at which principal on the Mortgage Loans is paid
or otherwise collected or advanced and applied to pay principal of such Offered
Certificate, which may be in the form of scheduled amortization, voluntary
prepayments, insurance and condemnation proceeds and liquidation proceeds. As
described in this prospectus supplement, the Loan Group 1 Principal
Distribution Amount (and, after the Class A-1A Certificates have been retired,
any remaining Loan Group 2 Principal Distribution Amount) for each Distribution
Date will generally be distributable first in respect of the Class A-1
Certificates until the Certificate Balance thereof has been reduced to zero,
then, to the Class A-2 Certificates until the Certificate Balance thereof has
been reduced to zero, then, to the Class A-3 Certificates until the Certificate
Balance thereof has been reduced to zero, and then, to the Class A-4
Certificates until the Certificate Balance thereof has been reduced to zero.
The Loan Group 2 Principal Distribution Amount (and, after the Class A-4
Certificates have been retired, any remaining Loan Group 1 Principal
Distribution Amount) for each Distribution Date will generally be distributable
first to the Class A-1A Certificates. After those distributions, the remaining
Principal Distribution Amount with respect to the Mortgage Pool will generally
be distributable entirely in respect of the Class B Certificates, the Class C
Certificates, the Class D Certificates and the Class E Certificates, in that
order, in each case until the Certificate Balance of such Class of Certificates
is reduced to zero.
The tables below indicate the percentage of the initial Certificate
Balance of each Class of Offered Certificates that would be outstanding after
each of the dates shown and the corresponding weighted average life of each
such Class of Offered Certificates. To the extent that the Mortgage Loans or
the Certificates have characteristics that differ from those assumed in
preparing the tables, 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 tables. Accordingly, the Mortgage Loans will not prepay at any
constant rate nor will the Mortgage Loans prepay at the same rate, and it is
highly unlikely that the Mortgage Loans will prepay in a manner consistent with
the assumptions described above. In addition, variations in the actual
prepayment experience and in the balance of the Mortgage Loans that actually
prepay may increase or decrease the percentages of initial Certificate Balances
(and shorten or extend the weighted average lives) shown in the following
tables. Investors are urged to conduct their own analyses of the rates at which
the Mortgage Loans may be expected to prepay.
Prepayments on mortgage loans may be measured by a prepayment standard or
model. The model used in this prospectus supplement is the "Constant Prepayment
Rate" or "CPR" model. The CPR model represents an assumed constant annual rate
of prepayment each month, expressed as a per annum
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percentage of the then scheduled principal balance of the pool of mortgage
loans. As used in the tables set forth below, the column headed "0% CPR"
assumes that none of the Mortgage Loans is prepaid in whole or in part before
maturity or the Anticipated Repayment Date, as the case may be. The columns
headed "25% CPR," "50% CPR," "75% CPR" and "100% CPR," respectively, assume
that prepayments are made each month at those levels of CPR on the Mortgage
Loans that are eligible for prepayment under the Table Assumptions set forth in
the next paragraph (each such scenario, a "Scenario"). There is no assurance,
however, that prepayments on the Mortgage Loans will conform to any level of
CPR, and no representation is made that the Mortgage Loans will prepay at the
levels of CPR shown or at any other prepayment rate.
The tables below were derived from calculations based on the following
assumptions (the "Table Assumptions"): (i) no Mortgage Loan prepays during any
applicable Lockout Period or any period during which Defeasance Collateral is
permitted or required to be pledged or any period during which a yield
maintenance charge or prepayment premium is required (otherwise, in the case of
each table, each Mortgage Loan is assumed to prepay at the indicated level of
CPR, with each prepayment being applied on the first day of the applicable
month in which it is assumed to be received), (ii) the Pass-Through Rates and
initial Certificate Balances of the respective Classes of Sequential Pay
Certificates are as described in this prospectus supplement, (iii) there are no
delinquencies or defaults with respect to, and no modifications, waivers or
amendments of the terms of, the Mortgage Loans, (iv) there are no Realized
Losses, Additional Trust Fund Expenses or Appraisal Reduction Amounts with
respect to the Mortgage Loans or the Trust Fund, (v) scheduled interest and
principal payments on the Mortgage Loans are timely received, (vi) ARD Loans
pay in full on their Anticipated Repayment Dates, (vii) all Mortgage Loans have
Due Dates on the first day of each month and accrue interest on the respective
basis described in this prospectus supplement (i.e., a 30/360 basis or an
actual/360 basis), (viii) all prepayments are accompanied by a full month's
interest and there are no Prepayment Interest Shortfalls, (ix) there are no
breaches of the Mortgage Loan Sellers' representations and warranties regarding
its Mortgage Loans, (x) all applicable Prepayment Premiums and Yield
Maintenance Charges are collected, (xi) no party entitled thereto exercises its
right of optional termination of the Trust Fund described in this prospectus
supplement and the Starrett-Lehigh Building Representative will not exercise
its option to purchase the Starrett-Lehigh Building Loan, (xii) distributions
on the Certificates are made on the 15th day (each assumed to be a business
day) of each month, commencing in March 2004, (xiii) the Closing Date for the
sale of the Offered Certificates is February 26, 2004, and (xiv) the Shops of
San Marcos Mortgage Loan (loan number 28) makes a partial prepayment of $1.7
million on the earliest date allowed.
The tables set forth below indicate the resulting weighted average lives
of each Class of Offered Certificates and set forth the percentages of the
initial Certificate Balance of such Class of Offered Certificates that would be
outstanding after each of the dates shown in each case assuming the indicated
level of CPR. For purposes of the following tables, the weighted average life
of an Offered Certificate is determined by (i) multiplying the amount of each
principal distribution thereon by the number of years from the assumed Closing
Date of such Certificate to the related Distribution Date, (ii) summing the
results and (iii) dividing the sum by the aggregate amount of the reductions in
the principal balance of such Certificate.
PERCENTAGES OF THE CLOSING DATE CERTIFICATE BALANCE OF THE CLASS A-1 CERTIFICATES
0% CPR DURING LOCKOUT, DEFEASANCE AND YIELD MAINTENANCE
OTHERWISE AT INDICATED CPR
--------------------------------------------------------
DISTRIBUTION DATE 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ------------------------------------------ -------- --------- --------- --------- ---------
Initial Date ............................. 100 100 100 100 100
02/15/05 ................................. 92 92 92 92 92
02/15/06 ................................. 83 81 80 80 80
02/15/07 ................................. 67 65 65 65 64
02/15/08 ................................. 50 48 48 48 48
02/15/09 ................................. 0 0 0 0 0
Weighted average life (in years) ......... 3.50 3.41 3.38 3.36 3.29
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PERCENTAGES OF THE CLOSING DATE CERTIFICATE BALANCE OF THE CLASS A-2 CERTIFICATES
0% CPR DURING LOCKOUT, DEFEASANCE AND YIELD MAINTENANCE
OTHERWISE AT INDICATED CPR
--------------------------------------------------------
DISTRIBUTION DATE 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ------------------------------------------ -------- --------- --------- --------- ---------
Initial Date ............................. 100 100 100 100 100
02/15/05 ................................. 100 100 100 100 100
02/15/06 ................................. 100 100 100 100 100
02/15/07 ................................. 100 100 100 100 100
02/15/08 ................................. 100 100 100 100 100
02/15/09 ................................. 57 55 55 55 55
02/15/10 ................................. 27 25 25 25 25
02/15/11 ................................. 0 0 0 0 0
Weighted average life (in years) ......... 5.50 5.46 5.45 5.44 5.29
PERCENTAGES OF THE CLOSING DATE CERTIFICATE BALANCE OF THE CLASS A-3 CERTIFICATES
0% CPR DURING LOCKOUT, DEFEASANCE AND YIELD MAINTENANCE
OTHERWISE AT INDICATED CPR
--------------------------------------------------------
DISTRIBUTION DATE 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ------------------------------------------ -------- --------- --------- --------- ---------
Initial Date ............................. 100 100 100 100 100
02/15/05 ................................. 100 100 100 100 100
02/15/06 ................................. 100 100 100 100 100
02/15/07 ................................. 100 100 100 100 100
02/15/08 ................................. 100 100 100 100 100
02/15/09 ................................. 100 100 100 100 100
02/15/10 ................................. 100 100 100 100 100
02/15/11 ................................. 67 64 64 64 64
02/15/12 ................................. 24 21 20 19 15
02/15/13 ................................. 0 0 0 0 0
Weighted average life (in years) ......... 7.60 7.54 7.53 7.52 7.42
PERCENTAGES OF THE CLOSING DATE CERTIFICATE BALANCE OF THE CLASS A-4 CERTIFICATES
0% CPR DURING LOCKOUT, DEFEASANCE AND YIELD MAINTENANCE
OTHERWISE AT INDICATED CPR
--------------------------------------------------------
DISTRIBUTION DATE 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ------------------------------------------ -------- --------- --------- --------- ---------
Initial Date ............................. 100 100 100 100 100
02/15/05 ................................. 100 100 100 100 100
02/15/06 ................................. 100 100 100 100 100
02/15/07 ................................. 100 100 100 100 100
02/15/08 ................................. 100 100 100 100 100
02/15/09 ................................. 100 100 100 100 100
02/15/10 ................................. 100 100 100 100 100
02/15/11 ................................. 100 100 100 100 100
02/15/12 ................................. 100 100 100 100 100
02/15/13 ................................. 100 99 99 99 99
02/15/14 ................................. 0 0 0 0 0
Weighted average life (in years) ......... 9.86 9.85 9.84 9.82 9.68
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PERCENTAGES OF THE CLOSING DATE CERTIFICATE BALANCE OF THE CLASS B CERTIFICATES
0% CPR DURING LOCKOUT, DEFEASANCE AND YIELD MAINTENANCE
OTHERWISE AT INDICATED CPR
--------------------------------------------------------
DISTRIBUTION DATE 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ------------------------------------------ -------- --------- --------- --------- ---------
Initial Date ............................. 100 100 100 100 100
02/15/05 ................................. 100 100 100 100 100
02/15/06 ................................. 100 100 100 100 100
02/15/07 ................................. 100 100 100 100 100
02/15/08 ................................. 100 100 100 100 100
02/15/09 ................................. 100 100 100 100 100
02/15/10 ................................. 100 100 100 100 100
02/15/11 ................................. 100 100 100 100 100
02/15/12 ................................. 100 100 100 100 100
02/15/13 ................................. 100 100 100 100 100
02/15/14 ................................. 0 0 0 0 0
Weighted average life (in years) ......... 9.97 9.97 9.97 9.97 9.80
PERCENTAGES OF THE CLOSING DATE CERTIFICATE BALANCE OF THE CLASS C CERTIFICATES
0% CPR DURING LOCKOUT, DEFEASANCE AND YIELD MAINTENANCE
OTHERWISE AT INDICATED CPR
--------------------------------------------------------
DISTRIBUTION DATE 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ------------------------------------------ -------- --------- --------- --------- ---------
Initial Date ............................. 100 100 100 100 100
02/15/05 ................................. 100 100 100 100 100
02/15/06 ................................. 100 100 100 100 100
02/15/07 ................................. 100 100 100 100 100
02/15/08 ................................. 100 100 100 100 100
02/15/09 ................................. 100 100 100 100 100
02/15/10 ................................. 100 100 100 100 100
02/15/11 ................................. 100 100 100 100 100
02/15/12 ................................. 100 100 100 100 100
02/15/13 ................................. 100 100 100 100 100
02/15/14 ................................. 0 0 0 0 0
Weighted average life (in years) ......... 9.97 9.97 9.97 9.97 9.80
PERCENTAGES OF THE CLOSING DATE CERTIFICATE BALANCE OF THE CLASS D CERTIFICATES
0% CPR DURING LOCKOUT, DEFEASANCE AND YIELD MAINTENANCE
OTHERWISE AT INDICATED CPR
--------------------------------------------------------
DISTRIBUTION DATE 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ------------------------------------------ -------- --------- --------- --------- ---------
Initial Date ............................. 100 100 100 100 100
02/15/05 ................................. 100 100 100 100 100
02/15/06 ................................. 100 100 100 100 100
02/15/07 ................................. 100 100 100 100 100
02/15/08 ................................. 100 100 100 100 100
02/15/09 ................................. 100 100 100 100 100
02/15/10 ................................. 100 100 100 100 100
02/15/11 ................................. 100 100 100 100 100
02/15/12 ................................. 100 100 100 100 100
02/15/13 ................................. 100 100 100 100 100
02/15/14 ................................. 0 0 0 0 0
Weighted average life (in years) ......... 9.97 9.97 9.97 9.97 9.80
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PERCENTAGES OF THE CLOSING DATE CERTIFICATE BALANCE OF THE CLASS E CERTIFICATES
0% CPR DURING LOCKOUT, DEFEASANCE AND YIELD MAINTENANCE
OTHERWISE AT INDICATED CPR
--------------------------------------------------------
DISTRIBUTION DATE 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ------------------------------------------ -------- --------- --------- --------- ---------
Initial Date ............................. 100 100 100 100 100
02/15/05 ................................. 100 100 100 100 100
02/15/06 ................................. 100 100 100 100 100
02/15/07 ................................. 100 100 100 100 100
02/15/08 ................................. 100 100 100 100 100
02/15/09 ................................. 100 100 100 100 100
02/15/10 ................................. 100 100 100 100 100
02/15/11 ................................. 100 100 100 100 100
02/15/12 ................................. 100 100 100 100 100
02/15/13 ................................. 100 100 100 100 100
02/15/14 ................................. 0 0 0 0 0
Weighted average life (in years) ......... 9.97 9.97 9.97 9.97 9.80
USE OF PROCEEDS
Substantially all of the proceeds from the sale of the Offered
Certificates will be used by the Depositor to purchase the Mortgage Loans and
to pay certain expenses in connection with the issuance of the Certificates.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
GENERAL
The following summary of the anticipated material federal income tax
consequences of the purchase, ownership and disposition of Offered Certificates
is based on the advice of Cadwalader, Wickersham & Taft LLP, counsel to the
Depositor. This summary is based on laws, regulations, including the REMIC
regulations promulgated by the Treasury Department (the "REMIC Regulations"),
rulings and decisions now in effect or (with respect to the regulations)
proposed, all of which are subject to change either prospectively or
retroactively. This summary does not address the federal income tax
consequences of an investment in Offered Certificates applicable to all
categories of investors, some of which (for example, banks and insurance
companies) may be subject to special rules. Prospective investors should
consult their tax advisors regarding the federal, state, local and other tax
consequences to them of the purchase, ownership and disposition of Offered
Certificates.
For federal income tax purposes, two separate REMIC elections will be made
with respect to segregated asset pools that make up the trust, other than any
Additional Interest on the ARD Loans. Upon the issuance of the Offered
Certificates, Cadwalader, Wickersham & Taft LLP will deliver its opinion
generally to the effect that, assuming compliance with all provisions of the
Pooling and Servicing Agreement, for federal income tax purposes, each such
REMIC will qualify as a REMIC under the Code. For federal income tax purposes,
the REMIC Regular Certificates and Class SL Certificates (other than the right
thereof to receive Additional Interest on the Starrett-Lehigh Building
Subordinate Loan) will represent ownership of the "regular interests" in one of
such REMICs and generally will be treated as newly originated debt instruments
of such REMIC. See "MATERIAL FEDERAL INCOME TAX CONSEQUENCES--REMICS" in the
accompanying prospectus. The portion of the Trust Fund consisting of Additional
Interest and the Additional Interest Account will be treated as a grantor trust
for federal income tax purposes, and the Class Z-I, Class Z-II, Class Z-III and
Class SL Certificates will represent undivided beneficial interests in the
related assets. See "MATERIAL FEDERAL INCOME TAX CONSEQUENCES--REMICs" and
"--Grantor Trust Funds" in the accompanying prospectus.
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TAXATION OF THE OFFERED CERTIFICATES
Based on expected issue prices, it is anticipated that the Offered
Certificates will be treated as having been issued at a premium for federal
income tax reporting purposes. The prepayment assumption that will be used in
determining the rate of accrual of original issue discount, if any, or
amortization of issue premium for federal income tax purposes will be based on
the assumption that subsequent to the date of any determination the Mortgage
Loans will pay at a rate equal to a CPR of 0%, except that it is assumed that
the ARD Loans will pay their respective outstanding principal balances on their
related Anticipated Repayment Dates. No representation is made that the
Mortgage Loans will pay at that rate or at any other rate. See "MATERIAL
FEDERAL INCOME TAX CONSEQUENCES--REMICs" and --"Taxation of Owners of REMIC
Regular Certificates--Original Issue Discount" in the accompanying prospectus.
The Internal Revenue Service (the "IRS") has issued regulations (the "OID
Regulations") under Sections 1271 to 1275 of the Code generally addressing the
treatment of debt instruments issued with original issue discount. 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, 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 used by the issuer. Accordingly, it is possible that the
holder of an Offered Certificate issued with original issue discount may be
able to select a method for recognizing original issue discount that differs
from that used by the Trustee in preparing reports to the Certificateholders
and the IRS. Prospective purchasers of Offered Certificates are advised to
consult their tax advisors concerning the tax treatment of such Certificates.
As described above, based on their anticipated issue prices (including
accrued interest), the Offered Certificates will be treated for federal income
tax purposes as having been issued at a premium. Whether any holder of such a
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. Holders of each such class of
Certificates should consult their own tax advisors regarding the possibility of
making an election to amortize such premium. See "MATERIAL FEDERAL INCOME TAX
CONSEQUENCES--Taxation of Owners of REMIC Regular Certificates--Premium" in the
accompanying prospectus.
The Offered Certificates will be treated as "real estate assets" within
the meaning of Section 856(c)(5)(B) of the Code for a "real estate investment
trust" ("REIT"). In addition, interest (including original issue discount) on
the Offered Certificates will be interest described in Section 856(c)(3)(B) of
the Code for a REIT. However, the Offered Certificates will generally only be
considered assets described in Section 7701(a)(19)(C) of the Code for a
domestic building and loan association to the extent that the Mortgage Loans
are secured by multifamily and mobile home park properties (approximately 23.2%
by initial Cut-off Date Pool Balance) and, accordingly, investment in the
Offered Certificates may not be suitable for certain thrift institutions. The
Offered Certificates will not qualify under the foregoing sections to the
extent of any Mortgage Loan that has been defeased with U.S. government
obligations.
Prepayment Premiums and Yield Maintenance Charges actually collected will
be distributed to the holders of the Offered Certificates as described in this
prospectus supplement. It is not entirely clear under the Code when the amount
of a Yield Maintenance Charge or Prepayment Premium should be taxed to the
holder of an Offered Certificate, but it is not expected, for federal income
tax reporting purposes, that Yield Maintenance Charges or Prepayment Premiums
will be treated as giving rise to any income to the holders of the Offered
Certificates prior to the Master Servicer's actual receipt of a Yield
Maintenance Charge or Prepayment Premium, as the case may be. It is not
entirely clear whether Yield Maintenance Charges or Prepayment Premiums give
rise to ordinary income or capital gains and Certificateholders should consult
their own tax advisors concerning this character issue and the treatment of
Yield Maintenance Charges and Prepayment Premiums in general.
The Treasury Department has issued final regulations that make certain
modifications to the withholding, backup withholding, and information reporting
rules. Prospective non-United States investors are urged to consult their tax
advisors regarding these regulations.
S-246
For further information regarding the federal income tax consequences of
investing in the Offered Certificates, see "MATERIAL FEDERAL INCOME TAX
CONSEQUENCES--REMICs" in the accompanying prospectus.
ERISA CONSIDERATIONS
The following description is general in nature, is not intended to be
all-inclusive, is based on the law and practice in force at the date of this
document and is subject to any subsequent changes therein. In view of the
individual nature of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and Code consequences, each potential investor that is a
Plan (as described below) is advised to consult its own legal advisor with
respect to the specific ERISA and Code consequences of investing in the Offered
Certificates and to make its own independent decision. The following is merely
a summary and should not be construed as legal advice.
A fiduciary of any employee benefit plan or other retirement plan or
arrangement, including individual retirement accounts and annuities, Keogh
plans and collective investment funds, separate accounts and general accounts
in which such plans, accounts or arrangements are invested, that is subject to
ERISA or Section 4975 of the Code (a "Plan") should carefully review with its
legal advisors whether the purchase or holding of Offered Certificates could
give rise to a transaction that is prohibited or is not otherwise permitted
either under ERISA or Section 4975 of the Code or whether there exists any
statutory or administrative exemption applicable thereto. Other employee
benefit plans, including governmental plans (as defined in Section 3(32) of
ERISA) and church plans (as defined in Section 3(33) of ERISA and provided no
election has been made under Section 410(d) of the Code), while not subject to
the foregoing provisions of ERISA or the Code, may be subject to materially
similar provisions of applicable federal, state or local law ("Similar Law").
The U.S. Department of Labor has issued individual exemptions to each of
the Underwriters (Prohibited Transaction Exemption ("PTE") 96-22 (April 3,
1996) to Wachovia Corporation, and its subsidiaries and its affiliates, which
include Wachovia Capital Markets, LLC ("Wachovia Securities"), PTE 89-89
(October 17, 1989) to Citigroup Global Markets Inc. ("Citigroup Securities"),
PTE 93-31 (May 14, 1993) to Banc of America Securities LLC ("Banc of America
Securities") and PTE 89-88 (October 17, 1989) to Goldman, Sachs & Co.
("Goldman, Sachs & Co.") (each, as amended, an "Exemption" and collectively,
the "Exemptions"), each of which generally exempts from the application of the
prohibited transaction provisions of Sections 406(a) and (b) and 407(a) of
ERISA, and the excise taxes imposed on such prohibited transactions pursuant to
Sections 4975(a) and (b) of the Code, the purchase, sale and holding of
mortgage pass-through certificates underwritten by an Underwriter, as
hereinafter defined, provided that certain conditions set forth in the
Exemptions are satisfied. For purposes of this discussion, the term
"Underwriter" shall include (a) Wachovia Securities, (b) Citigroup Securities,
(c) Banc of America Securities, (d) Goldman, Sachs & Co., (e) any person
directly or indirectly, through one or more intermediaries, controlling,
controlled by or under common control with Wachovia Securities, Citigroup
Securities, Banc of America Securities or Goldman, Sachs & Co. and (f) any
member of the underwriting syndicate or selling group of which Wachovia
Securities, Citigroup Securities, Banc of America Securities, Goldman, Sachs &
Co. or a person described in (e) is a manager or co-manager with respect to the
Offered Certificates.
The obligations covered by the Exemptions include mortgage loans such as
the Mortgage Loans. The Exemptions would apply to the acquisition, holding and
resale of the Offered Certificates by a Plan only if specific conditions
(certain of which are described below) are met. It is not clear whether the
Exemptions apply to participant directed Plans as described in Section 404(c)
of ERISA or Plans that are subject to Section 4975 of the Code but that are not
subject to Title I of ERISA, such as certain Keogh plans and certain individual
retirement accounts. The Exemptions would not apply to governmental plans,
certain church plans and other employee benefit plans that are not subject to
the prohibited transaction provisions of ERISA or the Code but that may be
subject to Similar Law.
The Exemptions set forth five general conditions that, among others, must
be satisfied for a transaction involving the purchase, sale and holding of the
Offered Certificates by a Plan to be eligible for exemptive relief thereunder.
First, the acquisition of the Offered Certificates by a Plan must be on terms,
S-247
including the price paid 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. Second, the Offered Certificates at the time of acquisition by the Plan
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.
("S&P"), Moody's Investors Service, Inc. ("Moody's") or Fitch, Inc. ("Fitch")
or any successor thereto (each, an "NRSRO"). Third, the Trustee cannot be an
affiliate of any other member of the Restricted Group, other than an
Underwriter. The "Restricted Group" consists of each of the Underwriters, the
Depositor, the Master Servicer, the Special Servicer, the Trustee, any
sub-servicer, and any obligor with respect to Mortgage Loans constituting more
than 5.0% of the aggregate unamortized principal balance of the Mortgage Loans
as of the date of initial issuance of the Offered Certificates, and any of
their affiliates. Fourth, the sum of all payments made to and retained by any
Underwriter in connection with the distribution or placement of the Offered
Certificates must represent not more than reasonable compensation for
underwriting such Certificates; the sum of all payments made to and retained by
the Depositor pursuant to the assignment of the Mortgage Loans to the Trust
Fund must represent not more than the fair market value of such obligations;
and the sum of all payments made to and retained by the Master Servicer, the
Special Servicer or any sub-servicer must represent 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. Fifth, the investing Plan must be an accredited investor as defined
in Rule 501(a)(1) of Regulation D of the Securities and Exchange Commission
under the Securities Act.
A fiduciary of a Plan contemplating purchasing any Class of the Offered
Certificates must make its own determination that, at the time of such
purchase, such Certificates satisfy the general conditions set forth above.
The Exemptions also require 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 in such other
investment pools must have been rated in one of the four highest generic rating
categories by S&P, Moody's or Fitch for at least one year prior to the Plan's
acquisition of the Offered Certificates; and (iii) certificates 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.
If the general conditions of the Exemptions are satisfied, the Exemptions
may provide an exemption from the restrictions imposed by Sections 406(a) and
407(a) of ERISA (as well as the excise taxes imposed by Sections 4975(a) and
(b) of the Code by reason of Sections 4975(c)(1)(A) through (D) of the Code) in
connection with (i) the direct or indirect sale, exchange or transfer of the
Offered Certificates in the initial issuance of Certificates between the
Depositor or an Underwriter and a Plan when the Depositor, an Underwriter, the
Trustee, the Master Servicer, the Special Servicer, a sub-servicer or an
obligor with respect to Mortgage Loans is a "Party in Interest", as defined in
the accompanying prospectus, with respect to the investing Plan, (ii) the
direct or indirect acquisition or disposition in the secondary market of the
Offered Certificates by a Plan and (iii) the holding of Offered Certificates by
a Plan. However, no exemption is provided from the restrictions of Sections
406(a)(1)(E), 406(a)(2) and 407 of ERISA for the acquisition or holding of the
Offered 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 hereof, an Excluded Plan is a Plan
sponsored by any member of the Restricted Group.
If certain specific conditions of the Exemptions are also satisfied, each
such Exemption may provide relief from the restrictions imposed by reason of
Sections 406(b)(1) and (b)(2) of ERISA and the taxes imposed by Section
4975(c)(1)(E) of the Code to an obligor with respect to Mortgage Loans acting
as a fiduciary with respect to the investment of a Plan's assets in the Offered
Certificates (or such obligor's affiliate) only if, among other requirements
(i) such obligor is an obligor with respect to 5% or less of the fair market
value of the obligations or receivables contained in the trust, (ii) the
investing Plan is not an Excluded Plan, (iii) a Plan's investment in each Class
of the Offered Certificates does not exceed 25% of all of the Certificates of
that Class outstanding at the time of the acquisition, (iv) immediately after
the acquisition, no more than 25% of the assets of the Plan are invested in
certificates representing an interest in trusts (including the Trust Fund)
containing assets sold or serviced by the Depositor or the Master Servicer and
(v) in the case of the acquisition of the Offered Certificates in connection
with their initial
S-248
issuance, at least 50% of each Class of Offered Certificates in which Plans
have invested and at least 50% of the aggregate interest in the Trust Fund is
acquired by persons independent of the Restricted Group.
The Exemptions also apply to transactions in connection with the
servicing, management and operation of the Trust Fund, provided that, in
addition to the general requirements described above, (a) such transactions are
carried out in accordance with the terms of a binding pooling and servicing
agreement, (b) the pooling and servicing agreement is provided to, or described
in all material respects in the prospectus or private placement memorandum
provided to, investing Plans before their purchase of Certificates issued by
the Trust Fund and (c) the terms and conditions for the defeasance of a
mortgage obligation and substitution of a new mortgage obligation, as so
described, have been approved by an NRSRO and do not result in any Offered
Certificates receiving a lower credit rating from the NRSRO than the current
rating. The Pooling and Servicing Agreement is a pooling and servicing
agreement as defined in the Exemptions. The Pooling and Servicing Agreement
provides that all transactions relating to the servicing, management and
operations of the Trust Fund must be carried out in accordance with the Pooling
and Servicing Agreement.
Before purchasing any Class of Offered Certificate, a fiduciary of a Plan
should itself confirm that the specific and general conditions of the
Exemptions and the other requirements set forth in the Exemptions would be
satisfied.
Any Plan fiduciary considering the purchase of Offered Certificates should
consult with its counsel with respect to the applicability of the Exemptions
and other issues and determine on its own whether all conditions have been
satisfied and whether the Offered Certificates are an appropriate investment
for a Plan under ERISA and the Code (or, in the case of governmental plans and
certain church plans, under Similar Law) with regard to ERISA's general
fiduciary requirements, including investment prudence and diversification and
the exclusive benefit rule. Each purchaser of the Offered Certificates with the
assets of one or more Plans shall be deemed to represent that each such Plan
qualifies as an "accredited investor" as defined in Rule 501(a)(1) of
Regulation D under the Securities Act. No Plan may purchase or hold an interest
in any Class of Offered Certificates unless (a) such Certificates are rated in
one of the top four generic rating categories by at least one NRSRO at the time
of such purchase or (b) such Plan is an insurance company general account that
represents and warrants that it is eligible for, and meets all of the
requirements of, Sections I and III of Prohibited Transaction Class Exemption
95-60.
THE SALE OF OFFERED CERTIFICATES TO A PLAN IS IN NO RESPECT A
REPRESENTATION OR WARRANTY BY THE DEPOSITOR, THE UNDERWRITERS OR ANY OTHER
PERSON THAT THIS INVESTMENT MEETS ALL RELEVANT LEGAL REQUIREMENTS WITH RESPECT
TO INVESTMENTS BY PLANS GENERALLY OR ANY PARTICULAR PLAN, THAT THE EXEMPTIONS
WOULD APPLY TO THE ACQUISITION OF THIS INVESTMENT BY PLANS IN GENERAL OR ANY
PARTICULAR PLAN, OR THAT THIS INVESTMENT IS APPROPRIATE FOR PLANS GENERALLY OR
ANY PARTICULAR PLAN.
LEGAL INVESTMENT
The Offered Certificates will not constitute "mortgage related securities"
for the purposes of the Secondary Mortgage Market Enhancement Act of 1984, as
amended. The appropriate characterization of the Offered Certificates under
various legal investment restrictions, and thus the ability of investors
subject to these restrictions to purchase the Offered Certificates, is subject
to significant interpretive uncertainties.
No representations are made as to the proper characterization of the
Offered Certificates for legal investment, financial institution regulatory, or
other purposes, or as to the ability of particular investors to purchase the
Offered Certificates under applicable legal investment restrictions. The
uncertainties described above (and any future determinations concerning the
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 constitute legal investments for them or are subject to
investment, capital or other restrictions. See "LEGAL INVESTMENT" in the
accompanying prospectus.
S-249
METHOD OF DISTRIBUTION
Subject to the terms and conditions set forth in the underwriting
agreement (the "Underwriting Agreement") among the Depositor and Wachovia
Securities, Citigroup Securities, Banc of America Securities or Goldman, Sachs
& Co. (collectively, the "Underwriters"), the Depositor has agreed to sell to
each of Wachovia Securities, Citigroup Securities, Banc of America Securities
or Goldman, Sachs & Co. and each of Wachovia Securities, Citigroup Securities,
Banc of America Securities or Goldman, Sachs & Co. has agreed to purchase,
severally but not jointly, the respective Certificate Balances as applicable,
of each Class of the Offered Certificates as set forth below, subject in each
case to a variance of 5%:
WACHOVIA CITIGROUP BANC OF AMERICA GOLDMAN, SACHS
CLASS SECURITIES SECURITIES SECURITIES & CO.
- ------------------- -------------- -------------- ----------------- ---------------
Class A-1 ......... $ 61,898,967 $ 5,218,033
Class A-2 ......... $ 95,925,553 $ 8,086,447
Class A-3 ......... $ 65,742,924 $ 5,542,076
Class A-4 ......... $488,090,373 $41,145,627 $25,000,000 $25,000,000
Class B ........... $ 35,694,022 $ 3,008,978
Class C ........... $ 14,873,201 $ 1,253,799
Class D ........... $ 29,744,558 $ 2,507,442
Class E ........... $ 14,872,279 $ 1,253,721
Wachovia Securities and Citigroup Securities are acting as co-lead
managers of the offering. Citigroup Securities is acting as sole bookrunner
with respect to 17.32% of the Class A-4 Certificates. Banc of America
Securities and Goldman, Sachs & Co. are acting as a co-managers for this
offering. Wachovia Securities is acting as sole bookrunner with respect to the
remainder of the Class A-4 Certificates and all other Classes of the Offered
Certificates.
Proceeds to the Depositor from the sale of the Offered Certificates,
before deducting expenses payable by the Depositor, will be approximately
$932,185,601, which includes accrued interest.
Distribution of the Offered Certificates will be made by each Underwriter
from time to time in negotiated transactions or otherwise at varying prices to
be determined at the time of sale. Wachovia Securities or one of its affiliates
may purchase a portion of certain Classes of the Offered Certificates, purchase
certain Offered Certificates for its own account or sell certain Offered
Certificates to one of its affiliates. Sales of the Offered Certificates may
also occur on the Closing Date and other dates after the Closing Date, as
agreed upon in negotiated transactions with various purchasers. Each
Underwriter may effect such transactions by selling the Offered Certificates to
or through dealers, and such dealers may receive compensation in the form of
underwriting discounts, concessions or commissions from such Underwriter. In
connection with the purchase and sale of the Offered Certificates, Wachovia
Securities, Citigroup Securities, Banc of America Securities and Goldman, Sachs
& Co. may be deemed to have received compensation from the Depositor in the
form of underwriting discounts. Each Underwriter and any dealers that
participate with any 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.
Purchasers of the 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 in connection with
reoffers and sales by them of Offered Certificates. Certificateholders should
consult with their legal advisors in this regard prior to any such reoffer or
sale.
The Depositor also has been advised by the Underwriters that each of them,
through one or more of its affiliates, currently intends to make a market in
the Offered Certificates; however, none of the Underwriters has any obligation
to do so, any market making may be discontinued at any time and there can be no
assurance that an active secondary market for the Offered Certificates will
develop. See "RISK FACTORS--Liquidity for Certificates May Be Limited" in this
prospectus supplement and "RISK FACTORS--Your Ability to Resell Certificates
May Be Limited Because of Their Characteristics" in the accompanying
prospectus.
S-250
This prospectus supplement and the accompanying prospectus may be used by
the Depositor, Wachovia Securities, an affiliate of the Depositor, and any
other affiliate of the Depositor when required under the federal securities
laws in connection with offers and sales of Offered Certificates in furtherance
of market-making activities in Offered Certificates. Wachovia Securities or any
such other affiliate may act as principal or agent in such transactions. Such
sales will be made at prices related to prevailing market prices at the time of
sale or otherwise.
The Depositor has agreed to indemnify each Underwriter and each person, if
any, who controls any Underwriter within the meaning of Section 15 of the
Securities Act against, or make contributions to each Underwriter and each such
controlling person with respect to, certain liabilities, including liabilities
under the Securities Act.
Wachovia Securities, one of the Underwriters, is an affiliate of the
Depositor and Wachovia Bank, National Association, which is one of the Mortgage
Loan Sellers and the Master Servicer. Citigroup Securities, one of the
Underwriters, is an affiliate of Citigroup Global Markets Realty Corp., a
Mortgage Loan Seller. It is expected that Wachovia Bank, National Association,
Artesia Mortgage Capital Corporation and Citigroup Global Markets Realty Corp.
or one of their affiliates will own the Class Z-I, Class Z-II or Class Z-III
Certificates, respectively. In addition, it is expected that Wachovia
Securities or one of its affiliates will be the initial holder of the Class SL
Certificates.
LEGAL MATTERS
Certain legal matters will be passed upon for the Depositor by Cadwalader,
Wickersham & Taft LLP, Charlotte, North Carolina. Certain legal matters will be
passed upon for the Underwriters by Cadwalader, Wickersham & Taft LLP, New
York, New York.
RATINGS
The Offered Certificates are required as a condition of their issuance to
have received the following ratings from S&P and Moody's (the "Rating
Agencies"):
EXPECTED
RATINGS FROM
CLASS S&P/MOODY'S
- ---------------------- -------------
Class A-1 ......... AAA/Aaa
Class A-2 ......... AAA/Aaa
Class A-3 ......... AAA/Aaa
Class A-4 ......... AAA/Aaa
Class B ........... AA/Aa2
Class C ........... AA-/Aa3
Class D ........... A/A2
Class E ........... A-/A3
The ratings on the Offered Certificates address the likelihood of timely
receipt by holders thereof of all distributions of interest to which they are
entitled and distributions of principal by the Rated Final Distribution Date
set forth on the cover page of this prospectus supplement. The ratings take
into consideration the credit quality of the Mortgage Pool, structural and
legal aspects associated with the Offered Certificates, and the extent to which
the payment stream from the Mortgage Pool is adequate to make payments required
under the Offered Certificates. In addition, rating adjustments may result from
a change in the financial position of the Trustee as back up liquidity
provider. A security rating does not represent any assessment of the yield to
maturity that investors may experience. In addition, a rating does not address
(i) the likelihood or frequency of voluntary or mandatory prepayments of
Mortgage Loans, (ii) the degree to which such prepayments might differ from
those originally anticipated, (iii) payment of Additional Interest or net
default interest, (iv) whether and to what extent payments of Prepayment
Premiums or Yield Maintenance Charges will be received or the corresponding
effect on yield to investors or (v) whether and to what extent Net Aggregate
Prepayment Interest Shortfalls will be realized or allocated to
Certificateholders.
S-251
There can be no assurance that any rating agency not requested to rate the
Offered Certificates will not nonetheless issue a rating to any or all Classes
thereof and, if so, what such rating or ratings would be. A rating assigned to
any Class of Offered Certificates by a rating agency that has not been
requested by the Depositor to do so may be lower than the rating assigned
thereto by any of the Rating Agencies.
The ratings on the Offered Certificates should be evaluated independently
from similar ratings on other types of securities. A security rating is not a
recommendation to buy, sell or hold securities and may be subject to revision
or withdrawal at any time by the assigning rating agency. See "RISK FACTORS--
Ratings Do Not Guarantee Payment and Do Not Address Prepayment Risks" in the
accompanying prospectus.
S-252
INDEX OF DEFINED TERMS
PAGE
11 Madison Avenue Accrued Interest .............S-149
11 Madison Avenue Anticipated
Repayment Date .................................S-148
11 Madison Avenue Assumption ...................S-151
11 Madison Avenue Borrower .....................S-148
11 Madison Avenue Casualty Insurance
Policy .........................................S-151
11 Madison Avenue Companion Loans ..............S-100
11 Madison Avenue Debt Service
Payment ........................................S-149
11 Madison Avenue Excess Funds .................S-153
11 Madison Avenue Final Maturity Date ..........S-148
11 Madison Avenue Insurance Policies ...........S-151
11 Madison Avenue Intercreditor
Agreement ......................................S-101
11 Madison Avenue Loan .........................S-100
11 Madison Avenue Lockbox Account ..............S-152
11 Madison Avenue Lockbox Bank .................S-152
11 Madison Avenue Lockout Period ...............S-149
11 Madison Avenue Lockout Release
Date S-150
11 Madison Avenue Mortgaged Property ...........S-148
11 Madison Avenue Net Cash Flow ................S-149
11 Madison Avenue Net Cash Flow
After Debt Service S-149
11 Madison Avenue Pari Passu Loans .............S-100
11 Madison Avenue Payment Differential..........S-149
11 Madison Avenue Regular Interest
Rate ...........................................S-148
11 Madison Avenue Reinvestment Yield ...........S-150
11 Madison Avenue Release Date .................S-150
11 Madison Avenue Reletting Reserve
Account ........................................S-152
11 Madison Avenue Replacement Reserve
Account ........................................S-152
11 Madison Avenue Restoration ..................S-151
11 Madison Avenue Senior Loans .................S-100
11 Madison Avenue Subordinate Loans ............S-100
11 Madison Avenue Tax and Insurance
Reserve Account ................................S-152
11 Madison Avenue Transfer .....................S-152
11 Madison Avenue Transferee ...................S-151
11 Madison Avenue Treasury Rate ................S-148
11 Madison Avenue Whole Loan ...................S-100
11 Madison Avenue Yield Maintenance
Charge .........................................S-149
1% ( ) ........................................S-111
2% ( ) ........................................S-111
3% ( ) ........................................S-111
30/360 basis ....................................S-94
520 Eighth Avenue Loan .........................S-162
ABB ............................................S-167
accredited investor ............................S-249
Accrued Certificate Interest ...................S-220
Actual/360 basis ................................S-94
Additional Interest .............................S-95
Additional Interest Account ....................S-214
Additional Trust Fund Expenses .................S-227
Administrative Cost Rate .......................S-110
Advance ........................................S-228
Advanced .......................................S-164
Albertsons .....................................S-165
Anticipated Repayment Date ......................S-95
Appraisal Reduction Amount .....................S-230
ARD Loans .......................................S-95
Artesia .........................................S-94
Artesia Mortgage Loans .........................S-181
Assumed Final Distribution Date ................S-235
Assumed Scheduled Payment ......................S-222
Available Distribution Amount ..................S-212
Bal Harbour Square Loan ........................S-169
Balloon Loans ...................................S-94
Balloon Payment .................................S-94
Banc of America Securities .....................S-247
banking organization ...........................S-205
Breach .........................................S-187
Capital Imp. Reserve ...........................S-111
Cedarbrook Apartments Intercreditor
Agreement ......................................S-101
Cedarbrook Apartments Loan .....................S-100
Cedarbrook Apartments Subordinate
Loan ...........................................S-100
Cedarbrook Apartments Whole Loan ...............S-101
Certificate Balance ............................S-206
Certificate Deferred Interest ..................S-208
Certificateholders .............................S-212
Certificates ...................................S-204
Circuit City ...................................S-169
Citigroup .......................................S-94
Citigroup Mortgage Loans .......................S-181
Citigroup Securities ...........................S-247
Class ..........................................S-204
Class A Certificates ...........................S-204
Class SL Available Distribution Amount .........S-213
Class SL Certificates ..........................S-204
Class SL Distributable Certificate Interest.....S-220
Class SL Principal Distribution Amount .........S-222
Class X Certificates ...........................S-204
Class X-C Components ...........................S-209
Class X-C Strip Rate ...........................S-209
S-253
PAGE
Class X-P Components ...........................S-210
Class X-P Strip Rate ...........................S-210
Class Z Certificates ...........................S-204
clearing agency ................................S-205
clearing corporation ...........................S-205
Clearstream ....................................S-204
Clearstream Participants .......................S-206
CMSA ...........................................S-233
CMSA Bond File .................................S-233
CMSA Collateral Summary File ...................S-233
CMSA Loan Periodic Update File .................S-232
CMSA Property File .............................S-232
Co-Lender Loans ................................S-100
Collection Period ..............................S-211
Companion Loans ................................S-101
Compensating Interest Payment ..................S-194
CompUSA ........................................S-169
Conopco ........................................S-155
Constant Prepayment Rate .......................S-241
Controlling Class ..............................S-191
Controlling Class Representative ...............S-191
Corrected Mortgage Loan ........................S-193
CPR ............................................S-241
Crossed Group ..................................S-187
Crossed Loan ...................................S-187
CSFB ...........................................S-150
Custodian ......................................S-183
Cut-Off Date ....................................S-92
Cut-Off Date Balance ............................S-92
Cut-Off Date Group 1 Balance ....................S-92
Cut-Off Date Group 2 Balance ....................S-92
Cut-Off Date Group Balances .....................S-92
Cut-Off Date LTV ...............................S-110
Cut-Off Date LTV Ratio .........................S-110
Cut-Off Date Pool Balance .......................S-92
D ( ) .........................................S-111
Defaulted Mortgage Loan ........................S-201
Defeasance .....................................S-111
Defeasance Collateral ...........................S-96
Defect .........................................S-187
Depositaries ...................................S-204
Designated Lease ...............................S-153
Designated Lease Curtailment Period ............S-153
Designated Lease Reserve Escrow
Account ........................................S-153
Designated Lease Space .........................S-153
Determination Date .............................S-212
Discount Rate ..................................S-224
Distributable Certificate Interest .............S-220
Distribution Account ...........................S-214
Distribution Date ..............................S-212
Distribution Date Statement ....................S-231
DTC ............................................S-204
Due Date .......................................S-94
ERISA ..........................................S-247
Euroclear Operator .............................S-204
Euroclear Participants .........................S-206
Euroclear System ...............................S-204
Excess Cash Flow ................................S-95
Excluded Plan ..................................S-248
Exemption ......................................S-247
Exemptions .....................................S-247
FBI ............................................S-157
Final Recovery Determination ...................S-231
Fitch ..........................................S-248
Form 8-K .......................................S-188
Fully Amortizing Loans ..........................S-94
Gain on Sale Reserve Account ...................S-214
G&G ............................................S-162
Goldman, Sachs & Co. ...........................S-247
Gunster Yoakley ................................S-155
IBM ............................................S-159
IBM Center Loan ................................S-159
IDA ............................................S-150
IDA Premises ...................................S-150
Indirect Participants ..........................S-205
Intercreditor Agreements .......................S-101
Interest Accrual Period ........................S-211
Interest Reserve Account .......................S-214
Interest Reserve Amount ........................S-214
Interest Reserve Loans .........................S-214
IRS ............................................S-246
L ( ) .........................................S-110
LACMA ..........................................S-167
Lerner .........................................S-160
Linens 'n Things ...............................S-169
Liquidation Fee ................................S-194
LNR ............................................S-190
Loan Group 1 ....................................S-92
Loan Group 1 Principal Distribution
Amount .........................................S-221
Loan Group 2 ....................................S-92
Loan Group 2 Principal Distribution
Amount .........................................S-221
Loan Groups .....................................S-92
Loan Pair ......................................S-189
Loan per Sq. Ft., Unit, Pad or Room ............S-110
Lockout ........................................S-110
Lockout Period .................................S-110
LTV at ARD or Maturity .........................S-110
S-254
PAGE
Majority Subordinate Certificateholder .........S-236
Marshalls ......................................S-165
Master Servicer ................................S-190
Master Servicing Fee ...........................S-193
Master Servicing Fee Rate ......................S-193
Maturity Date LTV Ratio ........................S-110
Moody's ........................................S-248
Mortgage ........................................S-93
Mortgage Deferred Interest .....................S-208
Mortgage File ..................................S-183
Mortgage Loan Purchase Agreement ...............S-181
Mortgage Loan Purchase Agreements ..............S-181
Mortgage Loans ..................................S-92
Mortgage Note ...................................S-92
Mortgage Pool ...................................S-92
Mortgage Rate ...................................S-94
mortgage related securities ....................S-249
Mortgaged Property ..............................S-93
MTDC ...........................................S-162
NA .............................................S-111
NAV ............................................S-111
Net Aggregate Prepayment Interest
Shortfall ......................................S-220
Net Mortgage Rate ..............................S-211
Newmark ........................................S-162
Non-Offered Certificates .......................S-204
Nonrecoverable P&I Advance .....................S-228
Non-Trust Subordinate Companion Loans ..........S-101
North Riverside Park Mall Loan .................S-160
Notional Amount ................................S-207
NRSRO ..........................................S-248
O ( ) .........................................S-110
Occupancy Percentage ...........................S-111
Offered Certificates ...........................S-204
OID Regulations ................................S-246
O&M Operative Period ...........................S-153
Omnimedia ......................................S-157
Open Period ....................................S-111
Option Price ...................................S-201
Original Term to Maturity ......................S-111
Pacific Center Loan ............................S-167
Pari Passu Companion Loans .....................S-100
Participants ...................................S-204
Party in Interest ..............................S-248
Periodic Payments ...............................S-94
Phillips Point Office Building Loan ............S-155
P&I Advance ....................................S-227
Pine Trail Square Loan .........................S-165
Plan ...........................................S-247
Plitt ..........................................S-160
Pooling and Servicing Agreement ................S-204
Prepayment Interest Excess .....................S-193
Prepayment Interest Shortfall ..................S-193
Prepayment Premiums ............................S-223
Primary Collateral .............................S-188
Prime Lease ....................................S-154
Principal Distribution Amount ..................S-221
Privileged Person ..............................S-234
PTE ............................................S-247
Purchase Option ................................S-201
Purchase Price .................................S-183
Qualified Appraiser ............................S-230
qualified replacement mortgage .................S-184
Qualified Substitute Mortgage Loan .............S-184
Rated Final Distribution Date ..................S-236
Rating Agencies ................................S-251
real estate assets .............................S-246
Realized Losses ................................S-226
Reimbursement Rate .............................S-228
REIT ...........................................S-246
Related Proceeds ...............................S-228
Remaining Amortization Term ....................S-110
Remaining Term to Maturity .....................S-110
REMIC ...........................................S-28
REMIC Administrator ............................S-237
REMIC Regular Certificates .....................S-204
REMIC Regulations ..............................S-245
REMIC Residual Certificates ....................S-204
Rental Property ................................S-108
REO Extension ..................................S-202
REO Mortgage Loan ..............................S-223
REO Property ...................................S-193
Replacement Reserve ............................S-111
Required Appraisal Date ........................S-229
Required Appraisal Loan ........................S-229
Required Defeasance Period .....................S-240
Restricted Group ...............................S-248
Restricted Servicer Reports ....................S-233
RPG ............................................S-165
Rules ..........................................S-205
Scenario .......................................S-242
Scheduled Payment ..............................S-222
Selfhelp .......................................S-162
Sequential Pay Certificates ....................S-204
Servicing Fees .................................S-194
Servicing Standard .............................S-189
Servicing Transfer Event .......................S-192
Similar Law ....................................S-247
S&P ............................................S-248
Special Servicer ...............................S-190
S-255
PAGE
Special Servicing Fee ..........................S-194
Special Servicing Fee Rate .....................S-194
Specially Serviced Mortgage Loans ..............S-193
Specially Serviced Trust Fund Assets. ..........S-193
Starrett-Lehigh Building Companion
Loans ..........................................S-100
Starrett-Lehigh Building Control
Appraisal Period ...............................S-104
Starrett-Lehigh Building Intercreditor
Agreement ......................................S-101
Starrett-Lehigh Building Loan ..................S-100
Starrett-Lehigh Building Loan Option
Price S-104
Starrett-Lehigh Building Pari Passu Loan .......S-100
Starrett-Lehigh Building Purchase Option .......S-104
Starrett-Lehigh Building Representative ........S-191
Starrett-Lehigh Building Senior Loans ..........S-100
Starrett-Lehigh Building
Subordinate Loan ...............................S-100
Starrett-Lehigh Building Whole Loan ............S-100
Stated Principal Balance .......................S-211
Subordinate Certificates .......................S-204
Subordinate Companion Loans ....................S-101
Substitution Shortfall Amount ..................S-184
Table Assumptions ..............................S-242
Terms and Conditions ...........................S-206
The Gap ........................................S-160
TI/LC Reserve ..................................S-111
Tower Space ....................................S-153
Trade Debt .....................................S-154
Trust Fund .....................................S-204
Trustee Fee ....................................S-237
Underwriter ....................................S-247
Underwriters ...................................S-250
underwriters ...................................S-250
Underwriting Agreement .........................S-250
Underwritten Replacement Reserves ..............S-110
United Way .....................................S-167
Unrestricted Servicer Reports ..................S-233
Updated Collection Report ......................S-233
US Customs Service .............................S-157
Vacate Date ....................................S-153
Villa Del Sol Apartments Loan ..................S-164
Voting Rights ..................................S-236
Wachovia ........................................S-93
Wachovia Mortgage Loans ........................S-181
Wachovia Securities ............................S-247
Weighted Average Net Mortgage Rate .............S-211
weighted averages ..............................S-110
Wells Fargo ....................................S-237
Workout Fee ....................................S-194
Year Built .....................................S-110
Yield Maintenance Charges ......................S-223
YM ( ) ........................................S-111
S-256
WACHOVIA BANK COMMERCIAL MORTGAGE TRUST SERIES 2004-C10
ANNEX A-1
MORTGAGE LOAN
LOAN GROUP
NUMBER NUMBER PROPERTY NAME ADDRESS
- ------------------------------------------------------------------------------------------------------------------------------------
1 1 11 Madison Avenue (1) 11 Madison Avenue
2 1 Phillips Point Office Building 777 South Flagler Drive
3 1 Starrett-Lehigh Building (1) 601 West 26th Street
4 1 IBM Center 4111 Northside Parkway
5 1 North Riverside Park Mall 7501 West Cermak Road
6 1 520 Eighth Avenue 520 Eighth Avenue
7 2 Villa Del Sol Apartments 811 South Fairview Street
8 1 Pine Trail Square SWQ of Okeechobee Boulevard and North Military Trail
9 1 Pacific Center 523 West 6th Street
10 1 Bal Harbour Square 1630-1860 North Federal Highway
11 1 Fairfax Corner-Bldg D 4100 Monument Drive
12 2 Indigo Creek Apartments 14221 North 51st Avenue
13 2 Sunrise Bay Apartments 102 South Thoreau Terrace
14 2 Caribbean Isle Apartments 3503 Bonaire Boulevard
15 1 Merritt Creek Farm Shopping Center Interstate 64 & Merritt Creek Road
16 1 Flemington Mall 325 Route 202
17 2 Summit San Raphael Apartments 14181 Noel Road
18 1 Festival Plaza 7915-7991 Vaughn Road
19 1 840 North Broadway 840 North Broadway
20 1 Villas of Juno Luxury Apartments 12801 U.S. Highway 1
21 2 Village Park Apartments 1055 North State Street
22 2 La Ventana Apartment Homes 2901 North Rainbow Boulevard
23 2 Forest Park Apartments 2829 South Oakland Forest Drive
24 1 Little Palm Island Resort 28500 Overseas Highway
25 2 Westwood Pines Apartments 4745 Pine Ridge Drive
26 2 Silver Shadow Apartments 8301 West Charleston Boulevard
27 1 Aliso Viejo Plaza 26852-27072 La Paz Road
28 1 Shops of San Marco 13800-13900 Jog Road
29 2 Cypress Point Apartments 5275 West Tropicana Ave
30 2 Cedarbrook Apartments 3627 Cedarbrook Drive
31 1 Studio Village Shopping Center 10900-11140 Jefferson Boulevard
32 1 The Meurice 145 West 58th Street
33 1 Cranbrook Plaza 528-598 Cranbrook Road & 10400 & 10402 Ridgland Road
34 1 Hampton Inn - Cocoa Beach, FL 3425 North Atlantic Avenue
35 2 Americana Mobile Home Park 16600 Downey Avenue
36 1 Sunrise Springs Apartment Homes 4455 East Twain Avenue
37 1 Lovejoy Station Shopping Center 11155 Tara Boulevard
38 1 Loch Raven Plaza 1206 Goucher Boulevard
39 1 A & P Plaza 3500 Route 9
40 1 Advocate Medical Office Building 18210 South LaGrange Road
41 1 Haywood Pointe Apartments 1175 Haywood Road
42 1 Wesmark Plaza 1121 Broad Street
43 1 Conyers Plaza II Shopping Center 1360 Dogwood Drive
44 1 Arrowhead Crossing 7759 West Bell Road
45 1 Village at Park Centre 1001-1005 West 120th Avenue
46 2 Gleneagle Apartments 1011 West Butler Road
47 1 Jefferson Plaza 300 Arthur Godfrey Road
48 1 INS Building - Boise, ID 1185 South Vinnell Way
49 1 Shoppes at Lake Dow 900-938 Highway 81 East
50 1 Carpenter's Office Building 1003 K Street NW
51 1 Lee Road Shopping Center 902-1028 Lee Road
52 1 Cordova Collections Shopping Center 4721-4761 Bayou Boulevard
53 1 Winn-Dixie/Movie Gallery Shopping Center 2625 Highway 14
54 2 Oak Pointe Apartments 469-497 Oakdale Road
55 2 Greyeagle Apartments 4551 Old Spartanburg Road
56 1 Northcrest I & II 7505-7577 & 7351-7379 Washington Avenue South
57 1 Airport Cinema 12 409 Aviation Boulevard
58 1 Alafaya Village Shopping Center 11762 E. Colonial Drive
59 1 Ventana Plaza 5415-5455 North Kolb Road
60 2 Cornerstone Apartments Phase II 1337 N. Fiddlesticks Place; 2421 Cornerstone Place;
1302,1303,1324, and 1343 England Links; and 2425,2474,
and 2483 Newport Drive
61 2 Carolina Crossing Apartments 702 Edwards Road
62 1 Borders Books & Music - McHenry, IL 2221 Richmond Road
63 1 Walgreens - St. Paul, MN SWC White Bear Avenue & Larpentuer Avenue
64 1 Osco Drug Store - Chicago, IL 2722 North Central Avenue
65 1 High Pointe Centre 800 Lake Murray Boulevard
66 1 Walgreens - Sherwood, OR 21065 SW Pacific Highway
67 1 Walgreens - Hampton, VA 235 East Mercury Boulevard
68 1 Panola Road Shopping Center 3020, 3040 and 3054 Panola Road
69 1 Bloomfield Plaza Shopping Center 796-824 Park Avenue
70 1 One Michigan Place 31260 Michigan Avenue
71 1 Walgreens - Hot Springs, AR 1400 Albert Pike Road
72 1 Walgreens - Seattle, WA 9400 16th Avenue S.W.
73 2 Manor IV Apartments 2600 Old Hapeville Road SW
74 1 Shops at Westwood 16255 West 64th Avenue
75 1 Office Max - Sacramento, CA 1707 J Street
76 1 Walgreens - Loveland, OH 10529 Loveland-Madeira Road
77 2 Carisbrooke Apartments Phase I 2401, 2403, 2405 Carisbrooke Drive & 23 Thatchem Drive
78 1 Beaulieu Oaks Townhomes 9804-9852 Whitfield Avenue
79 1 Meadowlark Apartments 4201 Meadowlark Lane SE
80 1 Creekwood Village at Skippack Mobile Home Park 4679 Perkiomen Creek Road
81 1 Campus Walk Shopping Center 2551 Drew Street
82 1 Walgreens - Jacksonville, FL 866 Dunn Avenue
83 1 Indian Trail Center 5151 and 5161 Brook Hollow Parkway
84 1 Walgreens - Saginaw, MI 3434 East Genesee Avenue
85 1 Walgreens - La Marque, TX 1801 FM 1765
86 2 Hickory Ridge Apartments 2413 Wade Hampton Boulevard
87 1 Eckerd - Mt. Pleasant, TX 601 South Jefferson Avenue
88 1 CVS - Hamilton, OH 1115 High Street
89 2 Windfield West II Apartments 25, 75 & 105 SE Windfield Parkway
90 1 GSA Building 8760 Mid South Drive
91 1 Office Depot - London, KY 1824 Highway 192 West
92 1 Eckerd - Kilgore,TX 1000 Stone Road
93 2 Waldorf Creek Apartments 4663 Waldrop Drive
94 1 CVS - Mechanicville, NY 12 South Central Avenue
95 1 Office Depot - Laurel, MS 1660 Highway 15 North
96 1 Walgreens - Tulsa, OK 6415 East Pine Street
97 1 Walgreens - Broken Arrow, OK 701 West Houston Street
98 1 Eckerd - San Antonio,TX 4805 Medical Drive
99 1 Payless Shoes Retail Building 4732 Devine Street
100 1 Checker Auto Parts - Rock Springs, WY 1265 Dewar Drive
101 1 Checker Auto Parts - Silver City, NM 2441 Highway 180
102 1 Checker Auto Parts - Lamar, CO 421 North Main Street
(1) Two Mortgage Loans, representing 18.9% of the Cut-Off Date Pool Balance
(23.4% of the Cut-Off Date Group 1 Balance), are part of a split loan structure
and the related pari passu companion loans are not included in the trust fund
with respect to these Mortgage Loans, unless otherwise specified, the
calculation of Balance per SF, LTV ratios and DSC ratios were based upon the
aggregate indebtedness of these Mortgage Loans and the related pari passu
companion loans.
(2) One Mortgage Loan (loan number 4) is structured with an initial
interest-only period of 24 months. In the 25th month, the loan begins amortizing
on a 336 month schedule through the 105th period at which time amortization
again ceases.
(3) For purposes of determining the DSC Ratios of 2 Mortgage Loans (loan numbers
20 and 59), representing 1.4% of the Cut-Off Date Pool Balance (1.7% of the
Cut-Off Date Group 1 Balance), the debt service payments were reduced by taking
into account amounts available under a letter of credit or cash reserves.
(4) For purposes of determining the LTV Ratios of 3 Mortgage Loans (loan numbers
18, 20 and 59), representing 2.5% of the Cut-Off Date Pool Balance (3.1% of the
Cut-Off Date Group 1 Balance), such ratios were reduced by taking into account
amounts available under a letter of credit or cash reserves.
(5) For purposes of determining the LTV Ratio at Maturity or Anticipated
Repayment Date of 1 Mortgage Loan (loan number 59), representing 0.3% of the
Cut-Off Date Pool Balance (0.4% of the Cut-Off Date Group 1 Balance), such ratio
was reduced by taking into account amounts available under a letter of credit or
cash reserves.
See "DESCRIPTION OF THE MORTGAGED POOL - Additional Mortgage Loan Information"
in the prospectus supplement.
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS AND MORTGAGED PROPERTIES
CROSS
COLLATERALIZED
MORTGAGE AND CROSS
LOAN ZIP DEFAULTED
NUMBER CITY STATE CODE LOAN FLAG
- ------------------------------------------------------------------------------------------------------------------------------------
1 New York NY 10010
2 West Palm Beach FL 33401
3 New York NY 10001
4 Atlanta GA 30327
5 North Riverside IL 60546
6 New York NY 10018
7 Santa Ana CA 92704
8 West Palm Beach FL 33409
9 Los Angeles CA 90017
10 Fort Lauderdale FL 33305
11 Fairfax VA 22033
12 Glendale AZ 85306
13 Galloway NJ 08205
14 Kissimmee FL 34741
15 Barboursville WV 25504
16 Raritan NJ 08822
17 Dallas TX 75240
18 Montgomery AL 36116
19 Everett WA 98201
20 Juno Beach FL 33408
21 Orem UT 84057
22 Las Vegas NV 89109
23 Oakland Park FL 33309
24 Little Torch Key FL 33042
25 Columbus IN 47201
26 Las Vegas NV 89117
27 Aliso Viejo CA 92656
28 Delray Beach FL 33444
29 Las Vegas NV 89103
30 Hoover AL 35216
31 Culver City CA 90230
32 New York NY 10019
33 Cockeysville MD 21030
34 Cocoa Beach FL 32931
35 Paramount CA 90723
36 Las Vegas NV 89121
37 Hampton GA 30228
38 Towson MD 21286
39 Old Bridge NJ 08857
40 Tinley Park IL 60477
41 Greenville SC 29615
42 Sumter SC 29150
43 Conyers GA 30013
44 Peoria AZ 85382
45 Westminster CO 80234
46 Greenville SC 29607
47 Miami Beach FL 33140
48 Boise ID 83709
49 McDonough GA 30252
50 Washington DC 20001
51 Orlando FL 32810
52 Pensacola FL 32503
53 Millbrook AL 36022
54 Atlanta GA 30307
55 Taylors SC 29687
56 Edina MN 55439
57 Santa Rosa CA 95403
58 Orlando FL 32817
59 Tucson AZ 85750
60 Fayetteville AR 72703
61 Greenville SC 29615
62 McHenry IL 60050
63 St. Paul MN 55106
64 Chicago IL 60639
65 Irmo SC 29063
66 Sherwood OR 97140
67 Hampton VA 23669
68 Lithonia GA 30038
69 Bloomfield CT 06002
70 Westland MI 48186
71 Hot Springs AR 71901
72 Seattle WA 98106 Cole Companies Portfolio
73 Atlanta GA 30315
74 Arvada CO 80007
75 Sacramento CA 95814
76 Loveland OH 45140
77 Champaign IL 61820
78 Savannah GA 31406
79 Rio Rancho NM 87124
80 Skippack Township PA 19473
81 Clearwater FL 33765
82 Jacksonville FL 32208 Cole Companies Portfolio
83 Norcross GA 30071
84 Saginaw MI 48601 Cole Companies Portfolio
85 La Marque TX 77568 Cole Companies Portfolio
86 Greenville SC 29615
87 Mt. Pleasant TX 75455 Eckerd Portfolio
88 Hamilton OH 45011 Cole Companies Portfolio
89 Waukee IA 50263
90 Olive Branch MS 38654
91 London KY 40741 Cole Companies Portfolio
92 Kilgore TX 75662 Eckerd Portfolio
93 Forest Park GA 30297
94 Mechanicville NY 12118 Cole Companies Portfolio
95 Laurel MS 39440 Cole Companies Portfolio
96 Tulsa OK 74115 Cole Companies Portfolio
97 Broken Arrow OK 74012 Cole Companies Portfolio
98 San Antonio TX 78229 Eckerd Portfolio
99 Columbia SC 29209 Cole Companies Portfolio
100 Rock Springs WY 82901
101 Silver City NM 88061
102 Lamar CO 81052
MORTGAGE GENERAL SPECIFIC ORIGINAL
LOAN LOAN PROPERTY PROPERTY LOAN
NUMBER ORIGINATOR TYPE TYPE BALANCE ($)
- ---------------------------------------------------------------------------------------------------------------------------------
1 Wachovia Office CBD 143,333,333.00
2 Wachovia Office CBD 105,000,000.00
3 Wachovia Office CBD 100,000,000.00
4 Wachovia Office Suburban 80,000,000.00
5 Wachovia Retail Anchored 80,000,000.00
6 Wachovia Office CBD 49,000,000.00
7 Wachovia Multifamily Conventional 45,000,000.00
8 Wachovia Retail Anchored 30,350,000.00
9 Wachovia Office CBD 27,500,000.00
10 Wachovia Retail Anchored 27,500,000.00
11 CGM Office Suburban 23,600,000.00
12 AMCC Multifamily Conventional 23,500,000.00
13 Wachovia Multifamily Conventional 21,500,000.00
14 Wachovia Multifamily Conventional 19,500,000.00
15 Wachovia Retail Anchored 18,400,000.00
16 Wachovia Retail Anchored 16,500,000.00
17 Wachovia Multifamily Conventional 15,000,000.00
18 CGM Retail Anchored 14,890,000.00
19 AMCC Office Suburban 13,825,000.00
20 CGM Multifamily Conventional 13,425,000.00
21 Wachovia Multifamily Conventional 13,100,000.00
22 Wachovia Multifamily Conventional 12,960,000.00
23 Wachovia Multifamily Conventional 12,600,000.00
24 Wachovia Hospitality Full Service 12,000,000.00
25 Wachovia Multifamily Conventional 11,840,000.00
26 Wachovia Multifamily Conventional 11,760,000.00
27 Wachovia Retail Shadow Anchored 11,500,000.00
28 Wachovia Retail Anchored 11,000,000.00
29 Wachovia Multifamily Conventional 10,600,000.00
30 Wachovia Multifamily Conventional 10,150,000.00
31 Wachovia Retail Anchored 10,000,000.00
32 Wachovia Multifamily Conventional 10,000,000.00
33 CGM Retail Unanchored 9,750,000.00
34 Wachovia Hospitality Limited Service 9,520,000.00
35 Wachovia Mobile Home Park Mobile Home Park 9,250,000.00
36 Wachovia Multifamily Conventional 8,630,000.00
37 Wachovia Retail Anchored 8,600,000.00
38 CGM Retail Anchored 8,600,000.00
39 CGM Retail Anchored 8,000,000.00
40 Wachovia Office Medical 7,800,000.00
41 Wachovia Multifamily Conventional 7,500,000.00
42 AMCC Retail Anchored 7,500,000.00
43 Wachovia Retail Shadow Anchored 7,400,000.00
44 CGM Retail Shadow Anchored 7,280,000.00
45 AMCC Mixed Use Retail/Office 6,750,000.00
46 Wachovia Multifamily Conventional 6,650,000.00
47 Wachovia Mixed Use Office/Retail 6,600,000.00
48 AMCC Office Suburban 6,225,000.00
49 Wachovia Retail Anchored 6,100,000.00
50 CGM Office CBD 5,592,000.00
51 AMCC Retail Anchored 4,995,000.00
52 Wachovia Retail Anchored 5,000,000.00
53 Wachovia Retail Anchored 4,960,000.00
54 AMCC Multifamily Conventional 4,800,000.00
55 Wachovia Multifamily Conventional 4,750,000.00
56 Wachovia Industrial Warehouse 4,750,000.00
57 CGM Special Purpose Cinema 4,600,000.00
58 AMCC Retail Shadow Anchored 4,250,000.00
59 AMCC Mixed Use Retail/Office 4,200,000.00
60 AMCC Multifamily Conventional 4,075,000.00
61 Wachovia Multifamily Conventional 4,050,000.00
62 Wachovia Retail Anchored 4,000,000.00
63 Wachovia Retail Anchored 3,900,000.00
64 AMCC Retail Anchored 3,800,000.00
65 AMCC Retail Anchored 3,760,000.00
66 AMCC Retail Anchored 3,700,000.00
67 Wachovia Retail Anchored 3,632,000.00
68 AMCC Retail Unanchored 3,500,000.00
69 Wachovia Retail Anchored 3,450,000.00
70 Wachovia Retail Shadow Anchored 3,450,000.00
71 Wachovia Retail Anchored 3,374,000.00
72 Wachovia Retail Anchored 3,349,500.00
73 AMCC Multifamily Conventional 3,160,000.00
74 AMCC Retail Unanchored 3,050,000.00
75 AMCC Retail Unanchored 3,100,000.00
76 AMCC Retail Anchored 3,000,000.00
77 Wachovia Multifamily Conventional 3,000,000.00
78 AMCC Multifamily Conventional 2,828,000.00
79 Wachovia Multifamily Conventional 2,560,000.00
80 Wachovia Mobile Home Park Mobile Home Park 2,560,000.00
81 AMCC Retail Unanchored 2,550,000.00
82 Wachovia Retail Anchored 2,510,750.00
83 AMCC Office Suburban 2,350,000.00
84 Wachovia Retail Anchored 2,282,500.00
85 Wachovia Retail Anchored 2,277,000.00
86 Wachovia Multifamily Conventional 2,150,000.00
87 CGM Retail Anchored 2,150,000.00
88 Wachovia Retail Anchored 1,787,500.00
89 AMCC Multifamily Low Income Housing 1,750,000.00
90 AMCC Office Suburban 1,700,000.00
91 Wachovia Retail Anchored 1,680,000.00
92 CGM Retail Anchored 1,700,000.00
93 AMCC Multifamily Low Income Housing 1,300,000.00
94 Wachovia Retail Anchored 1,290,000.00
95 Wachovia Retail Anchored 1,270,000.00
96 Wachovia Retail Anchored 1,215,500.00
97 Wachovia Retail Anchored 1,127,500.00
98 CGM Retail Anchored 1,020,000.00
99 Wachovia Retail Unanchored 860,000.00
100 AMCC Retail Unanchored 537,000.00
101 AMCC Retail Shadow Anchored 526,400.00
102 AMCC Retail Unanchored 350,000.00
% OF
MORTGAGE CUT-OFF AGGREGATE % OF LOAN % OF LOAN ORIGINATION
LOAN DATE LOAN CUT-OFF GROUP 1 GROUP 2 DATE
NUMBER BALANCE ($) DATE BALANCE BALANCE BALANCE
- ------------------------------------------------------------------------------------------------------------------
1 143,333,333.00 11.11% 13.81% 23-Dec-2003
2 105,000,000.00 8.14% 10.12% 8-Dec-2003
3 100,000,000.00 7.75% 9.64% 2-Jan-2004
4 80,000,000.00 6.20% 7.71% 4-Dec-2003
5 80,000,000.00 6.20% 7.71% 16-Jan-2004
6 49,000,000.00 3.80% 4.72% 30-Jan-2004
7 45,000,000.00 3.49% 17.83% 10-Dec-2003
8 30,350,000.00 2.35% 2.92% 21-Jan-2004
9 27,500,000.00 2.13% 2.65% 4-Dec-2003
10 27,475,431.54 2.13% 2.65% 12-Dec-2003
11 23,558,899.05 1.83% 2.27% 12-Nov-2003
12 23,500,000.00 1.82% 9.31% 24-Nov-2003
13 21,500,000.00 1.67% 8.52% 2-Feb-2004
14 19,500,000.00 1.51% 7.73% 15-Jan-2004
15 18,384,628.67 1.43% 1.77% 16-Dec-2003
16 16,500,000.00 1.28% 1.59% 27-Jan-2004
17 15,000,000.00 1.16% 5.94% 30-Dec-2003
18 14,877,865.60 1.15% 1.43% 23-Dec-2003
19 13,770,919.14 1.07% 1.33% 12-Sep-2003
20 13,318,520.95 1.03% 1.28% 22-May-2003
21 13,075,815.02 1.01% 5.18% 28-Nov-2003
22 12,947,489.61 1.00% 5.13% 15-Dec-2003
23 12,600,000.00 0.98% 4.99% 11-Dec-2003
24 11,988,566.81 0.93% 1.16% 30-Dec-2003
25 11,840,000.00 0.92% 4.69% 21-Jan-2004
26 11,748,647.98 0.91% 4.66% 15-Dec-2003
27 11,500,000.00 0.89% 1.11% 20-Jan-2004
28 11,000,000.00 0.85% 1.06% 23-Dec-2003
29 10,589,817.89 0.82% 4.20% 22-Dec-2003
30 10,140,250.15 0.79% 4.02% 16-Dec-2003
31 10,000,000.00 0.78% 0.96% 12-Jan-2004
32 10,000,000.00 0.78% 0.96% 29-Jan-2004
33 9,734,635.97 0.75% 0.94% 10-Nov-2003
34 9,503,946.06 0.74% 0.92% 18-Dec-2003
35 9,250,000.00 0.72% 3.67% 4-Feb-2004
36 8,621,669.39 0.67% 0.83% 15-Dec-2003
37 8,592,414.09 0.67% 0.83% 31-Dec-2003
38 8,591,900.71 0.67% 0.83% 11-Dec-2003
39 7,969,565.36 0.62% 0.77% 19-Sep-2003
40 7,800,000.00 0.60% 0.75% 3-Feb-2004
41 7,500,000.00 0.58% 0.72% 4-Dec-2003
42 7,500,000.00 0.58% 0.72% 15-Jan-2004
43 7,393,030.83 0.57% 0.71% 24-Dec-2003
44 7,274,045.20 0.56% 0.70% 18-Dec-2003
45 6,750,000.00 0.52% 0.65% 12-Jan-2004
46 6,650,000.00 0.52% 2.64% 4-Dec-2003
47 6,594,615.71 0.51% 0.64% 18-Dec-2003
48 6,225,000.00 0.48% 0.60% 20-Oct-2003
49 6,100,000.00 0.47% 0.59% 14-Nov-2003
50 5,592,000.00 0.43% 0.54% 31-Oct-2003
51 4,990,423.26 0.39% 0.48% 29-Dec-2003
52 4,988,953.96 0.39% 0.48% 11-Dec-2003
53 4,960,000.00 0.38% 0.48% 5-Feb-2004
54 4,800,000.00 0.37% 1.90% 1-Dec-2003
55 4,750,000.00 0.37% 1.88% 4-Dec-2003
56 4,738,589.87 0.37% 0.46% 5-Dec-2003
57 4,584,247.73 0.36% 0.44% 5-Nov-2003
58 4,238,635.25 0.33% 0.41% 23-Oct-2003
59 4,193,183.85 0.33% 0.40% 11-Nov-2003
60 4,066,963.51 0.32% 1.61% 11-Dec-2003
61 4,050,000.00 0.31% 1.60% 4-Dec-2003
62 3,996,344.15 0.31% 0.39% 22-Dec-2003
63 3,897,082.49 0.30% 0.38% 18-Dec-2003
64 3,795,197.21 0.29% 0.37% 18-Dec-2003
65 3,748,344.95 0.29% 0.36% 15-Dec-2003
66 3,700,000.00 0.29% 0.36% 28-Jan-2004
67 3,629,130.53 0.28% 0.35% 8-Jan-2004
68 3,492,552.08 0.27% 0.34% 19-Dec-2003
69 3,447,072.34 0.27% 0.33% 8-Jan-2004
70 3,445,622.42 0.27% 0.33% 16-Dec-2003
71 3,374,000.00 0.26% 0.33% 30-Jan-2004
72 3,349,500.00 0.26% 0.32% 26-Nov-2003
73 3,156,964.58 0.24% 1.25% 9-Dec-2003
74 3,035,358.88 0.24% 0.29% 12-Aug-2003
75 3,021,773.68 0.23% 0.29% 16-Jun-2000
76 2,996,871.69 0.23% 0.29% 2-Jan-2004
77 2,994,489.14 0.23% 1.19% 17-Nov-2003
78 2,828,000.00 0.22% 0.27% 30-Dec-2003
79 2,557,878.18 0.20% 0.25% 5-Jan-2004
80 2,557,666.13 0.20% 0.25% 31-Dec-2003
81 2,543,068.42 0.20% 0.25% 3-Nov-2003
82 2,510,750.00 0.19% 0.24% 25-Nov-2003
83 2,350,000.00 0.18% 0.23% 12-Nov-2003
84 2,282,500.00 0.18% 0.22% 26-Nov-2003
85 2,277,000.00 0.18% 0.22% 26-Nov-2003
86 2,150,000.00 0.17% 0.85% 4-Dec-2003
87 2,118,008.72 0.16% 0.20% 10-Feb-2003
88 1,787,500.00 0.14% 0.17% 25-Nov-2003
89 1,747,489.25 0.14% 0.69% 21-Nov-2003
90 1,692,093.16 0.13% 0.16% 13-Aug-2003
91 1,680,000.00 0.13% 0.16% 25-Nov-2003
92 1,674,704.55 0.13% 0.16% 10-Feb-2003
93 1,300,000.00 0.10% 0.52% 20-Jan-2004
94 1,290,000.00 0.10% 0.12% 25-Nov-2003
95 1,270,000.00 0.10% 0.12% 25-Nov-2003
96 1,215,500.00 0.09% 0.12% 24-Nov-2003
97 1,127,500.00 0.09% 0.11% 24-Nov-2003
98 1,004,822.80 0.08% 0.10% 10-Feb-2003
99 860,000.00 0.07% 0.08% 25-Nov-2003
100 459,630.81 0.04% 0.04% 28-Jul-1999
101 450,558.11 0.03% 0.04% 28-Jul-1999
102 280,588.68 0.02% 0.03% 30-Apr-1999
LOAN INTEREST
MORTGAGE ADMINISTRATIVE INTEREST ACCRUAL
LOAN FIRST PAY MATURITY DATE MORTGAGE COST RATE ACCRUAL METHOD
NUMBER DATE OR ARD RATE (%) (%) METHOD DURING IO
- ----------------------------------------------------------------------------------------------------------------------------
1 11-Feb-2004 11-Jan-2014 5.3043% 0.04190% Actual/360 Actual/360
2 11-Jan-2004 11-Dec-2013 6.2500% 0.04190% Actual/360 Actual/360
3 11-Feb-2004 11-Feb-2014 5.7600% 0.04190% Actual/360 Actual/360
4 11-Jan-2004 11-Sep-2014 5.3600% 0.04190% Actual/360 Actual/360
5 11-Mar-2004 11-Feb-2014 5.3200% 0.04190% Actual/360 Actual/360
6 11-Mar-2004 11-Feb-2014 4.8000% 0.04190% Actual/360 Actual/360
7 11-Jan-2004 11-Dec-2013 5.7300% 0.04190% Actual/360 Actual/360
8 11-Mar-2004 11-Feb-2014 5.7600% 0.04190% Actual/360
9 11-Jan-2004 11-Dec-2008 5.5400% 0.04190% Actual/360 Actual/360
10 11-Feb-2004 11-Jan-2014 5.7100% 0.04190% Actual/360
11 1-Jan-2004 1-Dec-2013 5.8200% 0.04190% Actual/360
12 11-Jan-2004 11-Dec-2010 5.2500% 0.04190% Actual/360 Actual/360
13 11-Mar-2004 11-Feb-2014 5.2900% 0.04190% Actual/360
14 11-Mar-2004 11-Feb-2011 5.6000% 0.04190% Actual/360 Actual/360
15 11-Feb-2004 11-Jan-2014 5.9700% 0.04190% Actual/360
16 11-Mar-2004 11-Feb-2014 5.7500% 0.04190% Actual/360
17 11-Feb-2004 11-Jan-2011 5.3900% 0.04190% Actual/360 Actual/360
18 1-Feb-2004 1-Jan-2014 6.0640% 0.10190% Actual/360
19 11-Nov-2003 11-Oct-2008 5.5400% 0.04190% Actual/360
20 1-Jul-2003 1-Jun-2013 5.6100% 0.04190% Actual/360
21 11-Jan-2004 11-Dec-2013 5.5900% 0.04190% Actual/360
22 11-Feb-2004 11-Jan-2009 5.4000% 0.04190% Actual/360
23 11-Jan-2004 11-Dec-2008 5.5000% 0.04190% Actual/360 Actual/360
24 11-Feb-2004 11-Jan-2012 7.4000% 0.04190% Actual/360
25 11-Mar-2004 11-Feb-2011 5.4100% 0.04190% Actual/360
26 11-Feb-2004 11-Jan-2009 5.4000% 0.04190% Actual/360
27 11-Mar-2004 11-Feb-2014 5.6700% 0.04190% Actual/360
28 11-Feb-2004 11-Jan-2014 5.4500% 0.04190% 30/360 30/360
29 11-Feb-2004 11-Jan-2014 5.4200% 0.04190% Actual/360
30 11-Feb-2004 11-Jan-2011 5.4200% 0.04190% Actual/360
31 11-Mar-2004 11-Feb-2011 5.6200% 0.04190% Actual/360
32 11-Mar-2004 11-Feb-2014 5.4500% 0.04190% Actual/360 Actual/360
33 1-Jan-2004 1-Dec-2013 6.2000% 0.04190% Actual/360
34 11-Feb-2004 11-Jan-2014 7.1500% 0.04190% Actual/360
35 11-Mar-2004 11-Feb-2014 5.6600% 0.04190% Actual/360 Actual/360
36 11-Feb-2004 11-Jan-2009 5.4000% 0.04190% Actual/360
37 11-Feb-2004 11-Jan-2014 5.7600% 0.04190% Actual/360
38 1-Feb-2004 1-Jan-2014 5.5000% 0.04190% Actual/360
39 1-Nov-2003 1-Oct-2013 5.6600% 0.04190% Actual/360
40 11-Mar-2004 11-Feb-2014 5.8800% 0.04190% Actual/360
41 11-Jan-2004 11-Dec-2010 5.2400% 0.04190% Actual/360 Actual/360
42 11-Mar-2004 11-Feb-2014 5.7000% 0.04190% Actual/360
43 11-Feb-2004 11-May-2009 5.5000% 0.04190% Actual/360
44 1-Feb-2004 1-Jan-2014 6.0500% 0.10190% Actual/360
45 11-Mar-2004 11-Feb-2012 5.4800% 0.04190% Actual/360
46 11-Jan-2004 11-Dec-2010 5.2400% 0.04190% Actual/360 Actual/360
47 11-Feb-2004 11-Jan-2014 6.0600% 0.04190% Actual/360
48 11-Dec-2003 11-Nov-2009 5.3200% 0.04190% Actual/360 Actual/360
49 11-Jan-2004 11-Dec-2010 4.9700% 0.04190% 30/360 30/360
50 1-Dec-2003 1-Nov-2010 5.1000% 0.10190% Actual/360 Actual/360
51 11-Feb-2004 11-Jan-2010 5.6100% 0.04190% Actual/360
52 11-Jan-2004 11-Dec-2013 5.8800% 0.04190% Actual/360
53 11-Mar-2004 11-Feb-2014 5.7800% 0.04190% Actual/360
54 11-Jan-2004 11-Dec-2013 5.8100% 0.04190% Actual/360 Actual/360
55 11-Jan-2004 11-Dec-2010 5.2400% 0.04190% Actual/360 Actual/360
56 11-Jan-2004 11-Dec-2013 6.3200% 0.04190% Actual/360
57 1-Jan-2004 1-Dec-2013 7.0700% 0.10190% Actual/360
58 11-Dec-2003 11-Nov-2013 5.9900% 0.04190% Actual/360
59 11-Jan-2004 11-Dec-2013 6.0900% 0.04190% Actual/360
60 11-Feb-2004 11-Jan-2024 6.2800% 0.09190% Actual/360
61 11-Jan-2004 11-Dec-2010 5.2400% 0.04190% Actual/360 Actual/360
62 11-Feb-2004 11-Jan-2014 5.6200% 0.04190% Actual/360
63 11-Feb-2004 11-Jan-2014 6.3800% 0.04190% Actual/360
64 11-Feb-2004 11-Jan-2014 6.0500% 0.04190% Actual/360
65 11-Feb-2004 11-Jan-2020 5.6600% 0.10190% Actual/360
66 11-Mar-2004 11-Feb-2014 5.6200% 0.04190% Actual/360
67 11-Feb-2004 11-Jan-2014 6.1800% 0.04190% Actual/360
68 11-Feb-2004 11-Jan-2014 5.5500% 0.04190% Actual/360
69 11-Feb-2004 11-Jan-2014 5.9100% 0.04190% Actual/360
70 11-Feb-2004 11-Jan-2014 6.0300% 0.04190% Actual/360
71 11-Mar-2004 11-Feb-2014 6.0300% 0.04190% Actual/360
72 11-Jan-2004 11-Dec-2008 4.2900% 0.04190% Actual/360 Actual/360
73 11-Feb-2004 11-Jan-2009 5.4200% 0.04190% Actual/360
74 11-Oct-2003 11-Sep-2010 5.7400% 0.04190% Actual/360
75 1-Aug-2000 1-Jul-2010 8.4500% 0.04190% Actual/360
76 11-Feb-2004 11-Jan-2011 5.0800% 0.04190% Actual/360
77 11-Jan-2004 11-Dec-2013 5.6100% 0.04190% Actual/360
78 11-Feb-2004 11-Jan-2014 5.9600% 0.04190% Actual/360 Actual/360
79 11-Feb-2004 11-Jan-2014 6.0000% 0.04190% Actual/360
80 11-Feb-2004 11-Jan-2014 5.6300% 0.04190% Actual/360
81 11-Dec-2003 11-Nov-2013 5.9200% 0.04190% Actual/360
82 11-Jan-2004 11-Dec-2008 4.2900% 0.04190% Actual/360 Actual/360
83 11-Jan-2004 11-Dec-2013 6.1400% 0.04190% Actual/360 Actual/360
84 11-Jan-2004 11-Dec-2008 4.2900% 0.04190% Actual/360 Actual/360
85 11-Jan-2004 11-Dec-2008 4.2900% 0.04190% Actual/360 Actual/360
86 11-Jan-2004 11-Dec-2010 5.2400% 0.04190% Actual/360 Actual/360
87 1-Apr-2003 1-Mar-2012 6.0800% 0.07190% Actual/360
88 11-Jan-2004 11-Dec-2008 4.2900% 0.04190% Actual/360 Actual/360
89 11-Jan-2004 11-Dec-2018 6.5400% 0.04190% Actual/360
90 11-Oct-2003 11-Sep-2010 5.8800% 0.04190% Actual/360
91 11-Jan-2004 11-Dec-2008 4.2900% 0.04190% Actual/360 Actual/360
92 1-Apr-2003 1-Mar-2012 6.0800% 0.07190% Actual/360
93 11-Mar-2004 11-Feb-2009 4.9600% 0.04190% Actual/360
94 11-Jan-2004 11-Dec-2008 4.2900% 0.04190% Actual/360 Actual/360
95 11-Jan-2004 11-Dec-2008 4.2900% 0.04190% Actual/360 Actual/360
96 11-Jan-2004 11-Dec-2008 4.2900% 0.04190% Actual/360 Actual/360
97 11-Jan-2004 11-Dec-2008 4.2900% 0.04190% Actual/360 Actual/360
98 1-Apr-2003 1-Mar-2012 6.0800% 0.07190% Actual/360
99 11-Jan-2004 11-Dec-2008 4.2900% 0.04190% Actual/360 Actual/360
100 1-Sep-1999 1-Aug-2016 8.5000% 0.04190% 30/360
101 1-Sep-1999 1-Aug-2016 8.5000% 0.04190% 30/360
102 1-Jun-1999 1-May-2014 8.1000% 0.04190% 30/360
ORIGINAL REMAINING
MORTGAGE TERM TO TERM TO REMAINING ORIGINAL REMAINING
LOAN MATURITY OR MATURITY OR IO PERIOD AMORT AMORT MONTHLY P&I
NUMBER ARD (MOS.) ARD (MOS.) (MOS.) (2) TERM (MOS.) TERM (MOS.) PAYMENTS ($)
- ------------------------------------------------------------------------------------------------------------------------------------
1 120 119 59 360 360 796,319.45
2 120 118 22 360 360 646,503.06
3 121 120 23 312 312 618,930.85
4 129 127 46 336 336 460,301.99
5 120 120 120 IO IO IO
6 120 120 120 IO IO IO
7 120 118 22 360 360 262,036.33
8 120 120 360 360 177,307.21
9 60 58 22 360 360 156,832.83
10 120 119 360 359 159,784.43
11 120 118 360 358 138,774.44
12 84 82 22 360 360 129,767.87
13 120 120 360 360 119,257.02
14 84 84 12 360 360 111,945.40
15 120 119 360 359 109,962.66
16 120 120 360 360 96,289.52
17 84 83 23 360 360 84,136.01
18 120 119 360 359 89,886.67
19 60 56 360 356 78,844.14
20 120 112 360 352 77,154.78
21 120 118 360 358 75,121.76
22 60 59 360 359 72,774.39
23 60 58 22 360 360 71,541.41
24 96 95 300 299 87,899.86
25 84 84 360 360 66,559.17
26 60 59 360 359 66,036.02
27 120 120 360 360 66,527.58
28 120 119 11 360 360 62,112.15
29 120 119 360 359 59,654.67
30 84 83 360 359 57,122.16
31 84 84 360 360 57,534.08
32 120 120 120 IO IO IO
33 120 118 360 358 59,715.73
34 120 119 240 239 74,668.05
35 120 120 36 360 360 53,452.80
36 60 59 360 359 48,460.11
37 120 119 360 359 50,241.91
38 120 119 360 359 48,829.85
39 120 116 360 356 46,229.45
40 120 120 360 360 46,164.87
41 84 82 46 360 360 41,368.84
42 120 120 240 240 52,442.41
43 64 63 360 359 42,016.39
44 120 119 360 359 43,881.58
45 96 96 360 360 38,241.10
46 84 82 46 360 360 36,680.37
47 120 119 360 359 39,825.29
48 72 69 21 360 360 34,645.07
49 84 82 82 IO IO 25,264.17
50 84 81 21 360 360 30,361.75
51 72 71 360 359 28,706.75
52 120 118 324 322 30,825.74
53 120 120 360 360 29,039.81
54 120 118 19 300 300 30,371.39
55 84 82 46 360 360 26,200.26
56 120 118 300 298 31,540.14
57 120 118 240 238 35,857.29
58 120 117 360 357 25,453.58
59 120 118 360 358 25,424.66
60 240 239 240 239 30,073.18
61 84 82 34 360 360 22,339.17
62 120 119 360 359 23,013.63
63 120 119 360 359 24,343.68
64 120 119 300 299 24,599.73
65 192 191 192 191 29,980.87
66 120 120 360 360 21,287.61
67 120 119 360 359 22,197.76
68 120 119 240 239 24,175.00
69 120 119 360 359 20,485.29
70 120 119 300 299 22,291.71
71 120 120 360 360 20,293.96
72 60 58 58 IO IO IO
73 60 59 360 359 17,783.84
74 84 79 360 355 17,779.60
75 120 77 360 317 23,726.56
76 84 83 360 359 16,251.64
77 120 118 360 358 17,241.29
78 120 119 11 360 360 16,882.63
79 120 119 360 359 15,348.49
80 120 119 360 359 14,744.89
81 120 117 360 357 15,157.63
82 60 58 58 IO IO IO
83 120 118 16 300 300 15,342.83
84 60 58 58 IO IO IO
85 60 58 58 IO IO IO
86 84 82 34 360 360 11,859.07
87 108 97 300 289 13,957.81
88 60 58 58 IO IO IO
89 180 178 360 358 11,107.27
90 84 79 360 355 10,061.58
91 60 58 58 IO IO IO
92 108 97 300 289 11,036.41
93 60 60 360 360 6,946.94
94 60 58 58 IO IO IO
95 60 58 58 IO IO IO
96 60 58 58 IO IO IO
97 60 58 58 IO IO IO
98 108 97 300 289 6,621.84
99 60 58 58 IO IO IO
100 204 150 204 150 4,984.93
101 204 150 204 150 4,886.53
102 180 123 180 123 3,365.02
MORTGAGE MATURITY DATE OR
LOAN ARD BALLOON ARD APPRAISED
NUMBER BALANCE ($) LOAN PREPAYMENT PROVISIONS VALUE ($)
- -----------------------------------------------------------------------------------------------------------------------------------
1 132,777,998.96 Y L(25),D(92),O(3) 675,000,000
2 93,573,597.99 N L(26),D(91),O(3) 138,900,000
3 83,689,255.42 Y L(25),D(93),O(3) 350,000,000
4 70,462,468.32 N L(26),D(96),O(7) 131,000,000
5 80,000,000.00 N L(24),D(93),O(3) 109,000,000
6 49,000,000.00 N L(24),D(93),O(3) 102,000,000
7 39,633,412.84 Y L(48),D(69),O(3) 60,000,000
8 25,553,972.34 Y L(48),D(67),O(5) 38,832,000
9 26,404,613.18 Y L(26),D(28),O(6) 36,000,000
10 23,121,650.18 Y L(48),D(67),O(5) 34,450,000
11 19,910,616.24 N L(26),D(91),O(3) 29,800,000
12 21,753,167.93 N L(36),D(45),O(3) 33,200,000
13 17,841,284.35 Y L(48),D(69),O(3) 27,200,000
14 17,817,710.31 Y L(36),D(44),O(4) 25,200,000
15 15,591,426.28 Y L(48),D(69),O(3) 23,000,000
16 13,888,411.51 N L(48),D(69),O(3) 20,700,000
17 13,912,778.26 Y L(36),D(44),O(4) 19,100,000
18 12,652,108.85 N L(25),D(93),O(2) 18,100,000
19 12,853,405.54 Y L(36),D(21),O(3) 19,750,000
20 11,254,923.89 N L(32),D(86),O(2) 17,900,000
21 10,975,056.50 Y L(48),D(69),O(3) 16,750,000
22 12,024,610.14 Y L(25),D(32),O(3) 16,200,000
23 12,094,132.56 Y L(36),D(20),O(4) 17,500,000
24 10,319,234.31 Y L(48),D(45),O(3) 22,000,000
25 10,572,820.37 Y L(48),D(33),O(3) 14,800,000
26 10,911,220.35 Y L(25),D(32),O(3) 14,700,000
27 9,656,344.31 Y L(48),D(69),O(3) 15,900,000
28 9,310,543.60 N L(25),YM1%(92),O(3); allows 17,600,000
partial prepayment of $1.7
million on 6 payment dates
following first 18 payments
29 8,833,034.76 Y L(25),D(92),O(3) 13,870,000
30 9,066,070.07 N L(48),D(33),O(3) 13,000,000
31 8,968,353.21 Y L(48),D(32),O(4) 33,600,000
32 10,000,000.00 N L(24),D(92),O(4) 27,000,000
33 8,318,370.81 N L(26),D(92),O(2) 13,900,000
34 6,515,307.82 Y L(48),D(69),O(3) 13,600,000
35 8,302,185.75 Y L(48),D(69),O(3) 12,700,000
36 8,007,128.30 Y L(25),D(32),O(3) 10,800,000
37 7,241,726.70 Y L(48),D(69),O(3) 10,750,000
38 7,184,312.66 N L(25),D(91),O(4) 10,820,000
39 6,716,862.40 N L(28),D(89),O(3) 10,000,000
40 6,591,083.97 N L(48),D(69),O(3) 10,600,000
41 7,183,349.96 Y L(48),D(33),O(3) 9,600,000
42 4,859,568.19 N L(36),D(81),O(3) 11,400,000
43 6,833,443.15 Y L(48),D(13),O(3) 9,800,000
44 6,183,317.55 N L(25),D(93),O(2) 9,100,000
45 5,909,522.49 N L(36),D(57),O(3) 9,500,000
46 6,369,237.02 Y L(48),D(33),O(3) 8,350,000
47 5,607,397.17 Y L(48),D(68),O(4) 9,200,000
48 5,869,677.05 Y L(36),D(33),O(3) 8,300,000
49 6,100,000.00 N L(26),YM1%(54),O(4) 11,350,000
50 5,164,728.90 N L(27),D(54),O(3) 7,900,000
51 4,566,096.16 Y L(35),D(34),O(3) 7,100,000
52 4,024,264.08 N L(26),D(87),O(7) 7,800,000
53 4,178,719.09 Y L(24),D(89),O(7) 6,200,000
54 3,936,084.11 N L(36),D(81),O(3) 6,000,000
55 4,549,455.18 Y L(48),D(33),O(3) 6,000,000
56 3,718,408.16 Y L(48),D(69),O(3) 6,450,000
57 3,139,722.62 N L(26),YM(91),O(3) 8,100,000
58 3,603,489.48 N L(36),D(81),O(3) 5,700,000
59 3,571,870.03 N L(36),D(81),O(3) 5,400,000
60 0.00 N L(36),D(201),O(3) 5,600,000
61 3,815,435.37 Y L(48),D(33),O(3) 5,200,000
62 3,353,929.20 Y L(25),D(91),O(4) 5,725,000
63 3,344,118.22 Y L(48),D(69),O(3) 5,000,000
64 2,947,731.63 N L(36),D(81),O(3) 5,100,000
65 0.00 N L(36),D(153),O(3) 5,300,000
66 3,102,083.55 N L(36),D(81),O(3) 5,660,000
67 3,096,555.39 Y L(48),D(69),O(3) 4,600,000
68 2,254,829.46 N L(36),D(81),O(3) 5,450,000
69 2,918,198.72 Y L(48),D(69),O(3) 4,900,000
70 2,674,430.73 N L(36),D(81),O(3) 4,600,000
71 2,863,734.72 Y L(48),D(69),O(3) 4,350,000
72 3,349,500.00 Y L(48),D(8),O(4) 6,090,000
73 2,932,770.92 N L(36),D(21),O(3) 3,950,000
74 2,742,203.57 N L(36),D(45),O(3) 4,000,000
75 2,801,715.95 N L(67),D(49),O(4) 4,850,000
76 2,660,375.49 Y L(36),D(45),O(3) 5,250,000
77 2,514,917.58 Y L(48),D(69),O(3) 3,750,000
78 2,450,917.61 N L(36),D(81),O(3) 3,535,000
79 2,171,163.08 Y L(48),D(69),O(3) 3,200,000
80 2,147,171.63 Y L(48),D(69),O(3) 3,200,000
81 2,157,618.85 N L(36),D(81),O(3) 3,400,000
82 2,510,750.00 Y L(48),D(8),O(4) 4,715,000
83 1,928,869.85 N L(36),D(81),O(3) 3,400,000
84 2,282,500.00 Y L(48),D(8),O(4) 4,150,000
85 2,277,000.00 Y L(48),D(8),O(4) 4,140,000
86 2,025,477.80 Y L(48),D(33),O(3) 2,700,000
87 1,732,495.70 N L(35),D(70),O(3) 2,720,000
88 1,787,500.00 Y L(48),D(8),O(4) 3,250,000
89 1,310,846.54 N L(36),D(141),O(3) 4,090,000
90 1,532,697.58 Y L(36),D(45),O(3) 2,270,000
91 1,680,000.00 Y L(48),D(8),O(4) 3,100,000
92 1,369,880.02 N L(35),D(70),O(3) 2,180,000
93 1,198,300.30 N L(36),D(21),O(3) 3,750,000
94 1,290,000.00 Y L(48),D(8),O(4) 2,280,000
95 1,270,000.00 Y L(48),D(8),O(4) 2,310,000
96 1,215,500.00 Y L(48),D(8),O(4) 2,210,000
97 1,127,500.00 Y L(48),D(8),O(4) 2,050,000
98 821,928.87 N L(35),D(70),O(3) 1,840,000
99 860,000.00 Y L(48),D(8),O(4) 1,600,000
100 0.00 N L(59),YM1%(141),O(4) 975,000
101 0.00 N L(59),YM1%(141),O(4) 1,013,900
102 0.00 N L(59),YM1%(117),O(4) 1,000,000
MORTGAGE LTV RATIO
LOAN APPRAISAL CUT-OFF DATE AT MATURITY YEAR YEAR
NUMBER DATE DSCR (X) (3) LTV RATIO (4) OR ARD (5) BUILT RENOVATED
- ------------------------------------------------------------------------------------------------------------------------------------
1 2-Dec-2003 1.55 63.70% 59.01% 1932 1997
2 20-Oct-2003 1.32 75.59% 67.37% 1985
3 24-Nov-2003 2.08 45.71% 38.26% 1931 2003
4 24-Nov-2003 1.89 61.07% 53.79% 1978
5 19-Dec-2003 2.08 73.39% 73.39% 1974 2001
6 2-Dec-2003 3.68 48.04% 48.04% 1926 2000
7 3-Sep-2003 1.26 75.00% 66.06% 1964 1994
8 1-Dec-2004 1.45 78.16% 65.81% 1980 2003
9 23-Sep-2003 1.44 76.39% 73.35% 1916 1985
10 1-Nov-2003 1.27 79.75% 67.12% 1981 2001
11 1-Jan-2004 1.20 79.06% 66.81% 2002
12 8-Oct-2003 1.33 70.78% 65.52% 1997
13 21-Nov-2003 1.32 79.04% 65.59% 1979
14 5-Nov-2003 1.22 77.38% 70.71% 1990
15 1-Oct-2003 1.28 79.93% 67.79% 2002
16 1-Dec-2003 1.33 79.71% 67.09% 1975 2002
17 9-Oct-2003 1.25 78.53% 72.84% 1998
18 19-Sep-2003 1.29 79.93% 69.90% 2000
19 31-Jul-2003 1.55 69.73% 65.08% 1985 2002
20 13-Mar-2003 1.21 69.38% 62.88% 2001
21 8-Sep-2003 1.20 78.06% 65.52% 1995
22 5-Nov-2003 1.23 79.92% 74.23% 1989
23 25-Sep-2003 1.29 72.00% 69.11% 1999
24 3-Sep-2003 1.77 54.49% 46.91% 1988 1999
25 1-Dec-2003 1.26 80.00% 71.44% 1999
26 5-Nov-2003 1.23 79.92% 74.23% 1992
27 5-Dec-2003 1.29 72.33% 60.73% 1989
28 20-Sep-2003 1.76 62.50% 52.90% 2003
29 18-Nov-2003 1.39 76.35% 63.68% 1989
30 21-Nov-2003 1.27 78.00% 69.74% 1970
31 17-Jul-2003 3.22 29.76% 26.69% 1962 1990
32 24-Dec-2003 2.16 37.04% 37.04% 1927 2001
33 1-Sep-2003 1.40 70.03% 59.84% 1973
34 1-Sep-2003 1.52 69.88% 47.91% 1999
35 16-Jan-2004 1.25 72.83% 65.37% 1963
36 5-Nov-2003 1.22 79.83% 74.14% 1989 2001
37 6-Nov-2003 1.20 79.93% 67.36% 1995
38 1-Aug-2003 1.35 79.41% 66.40% 1962 1998
39 30-Jun-2003 1.41 79.70% 67.17% 1996
40 2-Jul-2003 1.36 73.58% 62.18% 2002
41 21-Apr-2004 1.27 78.13% 74.83% 1985
42 8-Dec-2003 1.40 65.79% 42.63% 1966 2003
43 5-Nov-2003 1.36 75.44% 69.73% 2002
44 1-Dec-2003 1.28 79.93% 67.95% 1994 2003
45 11-Dec-2003 1.60 71.05% 62.21% 2000
46 22-Apr-2004 1.34 79.64% 76.28% 1990
47 2-Dec-2003 1.44 71.68% 60.95% 1980
48 30-Jul-2003 1.74 75.00% 70.72% 2001
49 12-May-2003 2.73 53.74% 53.74% 2002
50 27-Aug-2003 1.40 70.78% 65.38% 1926 2000
51 21-Oct-2003 1.57 70.29% 64.31% 1973 2001
52 31-Aug-2003 1.50 63.96% 51.59% 1992
53 3-Dec-2003 1.45 80.00% 67.40% 2003
54 24-Jul-2003 1.25 80.00% 65.60% 1963 2000
55 22-Apr-2004 1.28 79.17% 75.82% 1991
56 1-Oct-2003 1.27 73.47% 57.65% 1968 2002
57 1-Jul-2003 1.78 56.60% 38.76% 1995 2003
58 25-Aug-2003 1.46 74.36% 63.22% 1986 2003
59 11-Sep-2003 1.44 74.87% 63.37% 2003
60 23-Oct-2003 1.27 72.62% 0.00% 2003
61 21-Apr-2004 1.29 77.88% 73.37% 1967
62 3-Dec-2003 1.36 69.81% 58.58% 2002
63 18-Sep-2003 1.28 77.94% 66.88% 2003
64 5-Nov-2003 1.29 74.42% 57.80% 2002
65 28-Oct-2003 1.17 70.72% 0.00% 1994
66 1-Mar-2004 1.46 65.37% 54.81% 2003
67 30-Sep-2003 1.22 78.89% 67.32% 2003
68 12-Nov-2003 1.40 64.08% 41.37% 2003
69 3-Nov-2003 1.58 70.35% 59.56% 1956 2003
70 9-Jul-2003 1.48 74.90% 58.14% 2000
71 5-Jan-2004 1.23 77.56% 65.83% 2003
72 16-Apr-2003 3.07 55.00% 55.00% 2002
73 15-Oct-2003 1.55 79.92% 74.25% 1970 2003
74 23-Jul-2003 1.49 75.88% 68.56% 2001
75 18-Sep-2002 1.26 62.30% 57.77% 1999
76 4-Dec-2003 1.77 57.08% 50.67% 2000
77 18-Jul-2003 1.28 79.85% 67.06% 2002
78 17-Nov-2003 1.38 80.00% 69.33% 2003
79 1-Dec-2003 1.44 79.93% 67.85% 1980
80 8-Dec-2003 1.40 79.93% 67.10% 1999
81 29-Aug-2003 1.44 74.80% 63.46% 1987
82 19-Nov-2003 3.19 53.25% 53.25% 2000
83 17-Oct-2003 1.49 69.12% 56.73% 1985 2002
84 25-Jul-2003 3.13 55.00% 55.00% 2000
85 5-May-2003 3.15 55.00% 55.00% 2000
86 21-Apr-2004 1.25 79.63% 75.02% 1968
87 10-Jan-2003 1.30 77.87% 63.69% 2000
88 14-Apr-2003 3.30 55.00% 55.00% 1999
89 22-Oct-2003 1.23 42.73% 32.05% 2003
90 1-May-2003 1.56 74.54% 67.52% 2003
91 23-Oct-2003 3.36 54.19% 54.19% 2001
92 10-Jan-2003 1.30 76.82% 62.84% 2000
93 25-Nov-2003 2.99 34.67% 31.95% 1965
94 9-May-2003 3.05 56.58% 56.58% 1998
95 14-Mar-2003 3.35 54.98% 54.98% 2002
96 23-Jul-2003 3.24 55.00% 55.00% 1993
97 23-Jul-2003 3.23 55.00% 55.00% 1993
98 10-Jan-2003 1.45 54.61% 44.67% 1999
99 23-Mar-2003 3.06 53.75% 53.75% 1998
100 22-Jun-1999 1.21 47.14% 0.00% 1999
101 22-Jun-1999 1.22 44.44% 0.00% 1999
102 11-Mar-1999 1.87 28.06% 0.00% 1997
CUT-OFF
MORTGAGE DATE LOAN
LOAN NUMBER UNIT OF AMOUNT PER OCCUPANCY OCCUPANCY
NUMBER OF UNITS MEASURE (UNIT) ($) RATE (%) "AS OF" DATE
- ---------------------------------------------------------------------------------------------------------------
1 2,256,552 Sq. Ft. 191 98.60% 22-Dec-2003
2 421,650 Sq. Ft. 249 96.00% 22-Sep-2003
3 2,319,634 Sq. Ft. 69 74.32% 30-Sep-2003
4 784,700 Sq. Ft. 102 100.00% 12-Dec-2003
5 440,421 Sq. Ft. 182 86.93% 8-Jan-2004
6 739,718 Sq. Ft. 66 98.42% 21-Jan-2004
7 562 Units 80,071 98.04% 4-Dec-2003
8 269,576 Sq. Ft. 113 81.55% 16-Jan-2004
9 403,312 Sq. Ft. 68 69.59% 24-Nov-2003
10 138,594 Sq. Ft. 198 97.17% 19-Dec-2003
11 129,107 Sq. Ft. 182 92.09% 1-Oct-2003
12 408 Units 57,598 96.08% 28-Oct-2003
13 313 Units 68,690 99.68% 9-Jan-2004
14 448 Units 43,527 89.51% 6-Jan-2004
15 256,953 Sq. Ft. 72 95.94% 26-Nov-2003
16 234,129 Sq. Ft. 70 98.29% 26-Jan-2004
17 222 Units 67,568 96.85% 18-Dec-2003
18 108,118 Sq. Ft. 138 86.09% 30-Sep-2003
19 111,908 Sq. Ft. 123 100.00% 30-Sep-2003
20 123 Units 108,281 91.06% 30-Nov-2003
21 192 Units 68,103 95.31% 9-Sep-2003
22 256 Units 50,576 94.90% 20-Nov-2003
23 188 Units 67,021 94.68% 21-Nov-2003
24 30 Rooms 399,619 75.29% 31-Oct-2003
25 202 Units 58,614 93.07% 14-Jan-2004
26 200 Units 58,743 92.97% 20-Nov-2003
27 38,600 Sq. Ft. 298 100.00% 9-Jan-2004
28 91,536 Sq. Ft. 120 100.00% 11-Nov-2003
29 212 Units 49,952 93.87% 23-Oct-2003
30 320 Units 31,688 90.94% 3-Dec-2003
31 203,345 Sq. Ft. 49 100.00% 15-Jul-2003
32 108 Units 92,593 97.22% 21-Jan-2004
33 121,293 Sq. Ft. 80 89.52% 10-Nov-2003
34 150 Rooms 63,360 80.60% 31-Jul-2003
35 172 Pads 53,779 98.26% 1-Jan-2004
36 192 Units 44,905 89.01% 19-Nov-2003
37 77,336 Sq. Ft. 111 94.96% 12-Dec-2003
38 150,983 Sq. Ft. 57 96.96% 11-Dec-2003
39 64,920 Sq. Ft. 123 100.00% 13-Nov-2003
40 52,950 Sq. Ft. 147 93.45% 27-Jan-2004
41 216 Units 34,722 93.02% 2-Dec-2003
42 202,364 Sq. Ft. 37 95.28% 12-Jan-2004
43 51,783 Sq. Ft. 143 78.08% 13-Jan-2004
44 60,547 Sq. Ft. 120 100.00% 12-Dec-2003
45 38,743 Sq. Ft. 174 99.09% 1-Jan-2004
46 192 Units 34,635 93.72% 2-Dec-2003
47 50,748 Sq. Ft. 130 83.92% 17-Dec-2003
48 30,421 Sq. Ft. 205 100.00% 7-Oct-2003
49 73,271 Sq. Ft. 83 100.00% 3-Nov-2003
50 39,815 Sq. Ft. 140 98.26% 20-Oct-2003
51 169,490 Sq. Ft. 29 100.00% 1-Dec-2003
52 92,012 Sq. Ft. 54 92.42% 17-Oct-2003
53 50,002 Sq. Ft. 99 100.00% 22-Oct-2003
54 114 Units 42,105 97.37% 30-Sep-2003
55 156 Units 30,449 89.68% 2-Dec-2003
56 151,369 Sq. Ft. 31 90.87% 3-Dec-2003
57 38,802 Sq. Ft. 118 100.00% 4-Sep-2003
58 39,477 Sq. Ft. 107 90.81% 22-Oct-2003
59 32,282 Sq. Ft. 130 80.49% 30-Nov-2003
60 108 Units 37,657 97.22% 31-Oct-2003
61 156 Units 25,962 89.03% 2-Dec-2003
62 23,800 Sq. Ft. 168 100.00% 10-Dec-2003
63 14,490 Sq. Ft. 269 100.00% 11-Dec-2003
64 13,700 Sq. Ft. 277 100.00% 2-Dec-2003
65 61,736 Sq. Ft. 61 100.00% 19-Dec-2003
66 14,560 Sq. Ft. 254 100.00% 15-Jan-2004
67 13,650 Sq. Ft. 266 100.00% 22-Dec-2003
68 27,312 Sq. Ft. 128 86.69% 1-Nov-2003
69 20,300 Sq. Ft. 170 100.00% 23-Jan-2004
70 43,860 Sq. Ft. 79 100.00% 5-Dec-2003
71 14,259 Sq. Ft. 237 100.00% 14-Jan-2004
72 14,410 Sq. Ft. 232 100.00% 30-Oct-2003
73 80 Units 39,462 91.25% 30-Nov-2003
74 22,736 Sq. Ft. 134 93.64% 31-Oct-2003
75 23,500 Sq. Ft. 129 100.00% 30-Sep-2003
76 14,490 Sq. Ft. 207 100.00% 30-Nov-2003
77 64 Units 46,789 93.75% 1-Oct-2003
78 47 Units 60,170 97.87% 26-Dec-2003
79 72 Units 35,526 94.44% 5-Dec-2003
80 80 Pads 31,971 100.00% 4-Dec-2003
81 30,664 Sq. Ft. 83 94.61% 28-Oct-2003
82 15,120 Sq. Ft. 166 100.00% 29-Oct-2003
83 46,236 Sq. Ft. 51 92.69% 1-Nov-2003
84 15,120 Sq. Ft. 151 100.00% 29-Oct-2003
85 15,120 Sq. Ft. 151 100.00% 29-Oct-2003
86 90 Units 23,889 93.33% 2-Dec-2003
87 10,908 Sq. Ft. 194 100.00% 30-Sep-2003
88 11,180 Sq. Ft. 160 100.00% 6-Nov-2003
89 48 Units 36,406 97.92% 30-Sep-2003
90 11,388 Sq. Ft. 149 100.00% 7-Aug-2003
91 20,468 Sq. Ft. 82 100.00% 4-Nov-2003
92 10,908 Sq. Ft. 154 100.00% 30-Sep-2003
93 92 Units 14,130 93.48% 1-Dec-2003
94 10,125 Sq. Ft. 127 100.00% 6-Nov-2003
95 20,515 Sq. Ft. 62 100.00% 4-Nov-2003
96 13,000 Sq. Ft. 94 100.00% 30-Oct-2003
97 13,000 Sq. Ft. 87 100.00% 29-Oct-2003
98 10,908 Sq. Ft. 92 100.00% 30-Sep-2003
99 5,534 Sq. Ft. 155 100.00% 20-Nov-2003
100 7,000 Sq. Ft. 66 100.00% 31-Dec-2002
101 7,000 Sq. Ft. 64 100.00% 31-Dec-2002
102 6,000 Sq. Ft. 47 100.00% 31-Mar-2003
MORTGAGE MOST
LOAN RECENT MOST RECENT MOST RECENT MOST RECENT
NUMBER MOST RECENT PERIOD REVENUES ($) EXPENSES ($) NOI ($) NCF ($)
- ------------------------------------------------------------------------------------------------------------------------------------
1 11/16/02-11/15/03 62,279,306 17,608,014 44,671,292 44,445,637
2 TTM 9/30/03 16,550,107 5,557,373 10,992,734 10,992,734
3 T-11 thru 8/03 Annualized 38,011,964 16,183,135 21,828,830 21,480,884
4
5 TTM 11/30/03 18,571,700 9,033,700 9,538,000 9,449,916
6 2004 Budget 17,331,052 7,561,465 9,769,587 9,625,882
7 T-6 Jun-Nov 2003 6,752,326 2,555,603 4,196,723 4,043,780
8 2003 3,084,075 1,183,334 1,900,741 1,869,709
9 2003 YTD thru 8/03 Ann'l 5,666,696 2,872,777 2,793,919 2,685,883
10 2003 11-mo. Annualized 3,257,037 955,064 2,301,973 2,250,727
11 Trailing 12 mos. Ended 9/30/03 1,523,971 871,925 652,046 622,789
12 Trailing 12 (9/02-8/03) 3,435,064 1,468,664 1,966,400 1,966,400
13 2003 Thru Q3 Ann 3,448,367 1,473,556 1,974,811 1,898,752
14 JMG Yr 1 Budget 3,479,255 1,445,709 2,033,546 1,902,819
15
16 Pro Forma 2,459,724 663,435 1,796,289 1,767,117
17 T 12 2,288,048 967,561 1,320,487 1,273,645
18 Trailing 12 mos. Ended 8/31/03 1,639,851 370,978 1,268,873 1,260,594
19 Annualized 2003 (1/1-9/30) 1,806,215 262,276 1,543,939 1,543,939
20 Annualized 11 mos. Ended 11/30/03 2,052,864 795,531 1,257,333 1,252,041
21 2003 8 months - Annual. 1,480,895 346,854 1,134,041 1,090,841
22 T-6 (May-Oct) 2003 2,045,164 970,081 1,075,083 1,004,489
23 T-6 May-Oct 2003 Annualized 2,301,946 920,351 1,381,596 1,334,596
24 T12 - Oct 03 12,359,651 9,749,483 2,610,168 1,992,186
25 T-3 12/2003 1,830,312 725,760 1,104,552 1,054,052
26 T-6 (May-Oct) 2003 1,725,188 749,118 976,070 923,730
27 Sept. 03 - Ann. 1,356,978 337,917 1,019,061 1,012,113
28 Budget 1,898,093 420,088 1,478,005 1,468,852
29 Rolling 3 (10/03) 1,662,476 717,975 944,501 891,501
30 T12 Aug 2002 to Sept 2003 2,063,927 1,095,356 968,571 888,571
31 Jan-Sept 2003 Ann'l 3,624,940 953,324 2,671,616 2,621,371
32 TTM 12/02-11/03 2,728,687 1,903,184 825,503 792,239
33 Trailing 12 mos. Ended 6/30/03 1,123,298 487,483 635,815 347,194
34 T12 thru 8/30/03 4,335,285 2,726,841 1,608,444 1,435,032
35 2003 - 10 mo. Annualized 1,303,876 304,930 998,945 983,981
36 T-6 (May-Oct) 2003 1,409,894 686,118 723,776 672,954
37 T-12 Nov. 2003 1,007,598 229,511 778,087 767,260
38 Trailing 12 mos. Ended 6/30/03 1,286,523 421,171 865,352 778,980
39 Annualized 9 mos. Ended 9/30/03 926,577 29,245 897,332 885,927
40 Stabilized Proforma 1,420,936 589,697 831,239 820,649
41 7/2003 YTD Annualized 1,343,873 645,947 697,926 643,926
42 Annualized 2003 (1/1-11/30) 1,168,748 173,323 995,425 894,588
43 2003 Annualized 588,886 108,685 480,201 475,022
44
45 Annualized 2003 (3/20-12/18) 1,061,084 240,398 820,686 820,686
46 8/03 YTD Annualized 1,232,628 577,329 655,299 607,299
47 2002 1,082,996 358,800 724,196 714,047
48 Annualized 2003 (1/1-7/31) 1,011,224 222,297 788,927 788,927
49 2003 (7/03-10/03) ann. 1,028,772 199,832 828,940 819,415
50 Annualized 9 mos. Ended 9/30/03 934,223 334,884 599,339 588,356
51 Trailing 12 (10/02-9/03) 1,107,034 389,863 717,171 717,171
52 8 Mos. 2003 Annualized 898,573 289,797 608,776 586,693
53 5.25 Mos. Annualized 613,262 80,188 533,074 528,074
54 Annualized 2003 (Jan-Oct) 896,196 491,172 405,024 309,006
55 7/03 YTD Annualized 963,708 505,878 457,830 418,830
56 7/31/03 Annualized 883,388 388,430 494,958 479,821
57 Annualized 6 mos. Ended 6/30/03 756,943 29,461 727,482 727,482
58 Annualized 2003 (1/1 thru 9/30) 666,821 173,279 493,542 486,875
59 Annualized 2003 (1/03 thru 11/03) 481,500 167,062 314,438 76,651
60
61 9/03 YTD Annualized 861,731 449,539 412,192 360,400
62
63
64
65 Annualized 2003 (1/1-10/31) 569,556 76,932 492,624 476,231
66
67
68
69 Buyer's Budget 486,331 79,453 406,878 402,723
70 11/03 Annualized 550,387 111,008 439,379 434,993
71
72
73 Annualized 2003 (2/1-11/30) 380,023 136,207 243,816 243,816
74 Annualized 2003 (1/1-10/31) 360,817 153,601 207,216 192,216
75 Annualized 2003 (1/1- 9/30) 390,708 3,793 386,915 386,915
76 Annualized (1/1/-11/30) Statement 2003 370,000 11,282 358,718 358,718
77 T-2 mos. 10/03 448,304 113,841 334,463 318,463
78
79 TTM - Oct '03 512,771 221,549 291,222 273,222
80 2003 336,360 83,157 253,203 251,603
81 Trailing 12 (10/02-9/03) 583,028 153,983 429,045 414,679
82
83 Annualized 2003 (1/1-10/31) 627,169 286,262 340,907 298,071
84
85
86 9/2003 YTD Annualized 506,091 304,792 201,299 178,439
87 Annualized 9 mos. Ended 9/30/03 244,943 1,146 243,798 243,798
88
89 Annualized 2003 (1/1-8/31) 254,139 149,183 104,956 104,956
90
91
92 Annualized 9 mos. Ended 9/30/03 196,499 919 195,580 195,580
93 2003 Annualized (1/1-11/30) 501,856 266,384 235,472 210,599
94
95
96
97
98 Annualized 9 mos. Ended 9/30/03 323,860 175,696 148,163 148,163
99
100 Statement 2002 82,160 82,160 82,160
101 Statement 2002 81,112 81,112 81,112
102 NOI 2002 85,828 6,004 79,824 79,824
MORTGAGE UW NET
LOAN UW UW OPERATING UW NET
NUMBER REVENUES ($) EXPENSES ($) INCOME ($) CASH FLOW ($)
- --------------------------------------------------------------------------------------
1 63,438,713 18,543,090 44,895,623 44,558,893
2 17,380,151 6,391,036 10,989,115 10,253,777
3 43,623,415 17,819,694 25,803,721 24,677,230
4 10,549,250 105,492 10,443,757 10,443,757
5 18,432,726 9,368,616 9,064,110 8,848,821
6 17,072,599 7,608,262 9,464,337 8,644,433
7 6,678,159 2,561,627 4,116,532 3,963,590
8 4,472,342 1,254,484 3,217,859 3,087,682
9 6,129,562 3,295,101 2,834,461 2,708,977
10 3,385,750 850,889 2,534,861 2,429,191
11 3,320,707 1,124,639 2,196,068 1,990,292
12 3,575,231 1,414,133 2,161,098 2,077,458
13 3,486,635 1,526,920 1,959,715 1,883,656
14 3,197,482 1,430,410 1,767,072 1,636,346
15 2,188,898 374,045 1,814,853 1,688,847
16 2,358,995 639,726 1,719,269 1,532,701
17 2,323,537 1,012,324 1,311,213 1,264,371
18 1,920,582 437,303 1,483,279 1,393,600
19 1,960,434 369,318 1,591,116 1,466,166
20 1,955,773 880,224 1,075,549 1,044,799
21 1,488,276 366,007 1,122,269 1,079,069
22 2,034,351 888,634 1,145,717 1,075,123
23 2,313,589 1,158,058 1,155,531 1,108,531
24 12,216,344 9,738,019 2,478,325 1,867,508
25 1,840,052 781,027 1,059,025 1,008,525
26 1,725,188 698,849 1,026,339 973,999
27 1,487,729 408,348 1,079,381 1,028,481
28 1,853,491 505,926 1,347,565 1,310,182
29 1,700,645 652,273 1,048,372 995,372
30 2,053,622 1,105,966 947,656 867,656
31 3,409,347 962,591 2,446,756 2,223,638
32 3,058,021 1,849,378 1,208,643 1,175,379
33 1,583,138 477,559 1,105,579 1,004,477
34 4,027,766 2,502,580 1,525,186 1,364,076
35 1,339,228 520,068 819,160 804,196
36 1,409,416 647,194 762,222 711,400
37 1,001,491 243,224 758,267 725,716
38 1,288,375 411,882 876,493 792,767
39 878,796 51,462 827,334 783,457
40 1,582,875 755,284 827,592 754,605
41 1,338,873 654,155 684,718 630,718
42 1,311,245 313,381 997,864 878,687
43 958,775 228,473 730,303 687,270
44 1,018,527 285,685 732,842 672,428
45 1,033,012 252,004 781,009 732,101
46 1,235,632 599,792 635,840 587,840
47 1,149,327 390,751 758,576 686,417
48 978,709 225,793 752,916 725,386
49 1,190,872 319,357 871,514 828,966
50 937,511 379,578 557,933 511,770
51 1,065,254 421,266 643,988 540,009
52 961,151 327,361 633,791 555,550
53 633,072 119,680 513,392 503,572
54 949,252 466,148 483,104 454,604
55 950,345 509,001 441,344 402,344
56 927,360 375,650 551,709 479,923
57 880,655 75,856 804,799 765,070
58 661,964 174,701 487,264 446,722
59 635,465 180,013 455,452 422,263
60 681,796 195,893 485,903 458,903
61 846,486 448,041 398,445 346,653
62 404,005 8,080 395,925 376,811
63 384,000 7,680 376,320 374,871
64 401,800 14,554 387,246 380,583
65 626,601 170,934 455,667 420,921
66 392,000 14,760 377,240 372,527
67 336,000 10,080 325,920 324,555
68 544,657 122,286 422,371 405,307
69 474,384 75,799 398,585 388,303
70 580,631 155,844 424,786 396,409
71 308,250 9,248 299,003 299,003
72 457,000 13,710 443,290 441,849
73 521,798 170,735 351,063 331,063
74 486,668 145,219 341,450 318,128
75 375,173 12,998 362,175 358,296
76 362,596 11,372 351,224 345,818
77 447,187 166,196 280,991 264,991
78 373,076 81,766 291,311 279,561
79 509,616 225,659 283,957 265,957
80 326,269 76,073 250,196 248,596
81 452,566 161,280 291,286 261,947
82 356,000 10,680 345,320 343,808
83 608,151 271,293 336,858 274,272
84 318,000 9,540 308,460 306,948
85 319,000 9,570 309,430 307,918
86 507,228 307,122 200,106 177,246
87 232,697 8,354 224,343 217,253
88 262,145 7,864 254,281 253,163
89 349,976 173,986 175,991 164,084
90 258,516 62,512 196,004 188,683
91 251,808 7,554 244,253 242,207
92 186,674 6,973 179,701 172,611
93 553,018 280,881 272,137 249,137
94 174,960 5,249 169,711 168,699
95 190,020 5,701 184,320 182,268
96 175,500 5,265 170,235 168,805
97 162,500 4,875 157,625 156,195
98 308,972 185,642 123,330 115,402
99 119,499 3,585 115,914 112,957
100 78,052 2,342 75,710 72,326
101 77,056 2,312 74,745 71,377
102 87,997 9,355 78,642 75,400
MORTGAGE LARGEST LARGEST
LOAN TENANT LARGEST TENANT TENANT EXP.
NUMBER LARGEST TENANT NAME SQ. FT. % OF NRA DATE
- ------------------------------------------------------------------------------------------------------------------------------------
1 Credit Suisse First Boston 1,921,459 85.15% Multiple Spaces
2 Gunster Yoakley & Stewart 52,719 12.50% 31-Dec-2013
3 US Customs 266,327 11.48% 31-Oct-2013
4 IBM Corporation 784,700 100.00% 30-Sep-2014
5 Plitt Theaters 30,000 6.81% 31-Jan-2008
6 Mason Tenders District Council Welfare Fund 48,395 6.54% 28-Feb-2018
7
8 Albertsons 54,000 20.03% 30-Nov-2011
9 United Way, Inc. 48,700 12.08% Multiple Spaces
10 Circuit City 33,027 23.83% 31-Oct-2021
11 George Mason Mortgage LLC 33,511 25.96% 30-Jun-2007
12
13
14
15 Home Depot (ground lease) 121,039 47.11% 31-Jan-2024
16 Kohl's 86,450 36.92% 31-Jan-2024
17
18 Rave Motion Pictures 58,916 54.49% 31-Dec-2020
19 State of Washington Department of General Administration 111,908 100.00% 30-Jun-2010
20
21
22
23
24
25
26
27 Top Nails 3,300 8.55% 31-Jan-2006
28 Publix 44,271 48.36% 31-May-2023
29
30
31 Safeway 53,920 26.52% 31-Mar-2010
32
33 Merritt Athletic Club 23,875 19.68% 14-Oct-2013
34
35
36
37 Publix 47,955 62.01% 1-Jan-2016
38 Greetings & Readings, Inc. 43,766 28.99% 31-Jan-2009
39 A & P 58,620 90.30% 31-Mar-2021
40 Advocate Christ Women's 11,544 21.80% 31-Oct-2012
41
42 Georgia Theatre Company 30,618 15.13% 31-May-2009
43 Woody's BAR-B-Q 5,337 10.31% 31-Dec-2012
44 Savers 25,003 41.30% 31-Jul-2013
45 Northglenn Dental Group 3,014 7.78% 31-Oct-2008
46
47 Humana 7,619 15.01% 12-Jul-2005
48 United States of America, on behalf of the Immigration 30,421 100.00% 20-Feb-2012
and Naturalization Service ("INS")
49 Publix 44,271 60.42% 1-Mar-2022
50 Hotel & Restaurant Employees 7,825 19.65% 31-Oct-2009
51 Woolworth 72,524 42.79% 31-Jan-2009
52 Winn Dixie 45,000 48.91% 22-Jan-2012
53 Winn Dixie 45,802 91.60% 30-Jun-2023
54
55
56 Iowa Paint 17,059 11.27% 28-Feb-2006
57 Blue Fox Operations 38,802 100.00% 30-Jun-2019
58 Calico Jacks Restaurant 8,094 20.50% 31-Aug-2007
59 Sierra Fitness 10,267 31.80% 31-May-2012
60
61
62 Borders, Inc. 23,800 100.00% 31-Jan-2023
63 Walgreens 14,490 100.00% 31-Jan-2079
64 Osco Drug 13,700 100.00% 2-Dec-2021
65 Piggly Wiggly 41,436 67.12% 8-Aug-2014
66 Walgreens 14,560 100.00% 31-Dec-2078
67 Walgreens 13,650 100.00% 31-Oct-2078
68 IHOP (pad lease) 5,000 18.31% 25-Feb-2027
69 CVS 10,880 53.60% 31-Jan-2026
70 Family Dollar 8,160 18.60% 31-Dec-2009
71 Walgreens 14,259 100.00% 31-Dec-2078
72 Walgreens 14,410 100.00% 30-Nov-2062
73
74 West Wood Wine & Spirits, LLC 4,218 18.55% 15-Aug-2015
75 Office Max 23,500 100.00% 1-Sep-2014
76 Walgreens 14,490 100.00% 31-Mar-2061
77
78
79
80
81 Mexican Grocer 3,774 12.31% 30-Jun-2006
82 Walgreens 15,120 100.00% 30-Sep-2060
83 RE/MAX 7,273 15.73% 30-Nov-2008
84 Walgreens 15,120 100.00% 30-Apr-2061
85 Walgreens 15,120 100.00% 30-Jun-2060
86
87 Eckerd 10,908 100.00% 25-Jan-2020
88 CVS 11,180 100.00% 24-Feb-2019
89
90 General Services Administration (Social Security Administration) 11,388 100.00% 10-Jun-2013
91 Office Depot 20,468 100.00% 30-Sep-2016
92 Eckerd 10,908 100.00% 20-Sep-2020
93
94 CVS 10,125 100.00% 31-Jan-2018
95 Office Depot 20,515 100.00% 31-Oct-2017
96 Walgreens 13,000 100.00% 31-Dec-2043
97 Walgreens 13,000 100.00% 31-Oct-2043
98 Eckerd 10,908 100.00% 21-Nov-2019
99 Payless ShoeSource, Inc. 2,834 51.21% 30-Nov-2013
100 Checker Auto Parts 7,000 100.00% 31-Aug-2014
101 Checker Auto Parts 7,000 100.00% 31-Aug-2014
102 Checker Auto Parts 6,000 100.00% 31-Aug-2017
MORTGAGE 2ND LARGEST 2ND LARGEST 2ND LARGEST
LOAN TENANT TENANT % TENANT
NUMBER 2ND LARGEST TENANT NAME SQ. FT. OF NRA (%) EXP. DATE
- -----------------------------------------------------------------------------------------------------------------------------------
1 Aon (sublet to IBM) 138,072 6.12% 30-Apr-2013
2 Conopco (Unilever) 38,129 9.04% 30-Apr-2007
3 Martha Stewart 159,500 6.88% 16-Dec-2009
4
5 Old Navy 20,068 4.56% 28-Feb-2007
6 Selfhelp Community Services, Inc. 45,000 6.08% 30-Jun-2011
7
8 LA Fitness 40,737 15.11% 1-Nov-2017
9 LACMA 22,500 5.58% 31-Dec-2005
10 Linens 'n Things 29,400 21.21% 1-Nov-2005
11 C.C. Pace Systems, Inc. 19,505 15.11% 30-Sep-2006
12
13
14
15 Marshalls 30,000 11.68% 31-Aug-2012
16 Burlington Coat Factory 75,525 32.26% 30-Nov-2008
17
18 Mellow Mushroom 4,000 3.70% 1-Jan-2017
19
20
21
22
23
24
25
26
27 CA Chiropractic 2,880 7.46% 31-Jul-2006
28 Walgreens 14,490 15.83% 30-Jun-2023
29
30
31 Toys "R" Us 36,417 17.91% 31-Jan-2007
32
33 Coliseum Sports Bar 11,500 9.48% 31-Aug-2011
34
35
36
37 Blockbuster Video 4,783 6.18% 30-Apr-2006
38 A&P (sublet to JoAnn's Fabrics) 26,648 17.65% 30-Sep-2005
39 Denny's 6,300 9.70% 28-Feb-2018
40 High Technology (Advocate) 6,552 12.37% 31-Oct-2012
41
42 Big Lots 30,000 14.82% 31-Jan-2008
43 More For a Dollar 4,501 8.69% 30-Jun-2008
44 Pure Fitness 23,796 39.30% 30-Nov-2023
45 Delectable Egg 2,940 7.59% 31-Dec-2007
46
47 Schoenfield Securities 4,461 8.79% 31-May-2006
48
49 Blockbuster Video 4,800 6.55% 1-Jun-2007
50 Capitol Wholesale Imports 5,649 14.19% 30-Sep-2004
51 Sam Ash Pennsylvania 25,195 14.87% 31-Jan-2007
52 Michaels 20,012 21.75% 28-Feb-2008
53 Movie Gallery 4,200 8.40% 31-Aug-2008
54
55
56 Absolute Print Graphics Inc. 16,267 10.75% 31-Jan-2005
57
58 Bio-Medical Applications 4,331 10.97% 31-Dec-2006
59 DSDP, LLC dba Piazza Gavi 3,957 12.26% 31-Oct-2012
60
61
62
63
64
65 CVS (SunCom) 8,450 13.69% 31-Oct-2009
66
67
68 Bank of America (pad lease) 4,500 16.48% 26-Aug-2013
69 Stop n' Go Convenience 2,400 11.82% 1-Aug-2012
70 Advance Auto Parts 7,000 15.96% 30-Jun-2013
71
72
73
74 West Woods Tanning dba The Hot Spot 3,637 16.00% 30-Jun-2007
75
76
77
78
79
80
81 Countrywide Home Loans 3,575 11.66% 30-Jun-2006
82
83 Metro Mortgage 4,506 9.75% 28-Feb-2008
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99 Fields Chiropractic Clinic 1,500 27.11% 3-Feb-2007
100
101
102
MORTGAGE 3RD LARGEST 3RD LARGEST 3RD LARGEST
LOAN TENANT TENANT TENANT
NUMBER 3RD LARGEST TENANT NAME SQ. FT % OF NRA EXP. DATE
- --------------------------------------------------------------------------------------------------------------------------
1 Omnicom 95,557 4.23% 30-Sep-2008
2 Greenberg Traurig 35,078 8.32% 31-May-2011
3 FBI 118,288 5.10% 31-Oct-2008
4
5 Lerner New York & Co. 12,116 2.75% MTM
6 G & G Shops Inc 40,000 5.41% 31-Jan-2006
7
8 Marshalls 30,336 11.25% 31-Jan-2012
9 American Business Bank 22,452 5.57% Multiple Spaces
10 Comp USA 17,000 12.27% 31-Oct-2014
11 The Ryland Group Inc. 14,332 11.10% 31-Dec-2007
12
13
14
15 AC Moore 21,306 8.29% 1-Oct-2012
16 Borders, Inc. 23,384 9.99% 31-Jan-2019
17
18 Atlanta Bread 3,867 3.58% 31-Jan-2014
19
20
21
22
23
24
25
26
27 Citibank 2,800 7.25% 30-Apr-2006
28 Lucky's Antique Gallery 7,510 8.20% 30-Sep-2008
29
30
31 T.J. Maxx 25,223 12.40% 31-Jan-2007
32
33 Patrick's Restaurant 8,000 6.60% 30-Sep-2005
34
35
36
37 Family MedCare Center 2,925 3.78% 30-Jun-2006
38 Firestone 15,000 9.93% 31-Dec-2010
39
40 Tinley Orland Medical Center, LLC (Advocate) 5,812 10.98% 30-Jan-2012
41
42 Goody's 24,960 12.33% 31-May-2005
43 Chapter 11 Discount Bookstore 4,250 8.21% 30-Sep-2008
44 David's Bridal 11,748 19.40% 31-Oct-2013
45 Tokyo Joe's 2,665 6.88% 31-Aug-2007
46
47 Dr. Applebaum 4,000 7.88% 14-Jul-2004
48
49 Pete's Carlton Cards 2,800 3.82% 1-Nov-2005
50 Regan Associates, Chartered 4,651 11.68% 30-Sep-2009
51 Save-A-Lot 13,200 7.79% 31-Aug-2006
52 S & K Famous Brands 3,600 3.91% 31-Jan-2006
53
54
55
56 Water Heaters Only LLC 16,119 10.65% 31-Oct-2007
57
58 Feng Li, MD 3,626 9.19% 30-Jun-2005
59 JPK Restaurants dba Yama 2,621 8.12% 22-Aug-2013
60
61
62
63
64
65 Groucho's Deli 3,150 5.10% 1-Jul-2010
66
67
68 Orthodontic Centers of Georgia 2,487 9.11% 21-Jan-2013
69 Bloomfield Cleaners 2,400 11.82% MTM
70 Rainbow Apparel 6,000 13.68% 31-Jan-2006
71
72
73
74 Royal Garden 2,951 12.98% 28-Feb-2013
75
76
77
78
79
80
81 Clearwater Gas 2,852 9.30% 30-Sep-2004
82
83 WTS Agencies 3,477 7.52% 30-Jun-2005
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99 Cash Advance Centers of South Carolina, Inc. 1,200 21.68% MTM
100
101
102
MORTGAGE
LOAN LARGEST AFFILIATED SPONSOR FLAG
NUMBER LOCKBOX (> THAN 4% OF POOL)
- ----------------------------------------------------------------------------------------------------------------------------
1 Day 1 Tamir Sapir
2 Day 1 Benjamin Winter, Melvin Heller
3 Day 1 Mark Karasick
4 Day 1 Jeffrey C. Ackemann
5 Day 1 Jeffrey Feil, Lloyd Goldman
6 Day 1
7 Springing
8 Springing
9 Springing
10 Springing
11
12
13 Springing
14 Day 1
15 Springing
16 Day 1
17 Springing
18
19 Springing
20
21 Springing
22 Springing
23 Day 1
24 Springing
25 Springing
26 Springing
27 Springing
28
29 Springing
30
31 Springing
32
33
34 Springing
35 Springing
36 Springing
37 Springing
38
39
40
41 Springing
42
43 Springing
44 Springing
45
46 Springing
47 Springing
48 Day 1
49
50
51 Springing
52
53 Springing
54
55 Springing
56 Springing
57
58
59
60
61 Springing
62 Springing
63 Springing
64 Day 1
65 Springing
66
67 Springing
68
69 Springing
70
71 Springing
72 Springing
73
74
75
76 Springing
77 Springing
78
79 Springing
80 Springing
81
82 Springing
83
84 Springing
85 Springing
86 Springing
87 Day 1
88 Springing
89
90 Day 1
91 Springing
92 Day 1
93
94 Springing
95 Springing
96 Springing
97 Springing
98 Day 1
99 Springing
100
101
102
WACHOVIA BANK COMMERCIAL MORTGAGE TRUST SERIES 2004-C10
ANNEX A-1A
MORTGAGE LOAN
LOAN GROUP
NUMBER NUMBER PROPERTY NAME ADDRESS
- ------------------------------------------------------------------------------------------------------------------------------------
1 1 11 Madison Avenue (1) 11 Madison Avenue
2 1 Phillips Point Office Building 777 South Flagler Drive
3 1 Starrett-Lehigh Building (1) 601 West 26th Street
4 1 IBM Center 4111 Northside Parkway
5 1 North Riverside Park Mall 7501 West Cermak Road
6 1 520 Eighth Avenue 520 Eighth Avenue
8 1 Pine Trail Square SWQ of Okeechobee Boulevard and North Military Trail
9 1 Pacific Center 523 West 6th Street
10 1 Bal Harbour Square 1630-1860 North Federal Highway
11 1 Fairfax Corner-Bldg D 4100 Monument Drive
15 1 Merritt Creek Farm Shopping Center Interstate 64 & Merritt Creek Road
16 1 Flemington Mall 325 Route 202
18 1 Festival Plaza 7915-7991 Vaughn Road
19 1 840 North Broadway 840 North Broadway
20 1 Villas of Juno Luxury Apartments 12801 U.S. Highway 1
24 1 Little Palm Island Resort 28500 Overseas Highway
27 1 Aliso Viejo Plaza 26852-27072 La Paz Road
28 1 Shops of San Marco 13800-13900 Jog Road
31 1 Studio Village Shopping Center 10900-11140 Jefferson Boulevard
32 1 The Meurice 145 West 58th Street
33 1 Cranbrook Plaza 528-598 Cranbrook Road & 10400 & 10402 Ridgland Road
34 1 Hampton Inn - Cocoa Beach, FL 3425 North Atlantic Avenue
36 1 Sunrise Springs Apartment Homes 4455 East Twain Avenue
37 1 Lovejoy Station Shopping Center 11155 Tara Boulevard
38 1 Loch Raven Plaza 1206 Goucher Boulevard
39 1 A & P Plaza 3500 Route 9
40 1 Advocate Medical Office Building 18210 South LaGrange Road
41 1 Haywood Pointe Apartments 1175 Haywood Road
42 1 Wesmark Plaza 1121 Broad Street
43 1 Conyers Plaza II Shopping Center 1360 Dogwood Drive
44 1 Arrowhead Crossing 7759 West Bell Road
45 1 Village at Park Centre 1001-1005 West 120th Avenue
47 1 Jefferson Plaza 300 Arthur Godfrey Road
48 1 INS Building - Boise, ID 1185 South Vinnell Way
49 1 Shoppes at Lake Dow 900-938 Highway 81 East
50 1 Carpenter's Office Building 1003 K Street NW
51 1 Lee Road Shopping Center 902-1028 Lee Road
52 1 Cordova Collections Shopping Center 4721-4761 Bayou Boulevard
53 1 Winn-Dixie/Movie Gallery Shopping Center 2625 Highway 14
56 1 Northcrest I & II 7505-7577 & 7351-7379 Washington Avenue South
57 1 Airport Cinema 12 409 Aviation Boulevard
58 1 Alafaya Village Shopping Center 11762 E. Colonial Drive
59 1 Ventana Plaza 5415-5455 North Kolb Road
62 1 Borders Books & Music - McHenry, IL 2221 Richmond Road
63 1 Walgreens - St. Paul, MN SWC White Bear Avenue & Larpentuer Avenue
64 1 Osco Drug Store - Chicago, IL 2722 North Central Avenue
65 1 High Pointe Centre 800 Lake Murray Boulevard
66 1 Walgreens - Sherwood, OR 21065 SW Pacific Highway
67 1 Walgreens - Hampton, VA 235 East Mercury Boulevard
68 1 Panola Road Shopping Center 3020, 3040 and 3054 Panola Road
69 1 Bloomfield Plaza Shopping Center 796-824 Park Avenue
70 1 One Michigan Place 31260 Michigan Avenue
71 1 Walgreens - Hot Springs, AR 1400 Albert Pike Road
72 1 Walgreens - Seattle, WA 9400 16th Avenue S.W.
74 1 Shops at Westwood 16255 West 64th Avenue
75 1 Office Max - Sacramento, CA 1707 J Street
76 1 Walgreens - Loveland, OH 10529 Loveland-Madeira Road
78 1 Beaulieu Oaks Townhomes 9804-9852 Whitfield Avenue
79 1 Meadowlark Apartments 4201 Meadowlark Lane SE
80 1 Creekwood Village at Skippack Mobile Home Park 4679 Perkiomen Creek Road
81 1 Campus Walk Shopping Center 2551 Drew Street
82 1 Walgreens - Jacksonville, FL 866 Dunn Avenue
83 1 Indian Trail Center 5151 and 5161 Brook Hollow Parkway
84 1 Walgreens - Saginaw, MI 3434 East Genesee Avenue
85 1 Walgreens - La Marque, TX 1801 FM 1765
87 1 Eckerd - Mt. Pleasant, TX 601 South Jefferson Avenue
88 1 CVS - Hamilton, OH 1115 High Street
90 1 GSA Building 8760 Mid South Drive
91 1 Office Depot - London, KY 1824 Highway 192 West
92 1 Eckerd - Kilgore,TX 1000 Stone Road
94 1 CVS - Mechanicville, NY 12 South Central Avenue
95 1 Office Depot - Laurel, MS 1660 Highway 15 North
96 1 Walgreens - Tulsa, OK 6415 East Pine Street
97 1 Walgreens - Broken Arrow, OK 701 West Houston Street
98 1 Eckerd - San Antonio,TX 4805 Medical Drive
99 1 Payless Shoes Retail Building 4732 Devine Street
100 1 Checker Auto Parts - Rock Springs, WY 1265 Dewar Drive
101 1 Checker Auto Parts - Silver City, NM 2441 Highway 180
102 1 Checker Auto Parts - Lamar, CO 421 North Main Street
(1) Two Mortgage Loans, representing 18.9% of the Cut-Off Date Pool Balance
(23.4% of the Cut-Off Date Group 1 Balance), are part of a split loan structure
and the related pari passu companion loans are not included in the trust fund
with respect to these Mortgage Loans, unless otherwise specified, the
calculation of Balance per SF, LTV ratios and DSC ratios were based upon the
aggregate indebtedness of these Mortgage Loans and the related pari passu
companion loans.
(2) One Mortgage Loan (loan number 4) is structured with an initial
interest-only period of 24 months. In the 25th month, the loan begins amortizing
on a 336 month schedule through the 105th period at which time amortization
again ceases.
(3) For purposes of determining the DSC Ratios of 2 Mortgage Loans (loan numbers
20 and 59), representing 1.4% of the Cut-Off Date Pool Balance (1.7% of the
Cut-Off Date Group 1 Balance), the debt service payments were reduced by taking
into account amounts available under a letter of credit or cash reserves.
(4) For purposes of determining the LTV Ratios of 3 Mortgage Loans (loan numbers
18, 20 and 59), representing 2.5% of the Cut-Off Date Pool Balance (3.1% of the
Cut-Off Date Group 1 Balance), such ratios were reduced by taking into account
amounts available under a letter of credit or cash reserves.
(5) For purposes of determining the LTV Ratio at Maturity or Anticipated
Repayment Date of 1 Mortgage Loan (loan number 59), representing 0.3% of the
Cut-Off Date Pool Balance (0.4% of the Cut-Off Date Group 1 Balance), such ratio
was reduced by taking into account amounts available under a letter of credit or
cash reserves.
See "DESCRIPTION OF THE MORTGAGED POOL - Additional Mortgage Loan Information"
in the prospectus supplement.
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS AND MORTGAGED PROPERTIES IN LOAN GROUP 1
MORTGAGE
LOAN ZIP CROSS COLLATERALIZED AND
NUMBER CITY STATE CODE CROSS DEFAULTED LOAN FLAG
- ------------------------------------------------------------------------------------------------------------------------------------
1 New York NY 10010
2 West Palm Beach FL 33401
3 New York NY 10001
4 Atlanta GA 30327
5 North Riverside IL 60546
6 New York NY 10018
8 West Palm Beach FL 33409
9 Los Angeles CA 90017
10 Fort Lauderdale FL 33305
11 Fairfax VA 22033
15 Barboursville WV 25504
16 Raritan NJ 08822
18 Montgomery AL 36116
19 Everett WA 98201
20 Juno Beach FL 33408
24 Little Torch Key FL 33042
27 Aliso Viejo CA 92656
28 Delray Beach FL 33444
31 Culver City CA 90230
32 New York NY 10019
33 Cockeysville MD 21030
34 Cocoa Beach FL 32931
36 Las Vegas NV 89121
37 Hampton GA 30228
38 Towson MD 21286
39 Old Bridge NJ 08857
40 Tinley Park IL 60477
41 Greenville SC 29615
42 Sumter SC 29150
43 Conyers GA 30013
44 Peoria AZ 85382
45 Westminster CO 80234
47 Miami Beach FL 33140
48 Boise ID 83709
49 McDonough GA 30252
50 Washington DC 20001
51 Orlando FL 32810
52 Pensacola FL 32503
53 Millbrook AL 36022
56 Edina MN 55439
57 Santa Rosa CA 95403
58 Orlando FL 32817
59 Tucson AZ 85750
62 McHenry IL 60050
63 St. Paul MN 55106
64 Chicago IL 60639
65 Irmo SC 29063
66 Sherwood OR 97140
67 Hampton VA 23669
68 Lithonia GA 30038
69 Bloomfield CT 06002
70 Westland MI 48186
71 Hot Springs AR 71901
72 Seattle WA 98106 Cole Companies Portfolio
74 Arvada CO 80007
75 Sacramento CA 95814
76 Loveland OH 45140
78 Savannah GA 31406
79 Rio Rancho NM 87124
80 Skippack Township PA 19473
81 Clearwater FL 33765
82 Jacksonville FL 32208 Cole Companies Portfolio
83 Norcross GA 30071
84 Saginaw MI 48601 Cole Companies Portfolio
85 La Marque TX 77568 Cole Companies Portfolio
87 Mt. Pleasant TX 75455 Eckerd Portfolio
88 Hamilton OH 45011 Cole Companies Portfolio
90 Olive Branch MS 38654
91 London KY 40741 Cole Companies Portfolio
92 Kilgore TX 75662 Eckerd Portfolio
94 Mechanicville NY 12118 Cole Companies Portfolio
95 Laurel MS 39440 Cole Companies Portfolio
96 Tulsa OK 74115 Cole Companies Portfolio
97 Broken Arrow OK 74012 Cole Companies Portfolio
98 San Antonio TX 78229 Eckerd Portfolio
99 Columbia SC 29209 Cole Companies Portfolio
100 Rock Springs WY 82901
101 Silver City NM 88061
102 Lamar CO 81052
MORTGAGE GENERAL SPECIFIC CUT-OFF
LOAN LOAN PROPERTY PROPERTY ORIGINAL LOAN DATE LOAN
NUMBER ORIGINATOR TYPE TYPE BALANCE ($) BALANCE ($)
- ------------------------------------------------------------------------------------------------------------------------------------
1 Wachovia Office CBD 143,333,333.00 143,333,333.00
2 Wachovia Office CBD 105,000,000.00 105,000,000.00
3 Wachovia Office CBD 100,000,000.00 100,000,000.00
4 Wachovia Office Suburban 80,000,000.00 80,000,000.00
5 Wachovia Retail Anchored 80,000,000.00 80,000,000.00
6 Wachovia Office CBD 49,000,000.00 49,000,000.00
8 Wachovia Retail Anchored 30,350,000.00 30,350,000.00
9 Wachovia Office CBD 27,500,000.00 27,500,000.00
10 Wachovia Retail Anchored 27,500,000.00 27,475,431.54
11 CGM Office Suburban 23,600,000.00 23,558,899.05
15 Wachovia Retail Anchored 18,400,000.00 18,384,628.67
16 Wachovia Retail Anchored 16,500,000.00 16,500,000.00
18 CGM Retail Anchored 14,890,000.00 14,877,865.60
19 AMCC Office Suburban 13,825,000.00 13,770,919.14
20 CGM Multifamily Conventional 13,425,000.00 13,318,520.95
24 Wachovia Hospitality Full Service 12,000,000.00 11,988,566.81
27 Wachovia Retail Shadow Anchored 11,500,000.00 11,500,000.00
28 Wachovia Retail Anchored 11,000,000.00 11,000,000.00
31 Wachovia Retail Anchored 10,000,000.00 10,000,000.00
32 Wachovia Multifamily Conventional 10,000,000.00 10,000,000.00
33 CGM Retail Unanchored 9,750,000.00 9,734,635.97
34 Wachovia Hospitality Limited Service 9,520,000.00 9,503,946.06
36 Wachovia Multifamily Conventional 8,630,000.00 8,621,669.39
37 Wachovia Retail Anchored 8,600,000.00 8,592,414.09
38 CGM Retail Anchored 8,600,000.00 8,591,900.71
39 CGM Retail Anchored 8,000,000.00 7,969,565.36
40 Wachovia Office Medical 7,800,000.00 7,800,000.00
41 Wachovia Multifamily Conventional 7,500,000.00 7,500,000.00
42 AMCC Retail Anchored 7,500,000.00 7,500,000.00
43 Wachovia Retail Shadow Anchored 7,400,000.00 7,393,030.83
44 CGM Retail Shadow Anchored 7,280,000.00 7,274,045.20
45 AMCC Mixed Use Retail/Office 6,750,000.00 6,750,000.00
47 Wachovia Mixed Use Office/Retail 6,600,000.00 6,594,615.71
48 AMCC Office Suburban 6,225,000.00 6,225,000.00
49 Wachovia Retail Anchored 6,100,000.00 6,100,000.00
50 CGM Office CBD 5,592,000.00 5,592,000.00
51 AMCC Retail Anchored 4,995,000.00 4,990,423.26
52 Wachovia Retail Anchored 5,000,000.00 4,988,953.96
53 Wachovia Retail Anchored 4,960,000.00 4,960,000.00
56 Wachovia Industrial Warehouse 4,750,000.00 4,738,589.87
57 CGM Special Purpose Cinema 4,600,000.00 4,584,247.73
58 AMCC Retail Shadow Anchored 4,250,000.00 4,238,635.25
59 AMCC Mixed Use Retail/Office 4,200,000.00 4,193,183.85
62 Wachovia Retail Anchored 4,000,000.00 3,996,344.15
63 Wachovia Retail Anchored 3,900,000.00 3,897,082.49
64 AMCC Retail Anchored 3,800,000.00 3,795,197.21
65 AMCC Retail Anchored 3,760,000.00 3,748,344.95
66 AMCC Retail Anchored 3,700,000.00 3,700,000.00
67 Wachovia Retail Anchored 3,632,000.00 3,629,130.53
68 AMCC Retail Unanchored 3,500,000.00 3,492,552.08
69 Wachovia Retail Anchored 3,450,000.00 3,447,072.34
70 Wachovia Retail Shadow Anchored 3,450,000.00 3,445,622.42
71 Wachovia Retail Anchored 3,374,000.00 3,374,000.00
72 Wachovia Retail Anchored 3,349,500.00 3,349,500.00
74 AMCC Retail Unanchored 3,050,000.00 3,035,358.88
75 AMCC Retail Unanchored 3,100,000.00 3,021,773.68
76 AMCC Retail Anchored 3,000,000.00 2,996,871.69
78 AMCC Multifamily Conventional 2,828,000.00 2,828,000.00
79 Wachovia Multifamily Conventional 2,560,000.00 2,557,878.18
80 Wachovia Mobile Home Park Mobile Home Park 2,560,000.00 2,557,666.13
81 AMCC Retail Unanchored 2,550,000.00 2,543,068.42
82 Wachovia Retail Anchored 2,510,750.00 2,510,750.00
83 AMCC Office Suburban 2,350,000.00 2,350,000.00
84 Wachovia Retail Anchored 2,282,500.00 2,282,500.00
85 Wachovia Retail Anchored 2,277,000.00 2,277,000.00
87 CGM Retail Anchored 2,150,000.00 2,118,008.72
88 Wachovia Retail Anchored 1,787,500.00 1,787,500.00
90 AMCC Office Suburban 1,700,000.00 1,692,093.16
91 Wachovia Retail Anchored 1,680,000.00 1,680,000.00
92 CGM Retail Anchored 1,700,000.00 1,674,704.55
94 Wachovia Retail Anchored 1,290,000.00 1,290,000.00
95 Wachovia Retail Anchored 1,270,000.00 1,270,000.00
96 Wachovia Retail Anchored 1,215,500.00 1,215,500.00
97 Wachovia Retail Anchored 1,127,500.00 1,127,500.00
98 CGM Retail Anchored 1,020,000.00 1,004,822.80
99 Wachovia Retail Unanchored 860,000.00 860,000.00
100 AMCC Retail Unanchored 537,000.00 459,630.81
101 AMCC Retail Shadow Anchored 526,400.00 450,558.11
102 AMCC Retail Unanchored 350,000.00 280,588.68
% OF
MORTGAGE AGGREGATE % OF LOAN
LOAN CUT-OFF DATE GROUP 1 ORIGINATION FIRST PAY MATURITY DATE MORTGAGE
NUMBER BALANCE BALANCE DATE DATE OR ARD RATE (%)
- -------------------------------------------------------------------------------------------------------------------------------
1 11.11% 13.81% 23-Dec-2003 11-Feb-2004 11-Jan-2014 5.3043%
2 8.14% 10.12% 8-Dec-2003 11-Jan-2004 11-Dec-2013 6.2500%
3 7.75% 9.64% 2-Jan-2004 11-Feb-2004 11-Feb-2014 5.7600%
4 6.20% 7.71% 4-Dec-2003 11-Jan-2004 11-Sep-2014 5.3600%
5 6.20% 7.71% 16-Jan-2004 11-Mar-2004 11-Feb-2014 5.3200%
6 3.80% 4.72% 30-Jan-2004 11-Mar-2004 11-Feb-2014 4.8000%
8 2.35% 2.92% 21-Jan-2004 11-Mar-2004 11-Feb-2014 5.7600%
9 2.13% 2.65% 4-Dec-2003 11-Jan-2004 11-Dec-2008 5.5400%
10 2.13% 2.65% 12-Dec-2003 11-Feb-2004 11-Jan-2014 5.7100%
11 1.83% 2.27% 12-Nov-2003 1-Jan-2004 1-Dec-2013 5.8200%
15 1.43% 1.77% 16-Dec-2003 11-Feb-2004 11-Jan-2014 5.9700%
16 1.28% 1.59% 27-Jan-2004 11-Mar-2004 11-Feb-2014 5.7500%
18 1.15% 1.43% 23-Dec-2003 1-Feb-2004 1-Jan-2014 6.0640%
19 1.07% 1.33% 12-Sep-2003 11-Nov-2003 11-Oct-2008 5.5400%
20 1.03% 1.28% 22-May-2003 1-Jul-2003 1-Jun-2013 5.6100%
24 0.93% 1.16% 30-Dec-2003 11-Feb-2004 11-Jan-2012 7.4000%
27 0.89% 1.11% 20-Jan-2004 11-Mar-2004 11-Feb-2014 5.6700%
28 0.85% 1.06% 23-Dec-2003 11-Feb-2004 11-Jan-2014 5.4500%
31 0.78% 0.96% 12-Jan-2004 11-Mar-2004 11-Feb-2011 5.6200%
32 0.78% 0.96% 29-Jan-2004 11-Mar-2004 11-Feb-2014 5.4500%
33 0.75% 0.94% 10-Nov-2003 1-Jan-2004 1-Dec-2013 6.2000%
34 0.74% 0.92% 18-Dec-2003 11-Feb-2004 11-Jan-2014 7.1500%
36 0.67% 0.83% 15-Dec-2003 11-Feb-2004 11-Jan-2009 5.4000%
37 0.67% 0.83% 31-Dec-2003 11-Feb-2004 11-Jan-2014 5.7600%
38 0.67% 0.83% 11-Dec-2003 1-Feb-2004 1-Jan-2014 5.5000%
39 0.62% 0.77% 19-Sep-2003 1-Nov-2003 1-Oct-2013 5.6600%
40 0.60% 0.75% 3-Feb-2004 11-Mar-2004 11-Feb-2014 5.8800%
41 0.58% 0.72% 4-Dec-2003 11-Jan-2004 11-Dec-2010 5.2400%
42 0.58% 0.72% 15-Jan-2004 11-Mar-2004 11-Feb-2014 5.7000%
43 0.57% 0.71% 24-Dec-2003 11-Feb-2004 11-May-2009 5.5000%
44 0.56% 0.70% 18-Dec-2003 1-Feb-2004 1-Jan-2014 6.0500%
45 0.52% 0.65% 12-Jan-2004 11-Mar-2004 11-Feb-2012 5.4800%
47 0.51% 0.64% 18-Dec-2003 11-Feb-2004 11-Jan-2014 6.0600%
48 0.48% 0.60% 20-Oct-2003 11-Dec-2003 11-Nov-2009 5.3200%
49 0.47% 0.59% 14-Nov-2003 11-Jan-2004 11-Dec-2010 4.9700%
50 0.43% 0.54% 31-Oct-2003 1-Dec-2003 1-Nov-2010 5.1000%
51 0.39% 0.48% 29-Dec-2003 11-Feb-2004 11-Jan-2010 5.6100%
52 0.39% 0.48% 11-Dec-2003 11-Jan-2004 11-Dec-2013 5.8800%
53 0.38% 0.48% 5-Feb-2004 11-Mar-2004 11-Feb-2014 5.7800%
56 0.37% 0.46% 5-Dec-2003 11-Jan-2004 11-Dec-2013 6.3200%
57 0.36% 0.44% 5-Nov-2003 1-Jan-2004 1-Dec-2013 7.0700%
58 0.33% 0.41% 23-Oct-2003 11-Dec-2003 11-Nov-2013 5.9900%
59 0.33% 0.40% 11-Nov-2003 11-Jan-2004 11-Dec-2013 6.0900%
62 0.31% 0.39% 22-Dec-2003 11-Feb-2004 11-Jan-2014 5.6200%
63 0.30% 0.38% 18-Dec-2003 11-Feb-2004 11-Jan-2014 6.3800%
64 0.29% 0.37% 18-Dec-2003 11-Feb-2004 11-Jan-2014 6.0500%
65 0.29% 0.36% 15-Dec-2003 11-Feb-2004 11-Jan-2020 5.6600%
66 0.29% 0.36% 28-Jan-2004 11-Mar-2004 11-Feb-2014 5.6200%
67 0.28% 0.35% 8-Jan-2004 11-Feb-2004 11-Jan-2014 6.1800%
68 0.27% 0.34% 19-Dec-2003 11-Feb-2004 11-Jan-2014 5.5500%
69 0.27% 0.33% 8-Jan-2004 11-Feb-2004 11-Jan-2014 5.9100%
70 0.27% 0.33% 16-Dec-2003 11-Feb-2004 11-Jan-2014 6.0300%
71 0.26% 0.33% 30-Jan-2004 11-Mar-2004 11-Feb-2014 6.0300%
72 0.26% 0.32% 26-Nov-2003 11-Jan-2004 11-Dec-2008 4.2900%
74 0.24% 0.29% 12-Aug-2003 11-Oct-2003 11-Sep-2010 5.7400%
75 0.23% 0.29% 16-Jun-2000 1-Aug-2000 1-Jul-2010 8.4500%
76 0.23% 0.29% 2-Jan-2004 11-Feb-2004 11-Jan-2011 5.0800%
78 0.22% 0.27% 30-Dec-2003 11-Feb-2004 11-Jan-2014 5.9600%
79 0.20% 0.25% 5-Jan-2004 11-Feb-2004 11-Jan-2014 6.0000%
80 0.20% 0.25% 31-Dec-2003 11-Feb-2004 11-Jan-2014 5.6300%
81 0.20% 0.25% 3-Nov-2003 11-Dec-2003 11-Nov-2013 5.9200%
82 0.19% 0.24% 25-Nov-2003 11-Jan-2004 11-Dec-2008 4.2900%
83 0.18% 0.23% 12-Nov-2003 11-Jan-2004 11-Dec-2013 6.1400%
84 0.18% 0.22% 26-Nov-2003 11-Jan-2004 11-Dec-2008 4.2900%
85 0.18% 0.22% 26-Nov-2003 11-Jan-2004 11-Dec-2008 4.2900%
87 0.16% 0.20% 10-Feb-2003 1-Apr-2003 1-Mar-2012 6.0800%
88 0.14% 0.17% 25-Nov-2003 11-Jan-2004 11-Dec-2008 4.2900%
90 0.13% 0.16% 13-Aug-2003 11-Oct-2003 11-Sep-2010 5.8800%
91 0.13% 0.16% 25-Nov-2003 11-Jan-2004 11-Dec-2008 4.2900%
92 0.13% 0.16% 10-Feb-2003 1-Apr-2003 1-Mar-2012 6.0800%
94 0.10% 0.12% 25-Nov-2003 11-Jan-2004 11-Dec-2008 4.2900%
95 0.10% 0.12% 25-Nov-2003 11-Jan-2004 11-Dec-2008 4.2900%
96 0.09% 0.12% 24-Nov-2003 11-Jan-2004 11-Dec-2008 4.2900%
97 0.09% 0.11% 24-Nov-2003 11-Jan-2004 11-Dec-2008 4.2900%
98 0.08% 0.10% 10-Feb-2003 1-Apr-2003 1-Mar-2012 6.0800%
99 0.07% 0.08% 25-Nov-2003 11-Jan-2004 11-Dec-2008 4.2900%
100 0.04% 0.04% 28-Jul-1999 1-Sep-1999 1-Aug-2016 8.5000%
101 0.03% 0.04% 28-Jul-1999 1-Sep-1999 1-Aug-2016 8.5000%
102 0.02% 0.03% 30-Apr-1999 1-Jun-1999 1-May-2014 8.1000%
LOAN INTEREST ORIGINAL REMAINING
MORTGAGE ADMINISTRATIVE INTEREST ACCRUAL TERM TO TERM TO REMAINING ORIGINAL
LOAN COST RATE ACCRUAL METHOD MATURITY OR MATURITY OR IO PERIOD AMORT
NUMBER (%) METHOD DURING IO ARD (MOS.) ARD (MOS.) (MOS.) (2) TERM (MOS.)
- ------------------------------------------------------------------------------------------------------------------------------------
1 0.04190% Actual/360 Actual/360 120 119 59 360
2 0.04190% Actual/360 Actual/360 120 118 22 360
3 0.04190% Actual/360 Actual/360 121 120 23 312
4 0.04190% Actual/360 Actual/360 129 127 46 336
5 0.04190% Actual/360 Actual/360 120 120 120 IO
6 0.04190% Actual/360 Actual/360 120 120 120 IO
8 0.04190% Actual/360 120 120 360
9 0.04190% Actual/360 Actual/360 60 58 22 360
10 0.04190% Actual/360 120 119 360
11 0.04190% Actual/360 120 118 360
15 0.04190% Actual/360 120 119 360
16 0.04190% Actual/360 120 120 360
18 0.10190% Actual/360 120 119 360
19 0.04190% Actual/360 60 56 360
20 0.04190% Actual/360 120 112 360
24 0.04190% Actual/360 96 95 300
27 0.04190% Actual/360 120 120 360
28 0.04190% 30/360 30/360 120 119 11 360
31 0.04190% Actual/360 84 84 360
32 0.04190% Actual/360 Actual/360 120 120 120 IO
33 0.04190% Actual/360 120 118 360
34 0.04190% Actual/360 120 119 240
36 0.04190% Actual/360 60 59 360
37 0.04190% Actual/360 120 119 360
38 0.04190% Actual/360 120 119 360
39 0.04190% Actual/360 120 116 360
40 0.04190% Actual/360 120 120 360
41 0.04190% Actual/360 Actual/360 84 82 46 360
42 0.04190% Actual/360 120 120 240
43 0.04190% Actual/360 64 63 360
44 0.10190% Actual/360 120 119 360
45 0.04190% Actual/360 96 96 360
47 0.04190% Actual/360 120 119 360
48 0.04190% Actual/360 Actual/360 72 69 21 360
49 0.04190% 30/360 30/360 84 82 82 IO
50 0.10190% Actual/360 Actual/360 84 81 21 360
51 0.04190% Actual/360 72 71 360
52 0.04190% Actual/360 120 118 324
53 0.04190% Actual/360 120 120 360
56 0.04190% Actual/360 120 118 300
57 0.10190% Actual/360 120 118 240
58 0.04190% Actual/360 120 117 360
59 0.04190% Actual/360 120 118 360
62 0.04190% Actual/360 120 119 360
63 0.04190% Actual/360 120 119 360
64 0.04190% Actual/360 120 119 300
65 0.10190% Actual/360 192 191 192
66 0.04190% Actual/360 120 120 360
67 0.04190% Actual/360 120 119 360
68 0.04190% Actual/360 120 119 240
69 0.04190% Actual/360 120 119 360
70 0.04190% Actual/360 120 119 300
71 0.04190% Actual/360 120 120 360
72 0.04190% Actual/360 Actual/360 60 58 58 IO
74 0.04190% Actual/360 84 79 360
75 0.04190% Actual/360 120 77 360
76 0.04190% Actual/360 84 83 360
78 0.04190% Actual/360 Actual/360 120 119 11 360
79 0.04190% Actual/360 120 119 360
80 0.04190% Actual/360 120 119 360
81 0.04190% Actual/360 120 117 360
82 0.04190% Actual/360 Actual/360 60 58 58 IO
83 0.04190% Actual/360 Actual/360 120 118 16 300
84 0.04190% Actual/360 Actual/360 60 58 58 IO
85 0.04190% Actual/360 Actual/360 60 58 58 IO
87 0.07190% Actual/360 108 97 300
88 0.04190% Actual/360 Actual/360 60 58 58 IO
90 0.04190% Actual/360 84 79 360
91 0.04190% Actual/360 Actual/360 60 58 58 IO
92 0.07190% Actual/360 108 97 300
94 0.04190% Actual/360 Actual/360 60 58 58 IO
95 0.04190% Actual/360 Actual/360 60 58 58 IO
96 0.04190% Actual/360 Actual/360 60 58 58 IO
97 0.04190% Actual/360 Actual/360 60 58 58 IO
98 0.07190% Actual/360 108 97 300
99 0.04190% Actual/360 Actual/360 60 58 58 IO
100 0.04190% 30/360 204 150 204
101 0.04190% 30/360 204 150 204
102 0.04190% 30/360 180 123 180
MORTGAGE REMAINING MATURITY DATE OR
LOAN AMORT MONTHLY P&I ARD BALLOON ARD
NUMBER TERM (MOS.) PAYMENTS ($) BALANCE ($) LOAN PREPAYMENT PROVISIONS
- ------------------------------------------------------------------------------------------------------------------------------------
1 360 796,319.45 132,777,998.96 Y L(25),D(92),O(3)
2 360 646,503.06 93,573,597.99 N L(26),D(91),O(3)
3 312 618,930.85 83,689,255.42 Y L(25),D(93),O(3)
4 336 460,301.99 70,462,468.32 N L(26),D(96),O(7)
5 IO IO 80,000,000.00 N L(24),D(93),O(3)
6 IO IO 49,000,000.00 N L(24),D(93),O(3)
8 360 177,307.21 25,553,972.34 Y L(48),D(67),O(5)
9 360 156,832.83 26,404,613.18 Y L(26),D(28),O(6)
10 359 159,784.43 23,121,650.18 Y L(48),D(67),O(5)
11 358 138,774.44 19,910,616.24 N L(26),D(91),O(3)
15 359 109,962.66 15,591,426.28 Y L(48),D(69),O(3)
16 360 96,289.52 13,888,411.51 N L(48),D(69),O(3)
18 359 89,886.67 12,652,108.85 N L(25),D(93),O(2)
19 356 78,844.14 12,853,405.54 Y L(36),D(21),O(3)
20 352 77,154.78 11,254,923.89 N L(32),D(86),O(2)
24 299 87,899.86 10,319,234.31 Y L(48),D(45),O(3)
27 360 66,527.58 9,656,344.31 Y L(48),D(69),O(3)
28 360 62,112.15 9,310,543.60 N L(25),YM1%(92),O(3); allows
partial prepayment of $1.7
million on 6 payment dates
following first 18 payments
31 360 57,534.08 8,968,353.21 Y L(48),D(32),O(4)
32 IO IO 10,000,000.00 N L(24),D(92),O(4)
33 358 59,715.73 8,318,370.81 N L(26),D(92),O(2)
34 239 74,668.05 6,515,307.82 Y L(48),D(69),O(3)
36 359 48,460.11 8,007,128.30 Y L(25),D(32),O(3)
37 359 50,241.91 7,241,726.70 Y L(48),D(69),O(3)
38 359 48,829.85 7,184,312.66 N L(25),D(91),O(4)
39 356 46,229.45 6,716,862.40 N L(28),D(89),O(3)
40 360 46,164.87 6,591,083.97 N L(48),D(69),O(3)
41 360 41,368.84 7,183,349.96 Y L(48),D(33),O(3)
42 240 52,442.41 4,859,568.19 N L(36),D(81),O(3)
43 359 42,016.39 6,833,443.15 Y L(48),D(13),O(3)
44 359 43,881.58 6,183,317.55 N L(25),D(93),O(2)
45 360 38,241.10 5,909,522.49 N L(36),D(57),O(3)
47 359 39,825.29 5,607,397.17 Y L(48),D(68),O(4)
48 360 34,645.07 5,869,677.05 Y L(36),D(33),O(3)
49 IO 25,264.17 6,100,000.00 N L(26),YM1%(54),O(4)
50 360 30,361.75 5,164,728.90 N L(27),D(54),O(3)
51 359 28,706.75 4,566,096.16 Y L(35),D(34),O(3)
52 322 30,825.74 4,024,264.08 N L(26),D(87),O(7)
53 360 29,039.81 4,178,719.09 Y L(24),D(89),O(7)
56 298 31,540.14 3,718,408.16 Y L(48),D(69),O(3)
57 238 35,857.29 3,139,722.62 N L(26),YM(91),O(3)
58 357 25,453.58 3,603,489.48 N L(36),D(81),O(3)
59 358 25,424.66 3,571,870.03 N L(36),D(81),O(3)
62 359 23,013.63 3,353,929.20 Y L(25),D(91),O(4)
63 359 24,343.68 3,344,118.22 Y L(48),D(69),O(3)
64 299 24,599.73 2,947,731.63 N L(36),D(81),O(3)
65 191 29,980.87 0.00 N L(36),D(153),O(3)
66 360 21,287.61 3,102,083.55 N L(36),D(81),O(3)
67 359 22,197.76 3,096,555.39 Y L(48),D(69),O(3)
68 239 24,175.00 2,254,829.46 N L(36),D(81),O(3)
69 359 20,485.29 2,918,198.72 Y L(48),D(69),O(3)
70 299 22,291.71 2,674,430.73 N L(36),D(81),O(3)
71 360 20,293.96 2,863,734.72 Y L(48),D(69),O(3)
72 IO IO 3,349,500.00 Y L(48),D(8),O(4)
74 355 17,779.60 2,742,203.57 N L(36),D(45),O(3)
75 317 23,726.56 2,801,715.95 N L(67),D(49),O(4)
76 359 16,251.64 2,660,375.49 Y L(36),D(45),O(3)
78 360 16,882.63 2,450,917.61 N L(36),D(81),O(3)
79 359 15,348.49 2,171,163.08 Y L(48),D(69),O(3)
80 359 14,744.89 2,147,171.63 Y L(48),D(69),O(3)
81 357 15,157.63 2,157,618.85 N L(36),D(81),O(3)
82 IO IO 2,510,750.00 Y L(48),D(8),O(4)
83 300 15,342.83 1,928,869.85 N L(36),D(81),O(3)
84 IO IO 2,282,500.00 Y L(48),D(8),O(4)
85 IO IO 2,277,000.00 Y L(48),D(8),O(4)
87 289 13,957.81 1,732,495.70 N L(35),D(70),O(3)
88 IO IO 1,787,500.00 Y L(48),D(8),O(4)
90 355 10,061.58 1,532,697.58 Y L(36),D(45),O(3)
91 IO IO 1,680,000.00 Y L(48),D(8),O(4)
92 289 11,036.41 1,369,880.02 N L(35),D(70),O(3)
94 IO IO 1,290,000.00 Y L(48),D(8),O(4)
95 IO IO 1,270,000.00 Y L(48),D(8),O(4)
96 IO IO 1,215,500.00 Y L(48),D(8),O(4)
97 IO IO 1,127,500.00 Y L(48),D(8),O(4)
98 289 6,621.84 821,928.87 N L(35),D(70),O(3)
99 IO IO 860,000.00 Y L(48),D(8),O(4)
100 150 4,984.93 0.00 N L(59),YM1%(141),O(4)
101 150 4,886.53 0.00 N L(59),YM1%(141),O(4)
102 123 3,365.02 0.00 N L(59),YM1%(117),O(4)
MORTGAGE LTV RATIO
LOAN APPRAISED APPRAISAL CUT-OFF DATE AT MATURITY
NUMBER VALUE ($) DATE DSCR (X) (3) LTV RATIO (4) OR ARD (5)
- -------------------------------------------------------------------------------------------------------------------------------
1 675,000,000 2-Dec-2003 1.55 63.70% 59.01%
2 138,900,000 20-Oct-2003 1.32 75.59% 67.37%
3 350,000,000 24-Nov-2003 2.08 45.71% 38.26%
4 131,000,000 24-Nov-2003 1.89 61.07% 53.79%
5 109,000,000 19-Dec-2003 2.08 73.39% 73.39%
6 102,000,000 2-Dec-2003 3.68 48.04% 48.04%
8 38,832,000 1-Dec-2004 1.45 78.16% 65.81%
9 36,000,000 23-Sep-2003 1.44 76.39% 73.35%
10 34,450,000 1-Nov-2003 1.27 79.75% 67.12%
11 29,800,000 1-Jan-2004 1.20 79.06% 66.81%
15 23,000,000 1-Oct-2003 1.28 79.93% 67.79%
16 20,700,000 1-Dec-2003 1.33 79.71% 67.09%
18 18,100,000 19-Sep-2003 1.29 79.93% 69.90%
19 19,750,000 31-Jul-2003 1.55 69.73% 65.08%
20 17,900,000 13-Mar-2003 1.21 69.38% 62.88%
24 22,000,000 3-Sep-2003 1.77 54.49% 46.91%
27 15,900,000 5-Dec-2003 1.29 72.33% 60.73%
28 17,600,000 20-Sep-2003 1.76 62.50% 52.90%
31 33,600,000 17-Jul-2003 3.22 29.76% 26.69%
32 27,000,000 24-Dec-2003 2.16 37.04% 37.04%
33 13,900,000 1-Sep-2003 1.40 70.03% 59.84%
34 13,600,000 1-Sep-2003 1.52 69.88% 47.91%
36 10,800,000 5-Nov-2003 1.22 79.83% 74.14%
37 10,750,000 6-Nov-2003 1.20 79.93% 67.36%
38 10,820,000 1-Aug-2003 1.35 79.41% 66.40%
39 10,000,000 30-Jun-2003 1.41 79.70% 67.17%
40 10,600,000 2-Jul-2003 1.36 73.58% 62.18%
41 9,600,000 21-Apr-2004 1.27 78.13% 74.83%
42 11,400,000 8-Dec-2003 1.40 65.79% 42.63%
43 9,800,000 5-Nov-2003 1.36 75.44% 69.73%
44 9,100,000 1-Dec-2003 1.28 79.93% 67.95%
45 9,500,000 11-Dec-2003 1.60 71.05% 62.21%
47 9,200,000 2-Dec-2003 1.44 71.68% 60.95%
48 8,300,000 30-Jul-2003 1.74 75.00% 70.72%
49 11,350,000 12-May-2003 2.73 53.74% 53.74%
50 7,900,000 27-Aug-2003 1.40 70.78% 65.38%
51 7,100,000 21-Oct-2003 1.57 70.29% 64.31%
52 7,800,000 31-Aug-2003 1.50 63.96% 51.59%
53 6,200,000 3-Dec-2003 1.45 80.00% 67.40%
56 6,450,000 1-Oct-2003 1.27 73.47% 57.65%
57 8,100,000 1-Jul-2003 1.78 56.60% 38.76%
58 5,700,000 25-Aug-2003 1.46 74.36% 63.22%
59 5,400,000 11-Sep-2003 1.44 74.87% 63.37%
62 5,725,000 3-Dec-2003 1.36 69.81% 58.58%
63 5,000,000 18-Sep-2003 1.28 77.94% 66.88%
64 5,100,000 5-Nov-2003 1.29 74.42% 57.80%
65 5,300,000 28-Oct-2003 1.17 70.72% 0.00%
66 5,660,000 1-Mar-2004 1.46 65.37% 54.81%
67 4,600,000 30-Sep-2003 1.22 78.89% 67.32%
68 5,450,000 12-Nov-2003 1.40 64.08% 41.37%
69 4,900,000 3-Nov-2003 1.58 70.35% 59.56%
70 4,600,000 9-Jul-2003 1.48 74.90% 58.14%
71 4,350,000 5-Jan-2004 1.23 77.56% 65.83%
72 6,090,000 16-Apr-2003 3.07 55.00% 55.00%
74 4,000,000 23-Jul-2003 1.49 75.88% 68.56%
75 4,850,000 18-Sep-2002 1.26 62.30% 57.77%
76 5,250,000 4-Dec-2003 1.77 57.08% 50.67%
78 3,535,000 17-Nov-2003 1.38 80.00% 69.33%
79 3,200,000 1-Dec-2003 1.44 79.93% 67.85%
80 3,200,000 8-Dec-2003 1.40 79.93% 67.10%
81 3,400,000 29-Aug-2003 1.44 74.80% 63.46%
82 4,715,000 19-Nov-2003 3.19 53.25% 53.25%
83 3,400,000 17-Oct-2003 1.49 69.12% 56.73%
84 4,150,000 25-Jul-2003 3.13 55.00% 55.00%
85 4,140,000 5-May-2003 3.15 55.00% 55.00%
87 2,720,000 10-Jan-2003 1.30 77.87% 63.69%
88 3,250,000 14-Apr-2003 3.30 55.00% 55.00%
90 2,270,000 1-May-2003 1.56 74.54% 67.52%
91 3,100,000 23-Oct-2003 3.36 54.19% 54.19%
92 2,180,000 10-Jan-2003 1.30 76.82% 62.84%
94 2,280,000 9-May-2003 3.05 56.58% 56.58%
95 2,310,000 14-Mar-2003 3.35 54.98% 54.98%
96 2,210,000 23-Jul-2003 3.24 55.00% 55.00%
97 2,050,000 23-Jul-2003 3.23 55.00% 55.00%
98 1,840,000 10-Jan-2003 1.45 54.61% 44.67%
99 1,600,000 23-Mar-2003 3.06 53.75% 53.75%
100 975,000 22-Jun-1999 1.21 47.14% 0.00%
101 1,013,900 22-Jun-1999 1.22 44.44% 0.00%
102 1,000,000 11-Mar-1999 1.87 28.06% 0.00%
MORTGAGE CUT-OFF DATE
LOAN YEAR YEAR NUMBER UNIT OF LOAN AMOUNT
NUMBER BUILT RENOVATED OF UNITS MEASURE PER (UNIT) ($)
- -------------------------------------------------------------------------------------------------------------------------------
1 1932 1997 2,256,552 Sq. Ft. 191
2 1985 421,650 Sq. Ft. 249
3 1931 2003 2,319,634 Sq. Ft. 69
4 1978 784,700 Sq. Ft. 102
5 1974 2001 440,421 Sq. Ft. 182
6 1926 2000 739,718 Sq. Ft. 66
8 1980 2003 269,576 Sq. Ft. 113
9 1916 1985 403,312 Sq. Ft. 68
10 1981 2001 138,594 Sq. Ft. 198
11 2002 129,107 Sq. Ft. 182
15 2002 256,953 Sq. Ft. 72
16 1975 2002 234,129 Sq. Ft. 70
18 2000 108,118 Sq. Ft. 138
19 1985 2002 111,908 Sq. Ft. 123
20 2001 123 Units 108,281
24 1988 1999 30 Rooms 399,619
27 1989 38,600 Sq. Ft. 298
28 2003 91,536 Sq. Ft. 120
31 1962 1990 203,345 Sq. Ft. 49
32 1927 2001 108 Units 92,593
33 1973 121,293 Sq. Ft. 80
34 1999 150 Rooms 63,360
36 1989 2001 192 Units 44,905
37 1995 77,336 Sq. Ft. 111
38 1962 1998 150,983 Sq. Ft. 57
39 1996 64,920 Sq. Ft. 123
40 2002 52,950 Sq. Ft. 147
41 1985 216 Units 34,722
42 1966 2003 202,364 Sq. Ft. 37
43 2002 51,783 Sq. Ft. 143
44 1994 2003 60,547 Sq. Ft. 120
45 2000 38,743 Sq. Ft. 174
47 1980 50,748 Sq. Ft. 130
48 2001 30,421 Sq. Ft. 205
49 2002 73,271 Sq. Ft. 83
50 1926 2000 39,815 Sq. Ft. 140
51 1973 2001 169,490 Sq. Ft. 29
52 1992 92,012 Sq. Ft. 54
53 2003 50,002 Sq. Ft. 99
56 1968 2002 151,369 Sq. Ft. 31
57 1995 2003 38,802 Sq. Ft. 118
58 1986 2003 39,477 Sq. Ft. 107
59 2003 32,282 Sq. Ft. 130
62 2002 23,800 Sq. Ft. 168
63 2003 14,490 Sq. Ft. 269
64 2002 13,700 Sq. Ft. 277
65 1994 61,736 Sq. Ft. 61
66 2003 14,560 Sq. Ft. 254
67 2003 13,650 Sq. Ft. 266
68 2003 27,312 Sq. Ft. 128
69 1956 2003 20,300 Sq. Ft. 170
70 2000 43,860 Sq. Ft. 79
71 2003 14,259 Sq. Ft. 237
72 2002 14,410 Sq. Ft. 232
74 2001 22,736 Sq. Ft. 134
75 1999 23,500 Sq. Ft. 129
76 2000 14,490 Sq. Ft. 207
78 2003 47 Units 60,170
79 1980 72 Units 35,526
80 1999 80 Pads 31,971
81 1987 30,664 Sq. Ft. 83
82 2000 15,120 Sq. Ft. 166
83 1985 2002 46,236 Sq. Ft. 51
84 2000 15,120 Sq. Ft. 151
85 2000 15,120 Sq. Ft. 151
87 2000 10,908 Sq. Ft. 194
88 1999 11,180 Sq. Ft. 160
90 2003 11,388 Sq. Ft. 149
91 2001 20,468 Sq. Ft. 82
92 2000 10,908 Sq. Ft. 154
94 1998 10,125 Sq. Ft. 127
95 2002 20,515 Sq. Ft. 62
96 1993 13,000 Sq. Ft. 94
97 1993 13,000 Sq. Ft. 87
98 1999 10,908 Sq. Ft. 92
99 1998 5,534 Sq. Ft. 155
100 1999 7,000 Sq. Ft. 66
101 1999 7,000 Sq. Ft. 64
102 1997 6,000 Sq. Ft. 47
MORTGAGE
LOAN OCCUPANCY OCCUPANCY MOST RECENT
NUMBER RATE (%) "AS OF" DATE MOST RECENT PERIOD REVENUES ($)
- ----------------------------------------------------------------------------------------------------------------------
1 98.60% 22-Dec-2003 11/16/02-11/15/03 62,279,306
2 96.00% 22-Sep-2003 TTM 9/30/03 16,550,107
3 74.32% 30-Sep-2003 T-11 thru 8/03 Annualized 38,011,964
4 100.00% 12-Dec-2003
5 86.93% 8-Jan-2004 TTM 11/30/03 18,571,700
6 98.42% 21-Jan-2004 2004 Budget 17,331,052
8 81.55% 16-Jan-2004 2003 3,084,075
9 69.59% 24-Nov-2003 2003 YTD thru 8/03 Ann'l 5,666,696
10 97.17% 19-Dec-2003 2003 11-mo. Annualized 3,257,037
11 92.09% 1-Oct-2003 Trailing 12 mos. Ended 9/30/03 1,523,971
15 95.94% 26-Nov-2003
16 98.29% 26-Jan-2004 Pro Forma 2,459,724
18 86.09% 30-Sep-2003 Trailing 12 mos. Ended 8/31/03 1,639,851
19 100.00% 30-Sep-2003 Annualized 2003 (1/1-9/30) 1,806,215
20 91.06% 30-Nov-2003 Annualized 11 mos. Ended 11/30/03 2,052,864
24 75.29% 31-Oct-2003 T12 - Oct 03 12,359,651
27 100.00% 9-Jan-2004 Sept. 03 - Ann. 1,356,978
28 100.00% 11-Nov-2003 Budget 1,898,093
31 100.00% 15-Jul-2003 Jan-Sept 2003 Ann'l 3,624,940
32 97.22% 21-Jan-2004 TTM 12/02-11/03 2,728,687
33 89.52% 10-Nov-2003 Trailing 12 mos. Ended 6/30/03 1,123,298
34 80.60% 31-Jul-2003 T12 thru 8/30/03 4,335,285
36 89.01% 19-Nov-2003 T-6 (May-Oct) 2003 1,409,894
37 94.96% 12-Dec-2003 T-12 Nov. 2003 1,007,598
38 96.96% 11-Dec-2003 Trailing 12 mos. Ended 6/30/03 1,286,523
39 100.00% 13-Nov-2003 Annualized 9 mos. Ended 9/30/03 926,577
40 93.45% 27-Jan-2004 Stabilized Proforma 1,420,936
41 93.02% 2-Dec-2003 7/2003 YTD Annualized 1,343,873
42 95.28% 12-Jan-2004 Annualized 2003 (1/1-11/30) 1,168,748
43 78.08% 13-Jan-2004 2003 Annualized 588,886
44 100.00% 12-Dec-2003
45 99.09% 1-Jan-2004 Annualized 2003 (3/20-12/18) 1,061,084
47 83.92% 17-Dec-2003 2002 1,082,996
48 100.00% 7-Oct-2003 Annualized 2003 (1/1-7/31) 1,011,224
49 100.00% 3-Nov-2003 2003 (7/03-10/03) ann. 1,028,772
50 98.26% 20-Oct-2003 Annualized 9 mos. Ended 9/30/03 934,223
51 100.00% 1-Dec-2003 Trailing 12 (10/02-9/03) 1,107,034
52 92.42% 17-Oct-2003 8 Mos. 2003 Annualized 898,573
53 100.00% 22-Oct-2003 5.25 Mos. Annualized 613,262
56 90.87% 3-Dec-2003 7/31/03 Annualized 883,388
57 100.00% 4-Sep-2003 Annualized 6 mos. Ended 6/30/03 756,943
58 90.81% 22-Oct-2003 Annualized 2003 (1/1 thru 9/30) 666,821
59 80.49% 30-Nov-2003 Annualized 2003 (1/03 thru 11/03) 481,500
62 100.00% 10-Dec-2003
63 100.00% 11-Dec-2003
64 100.00% 2-Dec-2003
65 100.00% 19-Dec-2003 Annualized 2003 (1/1-10/31) 569,556
66 100.00% 15-Jan-2004
67 100.00% 22-Dec-2003
68 86.69% 1-Nov-2003
69 100.00% 23-Jan-2004 Buyer's Budget 486,331
70 100.00% 5-Dec-2003 11/03 Annualized 550,387
71 100.00% 14-Jan-2004
72 100.00% 30-Oct-2003
74 93.64% 31-Oct-2003 Annualized 2003 (1/1-10/31) 360,817
75 100.00% 30-Sep-2003 Annualized 2003 (1/1- 9/30) 390,708
76 100.00% 30-Nov-2003 Annualized (1/1/-11/30) Statement 2003 370,000
78 97.87% 26-Dec-2003
79 94.44% 5-Dec-2003 TTM - Oct '03 512,771
80 100.00% 4-Dec-2003 2003 336,360
81 94.61% 28-Oct-2003 Trailing 12 (10/02-9/03) 583,028
82 100.00% 29-Oct-2003
83 92.69% 1-Nov-2003 Annualized 2003 (1/1-10/31) 627,169
84 100.00% 29-Oct-2003
85 100.00% 29-Oct-2003
87 100.00% 30-Sep-2003 Annualized 9 mos. Ended 9/30/03 244,943
88 100.00% 6-Nov-2003
90 100.00% 7-Aug-2003
91 100.00% 4-Nov-2003
92 100.00% 30-Sep-2003 Annualized 9 mos. Ended 9/30/03 196,499
94 100.00% 6-Nov-2003
95 100.00% 4-Nov-2003
96 100.00% 30-Oct-2003
97 100.00% 29-Oct-2003
98 100.00% 30-Sep-2003 Annualized 9 mos. Ended 9/30/03 323,860
99 100.00% 20-Nov-2003
100 100.00% 31-Dec-2002 Statement 2002 82,160
101 100.00% 31-Dec-2002 Statement 2002 81,112
102 100.00% 31-Mar-2003 NOI 2002 85,828
MORTGAGE UW NET
LOAN MOST RECENT MOST RECENT MOST RECENT UW UW OPERATING UW NET
NUMBER EXPENSES ($) NOI ($) NCF ($) REVENUES ($) EXPENSES ($) INCOME ($) CASH FLOW ($)
- ------------------------------------------------------------------------------------------------------------------------------------
1 17,608,014 44,671,292 44,445,637 63,438,713 18,543,090 44,895,623 44,558,893
2 5,557,373 10,992,734 10,992,734 17,380,151 6,391,036 10,989,115 10,253,777
3 16,183,135 21,828,830 21,480,884 43,623,415 17,819,694 25,803,721 24,677,230
4 10,549,250 105,492 10,443,757 10,443,757
5 9,033,700 9,538,000 9,449,916 18,432,726 9,368,616 9,064,110 8,848,821
6 7,561,465 9,769,587 9,625,882 17,072,599 7,608,262 9,464,337 8,644,433
8 1,183,334 1,900,741 1,869,709 4,472,342 1,254,484 3,217,859 3,087,682
9 2,872,777 2,793,919 2,685,883 6,129,562 3,295,101 2,834,461 2,708,977
10 955,064 2,301,973 2,250,727 3,385,750 850,889 2,534,861 2,429,191
11 871,925 652,046 622,789 3,320,707 1,124,639 2,196,068 1,990,292
15 2,188,898 374,045 1,814,853 1,688,847
16 663,435 1,796,289 1,767,117 2,358,995 639,726 1,719,269 1,532,701
18 370,978 1,268,873 1,260,594 1,920,582 437,303 1,483,279 1,393,600
19 262,276 1,543,939 1,543,939 1,960,434 369,318 1,591,116 1,466,166
20 795,531 1,257,333 1,252,041 1,955,773 880,224 1,075,549 1,044,799
24 9,749,483 2,610,168 1,992,186 12,216,344 9,738,019 2,478,325 1,867,508
27 337,917 1,019,061 1,012,113 1,487,729 408,348 1,079,381 1,028,481
28 420,088 1,478,005 1,468,852 1,853,491 505,926 1,347,565 1,310,182
31 953,324 2,671,616 2,621,371 3,409,347 962,591 2,446,756 2,223,638
32 1,903,184 825,503 792,239 3,058,021 1,849,378 1,208,643 1,175,379
33 487,483 635,815 347,194 1,583,138 477,559 1,105,579 1,004,477
34 2,726,841 1,608,444 1,435,032 4,027,766 2,502,580 1,525,186 1,364,076
36 686,118 723,776 672,954 1,409,416 647,194 762,222 711,400
37 229,511 778,087 767,260 1,001,491 243,224 758,267 725,716
38 421,171 865,352 778,980 1,288,375 411,882 876,493 792,767
39 29,245 897,332 885,927 878,796 51,462 827,334 783,457
40 589,697 831,239 820,649 1,582,875 755,284 827,592 754,605
41 645,947 697,926 643,926 1,338,873 654,155 684,718 630,718
42 173,323 995,425 894,588 1,311,245 313,381 997,864 878,687
43 108,685 480,201 475,022 958,775 228,473 730,303 687,270
44 1,018,527 285,685 732,842 672,428
45 240,398 820,686 820,686 1,033,012 252,004 781,009 732,101
47 358,800 724,196 714,047 1,149,327 390,751 758,576 686,417
48 222,297 788,927 788,927 978,709 225,793 752,916 725,386
49 199,832 828,940 819,415 1,190,872 319,357 871,514 828,966
50 334,884 599,339 588,356 937,511 379,578 557,933 511,770
51 389,863 717,171 717,171 1,065,254 421,266 643,988 540,009
52 289,797 608,776 586,693 961,151 327,361 633,791 555,550
53 80,188 533,074 528,074 633,072 119,680 513,392 503,572
56 388,430 494,958 479,821 927,360 375,650 551,709 479,923
57 29,461 727,482 727,482 880,655 75,856 804,799 765,070
58 173,279 493,542 486,875 661,964 174,701 487,264 446,722
59 167,062 314,438 76,651 635,465 180,013 455,452 422,263
62 404,005 8,080 395,925 376,811
63 384,000 7,680 376,320 374,871
64 401,800 14,554 387,246 380,583
65 76,932 492,624 476,231 626,601 170,934 455,667 420,921
66 392,000 14,760 377,240 372,527
67 336,000 10,080 325,920 324,555
68 544,657 122,286 422,371 405,307
69 79,453 406,878 402,723 474,384 75,799 398,585 388,303
70 111,008 439,379 434,993 580,631 155,844 424,786 396,409
71 308,250 9,248 299,003 299,003
72 457,000 13,710 443,290 441,849
74 153,601 207,216 192,216 486,668 145,219 341,450 318,128
75 3,793 386,915 386,915 375,173 12,998 362,175 358,296
76 11,282 358,718 358,718 362,596 11,372 351,224 345,818
78 373,076 81,766 291,311 279,561
79 221,549 291,222 273,222 509,616 225,659 283,957 265,957
80 83,157 253,203 251,603 326,269 76,073 250,196 248,596
81 153,983 429,045 414,679 452,566 161,280 291,286 261,947
82 356,000 10,680 345,320 343,808
83 286,262 340,907 298,071 608,151 271,293 336,858 274,272
84 318,000 9,540 308,460 306,948
85 319,000 9,570 309,430 307,918
87 1,146 243,798 243,798 232,697 8,354 224,343 217,253
88 262,145 7,864 254,281 253,163
90 258,516 62,512 196,004 188,683
91 251,808 7,554 244,253 242,207
92 919 195,580 195,580 186,674 6,973 179,701 172,611
94 174,960 5,249 169,711 168,699
95 190,020 5,701 184,320 182,268
96 175,500 5,265 170,235 168,805
97 162,500 4,875 157,625 156,195
98 175,696 148,163 148,163 308,972 185,642 123,330 115,402
99 119,499 3,585 115,914 112,957
100 82,160 82,160 78,052 2,342 75,710 72,326
101 81,112 81,112 77,056 2,312 74,745 71,377
102 6,004 79,824 79,824 87,997 9,355 78,642 75,400
MORTGAGE LARGEST
LOAN TENANT LARGEST TENANT LARGEST TENANT
NUMBER LARGEST TENANT NAME SQ. FT. % OF NRA EXP. DATE
- ------------------------------------------------------------------------------------------------------------------------------------
1 Credit Suisse First Boston 1,921,459 85.15% Multiple Spaces
2 Gunster Yoakley & Stewart 52,719 12.50% 31-Dec-2013
3 US Customs 266,327 11.48% 31-Oct-2013
4 IBM Corporation 784,700 100.00% 30-Sep-2014
5 Plitt Theaters 30,000 6.81% 31-Jan-2008
6 Mason Tenders District Council Welfare Fund 48,395 6.54% 28-Feb-2018
8 Albertsons 54,000 20.03% 30-Nov-2011
9 United Way, Inc. 48,700 12.08% Multiple Spaces
10 Circuit City 33,027 23.83% 31-Oct-2021
11 George Mason Mortgage LLC 33,511 25.96% 30-Jun-2007
15 Home Depot (ground lease) 121,039 47.11% 31-Jan-2024
16 Kohl's 86,450 36.92% 31-Jan-2024
18 Rave Motion Pictures 58,916 54.49% 31-Dec-2020
19 State of Washington Department of General Administration 111,908 100.00% 30-Jun-2010
20
24
27 Top Nails 3,300 8.55% 31-Jan-2006
28 Publix 44,271 48.36% 31-May-2023
31 Safeway 53,920 26.52% 31-Mar-2010
32
33 Merritt Athletic Club 23,875 19.68% 14-Oct-2013
34
36
37 Publix 47,955 62.01% 1-Jan-2016
38 Greetings & Readings, Inc. 43,766 28.99% 31-Jan-2009
39 A & P 58,620 90.30% 31-Mar-2021
40 Advocate Christ Women's 11,544 21.80% 31-Oct-2012
41
42 Georgia Theatre Company 30,618 15.13% 31-May-2009
43 Woody's BAR-B-Q 5,337 10.31% 31-Dec-2012
44 Savers 25,003 41.30% 31-Jul-2013
45 Northglenn Dental Group 3,014 7.78% 31-Oct-2008
47 Humana 7,619 15.01% 12-Jul-2005
48 United States of America, on behalf of the Immigration 30,421 100.00% 20-Feb-2012
and Naturalization Service ("INS")
49 Publix 44,271 60.42% 1-Mar-2022
50 Hotel & Restaurant Employees 7,825 19.65% 31-Oct-2009
51 Woolworth 72,524 42.79% 31-Jan-2009
52 Winn Dixie 45,000 48.91% 22-Jan-2012
53 Winn Dixie 45,802 91.60% 30-Jun-2023
56 Iowa Paint 17,059 11.27% 28-Feb-2006
57 Blue Fox Operations 38,802 100.00% 30-Jun-2019
58 Calico Jacks Restaurant 8,094 20.50% 31-Aug-2007
59 Sierra Fitness 10,267 31.80% 31-May-2012
62 Borders, Inc. 23,800 100.00% 31-Jan-2023
63 Walgreens 14,490 100.00% 31-Jan-2079
64 Osco Drug 13,700 100.00% 2-Dec-2021
65 Piggly Wiggly 41,436 67.12% 8-Aug-2014
66 Walgreens 14,560 100.00% 31-Dec-2078
67 Walgreens 13,650 100.00% 31-Oct-2078
68 IHOP (pad lease) 5,000 18.31% 25-Feb-2027
69 CVS 10,880 53.60% 31-Jan-2026
70 Family Dollar 8,160 18.60% 31-Dec-2009
71 Walgreens 14,259 100.00% 31-Dec-2078
72 Walgreens 14,410 100.00% 30-Nov-2062
74 West Wood Wine & Spirits, LLC 4,218 18.55% 15-Aug-2015
75 Office Max 23,500 100.00% 1-Sep-2014
76 Walgreens 14,490 100.00% 31-Mar-2061
78
79
80
81 Mexican Grocer 3,774 12.31% 30-Jun-2006
82 Walgreens 15,120 100.00% 30-Sep-2060
83 RE/MAX 7,273 15.73% 30-Nov-2008
84 Walgreens 15,120 100.00% 30-Apr-2061
85 Walgreens 15,120 100.00% 30-Jun-2060
87 Eckerd 10,908 100.00% 25-Jan-2020
88 CVS 11,180 100.00% 24-Feb-2019
90 General Services Administration (Social Security Administration) 11,388 100.00% 10-Jun-2013
91 Office Depot 20,468 100.00% 30-Sep-2016
92 Eckerd 10,908 100.00% 20-Sep-2020
94 CVS 10,125 100.00% 31-Jan-2018
95 Office Depot 20,515 100.00% 31-Oct-2017
96 Walgreens 13,000 100.00% 31-Dec-2043
97 Walgreens 13,000 100.00% 31-Oct-2043
98 Eckerd 10,908 100.00% 21-Nov-2019
99 Payless ShoeSource, Inc. 2,834 51.21% 30-Nov-2013
100 Checker Auto Parts 7,000 100.00% 31-Aug-2014
101 Checker Auto Parts 7,000 100.00% 31-Aug-2014
102 Checker Auto Parts 6,000 100.00% 31-Aug-2017
MORTGAGE 2ND LARGEST 2ND LARGEST 2ND LARGEST
LOAN TENANT TENANT TENANT
NUMBER 2ND LARGEST TENANT NAME SQ. FT. % OF NRA (%) EXP. DATE
- -----------------------------------------------------------------------------------------------------------------------------------
1 Aon (sublet to IBM) 138,072 6.12% 30-Apr-2013
2 Conopco (Unilever) 38,129 9.04% 30-Apr-2007
3 Martha Stewart 159,500 6.88% 16-Dec-2009
4
5 Old Navy 20,068 4.56% 28-Feb-2007
6 Selfhelp Community Services, Inc. 45,000 6.08% 30-Jun-2011
8 LA Fitness 40,737 15.11% 1-Nov-2017
9 LACMA 22,500 5.58% 31-Dec-2005
10 Linens 'n Things 29,400 21.21% 1-Nov-2005
11 C.C. Pace Systems, Inc. 19,505 15.11% 30-Sep-2006
15 Marshalls 30,000 11.68% 31-Aug-2012
16 Burlington Coat Factory 75,525 32.26% 30-Nov-2008
18 Mellow Mushroom 4,000 3.70% 1-Jan-2017
19
20
24
27 CA Chiropractic 2,880 7.46% 31-Jul-2006
28 Walgreens 14,490 15.83% 30-Jun-2023
31 Toys "R" Us 36,417 17.91% 31-Jan-2007
32
33 Coliseum Sports Bar 11,500 9.48% 31-Aug-2011
34
36
37 Blockbuster Video 4,783 6.18% 30-Apr-2006
38 A&P (sublet to JoAnn's Fabrics) 26,648 17.65% 30-Sep-2005
39 Denny's 6,300 9.70% 28-Feb-2018
40 High Technology (Advocate) 6,552 12.37% 31-Oct-2012
41
42 Big Lots 30,000 14.82% 31-Jan-2008
43 More For a Dollar 4,501 8.69% 30-Jun-2008
44 Pure Fitness 23,796 39.30% 30-Nov-2023
45 Delectable Egg 2,940 7.59% 31-Dec-2007
47 Schoenfield Securities 4,461 8.79% 31-May-2006
48
49 Blockbuster Video 4,800 6.55% 1-Jun-2007
50 Capitol Wholesale Imports 5,649 14.19% 30-Sep-2004
51 Sam Ash Pennsylvania 25,195 14.87% 31-Jan-2007
52 Michaels 20,012 21.75% 28-Feb-2008
53 Movie Gallery 4,200 8.40% 31-Aug-2008
56 Absolute Print Graphics Inc. 16,267 10.75% 31-Jan-2005
57
58 Bio-Medical Applications 4,331 10.97% 31-Dec-2006
59 DSDP, LLC dba Piazza Gavi 3,957 12.26% 31-Oct-2012
62
63
64
65 CVS (SunCom) 8,450 13.69% 31-Oct-2009
66
67
68 Bank of America (pad lease) 4,500 16.48% 26-Aug-2013
69 Stop n' Go Convenience 2,400 11.82% 1-Aug-2012
70 Advance Auto Parts 7,000 15.96% 30-Jun-2013
71
72
74 West Woods Tanning dba The Hot Spot 3,637 16.00% 30-Jun-2007
75
76
78
79
80
81 Countrywide Home Loans 3,575 11.66% 30-Jun-2006
82
83 Metro Mortgage 4,506 9.75% 28-Feb-2008
84
85
87
88
90
91
92
94
95
96
97
98
99 Fields Chiropractic Clinic 1,500 27.11% 3-Feb-2007
100
101
102
MORTGAGE 3RD LARGEST 3RD LARGEST 3RD LARGEST
LOAN TENANT TENANT TENANT
NUMBER 3RD LARGEST TENANT NAME SQ. FT % OF NRA EXP. DATE
- --------------------------------------------------------------------------------------------------------------------------
1 Omnicom 95,557 4.23% 30-Sep-2008
2 Greenberg Traurig 35,078 8.32% 31-May-2011
3 FBI 118,288 5.10% 31-Oct-2008
4
5 Lerner New York & Co. 12,116 2.75% MTM
6 G & G Shops Inc 40,000 5.41% 31-Jan-2006
8 Marshalls 30,336 11.25% 31-Jan-2012
9 American Business Bank 22,452 5.57% Multiple Spaces
10 Comp USA 17,000 12.27% 31-Oct-2014
11 The Ryland Group Inc. 14,332 11.10% 31-Dec-2007
15 AC Moore 21,306 8.29% 1-Oct-2012
16 Borders, Inc. 23,384 9.99% 31-Jan-2019
18 Atlanta Bread 3,867 3.58% 31-Jan-2014
19
20
24
27 Citibank 2,800 7.25% 30-Apr-2006
28 Lucky's Antique Gallery 7,510 8.20% 30-Sep-2008
31 T.J. Maxx 25,223 12.40% 31-Jan-2007
32
33 Patrick's Restaurant 8,000 6.60% 30-Sep-2005
34
36
37 Family MedCare Center 2,925 3.78% 30-Jun-2006
38 Firestone 15,000 9.93% 31-Dec-2010
39
40 Tinley Orland Medical Center, LLC (Advocate) 5,812 10.98% 30-Jan-2012
41
42 Goody's 24,960 12.33% 31-May-2005
43 Chapter 11 Discount Bookstore 4,250 8.21% 30-Sep-2008
44 David's Bridal 11,748 19.40% 31-Oct-2013
45 Tokyo Joe's 2,665 6.88% 31-Aug-2007
47 Dr. Applebaum 4,000 7.88% 14-Jul-2004
48
49 Pete's Carlton Cards 2,800 3.82% 1-Nov-2005
50 Regan Associates, Chartered 4,651 11.68% 30-Sep-2009
51 Save-A-Lot 13,200 7.79% 31-Aug-2006
52 S & K Famous Brands 3,600 3.91% 31-Jan-2006
53
56 Water Heaters Only LLC 16,119 10.65% 31-Oct-2007
57
58 Feng Li, MD 3,626 9.19% 30-Jun-2005
59 JPK Restaurants dba Yama 2,621 8.12% 22-Aug-2013
62
63
64
65 Groucho's Deli 3,150 5.10% 1-Jul-2010
66
67
68 Orthodontic Centers of Georgia 2,487 9.11% 21-Jan-2013
69 Bloomfield Cleaners 2,400 11.82% MTM
70 Rainbow Apparel 6,000 13.68% 31-Jan-2006
71
72
74 Royal Garden 2,951 12.98% 28-Feb-2013
75
76
78
79
80
81 Clearwater Gas 2,852 9.30% 30-Sep-2004
82
83 WTS Agencies 3,477 7.52% 30-Jun-2005
84
85
87
88
90
91
92
94
95
96
97
98
99 Cash Advance Centers of South Carolina, Inc. 1,200 21.68% MTM
100
101
102
MORTGAGE
LOAN LARGEST AFFILIATED SPONSOR FLAG
NUMBER LOCKBOX (> THAN 4% OF POOL)
- --------------------------------------------------------------------------------------
1 Day 1 Tamir Sapir
2 Day 1 Benjamin Winter, Melvin Heller
3 Day 1 Mark Karasick
4 Day 1 Jeffrey C. Ackemann
5 Day 1 Jeffrey Feil, Lloyd Goldman
6 Day 1
8 Springing
9 Springing
10 Springing
11
15 Springing
16 Day 1
18
19 Springing
20
24 Springing
27 Springing
28
31 Springing
32
33
34 Springing
36 Springing
37 Springing
38
39
40
41 Springing
42
43 Springing
44 Springing
45
47 Springing
48 Day 1
49
50
51 Springing
52
53 Springing
56 Springing
57
58
59
62 Springing
63 Springing
64 Day 1
65 Springing
66
67 Springing
68
69 Springing
70
71 Springing
72 Springing
74
75
76 Springing
78
79 Springing
80 Springing
81
82 Springing
83
84 Springing
85 Springing
87 Day 1
88 Springing
90 Day 1
91 Springing
92 Day 1
94 Springing
95 Springing
96 Springing
97 Springing
98 Day 1
99 Springing
100
101
102
WACHOVIA BANK COMMERCIAL MORTGAGE TRUST SERIES 2004-C10
ANNEX A-1B
MORTGAGE LOAN
LOAN GROUP
NUMBER NUMBER PROPERTY NAME ADDRESS
- ------------------------------------------------------------------------------------------------------------------------------------
7 2 Villa Del Sol Apartments 811 South Fairview Street
12 2 Indigo Creek Apartments 14221 North 51st Avenue
13 2 Sunrise Bay Apartments 102 South Thoreau Terrace
14 2 Caribbean Isle Apartments 3503 Bonaire Boulevard
17 2 Summit San Raphael Apartments 14181 Noel Road
21 2 Village Park Apartments 1055 North State Street
22 2 La Ventana Apartment Homes 2901 North Rainbow Boulevard
23 2 Forest Park Apartments 2829 South Oakland Forest Drive
25 2 Westwood Pines Apartments 4745 Pine Ridge Drive
26 2 Silver Shadow Apartments 8301 West Charleston Boulevard
29 2 Cypress Point Apartments 5275 West Tropicana Ave
30 2 Cedarbrook Apartments 3627 Cedarbrook Drive
35 2 Americana Mobile Home Park 16600 Downey Avenue
46 2 Gleneagle Apartments 1011 West Butler Road
54 2 Oak Pointe Apartments 469-497 Oakdale Road
55 2 Greyeagle Apartments 4551 Old Spartanburg Road
60 2 Cornerstone Apartments Phase II 1337 N. Fiddlesticks Place; 2421 Cornerstone Place;
1302,1303,1324, and 1343 England Links;
and 2425,2474, and 2483 Newport Drive
61 2 Carolina Crossing Apartments 702 Edwards Road
73 2 Manor IV Apartments 2600 Old Hapeville Road SW
77 2 Carisbrooke Apartments Phase I 2401, 2403, 2405 Carisbrooke Drive & 23 Thatchem Drive
86 2 Hickory Ridge Apartments 2413 Wade Hampton Boulevard
89 2 Windfield West II Apartments 25, 75 & 105 SE Windfield Parkway
93 2 Waldorf Creek Apartments 4663 Waldrop Drive
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS AND MORTGAGED PROPERTIES IN LOAN GROUP 2
MORTGAGE
LOAN CROSS COLLATERALIZED AND
NUMBER CITY STATE ZIP CODE CROSS DEFAULTED LOAN FLAG
- ------------------------------------------------------------------------------------------------------------------------------------
7 Santa Ana CA 92704
12 Glendale AZ 85306
13 Galloway NJ 08205
14 Kissimmee FL 34741
17 Dallas TX 75240
21 Orem UT 84057
22 Las Vegas NV 89109
23 Oakland Park FL 33309
25 Columbus IN 47201
26 Las Vegas NV 89117
29 Las Vegas NV 89103
30 Hoover AL 35216
35 Paramount CA 90723
46 Greenville SC 29607
54 Atlanta GA 30307
55 Taylors SC 29687
60 Fayetteville AR 72703
61 Greenville SC 29615
73 Atlanta GA 30315
77 Champaign IL 61820
86 Greenville SC 29615
89 Waukee IA 50263
93 Forest Park GA 30297
MORTGAGE GENERAL SPECIFIC
LOAN LOAN PROPERTY PROPERTY ORIGINAL LOAN
NUMBER ORIGINATOR TYPE TYPE BALANCE ($)
- ---------------------------------------------------------------------------------------------------------------------------------
7 Wachovia Multifamily Conventional 45,000,000.00
12 AMCC Multifamily Conventional 23,500,000.00
13 Wachovia Multifamily Conventional 21,500,000.00
14 Wachovia Multifamily Conventional 19,500,000.00
17 Wachovia Multifamily Conventional 15,000,000.00
21 Wachovia Multifamily Conventional 13,100,000.00
22 Wachovia Multifamily Conventional 12,960,000.00
23 Wachovia Multifamily Conventional 12,600,000.00
25 Wachovia Multifamily Conventional 11,840,000.00
26 Wachovia Multifamily Conventional 11,760,000.00
29 Wachovia Multifamily Conventional 10,600,000.00
30 Wachovia Multifamily Conventional 10,150,000.00
35 Wachovia Mobile Home Park Mobile Home Park 9,250,000.00
46 Wachovia Multifamily Conventional 6,650,000.00
54 AMCC Multifamily Conventional 4,800,000.00
55 Wachovia Multifamily Conventional 4,750,000.00
60 AMCC Multifamily Conventional 4,075,000.00
61 Wachovia Multifamily Conventional 4,050,000.00
73 AMCC Multifamily Conventional 3,160,000.00
77 Wachovia Multifamily Conventional 3,000,000.00
86 Wachovia Multifamily Conventional 2,150,000.00
89 AMCC Multifamily Low Income Housing 1,750,000.00
93 AMCC Multifamily Low Income Housing 1,300,000.00
% OF
MORTGAGE CUT-OFF AGGREGATE % OF LOAN
LOAN DATE LOAN CUT-OFF DATE GROUP 2 ORIGINATION FIRST PAY MATURITY DATE
NUMBER BALANCE ($) BALANCE BALANCE DATE DATE OR ARD
- ----------------------------------------------------------------------------------------------------------------------------------
7 45,000,000.00 3.49% 17.83% 10-Dec-2003 11-Jan-2004 11-Dec-2013
12 23,500,000.00 1.82% 9.31% 24-Nov-2003 11-Jan-2004 11-Dec-2010
13 21,500,000.00 1.67% 8.52% 2-Feb-2004 11-Mar-2004 11-Feb-2014
14 19,500,000.00 1.51% 7.73% 15-Jan-2004 11-Mar-2004 11-Feb-2011
17 15,000,000.00 1.16% 5.94% 30-Dec-2003 11-Feb-2004 11-Jan-2011
21 13,075,815.02 1.01% 5.18% 28-Nov-2003 11-Jan-2004 11-Dec-2013
22 12,947,489.61 1.00% 5.13% 15-Dec-2003 11-Feb-2004 11-Jan-2009
23 12,600,000.00 0.98% 4.99% 11-Dec-2003 11-Jan-2004 11-Dec-2008
25 11,840,000.00 0.92% 4.69% 21-Jan-2004 11-Mar-2004 11-Feb-2011
26 11,748,647.98 0.91% 4.66% 15-Dec-2003 11-Feb-2004 11-Jan-2009
29 10,589,817.89 0.82% 4.20% 22-Dec-2003 11-Feb-2004 11-Jan-2014
30 10,140,250.15 0.79% 4.02% 16-Dec-2003 11-Feb-2004 11-Jan-2011
35 9,250,000.00 0.72% 3.67% 4-Feb-2004 11-Mar-2004 11-Feb-2014
46 6,650,000.00 0.52% 2.64% 4-Dec-2003 11-Jan-2004 11-Dec-2010
54 4,800,000.00 0.37% 1.90% 1-Dec-2003 11-Jan-2004 11-Dec-2013
55 4,750,000.00 0.37% 1.88% 4-Dec-2003 11-Jan-2004 11-Dec-2010
60 4,066,963.51 0.32% 1.61% 11-Dec-2003 11-Feb-2004 11-Jan-2024
61 4,050,000.00 0.31% 1.60% 4-Dec-2003 11-Jan-2004 11-Dec-2010
73 3,156,964.58 0.24% 1.25% 9-Dec-2003 11-Feb-2004 11-Jan-2009
77 2,994,489.14 0.23% 1.19% 17-Nov-2003 11-Jan-2004 11-Dec-2013
86 2,150,000.00 0.17% 0.85% 4-Dec-2003 11-Jan-2004 11-Dec-2010
89 1,747,489.25 0.14% 0.69% 21-Nov-2003 11-Jan-2004 11-Dec-2018
93 1,300,000.00 0.10% 0.52% 20-Jan-2004 11-Mar-2004 11-Feb-2009
INTEREST ORIGINAL REMAINING
MORTGAGE LOAN INTEREST ACCRUAL TERM TO TERM TO
LOAN MORTGAGE ADMINISTRATIVE ACCRUAL METHOD MATURITY OR MATURITY OR
NUMBER RATE (%) COST RATE (%) METHOD DURING IO ARD (MOS.) ARD (MOS.)
- ---------------------------------------------------------------------------------------------------------------------------
7 5.7300% 0.04190% Actual/360 Actual/360 120 118
12 5.2500% 0.04190% Actual/360 Actual/360 84 82
13 5.2900% 0.04190% Actual/360 120 120
14 5.6000% 0.04190% Actual/360 Actual/360 84 84
17 5.3900% 0.04190% Actual/360 Actual/360 84 83
21 5.5900% 0.04190% Actual/360 120 118
22 5.4000% 0.04190% Actual/360 60 59
23 5.5000% 0.04190% Actual/360 Actual/360 60 58
25 5.4100% 0.04190% Actual/360 84 84
26 5.4000% 0.04190% Actual/360 60 59
29 5.4200% 0.04190% Actual/360 120 119
30 5.4200% 0.04190% Actual/360 84 83
35 5.6600% 0.04190% Actual/360 Actual/360 120 120
46 5.2400% 0.04190% Actual/360 Actual/360 84 82
54 5.8100% 0.04190% Actual/360 Actual/360 120 118
55 5.2400% 0.04190% Actual/360 Actual/360 84 82
60 6.2800% 0.09190% Actual/360 240 239
61 5.2400% 0.04190% Actual/360 Actual/360 84 82
73 5.4200% 0.04190% Actual/360 60 59
77 5.6100% 0.04190% Actual/360 120 118
86 5.2400% 0.04190% Actual/360 Actual/360 84 82
89 6.5400% 0.04190% Actual/360 180 178
93 4.9600% 0.04190% Actual/360 60 60
MORTGAGE ORIGINAL REMAINING MATURITY DATE OR
LOAN REMAINING IO AMORT AMORT MONTHLY P&I ARD BALLOON ARD
NUMBER PERIOD (MOS.) TERM (MOS.) TERM (MOS.) PAYMENTS ($) BALANCE ($) LOAN
- ------------------------------------------------------------------------------------------------------------------------------------
7 22 360 360 262,036.33 39,633,412.84 Y
12 22 360 360 129,767.87 21,753,167.93 N
13 360 360 119,257.02 17,841,284.35 Y
14 12 360 360 111,945.40 17,817,710.31 Y
17 23 360 360 84,136.01 13,912,778.26 Y
21 360 358 75,121.76 10,975,056.50 Y
22 360 359 72,774.39 12,024,610.14 Y
23 22 360 360 71,541.41 12,094,132.56 Y
25 360 360 66,559.17 10,572,820.37 Y
26 360 359 66,036.02 10,911,220.35 Y
29 360 359 59,654.67 8,833,034.76 Y
30 360 359 57,122.16 9,066,070.07 N
35 36 360 360 53,452.80 8,302,185.75 Y
46 46 360 360 36,680.37 6,369,237.02 Y
54 19 300 300 30,371.39 3,936,084.11 N
55 46 360 360 26,200.26 4,549,455.18 Y
60 240 239 30,073.18 0.00 N
61 34 360 360 22,339.17 3,815,435.37 Y
73 360 359 17,783.84 2,932,770.92 N
77 360 358 17,241.29 2,514,917.58 Y
86 34 360 360 11,859.07 2,025,477.80 Y
89 360 358 11,107.27 1,310,846.54 N
93 360 360 6,946.94 1,198,300.30 N
MORTGAGE
LOAN APPRAISED APPRAISAL CUT-OFF DATE
NUMBER PREPAYMENT PROVISIONS VALUE ($) DATE DSCR (X) LTV RATIO
- -----------------------------------------------------------------------------------------------------------------------------------
7 L(48),D(69),O(3) 60,000,000 3-Sep-2003 1.26 75.00%
12 L(36),D(45),O(3) 33,200,000 8-Oct-2003 1.33 70.78%
13 L(48),D(69),O(3) 27,200,000 21-Nov-2003 1.32 79.04%
14 L(36),D(44),O(4) 25,200,000 5-Nov-2003 1.22 77.38%
17 L(36),D(44),O(4) 19,100,000 9-Oct-2003 1.25 78.53%
21 L(48),D(69),O(3) 16,750,000 8-Sep-2003 1.20 78.06%
22 L(25),D(32),O(3) 16,200,000 5-Nov-2003 1.23 79.92%
23 L(36),D(20),O(4) 17,500,000 25-Sep-2003 1.29 72.00%
25 L(48),D(33),O(3) 14,800,000 1-Dec-2003 1.26 80.00%
26 L(25),D(32),O(3) 14,700,000 5-Nov-2003 1.23 79.92%
29 L(25),D(92),O(3) 13,870,000 18-Nov-2003 1.39 76.35%
30 L(48),D(33),O(3) 13,000,000 21-Nov-2003 1.27 78.00%
35 L(48),D(69),O(3) 12,700,000 16-Jan-2004 1.25 72.83%
46 L(48),D(33),O(3) 8,350,000 22-Apr-2004 1.34 79.64%
54 L(36),D(81),O(3) 6,000,000 24-Jul-2003 1.25 80.00%
55 L(48),D(33),O(3) 6,000,000 22-Apr-2004 1.28 79.17%
60 L(36),D(201),O(3) 5,600,000 23-Oct-2003 1.27 72.62%
61 L(48),D(33),O(3) 5,200,000 21-Apr-2004 1.29 77.88%
73 L(36),D(21),O(3) 3,950,000 15-Oct-2003 1.55 79.92%
77 L(48),D(69),O(3) 3,750,000 18-Jul-2003 1.28 79.85%
86 L(48),D(33),O(3) 2,700,000 21-Apr-2004 1.25 79.63%
89 L(36),D(141),O(3) 4,090,000 22-Oct-2003 1.23 42.73%
93 L(36),D(21),O(3) 3,750,000 25-Nov-2003 2.99 34.67%
MORTGAGE LTV RATIO CUT-OFF DATE
LOAN AT MATURITY YEAR YEAR NUMBER LOAN AMOUNT
NUMBER OR ARD BUILT RENOVATED OF UNITS UNIT OF MEASURE PER (UNIT) ($)
- ------------------------------------------------------------------------------------------------------------------------------------
7 66.06% 1964 1994 562 Units 80,071
12 65.52% 1997 408 Units 57,598
13 65.59% 1979 313 Units 68,690
14 70.71% 1990 448 Units 43,527
17 72.84% 1998 222 Units 67,568
21 65.52% 1995 192 Units 68,103
22 74.23% 1989 256 Units 50,576
23 69.11% 1999 188 Units 67,021
25 71.44% 1999 202 Units 58,614
26 74.23% 1992 200 Units 58,743
29 63.68% 1989 212 Units 49,952
30 69.74% 1970 320 Units 31,688
35 65.37% 1963 172 Pads 53,779
46 76.28% 1990 192 Units 34,635
54 65.60% 1963 2000 114 Units 42,105
55 75.82% 1991 156 Units 30,449
60 0.00% 2003 108 Units 37,657
61 73.37% 1967 156 Units 25,962
73 74.25% 1970 2003 80 Units 39,462
77 67.06% 2002 64 Units 46,789
86 75.02% 1968 90 Units 23,889
89 32.05% 2003 48 Units 36,406
93 31.95% 1965 92 Units 14,130
MORTGAGE
LOAN OCCUPANCY OCCUPANCY MOST RECENT MOST RECENT
NUMBER RATE (%) "AS OF" DATE MOST RECENT PERIOD REVENUES ($) EXPENSES ($)
- ------------------------------------------------------------------------------------------------------------------------------------
7 98.04% 4-Dec-2003 T-6 Jun-Nov 2003 6,752,326 2,555,603
12 96.08% 28-Oct-2003 Trailing 12 (9/02-8/03) 3,435,064 1,468,664
13 99.68% 9-Jan-2004 2003 Thru Q3 Ann 3,448,367 1,473,556
14 89.51% 6-Jan-2004 JMG Yr 1 Budget 3,479,255 1,445,709
17 96.85% 18-Dec-2003 T 12 2,288,048 967,561
21 95.31% 9-Sep-2003 2003 8 months - Annual. 1,480,895 346,854
22 94.90% 20-Nov-2003 T-6 (May-Oct) 2003 2,045,164 970,081
23 94.68% 21-Nov-2003 T-6 May-Oct 2003 Annualized 2,301,946 920,351
25 93.07% 14-Jan-2004 T-3 12/2003 1,830,312 725,760
26 92.97% 20-Nov-2003 T-6 (May-Oct) 2003 1,725,188 749,118
29 93.87% 23-Oct-2003 Rolling 3 (10/03) 1,662,476 717,975
30 90.94% 3-Dec-2003 T12 Aug 2002 to Sept 2003 2,063,927 1,095,356
35 98.26% 1-Jan-2004 2003 - 10 mo. Annualized 1,303,876 304,930
46 93.72% 2-Dec-2003 8/03 YTD Annualized 1,232,628 577,329
54 97.37% 30-Sep-2003 Annualized 2003 (Jan-Oct) 896,196 491,172
55 89.68% 2-Dec-2003 7/03 YTD Annualized 963,708 505,878
60 97.22% 31-Oct-2003
61 89.03% 2-Dec-2003 9/03 YTD Annualized 861,731 449,539
73 91.25% 30-Nov-2003 Annualized 2003 (2/1-11/30) 380,023 136,207
77 93.75% 1-Oct-2003 T-2 mos. 10/03 448,304 113,841
86 93.33% 2-Dec-2003 9/2003 YTD Annualized 506,091 304,792
89 97.92% 30-Sep-2003 Annualized 2003 (1/1-8/31) 254,139 149,183
93 93.48% 1-Dec-2003 2003 Annualized (1/1-11/30) 501,856 266,384
MORTGAGE MOST MOST UW NET
LOAN RECENT RECENT UW UW OPERATING UW NET
NUMBER NOI ($) NCF ($) REVENUES ($) EXPENSES ($) INCOME ($) CASH FLOW ($)
- -----------------------------------------------------------------------------------------------------------------------
7 4,196,723 4,043,780 6,678,159 2,561,627 4,116,532 3,963,590
12 1,966,400 1,966,400 3,575,231 1,414,133 2,161,098 2,077,458
13 1,974,811 1,898,752 3,486,635 1,526,920 1,959,715 1,883,656
14 2,033,546 1,902,819 3,197,482 1,430,410 1,767,072 1,636,346
17 1,320,487 1,273,645 2,323,537 1,012,324 1,311,213 1,264,371
21 1,134,041 1,090,841 1,488,276 366,007 1,122,269 1,079,069
22 1,075,083 1,004,489 2,034,351 888,634 1,145,717 1,075,123
23 1,381,596 1,334,596 2,313,589 1,158,058 1,155,531 1,108,531
25 1,104,552 1,054,052 1,840,052 781,027 1,059,025 1,008,525
26 976,070 923,730 1,725,188 698,849 1,026,339 973,999
29 944,501 891,501 1,700,645 652,273 1,048,372 995,372
30 968,571 888,571 2,053,622 1,105,966 947,656 867,656
35 998,945 983,981 1,339,228 520,068 819,160 804,196
46 655,299 607,299 1,235,632 599,792 635,840 587,840
54 405,024 309,006 949,252 466,148 483,104 454,604
55 457,830 418,830 950,345 509,001 441,344 402,344
60 681,796 195,893 485,903 458,903
61 412,192 360,400 846,486 448,041 398,445 346,653
73 243,816 243,816 521,798 170,735 351,063 331,063
77 334,463 318,463 447,187 166,196 280,991 264,991
86 201,299 178,439 507,228 307,122 200,106 177,246
89 104,956 104,956 349,976 173,986 175,991 164,084
93 235,472 210,599 553,018 280,881 272,137 249,137
MORTGAGE
LOAN LARGEST TENANT LARGEST TENANT
NUMBER LARGEST TENANT NAME LARGEST TENANT SQ. FT. % OF NRA EXP. DATE
- ------------------------------------------------------------------------------------------------------------------------------------
7
12
13
14
17
21
22
23
25
26
29
30
35
46
54
55
60
61
73
77
86
89
93
MORTGAGE 2ND LARGEST 2ND LARGEST 2ND LARGEST
LOAN TENANT TENANT TENANT
NUMBER 2ND LARGEST TENANT NAME SQ. FT. % OF NRA (%) EXP. DATE
- -----------------------------------------------------------------------------------------------------------------------------------
7
12
13
14
17
21
22
23
25
26
29
30
35
46
54
55
60
61
73
77
86
89
93
MORTGAGE 3RD LARGEST 3RD LARGEST 3RD LARGEST
LOAN TENANT TENANT TENANT
NUMBER 3RD LARGEST TENANT NAME SQ. FT % OF NRA EXP. DATE
- ------------------------------------------------------------------------------------------------------------------------------------
7
12
13
14
17
21
22
23
25
26
29
30
35
46
54
55
60
61
73
77
86
89
93
MORTGAGE
LOAN LARGEST AFFILIATED SPONSOR FLAG
NUMBER LOCKBOX (> THAN 4% OF POOL)
- ----------------------------------------------------------------------------------------------------------------------------
7 Springing
12
13 Springing
14 Day 1
17 Springing
21 Springing
22 Springing
23 Day 1
25 Springing
26 Springing
29 Springing
30
35 Springing
46 Springing
54
55 Springing
60
61 Springing
73
77 Springing
86 Springing
89
93
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WACHOVIA BANK COMMERCIAL MORTGAGE TRUST CTSLink Customer Service
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WELLS FARGO BANK, N.A COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES Reports Available on the World Wide Web
CORPORATE TRUST SERVICES SERIES 2004-C10 @ www.ctslink.com/cmbs
9062 OLD ANNAPOLIS ROAD PAYMENT DATE: 03/17/2004
COLUMBIA, MD 21045 RECORD DATE: 02/27/2004
DISTRIBUTION DATE STATEMENT
TABLE OF CONTENTS
STATEMENT SECTIONS PAGE(S)
------------------ -------
Certificate Distribution Detail 2
Certificate Factor Detail 3
Reconciliation Detail 4
Other Required Information 5
Cash Reconciliation 6
Ratings Detail 7
Current Mortgage Loan and Property Stratification Tables 8-10
Mortgage Loan Detail 11
Principal Prepayment Detail 12
Historical Detail 13
Delinquency Loan Detail 14
Specially Serviced Loan Detail 15-16
Modified Loan Detail 17
Liquidated Loan Detail 18
DEPOSITOR MASTER SERVICER SPECIAL SERVICER
- --------------------------------------------- ----------------------------------- -----------------------------
Wachovia Commercial Mortgage Securities, Inc. Wachovia Bank, National Association Lennar Partners, Inc.
301 South College Street 8739 Research Drive 1601 Washington Avenue
Charlotte, NC 28288-1016 URP 4, NC1075 Suite 800
Charlotte, NC 28262 Miami Beach, FL 33139
Contact: Tim Steward Contact: Timothy S. Ryan Contact: Steve Bruha
Phone Number (704) 593-7822 Phone Number (704) 593-7878 Phone Number (305) 229-6614
This report has been compiled from information provided to Wells Fargo Bank,
N.A. by various third parties, which may include the Master Servicer, Special
Servicer and others. Wells Fargo Bank, N.A. has not independently confirmed the
accuracy of information received from these third parties and assumes no duty to
do so. Wells Fargo Bank, N.A. expressly disclaims any responsibility for the
accuracy or completeness of information furnished by third parties.
Copyright 2003, Wells Fargo Bank, N.A. Page 1 of 18
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9062 OLD ANNAPOLIS ROAD PAYMENT DATE: 03/17/2004
COLUMBIA, MD 21045 RECORD DATE: 02/27/2004
CERTIFICATE DISTRIBUTION DETAIL
- ------------------------------------------------------------------------------------------------------------------------------------
Current
Realized Loss / Subordi-
Pass-Through Original Beginning Principal Interest Prepayment Additional Trust Total Ending nation
Class CUSIP Rate Balance Balance Distribution Distribution Premium Fund Expenses Distribution Balance Level (1)
- ------------------------------------------------------------------------------------------------------------------------------------
A-1 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00%
A-2 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00%
A-3 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00%
A-4 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00%
A-1A 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00%
B 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00%
C 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00%
D 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00%
E 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00%
F 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00%
G 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00%
H 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00%
J 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00%
K 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00%
L 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00%
M 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00%
N 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00%
O 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00%
P 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00%
SL 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00%
Z-I 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00%
Z-II 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00%
Z-III 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00%
R-I 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00%
R-II 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00%
- ------------------------------------------------------------------------------------------------------------------------------------
Totals
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Original Beginning Ending
Pass-Through Notional Notional Interest Prepayment Total Notional
Class CUSIP Rate Amount Amount Distribution Premium Distribution Amount
- ------------------------------------------------------------------------------------------------------------------------------------
X-P 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
X-C 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
(1) Calculated by taking (A) the sum of the ending certificate balance of all
classes less (B) the sum of (i) the ending certificate balance of the designated
class and (ii) the ending certificate balance of all classes which are not
subordinate to the designated class and dividing the result by (A).
Copyright 2003, Wells Fargo Bank, N.A. Page 2 of 18
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CORPORATE TRUST SERVICES SERIES 2004-C10 @ www.ctslink.com/cmbs
9062 OLD ANNAPOLIS ROAD PAYMENT DATE: 03/17/2004
COLUMBIA, MD 21045 RECORD DATE: 02/27/2004
CERTIFICATE FACTOR DETAIL
- ------------------------------------------------------------------------------------------------------------------------------------
Realized Loss/
Beginning Principal Interest Prepayment Additional Trust Ending
Class CUSIP Balance Distribution Distribution Premium Fund Expenses Balance
- ------------------------------------------------------------------------------------------------------------------------------------
A-1 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
A-2 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
A-3 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
A-4 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
A-1A 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
B 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
C 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
D 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
E 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
F 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
G 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
H 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
J 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
K 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
L 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
M 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
N 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
O 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
P 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
SL 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
Z-I 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
Z-II 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
Z-III 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
R-I 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
R-II 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
- ------------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Beginning Ending
Notional Interest Prepayment Notional
Class CUSIP Amount Distribution Premium Amount
- --------------------------------------------------------------------------------
X-P 0.00000000 0.00000000 0.00000000 0.00000000
X-C 0.00000000 0.00000000 0.00000000 0.00000000
- --------------------------------------------------------------------------------
Copyright 2003, Wells Fargo Bank, N.A. Page 3 of 18
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(301) 815-6600
WELLS FARGO BANK, N.A COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES Reports Available on the World Wide Web
CORPORATE TRUST SERVICES SERIES 2004-C10 @ www.ctslink.com/cmbs
9062 OLD ANNAPOLIS ROAD PAYMENT DATE: 03/17/2004
COLUMBIA, MD 21045 RECORD DATE: 02/27/2004
RECONCILIATION DETAIL
ADVANCE SUMMARY SERVICING FEE SUMMARY
P & I Advances Outstanding 0.00 Current Period Accrued Servicing Fees 0.00
Servicing Advances Outstanding 0.00 Less Delinquent Servicing Fees 0.00
Reimbursement for Interest on Advances Less Reductions to Servicing Fees 0.00
paid from general collections 0.00
Plus Servicing Fees for Delinquent Payments Received 0.00
Reimbursement for Interest on Servicing
Advances paid from general collections 0.00 Plus Adjustments for Prior Servicing Calculation 0.00
Aggregate Amount of Nonrecoverable Advances 0.00 Total Servicing Fees Collected 0.00
CERTIFICATE INTEREST RECONCILIATION
- ------------------------------------------------------------------------------------------------------------------------------------
Accrued Net Aggregate Distributable Distributable Additional Remaining Unpaid
Certificate Prepayment Certificate Certificate Interest Trust Fund Interest Distributable
Class Interest Interest Shortfall Interest Adjustment Expenses Distribution Certificate Interest
- ------------------------------------------------------------------------------------------------------------------------------------
A-1
A-2
A-3
A-4
A-1A
X-P
X-C
B
C
D
E
F
G
H
J
K
L
M
N
O
P
SL
- ------------------------------------------------------------------------------------------------------------------------------------
Total
- ------------------------------------------------------------------------------------------------------------------------------------
Copyright 2003, Wells Fargo Bank, N.A. Page 4 of 18
B-4
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(301) 815-6600
WELLS FARGO BANK, N.A COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES Reports Available on the World Wide Web
CORPORATE TRUST SERVICES SERIES 2004-C10 @ www.ctslink.com/cmbs
9062 OLD ANNAPOLIS ROAD PAYMENT DATE: 03/17/2004
COLUMBIA, MD 21045 RECORD DATE: 02/27/2004
OTHER REQUIRED INFORMATION
Appraisal Reduction Amount
Available Distribution Amount 0.00 ---------------------------------------------------
Appraisal Cumulative Most Recent
Loan Reduction ASER App. Red.
Aggregate Number of Outstanding Loans 0 Number Amount Amount Date
---------------------------------------------------
Aggregate Stated Principal Balance of Loans before 0.00
Aggregate Stated Principal Balance of Loans
after Distributions 0.00
Aggregate Unpaid Principal Balance of Loans 0.00
Net Swap Payment received from Counterparty 0.00
Net Swap Payment made to Counterparty 0.00
Aggregate Amount of Servicing Fee 0.00
Aggregate Amount of Special Servicing Fee 0.00
Aggregate Amount of Trustee Fee 0.00
Aggregate Trust Fund Expenses 0.00
Interest Reserve Deposit 0.00
Interest Reserve Withdrawal 0.00
----------------------------------------------------
Total
Specially Serviced Loans not Delinquent ----------------------------------------------------
Number of Outstanding Loans 0
Aggregate Unpaid Principal Balance 0.00
Copyright 2003, Wells Fargo Bank, N.A. Page 5 of 18
B-5
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CORPORATE TRUST SERVICES SERIES 2004-C10 @ www.ctslink.com/cmbs
9062 OLD ANNAPOLIS ROAD PAYMENT DATE: 03/17/2004
COLUMBIA, MD 21045 RECORD DATE: 02/27/2004
CASH RECONCILIATION DETAIL
TOTAL FUNDS COLLECTED TOTAL FUNDS DISTRIBUTED
INTEREST: FEES:
Interest paid or advanced 0.00 Master Servicing Fee 0.00
Interest reductions due to Non-Recoverability Trustee Fee 0.00
Determinations 0.00 Certificate Administration Fee 0.00
Interest Adjustments 0.00 Insurer Fee 0.00
Deferred Interest 0.00 Miscellaneous Fee 0.00
Net Prepayment Interest Shortfall 0.00 --------
Net Prepayment Interest Excess 0.00 TOTAL FEES 0.00
Extension Interest 0.00
Interest Reserve Withdrawal 0.00 ADDITIONAL TRUST FUND EXPENSES:
-------- Reimbursement for Interest on Advances 0.00
TOTAL INTEREST COLLECTED 0.00 ASER Amount 0.00
Special Servicing Fee 0.00
PRINCIPAL: Rating Agency Expenses 0.00
Scheduled Principal 0.00 Attorney Fees & Expenses 0.00
Unscheduled Principal 0.00 Bankruptcy Expense 0.00
Principal Prepayments 0.00 Taxes Imposed on Trust Fund 0.00
Collection of Principal after Maturity Date 0.00 Non-Recoverable Advances 0.00
Recoveries from Liquidation and Insurance Other Expenses 0.00
Proceeds 0.00 --------
Excess of Prior Principal Amounts paid 0.00 TOTAL ADDITIONAL TRUST FUND EXPENSES 0.00
Curtailments 0.00
Negative Amortization 0.00 INTEREST RESERVE DEPOSIT 0.00
Principal Adjustments 0.00
-------- PAYMENTS TO CERTIFICATEHOLDERS & OTHERS:
TOTAL PRINCIPAL COLLECTED 0.00 Interest Distribution 0.00
Principal Distribution 0.00
OTHER: Prepayment Penalties/Yield Maintenance 0.00
Prepayment Penalties/Yield Maintenance 0.00 Borrower Option Extension Fees 0.00
Repayment Fees 0.00 Equity Payments Paid 0.00
Borrower Option Extension Fees 0.00 Net Swap Counterparty Payments Paid 0.00
Equity Payments Received 0.00 --------
Net Swap Counterparty Payments Received 0.00 TOTAL PAYMENTS TO CERTIFICATEHOLDERS & OTHERS 0.00
-------- --------
TOTAL OTHER COLLECTED 0.00 TOTAL FUNDS DISTRIBUTED 0.00
-------- ========
TOTAL FUNDS COLLECTED 0.00
========
Copyright 2003, Wells Fargo Bank, N.A. Page 6 of 18
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WELLS FARGO BANK, N.A COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES Reports Available on the World Wide Web
CORPORATE TRUST SERVICES SERIES 2004-C10 @ www.ctslink.com/cmbs
9062 OLD ANNAPOLIS ROAD PAYMENT DATE: 03/17/2004
COLUMBIA, MD 21045 RECORD DATE: 02/27/2004
RATINGS DETAIL
--------------------------------------------------------------------------
Original Ratings Current Ratings (1)
-------------------------- --------------------------
Class CUSIP Fitch Moody's S & P Fitch Moody's S & P
-------- ------- ------- -------- ------ ------- --------- --------
A-1
A-2
A-3
A-4
A-1A
X-P
X-C
B
C
D
E
F
G
H
J
K
L
M
N
O
P
SL
--------------------------------------------------------------------------
NR - Designates that the class was not rated by the above agency at the time
of original issuance.
X - Designates that the above rating agency did not rate any classes in this
transaction at the time of original issuance.
N/A - Data not available this period.
1) For any class not rated at the time of original issuance by any particular
rating agency, no request has been made subsequent to issuance to obtain rating
information, if any, from such rating agency. The current ratings were obtained
directly from the applicable rating agency within 30 days of the payment date
listed above. The ratings may have changed since they were obtained. Because the
ratings may have changed, you may want to obtain current ratings directly from
the rating agencies.
Fitch, Inc. Moody's Investors Service Standard & Poor's Rating Services
One State Street Plaza 99 Church Street 55 Water Street
New York, New York 10004 New York, New York 10007 New York, New York 10041
(212) 908-0500 (212) 553-0300 (212) 438-2430
Copyright 2003, Wells Fargo Bank, N.A. Page 7 of 18
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(301) 815-6600
WELLS FARGO BANK, N.A COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES Reports Available on the World Wide Web
CORPORATE TRUST SERVICES SERIES 2004-C10 @ www.ctslink.com/cmbs
9062 OLD ANNAPOLIS ROAD PAYMENT DATE: 03/17/2004
COLUMBIA, MD 21045 RECORD DATE: 02/27/2004
CURRENT MORTGAGE LOAN AND PROPERTY STRATIFICATION TABLES
SCHEDULED BALANCE STATE (3)
- ----------------------------------------------------------------- ------------------------------------------------------------
% of % of
Scheduled # of Scheduled Agg. WAM Weighted # of Scheduled Agg. WAM Weighted
Balance Loans Balance Bal. (2) WAC Avg DSCR (1) State Props Balance Bal. (2) WAC Avg DSCR (1)
- ----------------------------------------------------------------- ------------------------------------------------------------
- ----------------------------------------------------------------- ------------------------------------------------------------
Totals Totals
- ----------------------------------------------------------------- ------------------------------------------------------------
See footnotes on last page of this section.
Copyright 2003, Wells Fargo Bank, N.A. Page 8 of 18
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CORPORATE TRUST SERVICES SERIES 2004-C10 @ www.ctslink.com/cmbs
9062 OLD ANNAPOLIS ROAD PAYMENT DATE: 03/17/2004
COLUMBIA, MD 21045 RECORD DATE: 02/27/2004
CURRENT MORTGAGE LOAN AND PROPERTY STRATIFICATION TABLES
- ------------------------------------------------------------------ ---------------------------------------------------------------
DEBT SERVICE COVERAGE RATIO (1) PROPERTY TYPE (3)
- ------------------------------------------------------------------ ---------------------------------------------------------------
% of % of
Debt Service # of Scheduled Agg. WAM Weighted Property # of Scheduled Agg. WAM Weighted
Coverage Ratio Loans Balance Bal. (2) WAC Avg DSCR (1) Type Props Balance Bal. (2) WAC Avg DSCR (1)
- ------------------------------------------------------------------ ---------------------------------------------------------------
- ------------------------------------------------------------------ ---------------------------------------------------------------
Totals Totals
- ------------------------------------------------------------------ ---------------------------------------------------------------
NOTE RATE SEASONING
- ------------------------------------------------------------------ ---------------------------------------------------------------
% of % of
Note # of Scheduled Agg. WAM Weighted # of Scheduled Agg. WAM Weighted
Rate Loans Balance Bal. (2) WAC Avg DSCR (1) Seasoning Loans Balance Bal. (2) WAC Avg DSCR (1)
- ------------------------------------------------------------------ ---------------------------------------------------------------
- ------------------------------------------------------------------ ---------------------------------------------------------------
Totals Totals
- ------------------------------------------------------------------ ---------------------------------------------------------------
See footnotes on last page of this section.
Copyright 2003, Wells Fargo Bank, N.A. Page 9 of 18
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CORPORATE TRUST SERVICES SERIES 2004-C10 @ www.ctslink.com/cmbs
9062 OLD ANNAPOLIS ROAD PAYMENT DATE: 03/17/2004
COLUMBIA, MD 21045 RECORD DATE: 02/27/2004
CURRENT MORTGAGE LOAN AND PROPERTY STRATIFICATION TABLES
- ------------------------------------------------------------------ ---------------------------------------------------------------
ANTICIPATED REMAINING TERM (ARD AND BALLOON LOANS) REMAINING STATED TERM (FULLY AMORTIZING LOANS)
- ------------------------------------------------------------------ ---------------------------------------------------------------
Anticipated % of Remaining % of
Remaining # of Scheduled Agg. WAM Weighted Stated # of Scheduled Agg. WAM Weighted
Term (2) Loans Balance Bal. (2) WAC Avg DSCR (1) Term Loans Balance Bal. (2) WAC Avg DSCR (1)
- ------------------------------------------------------------------ ---------------------------------------------------------------
- ------------------------------------------------------------------ ---------------------------------------------------------------
Totals Totals
- ------------------------------------------------------------------ ---------------------------------------------------------------
- ------------------------------------------------------------------ -----------------------------------------------------------------
REMAINING AMORTIZATION TERM (ARD AND BALLOON LOANS) AGE OF MOST RECENT NOI
- ------------------------------------------------------------------ -----------------------------------------------------------------
Remaining % of % of
Amortization # of Scheduled Agg. WAM Weighted Age of Most # of Scheduled Agg. WAM Weighted
Term Loans Balance Bal. (2) WAC Avg DSCR (1) Recent NOI Loans Balance Bal. (2) WAC Avg DSCR (1)
- ------------------------------------------------------------------ -----------------------------------------------------------------
- ------------------------------------------------------------------ -----------------------------------------------------------------
Totals Totals
- ------------------------------------------------------------------ -----------------------------------------------------------------
(1) Debt Service Coverage Ratios are updated periodically as new NOI figures
become available from borrowers on an asset level. In all cases the most current
DSCR provided by the Servicer is used. To the extent that no DSCR is provided by
the Servicer, information from the offering document is used. The Trustee makes
no representations as to the accuracy of the data provided by the borrower for
this calculation.
(2) Anticipated Remaining Term and WAM are each calculated based upon the term
from the current month to the earlier of the Anticipated Repayment Date, if
applicable, and the Maturity Date.
(3) Data in this table was calculated by allocating pro-rata the current loan
information to the properties based upon the Cut-off Date balance of each
property as disclosed in the offering document.
Copyright 2003, Wells Fargo Bank, N.A. Page 10 of 18
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CORPORATE TRUST SERVICES SERIES 2004-C10 @ www.ctslink.com/cmbs
9062 OLD ANNAPOLIS ROAD PAYMENT DATE: 03/17/2004
COLUMBIA, MD 21045 RECORD DATE: 02/27/2004
MORTGAGE LOAN DETAIL
- ------------------------------------------------------------------------------------------------------------------------------------
Property Anticipated Neg. Beginning Ending Paid Appraisal Appraisal Res. Mod.
Loan Type Interest Principal Gross Repayment Maturity Amort Scheduled Scheduled Thru Reduction Reduction Strat. Code
Number ODCR (1) City State Payment Payment Coupon Date Date (Y/N) Balance Balance Date Date Amount (2) (3)
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Totals
- ------------------------------------------------------------------------------------------------------------------------------------
(1) Property Type Code (2) Resolution Strategy Code (3) Modification Code
---------------------- ---------------------------- ---------------------
MF - Multi-Family OF - Office 1 - Modification 6 - DPO 10 - Deed in Lieu Of 1 - Maturity Date Extension
RT - Retail MU - Mixed Use 2 - Foreclosure 7 - REO Foreclosure 2 - Amortization Change
HC - Health Care LO - Lodging 3 - Bankruptcy 8 - Resolved 11 - Full Payoff 3 - Principal Write-Off
IN - Industrial SS - Self Storage 4 - Extension 9 - Pending Return 12 - Reps and Warranties 4 - Combination
WH - Warehouse OT - Other 5 - Note Sale to Master Servicer 13 - Other or TBD
MH - Mobile Home Park
Copyright 2003, Wells Fargo Bank, N.A. Page 11 of 18
B-11
[WELLS FARGO LOGO]
For Additional Information, please contact
WACHOVIA BANK COMMERCIAL MORTGAGE TRUST CTSLink Customer Service
(301) 815-6600
WELLS FARGO BANK, N.A COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES Reports Available on the World Wide Web
CORPORATE TRUST SERVICES SERIES 2004-C10 @ www.ctslink.com/cmbs
9062 OLD ANNAPOLIS ROAD PAYMENT DATE: 03/17/2004
COLUMBIA, MD 21045 RECORD DATE: 02/27/2004
PRINCIPAL PREPAYMENT DETAIL
Principal Prepayment Amount Prepayment Penalties
Offering Document ------------------------------------- ----------------------------------------------
Loan Number Cross-Reference Payoff Amount Curtailment Amount Prepayment Premium Yield Maintenance Premium
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
Totals
- -------------------------------------------------------------------------------------------------------------------------------
Copyright 2003, Wells Fargo Bank, N.A. Page 12 of 18
B-12
[WELLS FARGO LOGO]
For Additional Information, please contact
WACHOVIA BANK COMMERCIAL MORTGAGE TRUST CTSLink Customer Service
(301) 815-6600
WELLS FARGO BANK, N.A COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES Reports Available on the World Wide Web
CORPORATE TRUST SERVICES SERIES 2004-C10 @ www.ctslink.com/cmbs
9062 OLD ANNAPOLIS ROAD PAYMENT DATE: 03/17/2004
COLUMBIA, MD 21045 RECORD DATE: 02/27/2004
HISTORICAL DETAIL
Delinquencies Prepayments Rate and Maturities
- ------------------------------------------------------------------------------------------------------------------------------------
Distribution 30-59 Days 60-89 Days 90 Days or More Foreclosure REO Modifications Curtailments Payoff Next Weighted Avg.
Date # Balance # Balance # Balance # Balance # Balance # Balance # Amount # Amount Coupon Remit WAM
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Note: Foreclosure and REO Totals are excluded from the delinquencies aging
categories.
Copyright 2003, Wells Fargo Bank, N.A. Page 13 of 18
B-13
[WELLS FARGO LOGO]
For Additional Information, please contact
WACHOVIA BANK COMMERCIAL MORTGAGE TRUST CTSLink Customer Service
(301) 815-6600
WELLS FARGO BANK, N.A COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES Reports Available on the World Wide Web
CORPORATE TRUST SERVICES SERIES 2004-C10 @ www.ctslink.com/cmbs
9062 OLD ANNAPOLIS ROAD PAYMENT DATE: 03/17/2004
COLUMBIA, MD 21045 RECORD DATE: 02/27/2004
DELINQUENCY LOAN DETAIL
Offering
Document # of Paid Current Outstanding Status of Resolution Servicing Actual Outstanding
Loan Cross- Months Through P & I P & I Mortgage Strategy Transfer Forcelosure Principal Servicing Bankruptcy REO
Number Reference Delinq. Date Advances Advances** Loan (1) Code (2) Date Date Balance Advances Date Date
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Totals
- ------------------------------------------------------------------------------------------------------------------------------------
(1) Status of Mortgage Loan (2) Resolution Strategy Code
--------------------------- ----------------------------
A - Payment Not Received 0 - Current 4 - Assumed Scheduled 1 - Modification 6 - DPO 10 - Deed In
But Still in Grace 1 - One Month Delinquent Payment (Performing 2 - Foreclosure 7 - REO Lieu Of
Period 2 - Two Months Delinquent Matured Balloon) 3 - Bankruptcy 8 - Resolved Foreclosure
B - Late Payment But 3 - Three or More Months 7 - Foreclosure 4 - Extension 9 - Pending Return 11 - Full Payoff
Less Than 1 Month Delinquent 9 - REO 5 - Note Sale to Master Servicer 12 - Reps and
Delinquent Warranties
13 - Other or TBD
** Outstanding P & I Advances include the current period advance.
Copyright 2003, Wells Fargo Bank, N.A. Page 14 of 18
B-14
[WELLS FARGO LOGO]
For Additional Information, please contact
WACHOVIA BANK COMMERCIAL MORTGAGE TRUST CTSLink Customer Service
(301) 815-6600
WELLS FARGO BANK, N.A COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES Reports Available on the World Wide Web
CORPORATE TRUST SERVICES SERIES 2004-C10 @ www.ctslink.com/cmbs
9062 OLD ANNAPOLIS ROAD PAYMENT DATE: 03/17/2004
COLUMBIA, MD 21045 RECORD DATE: 02/27/2004
SPECIALLY SERVICED LOAN DETAIL - PART 1
Offering Servicing Resolution Net Remaining
Loan Document Transfer Strategy Scheduled Property Interest Actual Operating DSCR Note Maturity Amortization
Number Cross-Reference Date Code (1) Balance Type (2) State Rate Balance Income Date DSCR Date Date Term
- ------ --------------- -------- --------- --------- ------- ----- -------- ------- --------- ---- ---- ---- -------- ------------
- ------------------------------------------------------------------------------------------------------------------------------------
(1) Resolution Strategy Code (2) Property Type Code
---------------------------- ----------------------
1 - Modification 6 - DPO 10 - Deed in Lieu Of MF - Multi-Family OF - Office
2 - Foreclosure 7 - REO Foreclosure RT - Retail MU - Mixed Use
3 - Bankruptcy 8 - Resolved 11 - Full Payoff HC - Health Care LO - Lodging
4 - Extension 9 - Pending Return 12 - Reps and Warranties IN - Industrial SS - Self Storage
5 - Note Sale to Master Servicer 13 - Other or TBD WH - Warehouse OT - Other
MH - Mobile Home Park
Copyright 2003, Wells Fargo Bank, N.A. Page 15 of 18
B-15
[WELLS FARGO LOGO]
For Additional Information, please contact
WACHOVIA BANK COMMERCIAL MORTGAGE TRUST CTSLink Customer Service
(301) 815-6600
WELLS FARGO BANK, N.A COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES Reports Available on the World Wide Web
CORPORATE TRUST SERVICES SERIES 2004-C10 @ www.ctslink.com/cmbs
9062 OLD ANNAPOLIS ROAD PAYMENT DATE: 03/17/2004
COLUMBIA, MD 21045 RECORD DATE: 02/27/2004
SPECIALLY SERVICED LOAN DETAIL - PART 2
Offering Resolution Site
Loan Document Strategy Inspection Appraisal Appraisal Other REO
Number Cross-Reference Code (1) Date Phase 1 Date Date Value Property Revenue Comment
- ------ --------------- -------- ---------- ------------ --------- --------- ---------------- -------
- ------------------------------------------------------------------------------------------------------------------------------------
(1) Resolution Strategy Code
1 - Modification 6 - DPO 10 - Deed in Lieu Of
2 - Foreclosure 7 - REO Foreclosure
3 - Bankruptcy 8 - Resolved 11 - Full Payoff
4 - Extension 9 - Pending Return 12 - Reps and Warranties
5 - Note Sale to Master Servicer 13 - Other or TBD
Copyright 2003, Wells Fargo Bank, N.A. Page 16 of 18
B-16
[WELLS FARGO LOGO]
For Additional Information, please contact
WACHOVIA BANK COMMERCIAL MORTGAGE TRUST CTSLink Customer Service
(301) 815-6600
WELLS FARGO BANK, N.A COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES Reports Available on the World Wide Web
CORPORATE TRUST SERVICES SERIES 2004-C10 @ www.ctslink.com/cmbs
9062 OLD ANNAPOLIS ROAD PAYMENT DATE: 03/17/2004
COLUMBIA, MD 21045 RECORD DATE: 02/27/2004
MODIFIED LOAN DETAIL
Offering
Loan Document Pre-Modification
Number Cross-Reference Balance Modification Date Modification Description
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
Totals
- ------------------------------------------------------------------------------------------------------------
Copyright 2003, Wells Fargo Bank, N.A. Page 17 of 18
B-17
[WELLS FARGO LOGO]
For Additional Information, please contact
WACHOVIA BANK COMMERCIAL MORTGAGE TRUST CTSLink Customer Service
(301) 815-6600
WELLS FARGO BANK, N.A COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES Reports Available on the World Wide Web
CORPORATE TRUST SERVICES SERIES 2004-C10 @ www.ctslink.com/cmbs
9062 OLD ANNAPOLIS ROAD PAYMENT DATE: 03/17/2004
COLUMBIA, MD 21045 RECORD DATE: 02/27/2004
LIQUIDATED LOAN DETAIL
Gross Net
Offering Proceeds Proceeds
Final Recovery Document as a % of Aggregate Net as a % of Repurchased
Loan Determination Cross- Appraisal Appraisal Actual Gross Actual Liquidation Liquidation Actual Realized by Seller
Number Date Reference Date Value Balance Proceeds Balance Expenses * Proceeds Balance Loss (Y/N)
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Current Total
- ------------------------------------------------------------------------------------------------------------------------------------
Cumulative Total
- ------------------------------------------------------------------------------------------------------------------------------------
* Aggregate liquidation expenses also include outstanding P & I advances and
unpaid fees (servicing, trustee, etc.).
Copyright 2003, Wells Fargo Bank, N.A. Page 18 of 18
B-18
ANNEX C
CLASS X-P REFERENCE RATE SCHEDULE
INTEREST INTEREST
ACCRUAL DISTRIBUTION CLASS X-P ACCRUAL DISTRIBUTION CLASS X-P
PERIOD DATE REFERENCE RATE PERIOD DATE REFERENCE RATE
-------------- -------------- ----------------- -------------- -------------- -----------------
1 03/15/04 5.56927 43 09/15/07 5.74818
2 04/15/04 5.75366 44 10/15/07 5.56365
3 05/15/04 5.56906 45 11/15/07 5.74783
4 06/15/04 5.75346 46 12/15/07 5.56332
5 07/15/04 5.56886 47 01/15/08 5.74748
6 08/15/04 5.75325 48 02/15/08 5.56298
7 09/15/04 5.75316 49 03/15/08 5.56300
8 10/15/04 5.56857 50 04/15/08 5.74695
9 11/15/04 5.75295 51 05/15/08 5.56246
10 12/15/04 5.56836 52 06/15/08 5.74660
11 01/15/05 5.56825 53 07/15/08 5.56211
12 02/15/05 5.56816 54 08/15/08 5.74624
13 03/15/05 5.56829 55 09/15/08 5.74607
14 04/15/05 5.75239 56 10/15/08 5.56159
15 05/15/05 5.56782 57 11/15/08 5.74636
16 06/15/05 5.75217 58 12/15/08 5.56189
17 07/15/05 5.56761 59 01/15/09 5.58642
18 08/15/05 5.75195 60 02/15/09 5.59306
19 09/15/05 5.75185 61 03/15/09 5.59463
20 10/15/05 5.56729 62 04/15/09 5.77862
21 11/15/05 5.75162 63 05/15/09 5.59335
22 12/15/05 5.56706 64 06/15/09 5.77917
23 01/15/06 5.56694 65 07/15/09 5.59389
24 02/15/06 5.56682 66 08/15/09 5.77888
25 03/15/06 5.56712 67 09/15/09 5.77874
26 04/15/06 5.75093 68 10/15/09 5.59347
27 05/15/06 5.56635 69 11/15/09 5.77843
28 06/15/06 5.75062 70 12/15/09 5.59485
29 07/15/06 5.56605 71 01/15/10 5.59469
30 08/15/06 5.75031 72 02/15/10 5.59466
31 09/15/06 5.75017 73 03/15/10 5.59559
32 10/15/06 5.56560 74 04/15/10 5.77945
33 11/15/06 5.74985 75 05/15/10 5.58723
34 12/15/06 5.56529 76 06/15/10 5.77231
35 01/15/07 5.56512 77 07/15/10 5.58691
36 02/15/07 5.56498 78 08/15/10 5.77124
37 03/15/07 5.56532 79 09/15/10 5.77108
38 04/15/07 5.74901 80 10/15/10 5.58541
39 05/15/07 5.56447 81 11/15/10 5.77005
40 06/15/07 5.74867 82 12/15/10 5.58791
41 07/15/07 5.56414 83 01/15/11 5.60910
42 08/15/07 5.74834 84 02/15/11 5.61628
C-1
PROSPECTUS
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
(ISSUABLE IN SERIES)
WACHOVIA COMMERCIAL MORTGAGE SECURITIES, INC.
DEPOSITOR
Wachovia Commercial Mortgage Securities, Inc. will periodically offer
certificates in one or more series. Each series of certificates will represent
the entire beneficial ownership interest in a trust fund. Distributions on the
certificates of any series will be made only from the assets of the related
trust fund.
Neither the certificates nor any assets in the related trust fund will be
obligations of, or be guaranteed by, the depositor, any servicer or any of
their respective affiliates. Neither the certificates nor any assets in the
related trust fund will be guaranteed or insured by any governmental agency or
instrumentality or by any person, unless otherwise provided in the prospectus
supplement.
The primary assets of the trust fund may include:
o multifamily and commercial mortgage loans, including participations
therein;
o mortgage-backed securities evidencing interests in or secured by
multifamily and commercial mortgage loans, including participations
therein, and other mortgage-backed securities;
o direct obligations of the United States or other government agencies;
or
o a combination of the assets described above.
INVESTING IN THE OFFERED CERTIFICATES INVOLVES RISKS. YOU SHOULD REVIEW
THE INFORMATION APPEARING UNDER THE CAPTION "RISK FACTORS" ON PAGE 14 AND IN
THE PROSPECTUS SUPPLEMENT BEFORE PURCHASING ANY OFFERED CERTIFICATE.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE OFFERED CERTIFICATES OR
DETERMINED THAT THIS PROSPECTUS OR THE ACCOMPANYING PROSPECTUS SUPPLEMENT IS
ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
February 4, 2004
TABLE OF CONTENTS
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS PROSPECTUS
AND THE ACCOMPANYING PROSPECTUS SUPPLEMENT .............................................. 5
ADDITIONAL INFORMATION ................................................................... 6
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE ........................................ 6
SUMMARY OF PROSPECTUS .................................................................... 7
RISK FACTORS ............................................................................. 14
DESCRIPTION OF THE TRUST FUNDS ........................................................... 34
General ................................................................................. 34
Mortgage Loans--Leases .................................................................. 34
CMBS .................................................................................... 38
Certificate Accounts .................................................................... 38
Credit Support .......................................................................... 39
Cash Flow Agreements .................................................................... 39
Pre-Funding ............................................................................. 39
YIELD CONSIDERATIONS ..................................................................... 40
General ................................................................................. 40
Pass-Through Rate ....................................................................... 40
Payment Delays .......................................................................... 40
Shortfalls in Collections of Interest Resulting from Prepayments ........................ 40
Prepayment Considerations ............................................................... 40
Weighted Average Life and Maturity ...................................................... 42
Controlled Amortization Classes and Companion Classes ................................... 43
Other Factors Affecting Yield, Weighted Average Life and Maturity ....................... 43
THE DEPOSITOR ............................................................................ 45
USE OF PROCEEDS .......................................................................... 45
DESCRIPTION OF THE CERTIFICATES .......................................................... 46
General ................................................................................. 46
Distributions ........................................................................... 46
Distributions of Interest on the Certificates ........................................... 47
Distributions of Principal of the Certificates .......................................... 48
Components .............................................................................. 48
Distributions on the Certificates in Respect of Prepayment Premiums or in Respect of
Equity Participations ................................................................. 48
Allocation of Losses and Shortfalls ..................................................... 48
Advances in Respect of Delinquencies .................................................... 49
Reports to Certificateholders ........................................................... 49
Voting Rights ........................................................................... 51
Termination ............................................................................. 51
Book-Entry Registration and Definitive Certificates ..................................... 52
DESCRIPTION OF THE POOLING AND SERVICING AGREEMENTS ...................................... 53
General ................................................................................. 53
Assignment of Mortgage Assets; Repurchases .............................................. 53
Representations and Warranties; Repurchases ............................................. 54
Certificate Account ..................................................................... 55
Collection and Other Servicing Procedures ............................................... 58
Realization upon Defaulted Mortgage Loans ............................................... 59
Hazard Insurance Policies ............................................................... 60
Due-on-Sale and Due-on-Encumbrance Provisions ........................................... 61
Servicing Compensation and Payment of Expenses .......................................... 61
2
Evidence as to Compliance ................................................ 62
Certain Matters Regarding the Master Servicer and the Depositor .......... 62
Events of Default ........................................................ 63
Rights upon Event of Default ............................................. 63
Amendment ................................................................ 64
List of Certificateholders ............................................... 65
The Trustee .............................................................. 65
Duties of the Trustee .................................................... 65
Certain Matters Regarding the Trustee .................................... 65
Resignation and Removal of the Trustee ................................... 65
DESCRIPTION OF CREDIT SUPPORT ............................................. 67
General .................................................................. 67
Subordinate Certificates ................................................. 67
Cross-Support Provisions ................................................. 67
Insurance or Guarantees with Respect to Mortgage Loans ................... 67
Letter of Credit ......................................................... 68
Certificate Insurance and Surety Bonds ................................... 68
Reserve Funds ............................................................ 68
Credit Support with Respect to CMBS ...................................... 68
CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS AND LEASES ........................ 69
General .................................................................. 69
Types of Mortgage Instruments ............................................ 69
Leases and Rents ......................................................... 70
Personalty ............................................................... 70
Cooperative Loans ........................................................ 70
Junior Mortgages; Rights of Senior Lenders ............................... 71
Foreclosure .............................................................. 72
Bankruptcy Laws .......................................................... 76
Environmental Considerations ............................................. 78
Due-on-Sale and Due-on-Encumbrance ....................................... 80
Subordinate Financing .................................................... 80
Default Interest and Limitations on Prepayments .......................... 80
Certain Laws and Regulations; Types of Mortgaged Properties .............. 80
Applicability of Usury Laws .............................................. 81
Servicemembers Civil Relief Act .......................................... 81
Americans with Disabilities Act .......................................... 81
Forfeiture in Drug, RICO and Money Laundering Violations ................. 82
Federal Deposit Insurance Act; Commercial Mortgage Loan Servicing ........ 82
MATERIAL FEDERAL INCOME TAX CONSEQUENCES .................................. 84
General .................................................................. 84
REMICs ................................................................... 84
Taxation of Owners of REMIC Regular Certificates ......................... 86
Taxation of Owners of REMIC Residual Certificates ........................ 89
Grantor Trust Funds ...................................................... 100
Characterization of Investments in Grantor Trust Certificates ............ 101
Taxation of Owners of Grantor Trust Fractional Interest Certificates ..... 101
STATE AND OTHER TAX CONSEQUENCES .......................................... 108
ERISA CONSIDERATIONS ...................................................... 109
General .................................................................. 109
Prohibited Transaction Exemptions ........................................ 109
3
LEGAL INVESTMENT ......................................................... 112
METHOD OF DISTRIBUTION ................................................... 114
LEGAL MATTERS ............................................................ 115
FINANCIAL INFORMATION .................................................... 115
RATINGS .................................................................. 115
INDEX OF PRINCIPAL DEFINITIONS ........................................... 116
4
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS PROSPECTUS
AND THE ACCOMPANYING PROSPECTUS SUPPLEMENT
We provide information to you about the offered certificates in two
separate documents that provide progressively more detail:
o this prospectus, which provides general information, some of which may
not apply to your series of certificates; and
o the accompanying prospectus supplement, which describes the specific
terms of your series of certificates.
If the description of your certificates in the accompanying prospectus
supplement differs from the related description in this prospectus, you should
rely on the information in that prospectus supplement.
This prospectus may not be used to consummate sales of the offered
certificates of any series unless accompanied by the prospectus supplement for
that series. This prospectus and the prospectus supplements also may be used by
us, Wachovia Capital Markets, LLC, our affiliate, and any other of our
affiliates when required under the federal securities laws in connection with
offers and sales of offered certificates in furtherance of market-making
activities in the offered certificates. Wachovia Capital Markets, LLC or any
such other affiliate may act as principal or agent in such transactions. Such
sales will be made at prices related to prevailing market prices at the time of
sale or otherwise.
Some capitalized terms used in this prospectus are defined under the
caption "Index of Principal Definitions" beginning on page 116 in this
prospectus.
In this prospectus, the terms "depositor", "we", "us" and "our" refer to
Wachovia Commercial Mortgage Securities, Inc.
---------------------
Until 90 days after the date of each prospectus supplement, all dealers
effecting transactions in the offered certificates covered by that prospectus
supplement, whether or not participating in the distribution thereof, may be
required to deliver such prospectus supplement and this prospectus. This is in
addition to the obligation of dealers to deliver a prospectus and prospectus
supplement when acting as underwriters and with respect to their unsold
allotments or subscriptions.
You should rely only on any information or representations contained or
incorporated by reference in this prospectus and the related prospectus
supplement. This prospectus and any prospectus supplement do not constitute an
offer to sell or a solicitation of an offer to buy any securities in any state
or other jurisdiction in which such offer would be unlawful.
5
ADDITIONAL INFORMATION
We have filed with the Securities and Exchange 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 do not contain all of the information set forth in
the registration statement. For further information, you should refer to the
registration statement and the exhibits attached thereto. Copies of the
Registration Statement may be obtained from the Public Reference Section of the
Securities and Exchange Commission, Washington, D.C. 20549, upon payment of the
prescribed charges, or may be examined free of charge at the Securities and
Exchange Commission's offices, 450 Fifth Street, N.W., Washington, D.C. 20549
or at the regional offices of the Securities and Exchange Commission located at
The Woolworth Building, 233 Broadway, New York, New York 10279 and 175 W.
Jackson Boulevard, Suite 900, Chicago, Illinois 60604. The Securities and
Exchange Commission also maintains a site on the World Wide Web at
"http://www.sec.gov" at which you can view and download copies of reports,
proxy and information statements and other information filed electronically
through the Electronic Data Gathering, Analysis and Retrieval system.
We will file or cause to be filed with the Securities and Exchange
Commission such periodic reports with respect to each trust fund as are
required under the Securities Exchange Act of 1934, as amended, and the rules
and regulations of the Securities and Exchange Commission thereunder.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
We are incorporating in this prospectus by reference all documents and
reports filed by us with respect to a trust fund pursuant to Section 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended. You may
obtain, without charge, a copy of any or all documents or reports incorporated
in this prospectus by reference, to the extent such documents or reports relate
to an offered certificate. Exhibits to those documents will be provided to you
only if such exhibits were specifically incorporated by reference in those
documents. Requests to the depositor should be directed in writing to Wachovia
Commercial Mortgage Securities, Inc., 301 South College Street, Charlotte,
North Carolina 28288-0166, Attention: Secretary, or by telephone at
704-374-6161.
6
SUMMARY OF PROSPECTUS
The following summary is a brief description of the main terms of the
offered certificates. For this reason, the summary does not contain all the
information that may be important to you. You will find a detailed description
of the terms of the offered certificates following this summary and in the
accompanying prospectus supplement.
The Trust Assets.............. Each series of certificates will represent
the entire beneficial ownership interest in a
trust fund consisting primarily of any of the
following:
o mortgage assets;
o certificate accounts;
o forms of credit support;
o cash flow agreements; and
o amounts on deposit in a pre-funding
account.
The Mortgage Assets........... The mortgage assets with respect to each
series of certificates may consist of any of
the following:
o multifamily and commercial mortgage loans,
including participations therein;
o commercial mortgage-backed securities,
including participations therein;
o direct obligations of the United States or
other government agencies; and
o a combination of the assets described
above.
The mortgage loans will not be guaranteed or
insured by us or any of our affiliates or,
unless otherwise provided in the prospectus
supplement, by any governmental agency or
instrumentality or other person. The mortgage
loans will be primarily secured by first or
junior liens on, or security interests in fee
simple, leasehold or a similar interest in,
any of the following types of properties:
o residential properties consisting of five
or more rental or cooperatively owned
dwelling units;
o shopping centers;
o retail buildings or centers;
o hotels and motels;
o office buildings;
o nursing homes;
o hospitals or other health-care related
facilities;
o industrial properties;
o warehouse, mini-warehouse or self-storage
facilities;
o mobile home parks;
7
o mixed use properties; and
o other types of commercial properties.
Some or all of the mortgage loans may also be
secured by an assignment of one or more leases
of all or a portion of the related mortgaged
properties. A significant or the sole source
of payments on certain mortgage loans will be
the rental payments due under the related
leases.
A mortgage loan may have an interest rate that
has any of the following features:
o is fixed over its term;
o adjusts from time to time;
o is partially fixed and partially floating;
o is floating based on one or more formulae
or indices;
o may be converted from a floating to a fixed
interest rate;
o may be converted from a fixed to a floating
interest rate; or
o interest is not paid currently but is
accrued and added to the principal balance.
A mortgage loan may provide for any of the
following:
o scheduled payments to maturity;
o payments that adjust from time to time;
o negative amortization or accelerated
amortization;
o full amortization or require a balloon
payment due on its stated maturity date;
o prohibitions on prepayment;
o releases or substitutions of collateral,
including defeasance thereof with direct
obligations of the United States; and
o payment of a premium or a yield maintenance
penalty in connection with a principal
prepayment.
Unless otherwise described in the prospectus
supplement for a series of certificates:
o the mortgaged properties may be located in
any one of the 50 states, the District of
Columbia or the Commonwealth of Puerto Rico;
o all mortgage loans will have original terms
to maturity of not more than 40 years;
o all mortgage loans will have individual
principal balances at origination of not
less than $100,000;
8
o all mortgage loans will have been
originated by persons other than the
depositor; and
o all mortgage assets will have been
purchased, either directly or indirectly, by
the depositor on or before the date of
initial issuance of the related series of
certificates.
Any commercial mortgage-backed securities
included in a trust fund will evidence
ownership interests in or be secured by
mortgage loans similar to those described
above and other mortgage-backed securities.
Some commercial mortgage-backed securities
included in a trust fund may be guaranteed or
insured by an affiliate of the depositor,
Freddie Mac, Fannie Mae, Ginnie Mae, Farmer
Mac or any other person specified in the
prospectus supplement.
Certificate Accounts.......... Each trust fund will include one or more
accounts established and maintained on behalf
of the certificateholders. All payments and
collections received or advanced with respect
to the mortgage assets and other assets in the
trust fund will be deposited into those
accounts. A certificate account may be
maintained as an interest bearing or a
non-interest bearing account, and funds may be
held as cash or reinvested.
Credit Support................ The following types of credit support may be
used to enhance the likelihood of distributions
on certain classes of certificates:
o subordination of junior certificates;
o over collateralization;
o letters of credit;
o issurance policies;
o guarantees;
o reserve funds; and/or
o other types of credit support described in
the prospectus supplement and a combination
of any of the above.
Cash Flow Agreements.......... Cash flow agreements are used to reduce the
effects of interest rate or currency exchange
rate fluctuations on the underlying mortgage
assets or on one or more classes of
certificates and increase the likelihood of
timely distributions on the certificates or
such classes of certificates, as the case may
be. The trust fund may include any of the
following types of cash flow agreements:
o guaranteed investment contracts;
o interest rate swap or exchange contracts;
o interest rate cap or floor agreements;
o currency exchange agreements;
o yield supplement agreements; or
9
o other types of similar agreements described
in the prospectus supplement.
Pre-Funding Account;
Capitalized Interest
Account....................... A trust fund may use monies deposited into a
pre-funding account to acquire additional
mortgage assets following a closing date for
the related series of certificates. The amount
on deposit in a pre-funding account will not
exceed 25% of the pool balance of the trust
fund as of the cut-off date on which the
ownership of the mortgage loans and rights to
payment thereon are deemed transferred to the
trust fund, as specified in the related
prospectus supplement. The depositor will
select any additional mortgage assets using
criteria that is substantially similar to the
criteria used to select the mortgage assets
included in the trust fund on the closing date.
If provided in the prospectus supplement, a
trust fund also may include amounts on deposit
in a separate capitalized interest account.
The depositor may use amounts on deposit in a
capitalized interest account to supplement
investment earnings, if any, of amounts on
deposit in the pre-funding account, supplement
interest collections of the trust fund, or
such other purpose as specified in the
prospectus supplement.
Amounts on deposit in any pre-funding account
or any capitalized interest account will be
held in cash or invested in short-term
investment grade obligations. Amounts
remaining on deposit in any pre-funding
account and any capitalized interest account
after the end of the related pre-funding
period will be distributed to
certificateholders as described in the
prospectus supplement.
Description of Certificates... Each series of certificates will include one
or more classes. Each series of certificates
will represent in the aggregate the entire
beneficial ownership interest in the related
trust fund. The offered certificates are the
classes of certificates being offered to you
pursuant to the prospectus supplement. The
non-offered certificates are the classes of
certificates not being offered to you pursuant
to the prospectus supplement. Information on
the non-offered certificates is being provided
solely to assist you in your understanding of
the offered certificates.
Distributions on
Certificates.................. The certificates may provide for different
methods of distributions to specific classes.
Any class of certificates may:
o provide for the accrual of interest thereon
based on fixed, variable or floating rates;
o be senior or subordinate to one or more
other classes of certificates with respect
to interest or principal distribution and
the allocation of losses on the assets of
the trust fund;
10
o be entitled to principal distributions, with
disproportionately low, nominal or no
interest distributions;
o be entitled to interest distributions, with
disproportionately low, nominal or no
principal distributions;
o provide for distributions of principal or
accrued interest only after the occurrence
of certain events, such as the retirement of
one or more other classes of certificates;
o provide for distributions of principal to be
made at a rate that is faster or slower than
the rate at which payments are received on
the mortgage assets in the related trust
fund;
o provide for distributions of principal
sequentially, based on specified payment
schedules or other methodologies; and
o provide for distributions based on a
combination of any of the above features.
Interest on each class of offered certificates
of each series will accrue at the applicable
pass-through rate on the outstanding
certificate balance or notional amount.
Distributions of interest with respect to one
or more classes of certificates may be reduced
to the extent of certain delinquencies, losses
and other contingencies described in this
prospectus and the prospectus supplement.
The certificate balance of a certificate
outstanding from time to time represents the
maximum amount that the holder thereof is then
entitled to receive in respect of principal
from future cash flow on the assets in the
related trust fund. Unless otherwise specified
in the prospectus supplement, distributions of
principal will be made on each distribution
date to the class or classes of certificates
entitled thereto until the certificate balance
of such certificates is reduced to zero.
Distributions of principal to any class of
certificates will be made on a pro rata basis
among all of the certificates of such class.
Advances...................... A servicer may be obligated as part of its
servicing responsibilities to make certain
advances with respect to delinquent scheduled
payments and property related expenses which it
deems recoverable. The trust fund may be
charged interest for any advance. We will not
have any responsibility to make such advances.
One of our affiliates may have the
responsibility to make such advances, but only
if that affiliate is acting as a servicer or
master servicer for the related series of
certificates.
Termination................... A series of certificates may be subject to
optional early termination through the
repurchase of the mortgage assets in the
related trust fund.
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Registration of Certificates... One or more classes of the offered
certificates may be initially represented by
one or more certificates registered in the name
of Cede & Co. as the nominee of The Depository
Trust Company. If your offered certificates are
so registered, you will not be entitled to
receive a definitive certificate representing
your interest except in the event that physical
certificates are issued under the limited
circumstances described in this prospectus and
the prospectus supplement.
Tax Status of
the Certificates.............. The certificates of each series will constitute
either:
o "regular interests" or "ownership interests"
in a trust fund treated as a "real estate
mortgage investment conduit" under the
Internal Revenue Code of 1986, as amended;
o interests in a trust fund treated as a
grantor trust under applicable provisions of
the Internal Revenue Code of 1986, as
amended;
o "regular interests" or "residual interests"
in a trust fund treated as a "financial
assets securitization investment trust"
under the Internal Revenue Code of 1986, as
amended; or
o any combination of any of the above
features.
ERISA Considerations.......... If you are a fiduciary of an employee benefit
plan or other retirement plan or arrangement
that is subject to the Employee Retirement
Income Security Act of 1974, as amended, or
Section 4975 of the Internal Revenue Code of
1986, as amended, or any materially similar
federal, state or local law, or any person who
proposes to use "plan assets" of any of these
plans to acquire any offered certificates, you
should carefully review with your legal counsel
whether the purchase or holding of any offered
certificates could give rise to transactions
not permitted under these laws. The prospectus
supplement will specify if investment in some
certificates may require a representation that
the investor is not (or is not investing on
behalf of) a plan or similar arrangement or if
other restrictions apply.
Legal Investment.............. The prospectus supplement will specify
whether the offered certificates will
constitute "mortgage related securities" for
purposes of the Secondary Mortgage Market
Enhancement Act of 1984, as amended. If your
investment activities are subject to legal
investment laws and regulations, regulatory
capital requirements or review by regulatory
authorities, then you may be subject to
restrictions on investment in the offered
certificates. You should consult your own legal
advisors for assistance in determining the
suitability of and consequences to you of the
purchase, ownership and sale of the offered
certificates. See "Legal Investment" herein.
12
Rating........................ At the date of issuance, as to each series,
each class of offered certificates will not be
rated lower than investment grade by one or
more nationally recognized statistical rating
agencies. A security rating is not a
recommendation to buy, sell or hold securities
and may be subject to qualification, revision
or withdrawal at any time by the assigning
rating organization.
13
RISK FACTORS
You should consider the following risk factors, in addition to the risk
factors in the prospectus supplement, in deciding whether to purchase any of
the offered certificates. The risks and uncertainties described below, together
with those described in the prospectus supplement under "Risk Factors",
summarize the material risks relating to your certificates.
Your Ability to Resell
Certificates May Be
Limited Because of Their
Characteristics.............. You may not be able to resell your certificates
and the value of your certificates may be less
than you anticipated for a variety of reasons
including:
o a secondary market for your certificates may
not develop;
o interest rate fluctuations;
o the absence of redemption rights; and
o the limited sources of information about
the certificates other than that provided
in this prospectus, the prospectus
supplement and the monthly report to
certificateholders.
The Assets of the Trust Fund
May Not Be Sufficient to Pay
Your Certificates............. Unless otherwise specified in the prospectus
supplement, neither the offered certificates of
any series nor the mortgage assets in the
related trust fund will be guaranteed or
insured by us or any of our affiliates, by any
governmental agency or instrumentality or by
any other person. No offered certificate of any
series will represent a claim against or
security interest in the trust fund for any
other series. Accordingly, if the related trust
fund has insufficient assets to make payments
on the certificates, there will be no other
assets available for payment of the deficiency.
Additionally, the trustee, master servicer,
special servicer or other specified person may
under certain circumstances withdraw some
amounts on deposit in certain funds or
accounts constituting part of a trust fund,
including the certificate account and any
accounts maintained as credit support, as
described in the prospectus supplement. The
trustee, master servicer, special servicer or
other specified person may have the authority
to make these withdrawals for purposes other
than the payment of principal of or interest
on the related series of certificates.
The prospectus supplement for a series of
certificates may provide for one or more
classes of certificates that are subordinate
to one or more other classes of certificates
in entitlement to certain distributions on the
certificates. On any distribution date in
which the related trust fund has incurred
losses or shortfalls in collections on the
mortgage assets, the subordinate certificates
initially will bear the amount of such losses
or shortfalls and, thereafter, the remaining
classes of certificates will bear the
remaining amount of such losses or shortfalls.
The priority, manner and
14
limitations on the allocation of losses and
shortfalls will be specified in the prospectus
supplement.
Prepayments and Repurchases of
the Mortgage Assets Will
Affect the Timing of Your
Cash Flow and May
Affect Your Yield............ Prepayments (including those caused by
defaults on the mortgage loans and repurchases
for breach of representation or warranty) on
the mortgage loans in a trust fund generally
will result in a faster rate of principal
payments on one or more classes of the related
certificates than if payments on such mortgage
assets were made as scheduled. Thus, the
prepayment experience on the mortgage assets
may affect the average life of each class of
related certificates. The rate of principal
payments on mortgage loans varies between pools
and from time to time is influenced by a
variety of economic, demographic, geographic,
social, tax, legal and other factors.
We cannot provide any assurance as to the rate
of prepayments on the mortgage loans in any
trust fund or that such rate will conform to
any model described in this prospectus or in
any prospectus supplement. As a result,
depending on the anticipated rate of
prepayment for the mortgage loans in any trust
fund, the retirement of any class of
certificates could occur significantly earlier
or later than you expected.
The rate of voluntary prepayments will also be
affected by:
o the voluntary prepayment terms of the
mortgage loan, including prepayment
lock-out periods and prepayment premiums;
o then-current interest rates being charged
on similar mortgage loans; and
o the availability of mortgage credit.
A series of certificates may include one or
more classes of certificates with entitlements
to payments prior to other classes of
certificates. As a result, yields on classes
of certificates with a lower priority of
payment, including classes of offered
certificates, of such series may be more
sensitive to prepayments on mortgage assets. A
series of certificates may include one or more
classes offered at a significant premium or
discount. Yields on such classes of
certificates will be sensitive, and in some
cases extremely sensitive, to prepayments on
mortgage assets and, where the amount of
interest payable with respect to a class is
disproportionately high, as compared to the
amount of principal, a holder might, in some
prepayment scenarios, fail to recoup its
original investment.
If a mortgage loan is in default, it may not
be possible to collect a prepayment premium.
No person will be required to pay any premium
if a mortgage loan is repurchased for a breach
of representation or warranty.
15
The yield on your certificates may be less
than anticipated because:
o the prepayment premium or yield maintenance
required under certain prepayment scenarios
may not be enforceable in some states or
under federal bankruptcy laws; and
o some courts may consider the prepayment
premium to be usurious.
Optional Early Termination of
the Trust Fund May Result in
an Adverse Impact on
Your Yield or May Result
in a Loss.................... A series of certificates may be subject to
optional early termination by means of the
repurchase of the mortgage assets in the
related trust fund. We cannot assure you that
the proceeds from a sale of the mortgage assets
will be sufficient to distribute the
outstanding certificate balance plus accrued
interest and any undistributed shortfalls in
interest accrued on the certificates that are
subject to the termination. Accordingly, the
holders of such certificates may suffer an
adverse impact on the overall yield on their
certificates, may experience repayment of their
investment at an unpredictable and inopportune
time or may even incur a loss on their
investment.
Ratings Do Not Guarantee Payment
and Do Not Address Prepayment
Risks........................ Any rating assigned by a rating agency to a
class of offered certificates will reflect only
its assessment of the likelihood that holders
of certificates of such class will receive
payments to which such certificateholders are
entitled under the related pooling and
servicing agreement. Ratings do not address:
o the likelihood that principal prepayments
(including those caused by defaults) on the
related mortgage loans will be made;
o the degree to which the rate of prepayments
on the related mortgage loans might differ
from that originally anticipated;
o the likelihood of early optional
termination of the related trust fund;
o the possibility that prepayments on 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
o the possibility that an investor that
purchases an offered certificate at a
significant premium might fail to recoup
its initial investment under certain
prepayment scenarios.
The amount, type and nature of credit support,
if any, provided with respect to a series of
certificates will be determined on the basis
of criteria established by each rating
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agency rating classes of certificates of such
series. Those criteria are sometimes based
upon an actuarial analysis of the behavior of
mortgage loans in a larger group. However, we
cannot provide 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, a rating agency may base their
criteria upon determinations of the values of
the mortgaged properties that provide security
for the mortgage loans. However, we cannot
provide assurance that those values will not
decline in the future.
Unused Amounts in Pre-Funding
Accounts May Be Returned to
You as a Prepayment.......... The prospectus supplement will disclose when
we are using a pre-funding account to purchase
additional mortgage assets in connection with
the issuance of certificates. Amounts on
deposit in a pre-funding account that are not
used to acquire additional mortgage assets by
the end of the pre-funding period for a series
of certificates may be distributed to holders
of those certificates as a prepayment of
principal, which may materially and adversely
affect the yield on those certificates.
Additional Mortgage Assets
Acquired in Connection with
the Use of a Pre-Funding
Account May Change the
Aggregate Characteristics of a
Trust Fund................... Any additional mortgage assets acquired by a
trust fund with funds in a pre-funding account
may possess substantially different
characteristics than the mortgage assets in the
trust fund on the closing date for a series of
certificates. Therefore, the aggregate
characteristics of a trust fund following the
pre-funding period may be substantially
different than the characteristics of a trust
fund on the closing date for that series of
certificates.
Net Operating Income Produced by
a Mortgaged Property May Be
Inadequate to Repay the
Mortgage Loans............... The value of a mortgage loan secured by a
multifamily or commercial property is directly
related to the net operating income derived
from that property because the ability of a
borrower to repay a loan secured by an
income-producing property typically depends
primarily upon the successful operation of that
property rather than upon the existence of
independent income or assets of the borrower.
The reduction in the net operating income of
the property may impair the borrower's ability
to repay the loan.
Many of the mortgage loans included in a trust
fund may be secured by liens on owner-occupied
mortgaged properties or
17
on mortgaged properties leased to a single
tenant. Accordingly, a decline in the
financial condition of the borrower or single
tenant may have a disproportionately greater
affect on the net operating income from such
mortgaged properties than would be the case
with respect to mortgaged properties with
multiple tenants.
Future Value of a Mortgaged
Property and its Net Operating
Income and Cash Flow Is
Not Predictable............... Commercial and multifamily property values and
cash flows and net operating income from such
mortgaged properties are volatile and may be
insufficient to cover debt service on the
related mortgage loan at any given time.
Property value, cash flow and net operating
income depend upon a number of factors,
including:
o changes in general or local economic
conditions and/or specific industry
segments;
o declines in real estate values;
o an oversupply of commercial or multifamily
properties in the relevant market;
o declines in rental or occupancy rates;
o increases in interest rates, real estate
tax rates and other operating expenses;
o changes in governmental rules, regulations
and fiscal policies, including
environmental legislation;
o perceptions by prospective tenants and, if
applicable, their customers, of the safety,
convenience, services and attractiveness of
the property;
o the age, construction quality and design of
a particular property;
o whether the mortgaged properties are
readily convertible to alternative uses;
o acts of God; and
o other factors beyond our control or the
control of a servicer.
Nonrecourse Loans Limit the
Remedies Available Following
a Mortgagor Default........... The mortgage loans will not be an obligation
of, or be insured or guaranteed by, any
governmental entity, by any private mortgage
insurer, or by the depositor, the originators,
the master servicer, the special servicer, the
trustee or any of their respective affiliates.
Each mortgage loan included in a trust fund
generally will be a nonrecourse loan. If there
is a default (other than a default resulting
from voluntary bankruptcy, fraud or willful
misconduct) there will generally only be
recourse against the specific mortgaged
properties and other assets that have been
pledged
18
to secure such mortgage loan. Even if a
mortgage loan provides for recourse to a
mortgagor or its affiliates, it is unlikely
the trust fund ultimately could recover any
amounts not covered by the mortgaged property.
Special Risks of Mortgage Loans
Secured by Multifamily
Properties.................... Mortgage loans secured by multifamily
properties may constitute a material
concentration of the mortgage loans in a trust
fund. Adverse economic conditions, either
local, regional or national, may limit the
amount of rent that a borrower may charge for
rental units, 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:
o construction of additional housing units;
o local military base closings;
o developments at local colleges and
universities;
o national, regional and local politics,
including, in the case of multifamily
rental properties, current or future rent
stabilization and rent control laws and
agreements;
o the level of mortgage interest rates, which
may encourage tenants in multifamily rental
properties to purchase housing;
o tax credit and city, state and federal
housing subsidy or similar programs which
may impose rent limitations and may
adversely affect the ability of the
applicable borrowers to increase rents to
maintain the mortgaged properties in proper
condition during periods of rapid inflation
or declining market value of the mortgaged
properties;
o tax credit and city, state and federal
housing subsidy or similar programs which
may impose income restrictions on tenants
and which may reduce the number of eligible
tenants in such mortgaged properties and
result in a reduction in occupancy rates
applicable thereto; and
o the possibility that some eligible tenants
may not find any differences in rents
between subsidized or supported properties
and other multifamily rental properties in
the same area to be a sufficient economic
incentive to reside at a subsidized or
supported property, which may have fewer
amenities or otherwise be less attractive
as a residence.
All of these conditions and events may
increase the possibility that a borrower may
be unable to meet its obligations under its
mortgage loan.
The multifamily projects market is
characterized generally by low barriers to
entry. Thus, a particular apartment market
with historically low vacancies could
experience substantial new construction, and a
resultant oversupply of units, in a
19
relatively short period of time. Because
multifamily apartment units are typically
leased on a short-term basis, the tenants who
reside in a particular project within such a
market may easily move to alternative projects
with more desirable amenities or locations.
Special Risks of Mortgage Loans
Secured by Retail Properties... Mortgage loans secured by retail properties may
constitute a material concentration of the
mortgage loans in a trust fund. Significant
factors determining the value of retail
properties are:
o the quality of the tenants; and
o the 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. Significant tenants
at a retail property play an important part in
generating customer traffic and making a
retail property a desirable location for other
tenants at that property. Accordingly, retail
properties may be adversely affected if a
significant tenant ceases operations at those
locations, which may occur on account of a
voluntary decision not to renew a lease,
bankruptcy or insolvency of the tenant, the
tenant's general cessation of business
activities or for other reasons. In addition,
some tenants at retail properties may be
entitled to terminate their leases or pay
reduced rent if an anchor tenant ceases
operations at the property. In those cases, we
cannot provide assurance that any anchor
tenants will continue to occupy space in the
related shopping centers.
Shopping centers, in general, are affected by
the health of the retail industry. In
addition, a shopping center may be adversely
affected by the bankruptcy or decline in
drawing power of an anchor tenant, the risk
that an anchor tenant may vacate
notwithstanding that tenant's continuing
obligation to pay rent, a shift in consumer
demand due to demographic changes (for
example, population decreases or changes in
average age or income) and/or changes in
consumer preference (for example, to discount
retailers).
Unlike other income producing properties,
retail properties also face competition from
sources outside a given real estate market,
such as:
o catalogue retailers;
o home shopping networks;
o the internet;
o telemarketing; and
o outlet centers.
20
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
which secure mortgage loans in a trust fund.
Special Risks of Mortgage Loans
Secured by Hospitality
Properties................... Mortgage loans secured by hospitality
properties (e.g., a hotel or motel) may
constitute a material concentration of the
mortgage loans in a trust fund. Various factors
affect the economic viability of a hospitality
property, including:
o location, quality and franchise affiliation
(or lack thereof);
o adverse economic conditions, either local,
regional or national, which may limit the
amount that a consumer is willing to pay
for a room and may result in a reduction in
occupancy levels;
o the construction of competing hospitality
properties, which may result in a reduction
in occupancy levels;
o the increased sensitivity of hospitality
properties (relative to other commercial
properties) to adverse economic conditions
and competition, as hotel rooms generally
are rented for short periods of time;
o the financial strength and capabilities of
the owner and operator of a hospitality
property, which may have a substantial
impact on the property's quality of service
and economic performance; and
o the generally seasonal nature of the
hospitality industry, which can be expected
to cause periodic fluctuations in room and
other revenues, occupancy levels, room
rates and operating expenses.
In addition, the successful operation of a
hospitality property with a franchise
affiliation may depend in part upon the
strength of the franchisor, the public
perception of the franchise service mark and
the continued existence of any franchise
license agreement. The transferability of a
franchise license agreement may be restricted,
and a lender or other person that acquires
title to a hospitality property as a result of
foreclosure may be unable to succeed to the
borrower's rights under the franchise license
agreement. Moreover, the transferability of a
hospitality property's operating, liquor and
other licenses upon a transfer of the
hospitality property, whether through purchase
or foreclosure, is subject to local law
requirements and may not be transferable.
Special Risks of Mortgage Loans
Secured by Office Buildings... Mortgage loans secured by office buildings
may constitute a material concentration of the
mortgage loans in a trust fund. Significant
factors determining the value of office
buildings include:
21
o the quality of the tenants in the building;
o the physical attributes of the building in
relation to competing buildings; and
o the strength and stability of the market
area as a desirable business location.
An economic decline in the business operated
by the tenants may adversely affect an office
building. That risk is increased if revenue is
dependent on a single tenant or if there is a
significant concentration of tenants in a
particular business or industry.
Office buildings are also subject to
competition with other office properties in
the same market. Competition is affected by a
property's:
o age;
o condition;
o design (e.g., floor sizes and layout);
o access to transportation; and
o ability or inability to offer certain
amenities to its tenants, including
sophisticated building systems (such as
fiber optic cables, satellite
communications or other base building
technological features).
The success of an office building also depends
on the local economy. A company's decision to
locate office headquarters in a given area,
for example, may be affected by such factors
as labor cost and quality, tax environment and
quality of life issues such as schools and
cultural amenities. A central business
district may have an economy which is markedly
different from that of a suburb. The local
economy and the financial condition of the
owner will impact on an office building's
ability to attract stable tenants on a
consistent basis. In addition, the cost of
refitting office space for a new tenant is
often more costly than for other property
types.
Special Risks of Mortgage Loans
Secured by Warehouse and Self
Storage Facilities........... Mortgage loans secured by warehouse and
storage facilities may constitute a material
concentration of the mortgage loans in a trust
fund. The storage facilities market contains
low barriers to entry.
Increased competition among self storage
facilities may reduce income available to
repay mortgage loans secured by a self storage
facility. Furthermore, the inability of a
borrower to police what is stored in a self
storage facility due to privacy considerations
may increase environmental risks.
22
Special Risks of Mortgage Loans
Secured by Healthcare-Related
Properties................... The mortgaged properties may include health
care-related facilities, including senior
housing, assisted living facilities, skilled
nursing facilities and acute care facilities.
o Senior housing generally consists of
facilities with respect to which the
residents are ambulatory, handle their own
affairs and typically are couples whose
children have left the home and at which
the accommodations are usually apartment
style;
o Assisted living facilities are typically
single or double room occupancy,
dormitory-style housing facilities which
provide food service, cleaning and some
personal care and with respect to which the
tenants are able to medicate themselves but
may require assistance with certain daily
routines;
o Skilled nursing facilities provide services
to post trauma and frail residents with
limited mobility who require extensive
medical treatment; and
o Acute care facilities generally consist of
hospital and other facilities providing
short-term, acute medical care services.
Certain types of health care-related
properties, particularly acute care
facilities, skilled nursing facilities and
some assisted living facilities, typically
receive a substantial portion of their
revenues from government reimbursement
programs, primarily Medicaid and Medicare.
Medicaid and Medicare are subject to statutory
and regulatory changes, retroactive rate
adjustments, administrative rulings, policy
interpretations, delays by fiscal
intermediaries and government funding
restrictions. Moreover, governmental payors
have employed cost-containment measures that
limit payments to health care providers, and
there exist various proposals for national
health care reform that could further limit
those payments. Accordingly, we cannot provide
assurance that payments under government
reimbursement programs will, in the future, be
sufficient to fully reimburse the cost of
caring for program beneficiaries. If those
payments are insufficient, net operating
income of health care-related facilities that
receive revenues from those sources may
decline, which consequently could have an
adverse affect on the ability of the related
borrowers to meet their obligations under any
mortgage loans secured by health care-related
facilities.
Moreover, health care-related facilities are
generally subject to federal and state laws
that relate to the adequacy of medical care,
distribution of pharmaceuticals, rate setting,
equipment, personnel, operating policies and
additions to facilities and services. In
addition, facilities where such care or other
medical services are provided are subject to
periodic
23
inspection by governmental authorities to
determine compliance with various standards
necessary to continued licensing under state
law and continued participation in the
Medicaid and Medicare reimbursement programs.
Furthermore, under applicable federal and
state laws and regulations, Medicare and
Medicaid reimbursements are generally not
permitted to be made to any person other than
the provider who actually furnished the
related medical goods and services.
Accordingly, in the event of foreclosure, the
trustee, the master servicer, the special
servicer or a subsequent lessee or operator of
any health care-related facility securing a
defaulted mortgage loan generally would not be
entitled to obtain from federal or state
governments any outstanding reimbursement
payments relating to services furnished at
such property prior to foreclosure. Any of the
aforementioned events may adversely affect the
ability of the related borrowers to meet their
mortgage loan obligations.
Providers of assisted living services are also
subject to state licensing requirements in
certain states. The failure of an operator to
maintain or renew any required license or
regulatory approval could prevent it from
continuing operations at a health care-related
facility or, if applicable, bar it from
participation in government reimbursement
programs. In the event of foreclosure, we
cannot provide assurance that the trustee or
any other purchaser at a foreclosure sale
would be entitled to the rights under the
licenses, and the trustee or other purchaser
may have to apply in its own right for the
applicable license. We cannot provide
assurance that the trustee or other purchaser
could obtain the applicable license or that
the related mortgaged property would be
adaptable to other uses.
Government regulation applying specifically to
acute care facilities, skilled nursing
facilities and certain types of assisted
living facilities includes health planning
legislation, enacted by most states, intended,
at least in part, to regulate the supply of
nursing beds. The most common method of
control is the requirement that a state
authority first make a determination of need,
evidenced by its issuance of a certificate of
need, before a long-term care provider can
establish a new facility, add beds to an
existing facility or, in some states, take
certain other actions (for example, acquire
major medical equipment, make major capital
expenditures, add services, refinance
long-term debt, or transfer ownership of a
facility). States also regulate nursing bed
supply in other ways. For example, some states
have imposed moratoria on the licensing of new
beds, or on the certification of new Medicaid
beds, or have discouraged the construction of
new nursing facilities by limiting Medicaid
reimbursements allocable to the cost of new
construction and equipment. In general, a
certificate of need is site specific and
operator specific; it cannot be transferred
from one site to another, or to another
operator, without the approval of the
appropriate state agency. Accordingly, in the
case of foreclosure upon a mortgage loan
24
secured by a lien on a health care-related
mortgaged property, the purchaser at
foreclosure might be required to obtain a new
certificate of need or an appropriate
exemption. In addition, compliance by a
purchaser with applicable regulations may in
any case require the engagement of a new
operator and the issuance of a new operating
license. Upon a foreclosure, a state
regulatory agency may be willing to expedite
any necessary review and approval process to
avoid interruption of care to a facility's
residents, but we cannot provide assurance
that any state regulatory agency will do so or
that the state regulatory agency will issue
any necessary licenses or approvals.
Federal and state government "fraud and abuse"
laws also apply to health care-related
facilities. "Fraud and abuse" laws generally
prohibit payment or fee-splitting arrangements
between health care providers that are
designed to induce or encourage the referral
of patients to, or the recommendation of, a
particular provider for medical products or
services. Violation of these restrictions can
result in license revocation, civil and
criminal penalties, and exclusion from
participation in Medicare or Medicaid
programs. The state law restrictions in this
area vary considerably from state to state.
Moreover, the federal anti-kickback law
includes broad language that potentially could
be applied to a wide range of referral
arrangements, and regulations designed to
create "safe harbors" under the law provide
only limited guidance. Accordingly, we cannot
provide assurance that such laws will be
interpreted in a manner consistent with the
practices of the owners or operators of the
health care-related mortgaged properties that
are subject to those laws.
The operators of health care-related
facilities are likely to compete on a local
and regional basis with others that operate
similar facilities, some of which competitors
may be better capitalized, may offer services
not offered by such operators, or may be owned
by non-profit organizations or government
agencies supported by endowments, charitable
contributions, tax revenues and other sources
not available to such operators. The
successful operation of a health care-related
facility will generally depend upon:
o the number of competing facilities in the
local market;
o the facility's age and appearance;
o the reputation and management of the
facility;
o the types of services the facility
provides; and
o where applicable, the quality of care and
the cost of that care.
The inability of a health care-related
mortgaged property to flourish in a
competitive market may increase the likelihood
of foreclosure on the related mortgage loan,
possibly affecting the yield on one or more
classes of the related series of offered
certificates.
25
Special Risks of Mortgage Loans
Secured by Industrial and
Mixed-Use Facilities........... Mortgage loans secured by industrial and
mixed-use facilities may constitute a material
concentration of the mortgage loans in a trust
fund. Significant factors determining the value
of industrial properties include:
o the quality of tenants;
o building design and adaptability; and
o the location of the property.
Concerns about the quality of tenants,
particularly major tenants, are similar in
both office properties and industrial
properties, although industrial properties are
more frequently dependent on a single tenant.
In addition, properties used for many
industrial purposes are more prone to
environmental concerns than other property
types.
Aspects of building site design and
adaptability affect the value of an industrial
property. Site characteristics which are
valuable to an industrial property include
clear heights, column spacing, zoning
restrictions, number of bays and bay depths,
divisibility, truck turning radius and overall
functionality and accessibility. Location is
also important because an industrial property
requires the availability of labor sources,
proximity to supply sources and customers and
accessibility to rail lines, major roadways
and other distribution channels.
Industrial properties may be adversely
affected by reduced demand for industrial
space occasioned by a decline in a particular
industry segment (e.g. a decline in defense
spending), and a particular industrial
property that suited the needs of its original
tenant may be difficult to relet to another
tenant or may become functionally obsolete
relative to newer properties.
Poor Property Management Will
Adversely Affect the
Performance of the Related
Mortgaged Property............ Each mortgaged property securing a mortgage
loan which has been sold into a trust fund is
managed by a property manager (which generally
is an affiliate of the borrower) or by the
borrower itself. The successful operation of a
real estate project is largely dependent on the
performance and viability of the management of
such project. The property manager is
responsible for:
o operating the property;
o providing building services;
o responding to changes in the local market;
and
o planning and implementing the rental
structure, including establishing levels of
rent payments and advising the borrowers so
that maintenance and capital improvements
can be carried out in a timely fashion.
26
We cannot provide assurance regarding the
performance of any operators, leasing agents
and/or property managers or persons who may
become operators and/or property managers upon
the expiration or termination of management
agreements or following any default or
foreclosure under a mortgage loan. In
addition, the property managers are usually
operating companies and unlike limited purpose
entities, may not be restricted from incurring
debt and other liabilities in the ordinary
course of business or otherwise. There can be
no assurance that the property managers will
at all times be in a financial condition to
continue to fulfill their management
responsibilities under the related management
agreements throughout the terms of those
agreements.
Balloon Payments on Mortgage Loans
Result in Heightened Risk of
Borrower Default............. Some of the mortgage loans included in a
trust fund may not be fully amortizing (or may
not amortize at all) over their terms to
maturity and, thus, will require substantial
principal payments (that is, balloon payments)
at their stated maturity. Mortgage loans of
this type involve a greater degree of risk than
self-amortizing loans because the ability of a
borrower to make a balloon payment typically
will depend upon either:
o its ability to fully refinance the loan; or
o its ability to sell the related mortgaged
property at a price sufficient to permit
the borrower to make the balloon payment.
The ability of a borrower to accomplish either
of these goals will be affected by a number of
factors, including:
o the value of the related mortgaged
property;
o the level of available mortgage interest
rates at the time of sale or refinancing;
o the borrower's equity in the related
mortgaged property;
o the financial condition and operating
history of the borrower and the related
mortgaged property;
o tax laws;
o rent control laws (with respect to certain
residential properties);
o Medicaid and Medicare reimbursement rates
(with respect to hospitals and nursing
homes);
o prevailing general economic conditions; and
o the availability of credit for loans
secured by commercial or multifamily, as
the case may be, real properties generally.
27
The Servicer Will Have Discretion
to Handle or Avoid Obligor
Defaults in a Manner Which May
Be Adverse to Your Interests.. If and to the extent specified in the
prospectus supplement defaulted mortgage loans
exist or are imminent, in order to maximize
recoveries on defaulted mortgage loans, the
related pooling and servicing agreement will
permit (within prescribed limits) the master
servicer or a special servicer to extend and
modify mortgage loans that are in default or as
to which a payment default is imminent. While
the related pooling and servicing agreement
generally will require a master servicer to
determine that any such extension or
modification is reasonably likely to produce a
greater recovery on a present value basis than
liquidation, we cannot provide assurance that
any such extension or modification will in fact
increase the present value of receipts from or
proceeds of the affected mortgage loans.
In addition, a master servicer or a special
servicer may receive a workout fee based on
receipts from or proceeds of such mortgage
loans that would otherwise be payable to the
certificateholders.
Proceeds Received upon Foreclosure
of Mortgage Loans Secured
Primarily by Junior Mortgages
May Result in Losses......... To the extent specified in the prospectus
supplement, some of the mortgage loans included
in a trust fund may be secured primarily by
junior mortgages. When liquidated, mortgage
loans secured by junior mortgages are entitled
to satisfaction from proceeds that remain from
the sale of the related mortgaged property
after the mortgage loans senior to such
mortgage loans have been satisfied. If there
are insufficient funds to satisfy both the
junior mortgage loans and senior mortgage
loans, the junior mortgage loans would suffer a
loss and, accordingly, one or more classes of
certificates would bear such loss. Therefore,
any risks of deficiencies associated with first
mortgage loans will be greater with respect to
junior mortgage loans.
Credit Support May Not Cover
Losses or Risks Which Could
Adversely Affect Payment on
Your Certificates............. The prospectus supplement for the offered
certificates of each series will describe any
credit support provided with respect to those
certificates. Use of credit support will be
subject to the conditions and limitations
described in this prospectus and in the related
prospectus supplement. Moreover, credit support
may not cover all potential losses or risks;
for example, credit support may or may not
cover fraud or negligence by a mortgage loan
originator or other parties.
A series of certificates may include one or
more classes of subordinate certificates
(which may include offered certificates), if
so provided in the prospectus supplement.
Although subordination is intended to reduce
the risk to holders of
28
senior certificates of delinquent
distributions or ultimate losses, the amount
of subordination will be limited and may
decline under certain circumstances. In
addition, if principal payments on one or more
classes of certificates of a series are made
in a specified order of priority, any limits
with respect to the aggregate amount of claims
under any related credit support may be
exhausted before the principal of the lower
priority classes of certificates of such
series has been fully repaid. As a result, the
impact of losses and shortfalls experienced
with respect to the mortgage assets may fall
primarily upon those classes of certificates
having a lower priority of payment. Moreover,
if a form of credit support covers more than
one series of certificates, holders of
certificates of one series will be subject to
the risk that such credit support will be
exhausted by the claims of the holders of
certificates of one or more other series.
Regardless of the form of credit enhancement
provided, the amount of coverage will be
limited in amount and in most cases will be
subject to periodic reduction in accordance
with a schedule or formula. The master
servicer will generally be permitted to
reduce, terminate or substitute all or a
portion of the credit enhancement for any
series of certificates if the applicable
rating agency indicates that the then-current
rating of those certificates will not be
adversely affected. The rating of any series
of certificates by any applicable rating
agency may be lowered following the initial
issuance of those certificates as a result of
the downgrading of the obligations of any
applicable credit support provider, or as a
result of losses on the related mortgage
assets substantially in excess of the levels
contemplated by that rating agency at the time
of its initial rating analysis. None of the
depositor, the master servicer or any of our
or the master servicer's affiliates will have
any obligation to replace or supplement any
credit enhancement, or to take any other
action to maintain any rating of any series of
certificates.
Mortgagors of Commercial Mortgage
Loans Are Sophisticated and May
Take Actions Adverse to Your
Interests.................... Mortgage loans made to partnerships,
corporations or other entities may entail risks
of loss from delinquency and foreclosure that
are greater than those of mortgage loans made
to individuals. The mortgagor's sophistication
and form of organization may increase the
likelihood of protracted litigation or
bankruptcy in default situations.
Some Actions Allowed by the
Mortgage May Be Limited
by Law....................... Mortgages securing mortgage loans included in
a trust fund 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 securing mortgage
loans included in a trust fund may also include
a
29
debt-acceleration clause, which permits the
lender to accelerate the debt upon a monetary
or non-monetary default of the borrower. Such
clauses are not always enforceable. 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.
Assignment of Leases and Rents to
Provide Further Security for
Mortgage Loans Poses
Special Risks................. The mortgage loans included in any trust fund
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 collect the rents. In addition,
bankruptcy or the commencement of similar
proceedings by or in respect of the borrower
may adversely affect the lender's ability to
collect the rents.
Inclusion in a Trust Fund of
Delinquent Mortgage Loans May
Adversely Affect the Rate of
Defaults and Prepayments on the
Mortgage Loans................. If so provided in the prospectus supplement,
the trust fund for a series of certificates may
include mortgage loans that are delinquent as
of the date they are deposited in the trust
fund. A mortgage loan will be considered
"delinquent" if it is 30 days or more past its
most recently contractual scheduled payment
date in payment of all amounts due according to
its terms. In any event, at the time of its
creation, the trust fund will not include
delinquent loans which by principal amount are
more than 20% of the aggregate principal amount
of all mortgage loans in the trust fund. If so
specified in the prospectus supplement, the
servicing of such mortgage loans will be
performed by a special servicer.
Credit support provided with respect to a
series of certificates may not cover all
losses related to delinquent 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 on the mortgage loans
in the trust fund and the yield on the offered
certificates of such series.
30
Environmental Liability May
Affect the Lien on a Mortgaged
Property and Expose the
Lender to Costs.............. Under certain laws, contamination of real
property may give rise to a lien on the
property to assure the costs of cleanup. In
several states, that lien has priority over an
existing mortgage lien on a property. In
addition, under the laws of some states and
under the federal Comprehensive Environmental
Response, Compensation, and Liability Act of
1980, a lender may be liable, as an "owner" or
"operator," for costs of addressing releases or
threatened releases of hazardous substances at
a property, if agents or employees of the
lender have become sufficiently involved in the
operations of the borrower, regardless of
whether or not the environmental damage or
threat was caused by the borrower. A lender
also risks such liability on foreclosure of the
mortgage. In addition, liabilities imposed upon
a borrower by CERCLA or other environmental
laws may adversely affect a borrower's ability
to repay a loan. If a trust fund includes
mortgage loans and the prospectus supplement
does not otherwise specify, the related pooling
and servicing agreement will contain provisions
generally to the effect that the master
servicer, acting on behalf of the trust fund,
may not acquire title to a mortgaged property
or assume control of its operation unless the
master servicer, based upon a report prepared
by a person who regularly conducts
environmental site assessments, has made the
determination that it is appropriate to do so.
These provisions are designed to reduce
substantially the risk of liability for costs
associated with remediation of hazardous
substances, but we cannot provide assurance in
a given case that those risks can be eliminated
entirely. In addition, it is likely that any
recourse against the person preparing the
environmental report, and such person's ability
to satisfy a judgment, will be limited.
One Action Jurisdiction May Limit
the Ability of the Special
Servicer to Foreclose on a
Mortgaged Property............ Several states (including California) have laws
that prohibit more than one "judicial action"
to enforce a mortgage obligation, and some
courts have construed the term "judicial
action" broadly. The special servicer may need
to obtain advice of counsel prior to enforcing
any of the trust fund's rights under any of the
mortgage loans that include mortgaged
properties where the rule could be applicable.
In the case of a mortgage loan secured by
mortgaged properties located in multiple
states, the special servicer may be required
to foreclose first on properties located in
states where "one action" rules apply (and
where non-judicial foreclosure is permitted)
before foreclosing on properties located in
states where judicial foreclosure is the only
permitted method of foreclosure.
31
Rights Against Tenants May Be Limited
if Leases Are Not Subordinate to the
Mortgage or Do Not Contain
Attornment Provisions........ Some of the tenant leases contain provisions
that require the tenant to attorn to (that is,
recognize as landlord under the lease) a
successor owner of the property following
foreclosure. Some of the leases may be either
subordinate to the liens created by the
mortgage loans or else contain a provision that
requires the tenant to subordinate the lease if
the mortgagee agrees to enter into a
non-disturbance agreement.
In some states, if tenant leases are
subordinate to the liens created by the
mortgage loans and such leases do not contain
attornment provisions, such leases may
terminate upon the transfer of the property to
a foreclosing lender or purchaser at
foreclosure. Accordingly, in the case of the
foreclosure of a mortgaged property located in
such a state and leased to one or more
desirable tenants under leases that do not
contain attornment provisions, such mortgaged
property could experience a further decline in
value if such tenants' leases were terminated
(e.g., if such tenants were paying
above-market rents).
If a lease is senior to a mortgage, the lender
will not (unless it has otherwise agreed with
the tenant) possess the right to dispossess
the tenant upon foreclosure of the property,
and if the lease contains provisions
inconsistent with the mortgage (e.g.,
provisions relating to application of
insurance proceeds or condemnation awards),
the provisions of the lease will take
precedence over the provisions of the
mortgage.
If Mortgaged Properties Are Not in
Compliance With Current Zoning
Laws, You May Not Be Able to
Restore Compliance Following a
Casualty Loss................ 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 may qualify as permitted
non-confirming 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 were 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.
Inspections of the Mortgaged
Properties Were Limited...... The mortgaged properties were inspected by
licensed engineers in connection with the
origination of the mortgage
32
loans to assess the structure, exterior walls,
roofing interior construction, mechanical and
electrical systems and general condition of
the site, buildings and other improvements
located on the mortgaged properties. We cannot
provide assurance that all conditions
requiring repair or replacement have been
identified in such inspections.
Litigation Concerns........... There may be legal proceedings pending and,
from time to time, threatened against the
mortgagors or their affiliates relating to the
business, or arising out of the ordinary course
of business, of the mortgagors and their
affiliates. We cannot provide assurance that
such litigation will not have a material
adverse effect on the distributions to you on
your certificates.
33
DESCRIPTION OF THE TRUST FUNDS
GENERAL
The primary assets of each trust fund will consist of mortgage assets
which include (i) one or more multifamily and/or commercial mortgage loans and
participations therein, (ii) CMBS, (iii) direct obligations of the United
States or other government agencies, or (iv) a combination of the assets
described in clauses (i), (ii) and (iii). 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, which may or may not be the originator
of such mortgage loan or the issuer of such CMBS and may be an affiliate of the
depositor. The mortgage assets will not be guaranteed or insured by the
depositor or any of its affiliates or, unless otherwise provided in the
prospectus supplement, by any governmental agency or instrumentality or by any
other person. The discussion below under the heading "--Mortgage
Loans--Leases," unless otherwise noted, applies equally to mortgage loans
underlying any CMBS included in a particular trust fund.
MORTGAGE LOANS--LEASES
General. The mortgage loans will be evidenced by mortgage notes secured by
mortgages or deeds of trust or similar security instruments that create first
or junior liens on, or installment contracts for the sale of, mortgaged
properties consisting of (i) multifamily properties, which are residential
properties consisting of five or more rental or cooperatively owned dwelling
units in high-rise, mid-rise or garden apartment buildings or other residential
structures, or (ii) commercial properties, which include office buildings,
retail stores, hotels or motels, nursing homes, hospitals or other health
care-related facilities, mobile home parks, warehouse facilities,
mini-warehouse facilities, self-storage facilities, industrial plants, mixed
use or other types of income-producing properties or unimproved land. The
multifamily properties may include mixed commercial and residential structures
and may include apartment buildings owned by private cooperative housing
corporations. If so specified in the prospectus supplement, each mortgage will
create a first priority mortgage lien on a mortgaged property. A mortgage may
create a lien on a borrower's leasehold estate in a property; however, 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 other than the
depositor.
If so specified in the prospectus supplement, mortgage assets for a series
of certificates may include mortgage loans made on the security of real estate
projects under construction. In that case, the prospectus supplement will
describe the procedures and timing for making disbursements from construction
reserve funds as portions of the related real estate project are completed. In
addition, mortgage assets may include mortgage loans that are delinquent as of
the date of issuance of a series of certificates. In that case, the prospectus
supplement will set forth, as to each such mortgage loan, available information
as to the period of such delinquency, 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.
Leases. To the extent specified in the prospectus supplement, the
commercial properties may be leased to lessees that occupy all or a portion of
such properties. Pursuant to a lease assignment, the borrower may assign its
right, title and interest as lessor under each lease and the income derived
therefrom to the mortgagee, while retaining a license to collect the rents for
so long as there is no default. If the borrower defaults, the license
terminates and the mortgagee or its agent is entitled to collect the rents from
the lessee for application to the monetary obligations of the borrower. State
law may limit or restrict the enforcement of the lease assignments by a
mortgagee until it takes possession of the mortgaged property and/or a receiver
is appointed. See "Certain Legal Aspects of the Mortgage Loans and
Leases--Leases and Rents." Alternatively, to the extent specified in the
prospectus supplement, the borrower and the mortgagee may agree that payments
under leases are to be made directly to a servicer.
To the extent described in the prospectus supplement, the leases, which
may include "bond-type" or "credit-type" leases, may require the lessees to pay
rent that is sufficient in the aggregate to cover all scheduled payments of
principal and interest on the mortgage loans and, in certain cases, their pro
rata
34
share of the operating expenses, insurance premiums and real estate taxes
associated with the mortgaged properties. A "bond-type" lease is a lease
between a lessor and a lessee for a specified period of time with specified
rent payments that are at least sufficient to repay the related note(s). A
bond-type lease requires the lessee to perform and pay for all obligations
related to the leased premises and provides that, no matter what occurs with
regard to the leased premises, the lessee is obligated to continue to pay its
rent. A "credit-type" lease is a lease between a lessor and a lessee for a
specified period of time with specified rent payments at least sufficient to
repay the related note(s). A credit-type lease requires the lessee to perform
and pay for most of the obligations related to the leased premises, excluding
only a few landlord duties which remain the responsibility of the
borrower/lessor. Leases (other than bond-type leases) may require the borrower
to bear costs associated with structural repairs and/or the maintenance of the
exterior or other portions of the mortgaged property or provide for certain
limits on the aggregate amount of operating expenses, insurance premiums, taxes
and other expenses that the lessees are required to pay.
If so specified in the prospectus supplement, under certain circumstances
the lessees may be permitted to set off their rental obligations against the
obligations of the borrowers under the leases. In those cases where payments
under the leases (net of any operating expenses payable by the borrowers) are
insufficient to pay all of the scheduled principal and interest on the mortgage
loans, the borrowers must rely on other income or sources generated by the
mortgaged property to make payments on the mortgage loan. To the extent
specified in the prospectus supplement, some commercial properties may be
leased entirely to one lessee. This is generally the case in bond-type leases
and credit-type leases. In such cases, absent the availability of other funds,
the borrower must rely entirely on rent paid by such lessee in order for the
borrower to pay all of the scheduled principal and interest on the related
commercial loan. To the extent specified in the prospectus supplement, some
leases (not including bond-type leases) may expire prior to the stated maturity
of the mortgage loan. In such cases, upon expiration of the leases the
borrowers will have to look to alternative sources of income, including rent
payment by any new lessees or proceeds from the sale or refinancing of the
mortgaged property, to cover the payments of principal and interest due on the
mortgage loans unless the lease is renewed. As specified in the prospectus
supplement, some leases may provide that upon the occurrence of a casualty
affecting a mortgaged property, the lessee will have the right to terminate its
lease, unless the borrower, as lessor, is able to cause the mortgaged property
to be restored within a specified period of time. Some leases may provide that
it is the lessor's responsibility to restore the mortgaged property to its
original condition after a casualty. Some leases may provide that it is the
lessee's responsibility to restore the mortgaged property to its original
condition after a casualty. Some leases may provide a right of termination to
the lessee if a taking of a material or specified percentage of the leased
space in the mortgage property occurs, or if the ingress or egress to the
leased space has been materially impaired.
Default and Loss Considerations with Respect to the Mortgage
Loans. Mortgage loans secured by liens on income-producing properties are
substantially different from loans which are secured by 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, some or all of
the mortgage loans included in a trust fund may be non-recourse loans, which
means that, absent special facts, recourse in the case of default will be
limited to the mortgaged property and such other assets, if any, that the
borrower pledged to secure repayment of the mortgage loan.
Lenders typically look to the Debt Service Coverage Ratio of a loan
secured by income-producing property as an important measure of the risk of
default on such a loan. As more fully set forth in the prospectus supplement,
the Debt Service Coverage Ratio of a mortgage loan at any given time is the
ratio of (i) the Net Operating Income of the mortgaged property for a
twelve-month period to (ii) the annualized scheduled payments on the mortgage
loan and on any other loan that is secured by a lien on the mortgaged property
prior to the lien of the mortgage. As more fully set forth in the prospectus
supplement, Net Operating Income means, for any given period, the total
operating revenues derived from a mortgaged property, minus the total operating
expenses incurred in respect of the mortgaged property other than (i) non-cash
items such as depreciation and amortization, (ii) capital expenditures and
(iii) debt service on loans (including the mortgage loan) secured by liens on
the mortgaged property. The Net Operating Income of a mortgaged property will
fluctuate over time and may not be sufficient to cover
35
debt service on the mortgage loan at any given time. An insufficiency of Net
Operating Income can be compounded or solely caused by an adjustable rate
mortgage loan. As the primary source of the operating revenues of a non-owner
occupied income-producing property, the condition of the applicable real estate
market and/or area economy may effect rental income (and maintenance payments
from tenant-stockholders of a private cooperative housing corporation). 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,
occupied or used for longer periods, such as warehouses, retail stores, office
buildings and industrial plants. Commercial loans may be secured by
owner-occupied mortgaged properties or mortgaged properties leased to a single
tenant. Accordingly, a decline in the financial condition of the mortgagor or
single tenant, as applicable, may have a disproportionately greater effect on
the Net Operating Income from such mortgaged properties than the case of
mortgaged properties with multiple tenants.
The Debt Service Coverage Ratio should not be relied upon as the sole
measure of the risk of default of any loan, however, since other factors may
outweigh a high Debt Service Coverage Ratio. With respect to a balloon mortgage
loan, for example, the risk of default as a result of the unavailability of a
source of funds to finance the related balloon payment at maturity on terms
comparable to or better than those of the balloon mortgage loans could be
significant even though the related Debt Service Coverage Ratio is high.
Increases in operating expenses due to the general economic climate or
economic conditions in a locality or industry segment, such as increases in
interest rates, real estate tax rates, energy costs, labor costs and other
operating expenses, and/or changes in governmental rules, regulations and
fiscal policies may also affect the risk of default on a mortgage loan. As may
be further described in the 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. 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. See "--Leases" above.
While the duration of leases and the existence of any "net of expense"
provisions are often viewed as the primary considerations in evaluating the
credit risk of mortgage loans secured by certain income-producing properties,
such risk may be affected equally or to a greater extent by changes in
government regulation of the operator of the property. Examples of the latter
include mortgage loans secured by health care-related facilities, the income
from which and the operating expenses of which are subject to state and/or
federal regulations, such as Medicare and Medicaid, and multifamily properties
and mobile home parks, which may be subject to state or local rent control
regulation and, in certain cases, restrictions on changes in use of the
property. Low- and moderate-income housing in particular may be subject to
legal limitations and regulations but, because of such regulations, may also be
less sensitive to fluctuations in market rents generally.
Lenders also look to the Loan-to-Value Ratio of a mortgage loan as a
measure of risk of loss if a property must be liquidated following a default.
The lower the Loan-to-Value Ratio, the greater the percentage of the borrower's
equity in a mortgaged property, and thus the greater the cushion provided to
the lender against loss on liquidation following a default.
Loan-to-Value Ratios will not necessarily constitute an accurate measure
of the risk of liquidation loss in a pool of mortgage loans. For example, the
value of a mortgaged property as of the date of initial issuance of the related
series of certificates may be less than the fair market value of the mortgaged
property determined in an appraisal determined at loan origination, and will
likely continue to fluctuate from time to time based upon 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
36
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. Where more than one of these appraisal methods
are used and provide significantly different results, an accurate determination
of value and, correspondingly, a reliable analysis of default and loss risks,
is even more difficult.
While 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 is 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--Net Operating Income
Produced by a Mortgaged Property May Be Inadequate to Repay the Mortgage Loans"
and "--Balloon Payments on Mortgage Loans Result in Heightened Risk of Borrower
Default."
Payment Provisions of the Mortgage Loans. Unless otherwise specified in
the prospectus supplement, all of the mortgage loans will have original terms
to maturity of not more than 40 years and will provide for scheduled payments
of principal, interest or both, to be made on specified dates that occur
monthly or quarterly or at such other interval as is specified in the
prospectus supplement. A mortgage loan (i) may provide for no accrual of
interest or for accrual of interest thereon at an interest rate that is fixed
over its term or that adjusts from time to time, or that may be converted at
the borrower's election from an adjustable to a fixed interest rate, or from a
fixed to an adjustable interest rate, (ii) may provide for the formula, index
or other method by which the interest rate will be calculated, (iii) may
provide for level payments to maturity or for payments that adjust from time to
time to accommodate changes in the interest rate or to reflect the occurrence
of certain events, and may permit negative amortization or accelerated
amortization, (iv) may be fully amortizing over its term to maturity, or may
provide for little or no amortization over its term and thus require a balloon
payment on its stated maturity date, and (v) may contain a prohibition on
prepayment for a specified lockout period or require payment of a prepayment
premium or a yield maintenance penalty in connection with a prepayment, in each
case as described in the prospectus supplement. A mortgage loan may also
contain an equity participation provision that entitles the lender to a share
of profits realized from the operation or disposition of the mortgaged
property, as described in the prospectus supplement. If holders of any series
or class of offered certificates will be entitled to all or a portion of a
prepayment premium or an equity participation, the prospectus supplement will
describe the prepayment premium and/or equity participation and the method or
methods by which any such amounts will be allocated to holders.
Mortgage Loan Information in Prospectus Supplements. Each prospectus
supplement will contain certain information pertaining to the mortgage loans in
the related trust fund which will generally include the following: (i) the
aggregate outstanding principal balance and the largest, smallest and average
outstanding principal balance of the mortgage loans as of the applicable
Cut-Off Date, (ii) the type or types of property that provide security for
repayment of the mortgage loans, (iii) the original and remaining terms to
maturity of the mortgage loans and the seasoning of the mortgage loans, (iv)
the earliest and latest origination date and maturity date and weighted average
original and remaining terms to maturity (or for ARD loans, the anticipated
repayment date) of the mortgage loans, (v) the original Loan-to-Value Ratios of
the mortgage loans, (vi) the mortgage interest rates or range of mortgage
interest rates and the weighted average mortgage interest rate carried by the
mortgage loans, (vii) the geographic distribution of the mortgaged properties
on a state-by-state basis, (viii) information with respect to the prepayment
provisions, if any, of the mortgage loans, (ix) with respect to adjustable rate
mortgage 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 interest rate adjustments at the time of any
adjustment and over the life of the adjustable rate mortgage loans, (x) Debt
Service Coverage Ratios either at origination or as of a more recent date (or
both) and (xi) information regarding the payment characteristics of the
mortgage loans, including without limitation balloon payment and other
amortization provisions. In appropriate cases, the prospectus supplement will
also contain certain information available to the depositor that pertains to
the provisions of leases and the nature of tenants
37
of the mortgaged properties. If specific information regarding the mortgage
loans is not known to the depositor at the time the certificates are initially
offered, the depositor will provide more general information of the nature
described above in the prospectus supplement, and the depositor will set forth
specific information of the nature described above in a report which will be
available to purchasers of the related certificates at or before the initial
issuance thereof and will be filed as part of a Current Report on Form 8-K with
the Securities and Exchange Commission within 15 days following such issuance.
CMBS
CMBS may include (i) private (that is, not guaranteed or insured by the
United States or any agency or instrumentality thereof) mortgage
participations, mortgage pass-through certificates or other mortgage-backed
securities such as mortgage-backed securities that are similar to a series of
certificates or (ii) certificates insured or guaranteed by Freddie Mac, Fannie
Mae, Ginnie Mae or Farmer Mac, provided that each CMBS will evidence an
interest in, or will be secured by a pledge of, mortgage loans that conform to
the descriptions of the mortgage loans contained in this prospectus.
The CMBS may have been issued in one or more classes with characteristics
similar to the classes of certificates described in this prospectus.
Distributions in respect of the CMBS will be made by the CMBS servicer or the
CMBS trustee on the dates specified in the prospectus supplement. The CMBS
issuer or the CMBS servicer or another person specified in the prospectus
supplement may have the right or obligation to repurchase or substitute assets
underlying the CMBS after a certain date or under other circumstances specified
in the 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 CMBS. 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 CMBS, or by the initial purchasers of the CMBS.
The prospectus supplement for certificates that evidence interests in CMBS
will specify, to the extent available and deemed material, (i) the aggregate
approximate initial and outstanding principal amount and type of the CMBS to be
included in the trust fund, (ii) the original and remaining term to stated
maturity of the CMBS, if applicable, (iii) the pass-through or bond rate of the
CMBS or the formula for determining such rates, (iv) the payment
characteristics of the CMBS, (v) the CMBS issuer, CMBS servicer and CMBS
trustee, (vi) a description of the credit support, if any, (vii) the
circumstances under which the related underlying mortgage loans, or the CMBS
themselves, may be purchased prior to their maturity, (viii) the terms on which
mortgage loans may be substituted for those originally underlying the CMBS,
(ix) the servicing fees payable under the CMBS agreement, (x) the type of
information in respect of the underlying mortgage loans described under
"--Mortgage Loans--Leases--Mortgage Loan Information in Prospectus Supplements"
and (xi) the characteristics of any cash flow agreements that relate to the
CMBS.
To the extent required under the securities laws, CMBS included among the
assets of a trust fund will (i) either have been registered under the
Securities Act of 1933, as amended, or be eligible for resale under Rule 144(k)
under the Securities Act of 1933, as amended, and (ii) have been acquired in a
bona fide secondary market transaction and not from the issuer or an affiliate.
CERTIFICATE ACCOUNTS
Each trust fund will include one or more certificate accounts established
and maintained on behalf of the certificateholders into which the person or
persons designated in the prospectus supplement will, to the extent described
in this prospectus and in the prospectus supplement, deposit all payments and
collections received or advanced with respect to the mortgage assets and other
assets in the trust fund. A certificate account may be maintained as an
interest bearing or a non-interest bearing account, and funds held therein may
be held as cash or invested in certain short-term, investment grade
obligations, in each case as described in the prospectus supplement.
38
CREDIT SUPPORT
If so provided in the prospectus supplement, partial or full protection
against certain defaults and losses on the mortgage assets in the trust fund
may be provided to one or more classes of certificates in the form of
subordination of one or more other classes of certificates or by one or more
other types of credit support, such as over collateralization, a letter of
credit, insurance policy, guarantee or reserve fund, or by a combination
thereof. The amount and types of 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
the certificates of each series. The prospectus supplement for any series of
certificates evidencing an interest in a trust fund that includes CMBS will
describe in the same fashion any similar forms of credit support that are
provided by or with respect to, or are included as part of the trust fund
evidenced by or providing security for, such CMBS to the extent information is
available and deemed material. The type, characteristic and amount of credit
support will be determined based on the characteristics of the mortgage assets
and other factors and will be established, in part, on the basis of
requirements of each rating agency rating a series of certificates. If so
specified in the prospectus supplement, any credit support may apply only in
the event of certain types of losses or delinquencies and the protection
against losses or delinquencies provided by such credit support will be
limited. See "Risk Factors--Credit Support May Not Cover Losses or Risks Which
Could Adversely Affect Payment on Your Certificates" and "Description of Credit
Support."
CASH FLOW AGREEMENTS
If so provided in the prospectus supplement, the trust fund may include
guaranteed investment contracts pursuant to which moneys held in the funds and
accounts established for the related series will be invested at a specified
rate. The trust fund may also include interest rate exchange agreements,
interest rate cap or floor agreements, currency exchange agreements or similar
agreements designed to reduce the effects of interest rate or currency exchange
rate fluctuations on the mortgage assets or on one or more classes of
certificates. The principal terms of any guaranteed investment contract or
other agreement, and the identity of the obligor under any guaranteed
investment contract or other agreement, will be described in the prospectus
supplement.
PRE-FUNDING
If so provided in the prospectus supplement, a trust fund may include
amounts on deposit in a separate pre-funding account that may be used by the
trust fund to acquire additional mortgage assets. Amounts in a pre-funding
account will not exceed 25% of the pool balance of the trust fund as of the
Cut-Off Date. Additional mortgage assets will be selected using criteria that
are substantially similar to the criteria used to select the mortgage assets
included in the trust fund on the closing date. The trust fund may acquire such
additional mortgage assets for a period of time of not more than 120 days after
the closing date for the related series of certificates. Amounts on deposit in
the pre-funding account after the end of the pre-funding period will be
distributed to certificateholders or such other person as set forth in the
prospectus supplement.
In addition, a trust fund may include a separate capitalized interest
account. Amounts on deposit in the capitalized interest account may be used to
supplement investment earnings, if any, of amounts on deposit in the
pre-funding account, supplement interest collections of the trust fund, or such
other purpose as specified in the prospectus supplement. Amounts on deposit in
the capitalized interest account and pre-funding account generally will be held
in cash or invested in short-term investment grade obligations. Any amounts on
deposit in the capitalized interest account will be released after the end of
the pre-funding period as specified in the prospectus supplement. See "Risk
Factors--Unused Amounts in Pre-Funding Accounts May Be Returned to You as a
Prepayment."
39
YIELD CONSIDERATIONS
GENERAL
The yield on any offered certificate will depend on the price paid by the
certificateholder, the pass-through rate of the certificate and the amount and
timing of distributions on the certificate. See "Risk Factors--Prepayments and
Repurchases of the Mortgage Assets Will Affect the Timing of Your Cash Flow and
May Affect Your Yield." The following discussion contemplates a trust fund that
consists solely of mortgage loans. While you generally can expect the
characteristics and behavior of mortgage loans underlying CMBS 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 CMBS. If
a trust fund includes CMBS, the prospectus supplement will discuss the effect
that the CMBS payment characteristics may have on the yield to maturity and
weighted average lives of the offered certificates.
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 will specify the pass-through rate for each class of
certificates 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
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 or near the date
they were due.
SHORTFALLS IN COLLECTIONS OF INTEREST RESULTING FROM PREPAYMENTS
When a borrower makes a principal prepayment on a mortgage loan in full or
in part, the borrower is generally charged interest only for the period from
the date on which the preceding scheduled payment was due up to the date of
such prepayment, instead of for the full accrual period, that is, the period
from the due date of the preceding scheduled payment up to the due date for the
next 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 principal balance of mortgage loans for their
respective full accrual periods. 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 for the full accrual
period, the interest charged to the borrower (net of servicing and
administrative fees) may be less than the corresponding amount of interest
accrued and otherwise payable on the certificates of the related series. If and
to the extent that any prepayment interest shortfall is allocated to a class of
offered certificates, the yield on the offered certificates will be adversely
affected. The prospectus supplement will describe the manner in which any
prepayment interest shortfalls will be allocated among the classes of
certificates. If so specified in the prospectus supplement, the master servicer
will be required to apply some or all of its servicing compensation for the
corresponding period to offset the amount of any prepayment interest
shortfalls. The prospectus supplement will also describe any other amounts
available to offset prepayment interest shortfalls. See "Description of the
Pooling and Servicing Agreements--Servicing Compensation and Payment of
Expenses."
PREPAYMENT CONSIDERATIONS
A certificate's yield to maturity will be affected by the rate of
principal payments on the mortgage loans in the related trust fund and the
allocation of those principal payments to reduce the principal
40
balance (or notional amount, if applicable) of the certificate. The rate of
principal payments on the mortgage loans will in turn be affected by the
amortization schedules of the mortgage loans (which, in the case of adjustable
rate mortgage loans, will change periodically to accommodate adjustments to
their mortgage interest rates), the dates on which any balloon payments are
due, and the rate of principal prepayments thereon (including for this purpose,
prepayments resulting from liquidations of mortgage loans due to defaults,
casualties or condemnations affecting the mortgaged properties, or purchases of
mortgage loans out of the 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 discussed more fully below), it is
impossible to predict with assurance a certificate's yield to maturity.
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 of the Stripped Interest Certificate). Further, 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 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 could result in an actual yield to such
investor that is lower than the anticipated yield. In general, the earlier a
prepayment of principal on the mortgage loans is distributed on an offered
certificate purchased at a discount or premium (or, if applicable, is allocated
in reduction of the notional amount thereof), the greater will be the effect on
the investor's yield to maturity. As a result, the effect on an investor's
yield of principal payments (to the extent distributable in reduction of the
principal balance or notional amount of the 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.
A class of certificates, including a class of offered certificates, may
provide that on any distribution date the holders of certificates are entitled
to a pro rata share of the prepayments (including prepayments occasioned by
defaults) on the mortgage loans in the related trust fund that are
distributable on that date, to a disproportionately large share (which, in some
cases, may be all) of such prepayments, or to a disproportionately small share
(which, in some cases, may be none) of the prepayments. As and to the extent
described in the prospectus supplement, the 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 a series of certificates) or subject to certain contingencies
(e.g., prepayment and default rates with respect to the mortgage loans).
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
directly related to the amortization of the mortgage assets or classes of
certificates, as the case may be. Thus, 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 the mortgage loans will negatively affect the
yield to investors in Stripped Interest Certificates.
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 multifamily or commercial mortgage loans. However, the
extent of prepayments of principal of the mortgage loans in any trust fund may
be affected by a 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 addition, the rate of
principal payments on the mortgage loans in any
41
trust fund may be affected by the existence of lockout periods and requirements
that principal prepayments be accompanied by prepayment premiums, and by the
extent to which such provisions may be practicably enforced.
The rate of prepayment on a pool of mortgage loans is also affected by
prevailing market interest rates for mortgage loans of a comparable type, term
and risk level. When the prevailing market interest rate is below a mortgage
coupon, a borrower may have an increased incentive to refinance its mortgage
loan. In addition, as prevailing market interest rates decline, even borrowers
with adjustable rate mortgage loans that have experienced a corresponding
interest rate decline 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 the initial "teaser rate" (a mortgage interest
rate below what it would otherwise be if the applicable index and gross margin
were applied) on another adjustable rate mortgage loan.
Depending on prevailing market interest rates, the outlook for market
interest rates and economic conditions generally, some borrowers may sell
mortgaged properties in order to realize their equity 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 will make no representation as to the particular factors that will
affect the prepayment of the mortgage loans in any trust fund, as to the
relative importance of such factors, as to the percentage of the principal
balance of the mortgage loans that will be paid as of any date or as to the
overall rate of prepayment on the mortgage loans.
WEIGHTED AVERAGE LIFE AND MATURITY
The rate at which principal payments are received on the mortgage loans in
a trust fund will affect the ultimate maturity and the weighted average life of
one or more classes of a series of certificates. Weighted average life refers
to the average amount of time that will elapse from the date of issuance of an
instrument until each dollar of the principal amount of such instrument is
repaid to the investor.
The weighted average life and maturity of a class of certificates of a
series will be influenced by the rate at which principal on the mortgage loans,
whether in the form of scheduled amortization or prepayments (for this purpose,
the term "prepayment" includes voluntary prepayments, liquidations due to
default and purchases of mortgage loans out of the trust fund), is paid to that
class of certificateholders. Prepayment rates on loans are commonly measured
relative to a prepayment standard or model, such as the CPR prepayment model or
the SPA prepayment model. CPR represents an assumed constant rate of prepayment
each month (expressed as an annual percentage) relative to the then outstanding
principal balance of a pool of loans for the life of those loans. SPA
represents an assumed variable rate of prepayment each month (expressed as an
annual percentage) relative to the then outstanding principal balance of a pool
of loans, with different prepayment assumptions often expressed as percentages
of SPA. For example, a prepayment assumption of 100% of SPA assumes prepayment
rates of 0.2% per annum of the then outstanding principal balance of loans in
the first month of the life of the loans and an additional 0.2% per annum in
each following month until the 30th month. Beginning in the 30th month, and in
each following month during the life of the loans, 100% of SPA assumes a
constant prepayment rate of 6% per annum each month.
Neither CPR nor SPA nor any other prepayment model or assumption purports
to be a historical description of prepayment experience or a prediction of the
anticipated rate of prepayment of any particular pool of loans. Moreover, the
CPR and SPA models were developed based upon historical prepayment experience
for single-family loans. Thus, it is unlikely that the prepayment experience of
the mortgage loans included in any trust fund will conform to any particular
level of CPR or SPA.
The prospectus supplement for each series of certificates will contain
tables, if applicable, setting forth the projected weighted average life of
each class of offered certificates and the percentage of the initial
certificate balance of each class that would be outstanding on specified
distribution dates based on the assumptions stated in the prospectus
supplement, including assumptions that borrowers make prepayments on the
mortgage loans at rates corresponding to various percentages of CPR or SPA, or
at such other rates specified in the prospectus supplement. The tables and
assumptions will illustrate the
42
sensitivity of the weighted average lives of the certificates to various
assumed prepayment rates and will not be intended to predict, or to provide
information that will enable investors to predict, the actual weighted average
lives of the certificates.
CONTROLLED AMORTIZATION CLASSES AND COMPANION CLASSES
A series of certificates may include one or more controlled amortization
classes that are designed to provide increased protection against prepayment
risk by transferring that risk to one or more companion classes. Unless
otherwise specified in the prospectus supplement, each controlled amortization
class will either be a planned amortization class or a targeted amortization
class. In general, distributions of principal on a planned amortization class
of certificates are made in accordance with a specified amortization schedule
so long as prepayments on the underlying mortgage loans occur within a
specified range of constant prepayment rates and, as described below, so long
as one or more companion classes remain to absorb excess cash flows and make up
for shortfalls. For example, if the rate of prepayments is significantly higher
than expected, the excess prepayments will be applied to retire the companion
classes prior to reducing the principal balance of a planned amortization
class. If the rate of prepayments is significantly lower than expected, a
disproportionately large portion of prepayments may be applied to a planned
amortization class. Once the companion classes for a planned amortization class
are retired, the planned amortization class of certificates will have no
further prepayment protection. A targeted amortization class of certificates is
similar to a planned amortization class of certificates, but a targeted
amortization class structure generally does not draw on companion classes to
make up cash flow shortfalls, and will generally not provide protection to the
targeted amortization class against the risk that prepayments occur more slowly
than expected.
In general, the reduction of prepayment risk afforded to a controlled
amortization class comes at the expense of one or more companion classes of the
same series (any of which may also be a class of offered certificates) which
absorb a disproportionate share of the overall prepayment risk of a given
structure. As more particularly described in the prospectus supplement, the
holders of a companion class will receive a disproportionately large share of
prepayments when the rate of prepayment exceeds the rate assumed in structuring
the controlled amortization class, and (in the case of a companion class that
supports a planned amortization class of certificates) a disproportionately
small share of prepayments (or no prepayments) when the rate of prepayment
falls below that assumed rate. Thus, as and to the extent described in the
prospectus supplement, a companion class will absorb a disproportionate share
of the risk that a relatively fast rate of prepayments will result in the early
retirement of the investment, that is, "call risk," and, if applicable, the
risk that a relatively slow rate of prepayments will extend the average life of
the investment, that is, "extension risk", that would otherwise be allocated to
the related controlled amortization class. Accordingly, companion classes can
exhibit significant average life variability.
OTHER FACTORS AFFECTING YIELD, WEIGHTED AVERAGE LIFE AND MATURITY
Balloon Payments; Extensions of Maturity. Some or all of the mortgage
loans included in a 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
mortgaged property, there is a risk 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 a special
servicer, to the extent and under the circumstances set forth in this
prospectus and in the 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 the
certificates and, if the certificates were purchased at a discount, reduce the
yield thereon.
Negative Amortization. Mortgage loans that permit negative amortization
can affect the weighted average life of a class of certificates. In general,
mortgage loans that permit negative amortization by their
43
terms limit the amount by which scheduled payments may adjust in response to
changes in mortgage interest rates and/or provide that scheduled payment
amounts will adjust less frequently than the mortgage interest rates.
Accordingly, during a period of rising interest rates, the scheduled payment on
a mortgage loan that permits negative amortization may be less than the amount
necessary to amortize the loan fully over its remaining amortization schedule
and pay interest at the then applicable mortgage interest rate. In that case,
the mortgage loan balance would amortize more slowly than necessary to repay it
over its schedule and, if the amount of scheduled payment were less than the
amount necessary to pay current interest at the applicable mortgage interest
rate, the loan balance would negatively amortize to the extent of the amount of
the interest shortfall. Conversely, during a period of declining interest
rates, the scheduled payment on a mortgage loan that permits negative
amortization may exceed the amount necessary to amortize the loan fully over
its remaining amortization schedule and pay interest at the then applicable
mortgage interest rate. In that case, the excess would be applied to principal,
thereby resulting in amortization at a rate faster than necessary to repay the
mortgage loan balance over its schedule.
A slower or negative rate of mortgage loan amortization would
correspondingly be reflected in a slower or negative 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 which would bear the effects of a slower rate of
amortization on the mortgage loans) may increase as a result of such feature. A
faster rate of mortgage loan amortization will shorten the weighted average
life of the mortgage loans and, correspondingly, the weighted average lives of
those classes of certificates then entitled to a portion of the principal
payments on those mortgage loans. The 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.
Foreclosures and Payment Plans. The number of foreclosures and the
principal amount of the mortgage loans that are foreclosed in relation to the
number and principal amount of mortgage loans that are repaid in accordance
with their terms will affect the weighted average lives of those mortgage loans
and, accordingly, the weighted average lives of and yields on the certificates
of the related series. Servicing decisions made with respect to the mortgage
loans, including the use of payment plans prior to a demand for acceleration
and the restructuring of mortgage loans in bankruptcy proceedings, may also
have an effect upon the payment patterns of particular mortgage loans and thus
the weighted average lives of and yields on the certificates of the related
series.
Losses and Shortfalls on the Mortgage Assets. The yield 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 assets 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 of the
loss or shortfall.
The amount of any losses or shortfalls in collections on the mortgage
assets in any trust fund (to the extent not covered or offset by draws on any
reserve fund or under any instrument of credit support) will be allocated among
the classes of certificates of the related series in the priority and manner,
and subject to the limitations, specified in the prospectus supplement. As
described in the prospectus supplement, such allocations may result in
reductions in the entitlements to interest and/or certificate balances of one
or more classes of certificates, or may be effected simply by a prioritization
of payments among the 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 assets in the related trust fund.
Additional Certificate Amortization. In addition to entitling
certificateholders to a specified portion (which may 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 a series, may provide for distributions of
principal 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 prospectus supplement. As
specifically set forth in the prospectus supplement, "excess funds" generally
will represent that portion of the amounts distributable in respect
44
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 distributable on that series of
certificates, as well as any interest accrued but not currently distributable
on any Accrual Certificates of that series or (ii) prepayment premiums,
payments from equity participations entitling the lender to a share of profits
realized from the operation or disposition of the mortgaged property, or any
other amounts received on the mortgage assets in the 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
certificates and, if those certificates were purchased at a premium, reduce the
yield on those certificates. The prospectus supplement will discuss the
relevant factors that you should consider in determining whether distributions
of principal of any class of certificates out of such sources would have any
material effect on the rate at which your certificates are amortized.
THE DEPOSITOR
Wachovia Commercial Mortgage Securities, Inc., the depositor, is a North
Carolina corporation organized on August 17, 1988 as a wholly-owned subsidiary
of Wachovia Bank, National Association (formerly known as First Union National
Bank), a national banking association with its main office located in
Charlotte, North Carolina. Wachovia Bank, National Association is a subsidiary
of Wachovia Corporation, a North Carolina corporation registered as a bank
holding company under the Bank Holding Company Act of 1956, as amended.
Wachovia Corporation is a financial holding company under the
Gramm-Leach-Bliley Act. The depositor's principal business is to acquire, hold
and/or sell or otherwise dispose of cash flow assets, usually in connection
with the securitization of that asset. The depositor maintains its principal
office at 301 South College Street, Charlotte, North Carolina 28288-0166. Its
telephone number is 704-374-6161. There can be no assurance that the depositor
will have any significant assets.
USE OF PROCEEDS
The net proceeds to be received from the sale of certificates will be
applied by the depositor to the purchase of trust assets or will be used by the
depositor for general corporate purposes. 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.
45
DESCRIPTION OF THE CERTIFICATES
GENERAL
In the aggregate, the certificates of each series of certificates will
represent the entire beneficial ownership interest in the trust fund created
pursuant to the related pooling and servicing agreement. Each series of
certificates may consist of one or more classes of certificates (including
classes of offered certificates), and such class or classes may (i) provide for
the accrual of interest thereon at a fixed, variable or adjustable rate; (ii)
be senior or subordinate to one or more other classes of certificates in
entitlement to certain distributions on the certificates; (iii) be entitled, as
Stripped Principal Certificates, to distributions of principal with
disproportionately small, nominal or no distributions of interest; (iv) be
entitled, as Stripped Interest Certificates, to distributions of interest with
disproportionately small, nominal or no distributions of principal; (v) provide
for distributions of principal and/or interest thereon that commence only after
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 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; (vii) provide for distributions of principal to be made, subject to
available funds, based on a specified principal payment schedule or other
methodology; and/or (viii) provide for distributions based on a combination of
two or more components thereof with one or more of the characteristics
described in this paragraph, including a Stripped Principal Certificate
component and a Stripped Interest Certificate component, to the extent of
available funds, in each case as described in the prospectus supplement. Any
such classes may include classes of offered certificates. With respect to
certificates with two or more components, references in this prospectus to
certificate balance, notional amount and pass-through rate refer to the
principal balance, if any, notional amount, if any, and the pass-through rate,
if any, for that component.
Each class of offered certificates of a series will be issued in minimum
denominations corresponding to the certificate balances or, in the case of
Stripped Interest Certificates or REMIC residual certificates, notional amounts
or percentage interests specified in the prospectus supplement. As provided in
the prospectus supplement, one or more classes of offered certificates of any
series may be issued in fully registered, definitive form or may be offered in
book-entry format 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 prospectus
supplement, at the location specified in the prospectus supplement, without the
payment of any service charge, other than any tax or other governmental charge
payable in connection therewith. Interests in a class of book-entry
certificates will be transferred on the book-entry records of DTC and its
participating organizations. See "Risk Factors--Your Ability to Resell
Certificates May Be Limited Because of Their Characteristics," and "--The
Assets of the Trust Fund May Not Be Sufficient to Pay Your Certificates."
DISTRIBUTIONS
Distributions on the certificates of each series will be made by or on
behalf of the trustee or master servicer on each distribution date as specified
in the prospectus supplement from the Available Distribution Amount for such
series and such distribution date.
Except as otherwise specified in the prospectus supplement, distributions
on the certificates of each series (other than the final distribution in
retirement of any certificate) will be made to the persons in whose names those
certificates are registered on the record date, which is the close of business
on the last business day of the month preceding the month in which the
applicable distribution date occurs, and the amount of each distribution will
be determined as of the close of business on the determination date that is
specified in the prospectus supplement. All distributions with respect to each
class of certificates on each distribution date will be allocated pro rata
among the outstanding certificates in that class. The trustee will make
payments 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 trustee or other person
required to make such payments with wiring instructions (which may be provided
46
in the form of a standing order applicable to all subsequent distributions) no
later than the date specified in the prospectus supplement (and, if so provided
in the prospectus supplement, such certificateholder holds certificates in the
requisite amount or denomination specified in the prospectus supplement), or by
check mailed to the address of the certificateholder as it appears on the
certificate register; provided, however, that the trustee will make the final
distribution in retirement of any class of certificates (whether definitive
certificates or book-entry certificates) only upon presentation and surrender
of the certificates at the location specified in the notice to
certificateholders of such final distribution.
DISTRIBUTIONS OF INTEREST ON THE CERTIFICATES
Each class of certificates of each series (other than certain classes of
Stripped Principal Certificates and certain REMIC residual certificates that
have no pass-through rate) may have a different pass-through rate which may be
fixed, variable or adjustable. The 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. Unless
otherwise specified in the 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 the certificates of any class
(other than any class of Accrual Certificates that will be entitled to
distributions of accrued interest commencing only on the distribution date, or
under the circumstances, specified in the prospectus supplement, and other than
any class of Stripped Principal Certificates or REMIC 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 the portion of the
Available Distribution Amount allocable to such class on such distribution
date. Prior to the time interest is distributable on any class of Accrual
Certificates, the amount of Accrued Certificate Interest otherwise
distributable on that class will be added to the certificate balance of that
class on each distribution date. With respect to each class of certificates
(other than some classes of Stripped Interest Certificates and REMIC residual
certificates), 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 period between distribution dates) on the outstanding
certificate balance thereof immediately prior to such distribution date. Unless
otherwise provided in the prospectus supplement, Accrued Certificate Interest
for each distribution date on 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 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 will be reduced to the
extent that any prepayment interest shortfalls, as described under "Yield
Considerations--Shortfalls in Collections of Interest Resulting from
Prepayments" exceed the amount of any sums (including, if and to the extent
specified in the prospectus supplement, the master servicer's servicing
compensation) that are applied to offset such shortfalls. The particular manner
in which prepayment interest shortfalls will be allocated among some or all of
the classes of certificates of that series will be specified in the prospectus
supplement. The 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 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 that
class. See "Risk Factors--Prepayment and Repurchases of the Mortgage Assets
Will Affect the Timing of Your Cash Flow and May Affect Your Yield" and "Yield
Considerations."
47
DISTRIBUTIONS OF PRINCIPAL OF THE CERTIFICATES
Each class of certificates of each series (other than certain classes of
Stripped Interest Certificates or REMIC residual certificates) will have a
certificate balance which, at any time, will equal the then maximum amount that
the holders of certificates of that class will be entitled to receive in
respect of principal out of the future cash flow on the mortgage assets and
other assets included in the related trust fund. The outstanding certificate
balance of a class of certificates will be reduced by distributions of
principal made on those certificates from time to time and, if so provided in
the prospectus supplement, further by any losses incurred in respect of the
related mortgage assets allocated to those certificates 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 that is allocated to those certificates from time to time, and
will be increased, in the case of a class of Accrual Certificates prior to the
distribution date on which distributions of interest on those Accrual
Certificates are required to commence, by the amount of any Accrued Certificate
Interest in respect thereof (reduced as described above). Unless otherwise
provided in the prospectus supplement, 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
the applicable 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 the 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 to distributions until the certificate balances of those
certificates have been reduced to zero. Distributions of principal with respect
to one or more classes of certificates may be made at a rate that is faster
(and, in some cases, substantially faster) than the rate at which payments or
other collections of principal are received on the mortgage assets in the
related trust fund, 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 such mortgage assets. In addition, distributions of
principal with respect to one or more classes of controlled amortization
certificates may be made, subject to available funds, based on a specified
principal payment schedule and, with respect to one or more classes of
companion classes of certificates, may be contingent on the specified principal
payment schedule for a controlled amortization class of certificates 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 prospectus supplement, distributions of principal of any class
of certificates will be made on a pro rata basis among all of the certificates
belonging to that class.
COMPONENTS
To the extent specified in the prospectus supplement, distribution on a
class of certificates may be based on a combination of two or more different
components as described under "--General" above. To that extent, the
descriptions set forth under "--Distributions of Interest on the Certificates"
and "--Distributions of Principal of the Certificates" above also relate to
components of such a class of certificates. In such case, reference in those
sections to certificate balance and pass-through rate refer to the principal
balance, if any, of any of the components and the pass-through rate, if any, on
any component, respectively.
DISTRIBUTIONS ON THE CERTIFICATES IN RESPECT OF PREPAYMENT PREMIUMS OR IN
RESPECT OF EQUITY PARTICIPATIONS
If so provided in the prospectus supplement, prepayment premiums or
payments in respect of equity participations entitling the lender to a share of
profits realized from the operation or disposition of the mortgaged property
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.
ALLOCATION OF LOSSES AND SHORTFALLS
If 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
48
collections on the mortgage assets have been incurred, the amount of such
losses or shortfalls will be borne first by a class of subordinate certificates
in the priority and manner and subject to the limitations specified in the
prospectus supplement. See "Description of Credit Support" for a description of
the types of protection that may be included in shortfalls on mortgage assets
comprising the trust fund.
ADVANCES IN RESPECT OF DELINQUENCIES
With respect to any series of certificates evidencing an interest in a
trust fund, unless otherwise provided in the prospectus supplement, a servicer
or another entity described therein will be required as part of its servicing
responsibilities to advance on or before each distribution date its own funds
or funds held in the related certificate account that are not included in the
Available Distribution Amount for such distribution date, in an amount equal to
the aggregate of payments of principal (other than any balloon payments) and
interest (net of related servicing fees) that were due on the mortgage loans in
the trust fund and were delinquent on the related determination date, subject
to the servicer's (or another entity's) good faith determination that such
advances will be reimbursable from the loan proceeds. In the case of a series
of certificates that includes one or more classes of subordinate certificates
and if so provided in the prospectus supplement, each servicer's (or another
entity's) advance obligation may be limited only to the portion of such
delinquencies necessary to make the required distributions on one or more
classes of senior certificates and/or may be subject to the servicer's (or
another entity's) good faith determination that such advances will be
reimbursable not only from the loan proceeds but also from collections on other
trust assets otherwise distributable on one or more classes of subordinate
certificates. See "Description of Credit Support".
Advances are intended to maintain a regular flow of scheduled interest and
principal payments to holders of the class or classes of certificates entitled
thereto, rather than to guarantee or insure against losses. Unless otherwise
provided in the prospectus supplement, advances of a servicer's (or another
entity's) funds will be reimbursable only out of recoveries on the mortgage
loans (including amounts received under any form of credit support) respecting
which advances were made and, if so provided in the prospectus supplement, out
of any amounts otherwise distributable on one or more classes of subordinate
certificates of such series; provided, however, that any advance will be
reimbursable from any amounts in the related certificate account prior to any
distributions being made on the certificates to the extent that a servicer (or
such other entity) shall determine in good faith that such advance is not
ultimately recoverable from related proceeds on the mortgage loans or, if
applicable, from collections on other trust assets otherwise distributable on
the subordinate certificates.
If advances have been made from excess funds in a certificate account, the
master servicer or other person that advanced such funds will be required to
replace such funds in the certificate account on any future distribution date
to the extent that funds then in the certificate account are insufficient to
permit full distributions to certificateholders on that date. If so specified
in the prospectus supplement, the obligation of a master servicer or other
specified person to make advances may be secured by a cash advance reserve fund
or a surety bond. If applicable, we will provide in the prospectus supplement
information regarding the characteristics of, and the identity of any obligor
on, any such surety bond.
If and to the extent so provided in the prospectus supplement, any entity
making advances will be entitled to receive interest on those advances for the
period that such advances are outstanding at the rate specified therein and
will be entitled to pay itself that interest periodically from general
collections on the mortgage assets prior to any payment to certificateholders
as described in the prospectus supplement.
The prospectus supplement for any series of certificates evidencing an
interest in a trust fund that includes CMBS will describe any comparable
advancing obligation of a party to the related pooling and servicing agreement
or of a party to the related CMBS agreement.
REPORTS TO CERTIFICATEHOLDERS
On each distribution date a master servicer or trustee will forward to the
holder of certificates of each class of a series a distribution date statement
accompanying the distribution of principal and/or interest to those holders. As
further provided in the prospectus supplement, the distribution date statement
for each class will set forth to the extent applicable and available:
49
(i) the amount of such distribution to holders of certificates of such
class applied to reduce the certificate balance thereof;
(ii) the amount of such distribution to holders of certificates of
such class allocable to Accrued Certificate Interest;
(iii) the amount, if any, of such distribution to holders of
certificates of such class allocable to prepayment premiums;
(iv) the amount of servicing compensation received by each servicer
and such other customary information as the master servicer or the trustee
deems necessary or desirable, or that a certificateholder reasonably
requests, to enable certificateholders to prepare their tax returns;
(v) the aggregate amount of advances included in such distribution and
the aggregate amount of unreimbursed advances at the close of business on,
or as of a specified date shortly prior to, such distribution date;
(vi) the aggregate principal balance of the related mortgage loans on,
or as of a specified date shortly prior to, such distribution date;
(vii) the number and aggregate principal balance of any mortgage loans
in respect of which (A) one scheduled payment is delinquent, (B) two
scheduled payments are delinquent, (C) three or more scheduled payments are
delinquent and (D) foreclosure proceedings have been commenced;
(viii) with respect to any mortgage loan liquidated during the related
prepayment period (as to the current distribution date, generally the
period extending from the prior distribution date to and including the
current distribution date) in connection with a default on that mortgage
loan or because the mortgage loan was purchased out of the trust fund
(other than a payment in full), (A) the loan number, (B) the aggregate
amount of liquidation proceeds received and (C) the amount of any loss to
certificateholders;
(ix) with respect to any REO Property sold during the related
collection period, (A) the loan number of the related mortgage loan, (B)
the aggregate amount of sales proceeds and (C) the amount of any loss to
certificateholders in respect of the related mortgage loan;
(x) the certificate balance or notional amount of each class of
certificates (including any class of certificates not offered hereby)
immediately before and immediately after such distribution date, separately
identifying any reduction in the certificate balance due to the allocation
of any losses in respect of the related mortgage loans;
(xi) the aggregate amount of principal prepayments made on the
mortgage
loans during the related prepayment period;
(xii) the amount deposited in or withdrawn from any reserve fund on
such distribution date, and the amount remaining on deposit in the reserve
fund as of the close of business on such distribution date;
(xiii) the amount of any Accrued Certificate Interest due but not paid
on such class of offered certificates at the close of business on such
distribution date; and
(xiv) 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.
In the case of information furnished pursuant to subclauses (i)-(iv)
above, the amounts will be expressed as a dollar amount per minimum
denomination of the relevant class of offered certificates or per a specified
portion of such minimum denomination. The prospectus supplement for each series
of offered certificates will describe any additional information to be included
in reports to the holders of such certificates.
Within a reasonable period of time after the end of each calendar year,
the related master servicer or trustee, as the case may be, will be required to
furnish to each person who at any time during the
50
calendar year was a holder of an offered certificate a statement containing the
information set forth in subclauses (i)-(iv) above, aggregated for such
calendar year or the applicable portion thereof during which such person was a
certificateholder. Such obligation 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,
"Description of the Certificates--Book-Entry Registration and Definitive
Certificates."
If the trust fund for a series of certificates includes CMBS, the ability
of the related master servicer or trustee, as the case may be, to include in
any distribution date statement information regarding the mortgage loans
underlying such CMBS will depend on the reports received with respect to such
CMBS. In such cases, the prospectus supplement will describe the loan-specific
information to be included in the distribution date statements that will be
forwarded to the holders of the offered certificates of that series in
connection with distributions made to them.
VOTING RIGHTS
The voting rights evidenced by each series of certificates will be
allocated among the respective classes of such series in the manner described
in the prospectus supplement.
Certificateholders will generally have a right to vote only with respect
to required consents to certain amendments to the related pooling and servicing
agreement and as otherwise specified in the prospectus supplement. See
"Description of the Pooling and Servicing Agreements--Amendment." The holders
of specified amounts of certificates of a particular series will have the
collective right to remove the related trustee and also to cause the removal of
the related master servicer in the case of an event of default under the
related pooling and servicing agreement on the part of the master servicer. See
"Description of the Pooling and Servicing Agreements--Events of Default,"
"--Rights upon Event of Default" and "--Resignation and Removal of the
Trustee."
TERMINATION
The obligations created by the pooling and servicing agreement for each
series of certificates will terminate upon the payment (or provision for
payment) to certificateholders of that series of all amounts held in the
related certificate account, or otherwise by the related master servicer or
trustee or by a special servicer, and required to be paid to such
certificateholders pursuant to such pooling and servicing agreement following
the earlier of (i) the final payment or other liquidation of the last mortgage
asset subject to the pooling and servicing agreement or the disposition of all
property acquired upon foreclosure of any mortgage loan subject to the pooling
and servicing agreement and (ii) the purchase of all of the assets of the
related trust fund by the party entitled to effect such termination, under the
circumstances and in the manner that will be described in the prospectus
supplement. Written notice of termination of a pooling and servicing 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 prospectus supplement, a series of certificates
will be subject to optional early termination through the repurchase of the
assets in the related trust fund by a party that will be specified in the
prospectus supplement, under the circumstances and in the manner set forth in
the prospectus supplement. If so provided in the prospectus supplement, upon
the reduction of the certificate balance of a specified class or classes of
certificates by a specified percentage or amount, a party identified in the
prospectus supplement will be authorized or required to solicit bids for the
purchase of all the assets of the related trust fund, or of a sufficient
portion of such assets to retire such class or classes, under the circumstances
and in the manner set forth in the prospectus supplement. In any event, unless
otherwise disclosed in the prospectus supplement, any such repurchase or
purchase shall be at a price or prices that are generally based upon the unpaid
principal balance of, plus accrued interest on, all mortgage loans (other than
mortgage loans secured by REO Properties) then included in a trust fund and the
fair market value of all REO Properties then included in the trust fund, which
may or may not result in full payment of the aggregate certificate balance plus
accrued interest and any undistributed shortfall in interest for the then
outstanding certificates. Any sale of trust fund assets will be without
recourse to the trust and/or
51
certificateholders, provided, however, that there can be no assurance that in
all events a court would accept such a contractual stipulation.
BOOK-ENTRY REGISTRATION AND DEFINITIVE CERTIFICATES
If so provided in the prospectus supplement, one or more classes of the
offered certificates of any 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 DTC or its nominee.
DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking corporation" within the meaning of the New York Banking
Law, a member of the Federal Reserve System, a "clearing corporation" within
the meaning of the New York Uniform Commercial Code and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934. DTC holds securities that its participating organizations deposit
with DTC. DTC also facilitates the settlement among participants of securities
transactions, such as transfers and pledges, in deposited securities through
electronic computerized book entry changes in their accounts, thereby
eliminating the need for physical movement of securities certificates. Direct
participants that maintain accounts with DTC include securities brokers and
dealers, banks, trust companies and clearing corporations and may include
certain other organizations. DTC is owned by a number of its direct
participants and by the New York Stock Exchange, Inc., the American Stock
Exchange, Inc., and the National Association of Securities Dealers, Inc. Access
to the DTC system also is available to indirect participants in the DTC system
such as securities brokers and dealers, banks and trust companies that clear
through or maintain a custodial relationship with a direct participant in the
DTC system, either directly or indirectly. The rules applicable to DTC and its
participants are on file with the Securities and Exchange Commission.
Purchases of book-entry certificates under the DTC system must be made by
or through direct participants in the DTC system, which will receive a credit
for the book-entry certificates on DTC's records. A certificate owner's
ownership interest as an actual purchaser of a book-entry certificate will in
turn be recorded on the records of direct participants and indirect
participants. Certificate owners will not receive written confirmation from DTC
of their purchases, but certificate owners are expected to receive written
confirmations providing details of such transactions, as well as periodic
statements of their holdings, from the direct participant or indirect
participant through which each certificate owner entered into the transaction.
Transfers of ownership interest in the book-entry certificates will be
accomplished by entries made on the books of participants acting on behalf of
certificate owners. Certificate owners will not receive certificates
representing their ownership interests in the book-entry certificates, except
in the event that use of the book-entry system for the book-entry certificates
of any series is discontinued as described below.
DTC will not know the identity of actual certificate owners of the
book-entry certificates; DTC's records reflect only the identity of the direct
participants in the DTC system to whose accounts such certificates are
credited. The participants will remain responsible for keeping account of their
holdings on behalf of their customers. Notices and other communications
conveyed by DTC to direct participants in the DTC system, by direct
participants to indirect participants, and by direct participants and indirect
participants to certificate owners will be governed by arrangements among them,
subject to any statutory or regulatory requirements as may be in effect from
time to time.
Distributions on the book-entry certificates will be made to DTC. DTC's
practice is to credit direct participants' accounts on the related distribution
date in accordance with their respective holdings shown on DTC's records unless
DTC has reason to believe that it will not receive payment on such date.
Disbursement of such distributions by participants to certificate owners will
be governed by standing instructions and customary practices, as is the case
with securities held for the accounts of customers in bearer form or registered
in "street name," and will be the responsibility of each such participant (and
not of DTC, the depositor or any trustee or master servicer), subject to any
statutory or regulatory requirements as may be in effect from time to time.
Under a book-entry system, certificate owners may receive payments after the
related distribution date.
As may be provided in the prospectus supplement, the only
"certificateholder" (as such term is used in the related pooling and servicing
agreement) of a book-entry certificate will be the nominee of DTC,
52
and the certificate owners will not be recognized as certificateholders under
the pooling and servicing agreement. Certificate owners will be permitted to
exercise the rights of certificateholders under the related pooling and
servicing agreement only indirectly through the participants who in turn will
exercise their rights through DTC. The depositor is informed that DTC will take
action permitted to be taken by a certificateholder under a pooling and
servicing agreement only at the direction of one or more participants to whose
account with DTC interests in the book-entry certificates are credited.
Because DTC can act only on behalf of direct participants in the DTC
system, who in turn act on behalf of indirect participants and certain
certificate owners, the ability of a certificate owner to pledge its interest
in book-entry certificates to persons or entities that do not participate in
the DTC system, or otherwise take actions in respect of its interest in
book-entry certificates, may be limited due to the lack of a physical
certificate evidencing such interest.
As may be specified in the prospectus supplement, certificates initially
issued in book-entry form will be issued as definitive certificates to
certificate owners or their nominees, rather than to DTC or its nominee, only
if (i) the depositor advises the trustee in writing that DTC is no longer
willing or able to properly discharge its responsibilities as depository with
respect to 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 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 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
the related pooling and servicing agreement.
DESCRIPTION OF THE POOLING AND SERVICING AGREEMENTS
GENERAL
The certificates of each series will be issued pursuant to a pooling and
servicing agreement or other agreement specified in the prospectus supplement.
In general, the parties to a pooling and servicing agreement will include the
depositor, the trustee, the master servicer and, in some cases, a special
servicer appointed as of the date of the pooling and servicing agreement.
However, a pooling and servicing agreement that relates to a trust fund that
consists solely of CMBS may not include a master servicer or other servicer as
a party. All parties to each pooling and servicing agreement under which
certificates of a series are issued will be identified in the prospectus
supplement.
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 and servicing 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 and servicing 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
and servicing agreement that materially differs from the description thereof
contained in this prospectus and, if the related trust fund includes CMBS, will
summarize all of the material provisions of the related pooling and servicing
agreement. The summaries in this prospectus do not purport to be complete and
are subject to, and are qualified in their entirety by reference to, all of the
provisions of the pooling and servicing agreement for each series of
certificates and the description of such provisions in the prospectus
supplement. As used in this prospectus with respect to any series, the term
"certificate" refers to all of the certificates of that series, whether or not
offered hereby and by the prospectus supplement, unless the context otherwise
requires.
ASSIGNMENT OF MORTGAGE ASSETS; REPURCHASES
As set forth in the prospectus supplement, generally 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
53
to be included in the related trust fund, together with, unless otherwise
specified in the 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 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 and servicing 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 interest rate and,
if applicable, the applicable index, gross margin, adjustment date and any rate
cap information; the original and remaining term to maturity; the original
amortization term; the original and outstanding principal balance; and the
Loan-to-Value Ratio and Debt Service Coverage Ratio as of the date indicated.
With respect to each mortgage loan to be included in a trust fund, the
depositor will deliver (or cause to be delivered) to the related trustee (or to
a custodian appointed by the trustee) certain loan documents which will include
the original mortgage note (or lost note affidavit) endorsed, without recourse,
to the order of the trustee, the original mortgage (or a certified copy
thereof) with evidence of recording indicated thereon and an assignment of the
mortgage to the trustee in recordable form. The related pooling and servicing
agreement will require that the depositor or other party thereto promptly cause
each such assignment of mortgage to be recorded in the appropriate public
office for real property records.
The related trustee (or the custodian appointed by the trustee) will be
required to review the mortgage loan documents within a specified period of
days after receipt thereof, and the trustee (or the custodian) will hold such
documents in trust for the benefit of the certificateholders of the related
series. Unless otherwise specified in the prospectus supplement, if any
document is found to be missing or defective, in either case such that
interests of the certificateholders are materially and adversely affected, the
trustee (or such custodian) will be required to notify the master servicer and
the depositor, and the master servicer will be required to notify the relevant
seller of the mortgage asset. 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 unless otherwise specified in the
prospectus supplement, the mortgage asset seller will be obligated to replace
the related mortgage loan or repurchase it from the trustee at a price that
will be specified in the prospectus supplement.
If so provided in the prospectus supplement, the depositor will, as to
some or all of the mortgage loans, assign or cause to be assigned to the
trustee the related lease assignments. In certain cases, the trustee, or master
servicer, as applicable, may collect all moneys under the related leases and
distribute amounts, if any, required under the leases for the payment of
maintenance, insurance and taxes, to the extent specified in the related
leases. The trustee, or if so specified in the prospectus supplement, the
master servicer, as agent for the trustee, may hold the leases in trust for the
benefit of the certificateholders.
With respect to each CMBS in certificate form, the depositor will deliver
or cause to be delivered to the trustee (or the custodian) the original
certificate or other definitive evidence of such CMBS together with bond power
or other instruments, certifications or documents required to transfer fully
such CMBS to the trustee for the benefit of the certificateholders. With
respect to each CMBS in uncertificated or book-entry form or held through a
"clearing corporation" within the meaning of the New York Uniform Commercial
Code, the depositor and the trustee will cause such CMBS to be registered
directly or on the books of such clearing corporation or of a financial
intermediary in the name of the trustee for the benefit of the
certificateholders. Unless otherwise provided in the prospectus supplement, the
related pooling and servicing agreement will require that either the depositor
or the trustee promptly cause any CMBS in certificated form not registered in
the name of the trustee to be reregistered, with the applicable persons, in the
name of the trustee.
REPRESENTATIONS AND WARRANTIES; REPURCHASES
The depositor will, with respect to each mortgage loan in the related
trust fund, make or assign certain representations and warranties made by the
warranting party, covering, by way of example: (i) the
54
accuracy of the information set forth for such mortgage loan on the schedule of
mortgage loans appearing as an exhibit to the related pooling and servicing
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. Each warranting party will be identified
in the prospectus supplement.
Unless otherwise provided in the prospectus supplement, each pooling and
servicing 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 related
certificateholders. 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 prospectus supplement, it will be
obligated to repurchase such mortgage loan from the trustee within a specified
period at a price that will be specified in the prospectus supplement. If so
provided in the prospectus supplement for a series of certificates, a
warranting party, in lieu of repurchasing a mortgage loan as to which a breach
has occurred, will have the option, exercisable upon certain conditions and/or
within a specified period after initial issuance of 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. This repurchase or substitution obligation may constitute the sole
remedy available to holders of certificates of any series for a breach of
representation and warranty by a warranting party. Moreover, neither the
depositor (unless it is the warranting party) nor any entity acting solely in
its capacity as the master servicer will be obligated to purchase or replace a
mortgage loan if a warranting party defaults on its obligation to do so.
The dates as of which representations and warranties have been made by a
warranting party will be specified in the prospectus supplement. In some cases,
such representations and warranties will have been made 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 such date of issuance.
CERTIFICATE ACCOUNT
General. The master servicer and/or the trustee will, as to each trust
fund, establish and maintain or cause to be established and maintained
certificate accounts for the collection of payments on the related mortgage
loans, which will be established so as to comply with the standards of each
rating agency that has rated any one or more classes of certificates of the
related series. As described in the prospectus supplement, a certificate
account may be maintained either as an interest-bearing or a
non-interest-bearing account, and the funds held therein may be held as cash or
invested in permitted investments, such as United States government securities
and other investment grade obligations specified in the related pooling and
servicing agreement. Any interest or other income earned on funds in the
certificate account will be paid to the related master servicer or trustee as
additional compensation. If permitted by such rating agency or agencies and so
specified in the prospectus supplement, a certificate account may contain funds
relating to more than one series of mortgage pass-through certificates and may
contain other funds representing payments on mortgage loans owned by the
related master servicer or serviced by it on behalf of others.
Deposits. Unless otherwise provided in the related pooling and servicing
agreement and described in the prospectus supplement, the related master
servicer, trustee or special servicer will be required to deposit or cause to
be deposited in the certificate account for each trust fund within a certain
period following receipt (in the case of collections and payments), the
following payments and collections received, or advances made, by the master
servicer, the trustee or any special servicer subsequent to the Cut-Off Date
(other than payments due on or before the Cut-Off Date):
55
(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, any special servicer or
sub-servicer as its servicing compensation or as compensation to the
trustee;
(iii) all insurance proceeds received under any hazard, title or other
insurance policy that provides coverage with respect to a mortgaged
property or the related mortgage loan (other than proceeds applied to the
restoration of the property or released to the related borrower in
accordance with the customary servicing practices of the master servicer
(or, if applicable, a special servicer) and/or the terms and conditions of
the related mortgage and all other liquidation proceeds received and
retained in connection with the liquidation of defaulted mortgage loans or
property acquired in respect thereof, by foreclosure or otherwise, 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 as
described under "Description of Credit Support;"
(v) any advances made as described under "Description of the
Certificate--Advances in Respect of Delinquencies;"
(vi) any amounts paid under any cash flow agreement, as described
under "Description of the Trust Funds--Cash Flow Agreements;"
(vii) all liquidation proceeds resulting from 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 Assets; Repurchases" and "--Representations and
Warranties; Repurchases," all liquidation proceeds resulting from the
purchase of any defaulted mortgage loan as described under "--Realization
Upon Defaulted Mortgage Loans," and all liquidation proceeds resulting from
any mortgage asset purchased as described under "Description of the
Certificates--Termination;"
(viii) any amounts paid by the master servicer to cover prepayment
interest shortfalls arising out of the prepayment of mortgage loans as
described under "--Servicing Compensation and Payment of Expenses;"
(ix) to the extent that any such item does not constitute additional
servicing compensation to the master servicer or a special servicer, any
payments on account of modification or assumption fees, late payment
charges, prepayment premiums or lenders' equity participations on the
mortgage loans;
(x) all payments required to be deposited in the certificate account
with respect to any deductible clause in any blanket insurance policy
described under "--Hazard Insurance Policies;"
(xi) any amount required to be deposited by the master servicer or the
trustee in connection with losses realized on investments for the benefit
of the master servicer or the trustee, as the case may be, of funds held in
the certificate account; and
(xii) any other amounts required to be deposited in the certificate
account as provided in the related pooling and servicing agreement and
described in the prospectus supplement.
Withdrawals. Unless otherwise provided in the related pooling and
servicing agreement and described in the prospectus supplement, the master
servicer, trustee or special servicer may make withdrawals from the certificate
account for each trust fund for any of the following purposes:
(i) to make distributions to the certificateholders on each
distribution date;
(ii) to reimburse the master servicer or any other specified person
for unreimbursed amounts advanced by it as described under "Description of
the Certificates--Advances in Respect of Delinquencies," such reimbursement
to be made out of amounts received which were identified
56
and applied by the master servicer as late collections of interest (net of
related servicing fees) on and principal of the particular mortgage loans
with respect to which the advances were made or out of amounts drawn under
any form of credit support with respect to such mortgage loans;
(iii) to reimburse the master servicer or a special servicer for
unpaid servicing fees earned by it and certain unreimbursed servicing
expenses incurred by it with respect to mortgage loans in the trust fund
and properties acquired in respect thereof, such reimbursement to be made
out of amounts that represent liquidation proceeds and insurance proceeds
collected on the particular mortgage loans and properties, and net income
collected on the particular properties, with respect to which such fees
were earned or such expenses were incurred or out of amounts drawn under
any form of credit support with respect to such mortgage loans and
properties;
(iv) to reimburse the master servicer or any other specified person
for any advances described in clause (ii) above made by it, any servicing
expenses referred to in clause (iii) above incurred by it and any servicing
fees earned by it, which, in the good faith judgment of the master servicer
or such other person, will not be recoverable from the amounts described in
clauses (ii) and (iii), respectively, such reimbursement to be made from
amounts collected on other mortgage loans in the related trust fund or, if
and to the extent so provided by the related pooling and servicing
agreement and described in the 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;
(v) if and to the extent described in the prospectus supplement, to
pay the master servicer, a special servicer or another specified entity
(including a provider of credit support) interest accrued on the advances
described in clause (ii) above made by it and the servicing expenses
described in clause (iii) above incurred by it while such remain
outstanding and unreimbursed;
(vi) 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;"
(vii) to reimburse the master servicer, the depositor, or any of their
respective directors, officers, employees and agents, as the case may be,
for certain expenses, costs and liabilities incurred thereby, as and to the
extent described under "--Certain Matters Regarding the Master Servicer and
the Depositor;"
(viii) if and to the extent described in the prospectus supplement, to
pay the fees of the trustee;
(ix) to reimburse the trustee or any of its directors, officers,
employees and agents, as the case may be, for certain expenses, costs and
liabilities incurred thereby, as and to the extent described under
"--Certain Matters Regarding the Trustee;"
(x) to pay the master servicer or the trustee, as additional
compensation, interest and investment income earned in respect of amounts
held in the certificate account and, to the extent described in the
prospectus supplement, prepayment interest excesses collected from
borrowers in connection with prepayments of mortgage loans and late charges
and default interest collected from borrowers;
(xi) to pay (generally from related income) for costs incurred in
connection with the operation, management and maintenance of any mortgaged
property acquired by the trust fund by foreclosure or otherwise;
(xii) 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 "Material Federal Income Tax
Consequences--Taxation of Owners of REMIC Residual Certificates--Prohibited
Transactions Tax and Other Taxes;"
57
(xiii) to pay for the cost of an independent appraiser or other expert
in real estate matters retained to determine a fair sale price for a
defaulted mortgage loan or a property acquired in respect thereof in
connection with the liquidation of such mortgage loan or property;
(xiv) to pay for the cost of various opinions of counsel obtained
pursuant to the related pooling and servicing agreement for the benefit of
certificateholders;
(xv) to pay for the cost of recording the pooling and servicing
agreement if recorded in accordance with the pooling and servicing
agreement;
(xvi) to make any other withdrawals permitted by the related pooling
and servicing agreement and described in the prospectus supplement; and
(xvii) to clear and terminate the certificate account upon the
termination of the trust fund.
COLLECTION AND OTHER SERVICING PROCEDURES
Master Servicer. The master servicer for any mortgage pool, directly or
through sub-servicers, will be required to make reasonable efforts to collect
all scheduled mortgage loan payments and will be required 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
such procedures are consistent with (i) the terms of the related pooling and
servicing agreement and any related instrument of credit support included in
the related trust fund, (ii) applicable law and (iii) the servicing standard
specified in the pooling and servicing agreement.
The master servicer will also be required to perform other customary
functions of a servicer of comparable loans, including maintaining escrow or
impound accounts for payment of taxes, insurance premiums and similar items, or
otherwise monitoring the timely payment of those items; attempting to collect
delinquent payments; supervising foreclosures; conducting property inspections
on a periodic or other basis; managing REO Properties; and maintaining
servicing records relating to the mortgage loans. Generally, 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 master servicer may agree to modify, waive or amend any term of any
mortgage loan serviced by it in a manner consistent with the servicing standard
specified in the pooling and servicing agreement; provided that the
modification, waiver or amendment will not (i) affect the amount or timing of
any scheduled payments of principal or interest on the mortgage loan or (ii) in
the judgment of the master servicer, materially impair the security for the
mortgage loan or reduce the likelihood of timely payment of amounts due
thereon. A master servicer also may agree to any other modification, waiver or
amendment if, in its judgment (x) a material default on the mortgage loan has
occurred or a payment default is imminent and (y) such modification, waiver or
amendment is reasonably likely to produce a greater recovery with respect to
the mortgage loan on a present value basis than would liquidation.
Sub-Servicers. A master servicer may delegate its servicing obligations in
respect of the mortgage loans serviced by it to one or more third-party
sub-servicers, but the master servicer will remain liable for such obligations
under the related pooling and servicing agreement unless otherwise provided in
the prospectus supplement. Unless otherwise provided in the prospectus
supplement, each sub-servicing agreement between a master servicer and a
sub-servicer must provide that, if for any reason the master servicer is no
longer acting in such capacity, the trustee or any successor master servicer
may assume the master servicer's rights and obligations under such
sub-servicing agreement.
Generally, the master servicer will be solely liable for all fees owed by
it to any sub-servicer, irrespective of whether the master servicer's
compensation pursuant to the related pooling and servicing agreement is
sufficient to pay such fees. Each sub-servicer will be reimbursed by the master
servicer for certain expenditures which it makes, generally to the same extent
the master servicer would be reimbursed under a pooling and servicing
agreement. See "--Certificate Account" and "--Servicing Compensation and
Payment of Expenses."
Special Servicers. If and to the extent specified in the prospectus
supplement, a special servicer may be a party to the related pooling and
servicing agreement or may be appointed by the master servicer or
58
another specified party to perform certain specified duties (for example, the
servicing of defaulted mortgage loans) in respect of the servicing of the
related mortgage loans. The special servicer under a pooling and servicing
agreement may be an affiliate of the depositor and may have other normal
business relationships with the depositor or the depositor's affiliates. The
master servicer will be liable for the performance of a special servicer only
if, and to the extent, set forth in the prospectus supplement.
Each pooling and servicing agreement may provide that neither the special
servicer nor any director, officer, employee or agent of the special servicer
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 and
servicing agreement or for errors in judgment; provided, however, that neither
the special servicer nor any such person will be protected against any breach
of a representation, warranty or covenant made in such pooling and servicing
agreement, or against any expense or liability that such person is specifically
required to bear pursuant to the terms of such pooling and servicing agreement,
or against any liability that would otherwise be imposed by reason of
misfeasance, bad faith or negligence in the performance of obligations or
duties thereunder.
REALIZATION UPON DEFAULTED MORTGAGE LOANS
A borrower's failure to make required mortgage loan payments may mean that
operating income is insufficient to service the mortgage debt, or may reflect
the diversion of that income from the servicing of the mortgage debt. In
addition, a borrower that is unable to make mortgage loan payments may also be
unable to make timely payment of taxes and to otherwise maintain and insure the
related mortgaged property. In general, the related master 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 borrower if cure is likely, inspect
the related mortgaged property and take such other actions as are consistent
with the servicing standard specified in the pooling and servicing agreement. A
significant period of time may elapse before the master servicer is able to
assess the success of any such corrective action or the need for additional
initiatives.
The time within which the master servicer can make the initial
determination of appropriate action, evaluate the success of corrective action,
develop additional initiatives, institute foreclosure proceedings and actually
foreclose (or accept a deed to a mortgaged property in lieu of foreclosure) on
behalf of the certificateholders may vary considerably depending on the
particular mortgage loan, the mortgaged property, the borrower, the presence of
an acceptable party to assume the mortgage loan and the laws of the
jurisdiction in which the mortgaged property is located. If a borrower files a
bankruptcy petition, the master servicer may not be permitted to accelerate the
maturity of the related mortgage loan or to foreclose on the mortgaged property
for a considerable period of time. See "Certain Legal Aspects of Mortgage Loans
and Leases."
A pooling and servicing agreement may grant to the master servicer, a
special servicer, a provider of credit support and/or the holder or holders of
certain classes of certificates of the related series a right of first refusal
to purchase from the trust fund, at a predetermined purchase price (which, if
insufficient to fully fund the entitlements of certificateholders to principal
and interest thereon, will be specified in the prospectus supplement), any
mortgage loan as to which a specified number of scheduled payments are
delinquent. In addition, the prospectus supplement may specify other methods
for the sale or disposal of defaulted mortgage loans pursuant to the terms of
the related pooling and servicing agreement.
If a default on a mortgage loan has occurred, the master servicer, on
behalf of the trustee, may at any time institute foreclosure proceedings,
exercise any power of sale contained in the related mortgage, obtain a deed in
lieu of foreclosure, or otherwise acquire title to the related mortgaged
property, by operation of law or otherwise, if such action is consistent with
the servicing standard specified in the pooling and servicing agreement. Unless
otherwise specified in the prospectus supplement, the master servicer may not,
however, acquire title to any mortgaged property or take any other action that
would cause the trustee, for the benefit of certificateholders of the related
series, 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
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the master servicer has previously determined, based on a report prepared by a
person who regularly conducts environmental audits (which report will be an
expense of the trust fund), that:
(i) either the mortgaged property is in compliance with applicable
environmental laws and regulations or, if not, that taking such actions as
are necessary to bring the mortgaged property into compliance therewith is
reasonably likely to produce a greater recovery on a present value basis
than not taking such actions; and
(ii) either there are no circumstances or conditions present at the
mortgaged property relating to the use, management or disposal of hazardous
materials for which investigation, testing, monitoring, containment,
cleanup or remediation could be required under any applicable environmental
laws and regulations or, if such circumstances or conditions are present
for which any such action could reasonably be expected to be required,
taking such actions with respect to the mortgaged property is reasonably
likely to produce a greater recovery on a present value basis than not
taking such actions. See "Certain Legal Aspects of Mortgage Loans and
Leases--Environmental Considerations."
If title to any mortgaged property is acquired by a trust fund as to which
a REMIC election has been made, the master servicer, on behalf of the trust
fund, will be required to sell the mortgaged property by the end of the third
calendar year following the year of acquisition or 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 fund for more than three years after the
end of the calendar year in which it was acquired will not result in the
imposition of a tax on the trust fund or cause the trust fund to fail to
qualify as a REMIC under the Code at any time that any certificate is
outstanding. Subject to the foregoing, the master servicer will generally be
required to solicit bids for any mortgaged property so acquired in such a
manner as will be reasonably likely to realize a fair price for such property.
If the trust fund acquires title to any mortgaged property, the master
servicer, on behalf of the trust fund, may retain an independent contractor to
manage and operate such property. The retention of an independent contractor,
however, will not relieve the master servicer of its obligation to manage such
mortgaged property in a manner consistent with the servicing standard specified
in the pooling and servicing 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 master servicer with respect to such mortgage loan,
the trust fund will realize a loss in the amount of such difference. The master
servicer will be entitled to reimburse itself from the liquidation proceeds
recovered on any defaulted mortgage loan (prior to the distribution of such
liquidation proceeds to certificateholders), amounts that represent unpaid
servicing compensation in respect of the mortgage loan, unreimbursed servicing
expenses incurred with respect to the mortgage loan and any unreimbursed
advances of delinquent payments made with respect to the mortgage loan.
HAZARD INSURANCE POLICIES
Each pooling and servicing agreement may require the related master
servicer 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 requirements of the servicing
standard specified in the pooling and servicing agreement. 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 mortgaged property,
but in either case not less than the amount necessary to avoid the application
of any co-insurance clause contained in the hazard insurance policy. The
ability of the master servicer to assure that hazard insurance proceeds are
appropriately applied may be dependent upon its being named as an additional
insured under 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 the master servicer
under any such policy (except for amounts to be applied to the restoration or
repair of the
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mortgaged property or released to the borrower in accordance with the master
servicer's normal servicing procedures and/or to the terms and conditions of
the related mortgage and mortgage note) will be deposited in the related
certificate account. The pooling and servicing agreement may provide that the
master 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 all of the mortgage loans in the related trust fund. If such
blanket policy contains a deductible clause, the master servicer will be
required, in the event of a casualty covered by such blanket policy, to deposit
in the related certificate account all sums that would have been deposited
therein but for 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, 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, terrorism, 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.
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.
The master servicer will determine whether to exercise any right the trustee
may have under any such provision in a manner consistent with the servicing
standard specified in the pooling and servicing agreement. Unless otherwise
specified in the prospectus supplement, the master servicer will be entitled to
retain as additional servicing compensation any fee collected in connection
with the permitted transfer of a mortgaged property. See "Certain Legal Aspects
of Mortgage Loans and Leases--Due-on-Sale and Due-on-Encumbrance."
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
Generally, a master servicer's primary servicing compensation with respect
to a series of certificates will come from the periodic payment to it of a
portion of the interest payments on each mortgage loan in the related trust
fund. Since that compensation is generally based on a percentage of the
principal balance of each such mortgage loan outstanding from time to time, it
will decrease in accordance with the amortization of the mortgage loans. The
prospectus supplement with respect to a series of certificates may provide
that, as additional compensation, the master servicer may retain all or a
portion of late payment charges, prepayment premiums, modification fees and
other fees collected from borrowers and any interest or other income that may
be earned on funds held in the certificate account. Any sub-servicer will
receive a portion of the master servicer's compensation as its sub-servicing
compensation.
In addition to amounts payable to any sub-servicer, a master servicer may
be required, to the extent provided in the prospectus supplement, to pay from
amounts that represent its servicing compensation certain expenses incurred in
connection with the administration of the related trust fund, including,
without limitation, payment of the fees and disbursements of independent
accountants and payment of
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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 prospectus supplement, interest on such expenses at the rate specified
therein, and the fees of the trustee and any special servicer, may be required
to be borne by the trust fund.
If and to the extent provided in the prospectus supplement, the master
servicer may be required to apply a portion of the servicing compensation
otherwise payable to it in respect of any period to prepayment interest
shortfalls.
See "Yield Considerations--Shortfalls in Collections of Interest Resulting
from Prepayments."
EVIDENCE AS TO COMPLIANCE
Each pooling and servicing agreement may require that, on or before a
specified date in each year, the master servicer cause a firm of independent
public accountants to furnish a statement to the trustee to the effect that,
based on an examination by such firm conducted substantially in compliance with
the Uniform Single Audit Program for Mortgage Bankers, the servicing by or on
behalf of the master servicer of mortgage loans under pooling and servicing
agreements substantially similar to each other (which may include the related
pooling and servicing agreement) was conducted through the preceding calendar
year or other specified twelve-month period in compliance with the terms of
such agreements except for any significant exceptions or errors in records
that, in the opinion of such firm, paragraph 4 of the Uniform Single Audit
Program for Mortgage Bankers requires it to report. Each pooling and servicing
agreement will also provide for delivery to the trustee, on or before a
specified date in each year, of a statement signed by one or more officers of
the master servicer to the effect that the master servicer has fulfilled its
material obligations under the pooling and servicing agreement throughout the
preceding calendar year or other specified twelve-month period.
Copies of the annual accountants' statement and the statement of officers
of a master servicer will be made available to certificateholders upon written
request to the master servicer.
CERTAIN MATTERS REGARDING THE MASTER SERVICER AND THE DEPOSITOR
The master servicer under a pooling and servicing agreement may be an
affiliate of the depositor and may have other normal business relationships
with the depositor or the depositor's affiliates. The related pooling and
servicing agreement may permit the master servicer to resign from its
obligations thereunder upon 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 at the date of the
pooling and servicing agreement. Unless applicable law requires the master
servicer's resignation to be effective immediately, no such resignation will
become effective until the trustee or a successor servicer has assumed the
master servicer's obligations and duties under the pooling and servicing
agreement. The related pooling and servicing agreement may also provide that
the master servicer may resign at any other time provided that (i) a willing
successor master servicer has been found, (ii) each of the rating agencies that
has rated any one or more classes of certificates of the related series
confirms in writing that the successor's appointment will not result in a
withdrawal, qualification or downgrade of any rating or ratings assigned to any
such class of certificates, (iii) the resigning party pays all costs and
expenses in connection with such transfer, and (iv) the successor accepts
appointment prior to the effectiveness of such resignation. Unless otherwise
specified in the prospectus supplement, the master servicer will also be
required to maintain a fidelity bond and errors and omissions policy that
provides coverage against losses that may be sustained as a result of an
officer's or employee's misappropriation of funds, errors and omissions or
negligence, subject to certain limitations as to amount of coverage, deductible
amounts, conditions, exclusions and exceptions.
Each pooling and servicing agreement may further provide that none of the
master servicer, the depositor and any director, officer, employee or agent of
either of them will be under any liability to the related trust fund or
certificateholders for any action taken, or not taken, in good faith pursuant
to the pooling and servicing agreement or for errors in judgment; provided,
however, that none of the master servicer, the depositor and any such person
will be protected against any breach of a representation,
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warranty or covenant made in such pooling and servicing agreement, or against
any expense or liability that such person is specifically required to bear
pursuant to the terms of such pooling and servicing agreement, or against any
liability that would otherwise be imposed by reason of misfeasance, bad faith
or negligence in the performance of obligations or duties thereunder. Unless
otherwise specified in the prospectus supplement, each pooling and servicing
agreement will further provide that the master servicer, the depositor and any
director, officer, employee or agent of either of them will be entitled to
indemnification by the related trust fund against any loss, liability or
expense incurred in connection with the pooling and servicing agreement or the
related series of certificates; provided, however, that such indemnification
will not extend to any loss, liability or expense (i) that such person is
specifically required to bear pursuant to the terms of such agreement, and is
not reimbursable pursuant to the pooling and servicing agreement; (ii) incurred
in connection with any breach of a representation, warranty or covenant made in
the pooling and servicing agreement; (iii) incurred by reason of misfeasance,
bad faith or negligence in the performance of obligations or duties under the
pooling and servicing agreement. In addition, each pooling and servicing
agreement will provide that neither the master servicer nor the depositor will
be under any obligation to appear in, prosecute or defend any legal action
unless such action is related to its respective duties under the pooling and
servicing agreement and, unless it has received sufficient assurance as to the
reimbursement of the costs and liabilities of such legal action or, in its
opinion such legal action does not involve it in any expense or liability.
However, each of the master servicer and the depositor will be permitted, in
the exercise of its discretion, to undertake any 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 and servicing agreement and the
interests of the certificateholders thereunder. In such event, the legal
expenses and costs of such action, and any liability resulting therefrom, will
be expenses, costs and liabilities of the certificateholders, and the master
servicer or the depositor, as the case may be, will be entitled to charge the
related certificate account therefor.
Subject, in certain circumstances, to the satisfaction of certain
conditions that may be required in the related pooling and servicing agreement,
any person into which the master servicer or the depositor may be merged or
consolidated, or any person resulting from any merger or consolidation to which
the master servicer or the depositor is a party, or any person succeeding to
the business of the master servicer or the depositor, will be the successor of
the master servicer or the depositor, as the case may be, under the related
pooling and servicing agreement.
EVENTS OF DEFAULT
The events of default for a series of certificates under the related
pooling and servicing agreement generally will include (i) any failure by the
master servicer to distribute or cause to be distributed to certificateholders,
or to remit to the trustee for distribution to certificateholders in a timely
manner, any amount required to be so distributed or remitted, provided that
such failure is permitted so long as the failure is corrected by 10:00 a.m. on
the related distribution date, (ii) any failure by the master servicer or the
special servicer duly to observe or perform in any material respect any of its
other covenants or obligations under the pooling and servicing agreement which
continues unremedied for 30 days after written notice of such failure has been
given to the master servicer or the special servicer, as applicable, by any
party to the pooling and servicing agreement, or to the master servicer or the
special servicer, as applicable, by certificateholders entitled to not less
than 25% (or such other percentage specified in the prospectus supplement) of
the voting rights for such series (subject to certain extensions provided in
the related pooling and servicing agreement); and (iii) certain events of
insolvency, readjustment of debt, marshaling of assets and liabilities or
similar proceedings in respect of or relating to the master servicer or the
special servicer and certain actions by or on behalf of the master servicer or
the special servicer indicating its insolvency or inability to pay its
obligations. 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 prospectus supplement.
RIGHTS UPON EVENT OF DEFAULT
So long as an event of default under a pooling and servicing agreement
remains unremedied, the depositor or the trustee will be authorized, and at the
direction of certificateholders entitled to not less
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than 25% (or such other percentage specified in the prospectus supplement) of
the voting rights for such series, the trustee will be required, to terminate
all of the rights and obligations of the master servicer as master servicer
under the pooling and servicing agreement, whereupon the trustee will succeed
to all of the responsibilities, duties and liabilities of the master servicer
under the pooling and servicing agreement (except that if the master servicer
is required to make advances in respect of mortgage loan delinquencies, but the
trustee is prohibited by law from obligating itself to do so, or if the
prospectus supplement so specifies, the trustee will not be obligated to make
such advances) and will be entitled to similar compensation arrangements. If
the trustee is unwilling or unable so to act, it may (or, at the written
request of certificateholders entitled to at least 51% (or such other
percentage specified in the 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 that (unless otherwise
provided in the prospectus supplement) is acceptable to each rating agency that
assigned ratings to the offered certificates of such series to act as successor
to the master servicer under the pooling and servicing agreement. Pending such
appointment, the trustee will be obligated to act in such capacity.
No certificateholder will have the right under any pooling and servicing
agreement to institute any proceeding with respect thereto unless such holder
previously has given to the trustee written notice of default and unless
certificateholders entitled to at least 25% (or such other percentage specified
in the prospectus supplement) of the voting rights for the related series shall
have made written request upon the trustee to institute such proceeding in its
own name as trustee thereunder and shall have offered to the trustee reasonable
indemnity, and the trustee for 60 days (or such other period specified in the
prospectus supplement) shall have neglected or refused to institute any such
proceeding. The trustee, however, will be under no obligation to exercise any
of the trusts or powers vested in it by any pooling and servicing agreement or
to make any investigation of matters arising thereunder or to institute,
conduct or defend any litigation thereunder or in relation thereto at the
request, order or direction of any of the holders of certificates of the
related series, 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
Each pooling and servicing agreement may be amended by the parties
thereto, without the consent of any of the holders of the related certificates,
(i) to cure any ambiguity, (ii) to correct, modify or supplement any provision
in the pooling and servicing agreement that may be inconsistent with any other
provision therein, (iii) to add any other provisions with respect to matters or
questions arising under the pooling and servicing agreement that are not
inconsistent with the provisions thereof, (iv) to comply with any requirements
imposed by the Code or (v) for any other purpose; provided that such amendment
(other than an amendment for the purpose specified in clause (iv) above) may
not (as evidenced by an opinion of counsel to such effect satisfactory to the
trustee) adversely affect in any material respect the interests of any such
holder. Each pooling and servicing agreement may also be amended for any
purpose by the parties, with the consent of certificateholders entitled to at
least 51% (or such other percentage specified in the prospectus supplement) of
the voting rights for the related series allocated to the affected classes;
provided, however, that no such amendment may (x) reduce in any manner the
amount of, or delay the timing of, payments received or advanced on mortgage
loans that are required to be distributed in respect of any certificate without
the consent of the holder of such certificate, (y) adversely affect in any
material respect the interests of the holders of any class of certificates, in
a manner other than as described in clause (x), without the consent of the
holders of all certificates of such class or (z) modify the provisions of the
pooling and servicing agreement described in this paragraph without the consent
of the holders of all certificates of the related series. However, unless
otherwise specified in the related pooling and servicing agreement, the trustee
will be prohibited from consenting to any amendment of a pooling and servicing
agreement pursuant to which a REMIC election is to be or has been made unless
the trustee shall first have received an opinion of counsel to the effect that
such amendment will not result in the imposition of a tax on the related trust
fund or cause the related trust fund to fail to qualify as a REMIC at any time
that the related certificates are outstanding.
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LIST OF CERTIFICATEHOLDERS
Upon written request of any certificateholder 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 and servicing agreement, the
trustee or other specified person will afford such certificateholder access,
during normal business hours, to the most recent list of certificateholders of
that series then maintained by such person.
THE TRUSTEE
The trustee under each pooling and servicing 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 and its affiliates.
DUTIES OF THE TRUSTEE
The trustee for a series of certificates will make no representation as to
the validity or sufficiency of the related pooling and servicing agreement, the
certificates or any mortgage loan or related document and will not be
accountable for the use or application by or on behalf of any master servicer
of any funds paid to the master servicer or any special servicer in respect of
the certificates or the mortgage loans, or any funds deposited into or
withdrawn from the certificate account or any other account by or on behalf of
the master servicer or any special servicer. If no event of default under a
related pooling and servicing agreement has occurred and is continuing, the
trustee will be required to perform only those duties specifically required
under the related pooling and servicing agreement. However, upon receipt of any
of the various certificates, reports or other instruments required to be
furnished to it pursuant to the pooling and servicing agreement, the trustee
will be required to examine such documents and to determine whether they
conform to the requirements of the pooling and servicing agreement.
CERTAIN MATTERS REGARDING THE TRUSTEE
The trustee for a series of certificates may be entitled to
indemnification, from amounts held in the related certificate account, 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
and servicing agreement; provided, however, that such indemnification will not
extend to any loss, liability or expense that constitutes a specific liability
imposed on the trustee pursuant to the pooling and servicing agreement, or to
any loss, liability or expense incurred by reason of willful misfeasance, bad
faith or 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, or as may arise from a breach of any
representation, warranty or covenant of the trustee made in the pooling and
servicing agreement. As and to the extent described in the 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.
RESIGNATION AND REMOVAL OF THE TRUSTEE
The trustee for a series of certificates will be permitted at any time to
resign from its obligations and duties under the related pooling and servicing
agreement by giving written notice thereof to the depositor. Upon receiving
such notice of resignation, the master servicer (or such other person as may be
specified in the prospectus supplement) will be required to use reasonable
efforts to promptly appoint a successor trustee. If no successor trustee shall
have accepted an appointment within a specified period after the giving of such
notice of resignation, the resigning trustee may petition any court of
competent jurisdiction to appoint a successor trustee.
Unless otherwise provided in the prospectus supplement, if at any time the
trustee ceases to be eligible to continue as such under the related pooling and
servicing agreement, or if at any time the trustee becomes incapable of acting,
or if certain events of (or proceedings in respect of) bankruptcy or insolvency
occur with respect to the trustee, the depositor will be authorized to remove
the trustee and
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appoint a successor trustee. In addition, unless otherwise provided in the
prospectus supplement, holders of the certificates of any series entitled to at
least 51% (or such other percentage specified in the prospectus supplement) of
the voting rights for such series may at any time (with or without cause)
remove the trustee and appoint a successor trustee.
Any resignation or removal of the trustee and appointment of a successor
trustee will not become effective until acceptance of appointment by the
successor trustee.
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DESCRIPTION OF CREDIT SUPPORT
GENERAL
Credit support may be provided with respect to one or more classes of the
certificates of any series, or with respect to the related mortgage assets.
Credit support may be in the form of over-collateralization, a letter of
credit, the subordination of one or more classes of certificates, the use of a
pool insurance policy or guarantee insurance, the establishment of one or more
reserve funds or another method of credit support described in the prospectus
supplement, or any combination of the foregoing. If so provided in the
prospectus supplement, any form of credit support may provide credit
enhancement for more than one series of certificates to the extent described in
the prospectus supplement.
The credit support generally will not provide protection against all risks
of loss and will not guarantee payment to certificateholders of all amounts to
which they are entitled under the related pooling and servicing agreement. If
losses or shortfalls occur that exceed the amount covered by the credit support
or that are not covered by the credit support, certificateholders will bear
their allocable share of deficiencies. Moreover, if a form of credit support
covers more than one series of certificates, holders of certificates of one
series will be subject to the risk that such credit support will be exhausted
by the claims of the holders of certificates of one or more other series before
the former receive their intended share of such coverage.
If credit support is provided with respect to one or more classes of
certificates of a series, or with respect to the related mortgage assets, the
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 in this prospectus, (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
prospectus supplement will set forth certain information with respect to the
obligor under any instrument of credit support, generally including (w) a brief
description of its principal business activities, (x) its principal place of
business, place of incorporation and the jurisdiction under which it is
chartered or licensed to do business, (y) if applicable, the identity of the
regulatory agencies that exercise primary jurisdiction over the conduct of its
business and (z) its total assets, and its stockholders equity or
policyholders' surplus, if applicable, as of a date that will be specified in
the prospectus supplement. See "Risk Factors--Credit Support May Not Cover
Losses or Risks Which Could Adversely Affect Payment on Your Certificates."
SUBORDINATE CERTIFICATES
If so specified in the prospectus supplement, one or more classes of
certificates of a series may be subordinate certificates which are subordinated
in right of payment to one or more other classes of senior certificates. If so
provided in the prospectus supplement, the subordination of a class may apply
only in the event of (or may be limited to) certain types of losses or
shortfalls. The prospectus supplement will set forth information concerning the
amount of subordination provided by a class or classes of subordinate
certificates in a series, the circumstances under which such subordination will
be available and the manner in which the amount of subordination will be made
available.
CROSS-SUPPORT PROVISIONS
If the mortgage assets in any trust fund are divided into separate groups,
each supporting a separate class or classes of certificates of a series, credit
support may be provided by cross-support provisions requiring that
distributions be made on senior certificates evidencing interests in one group
of mortgage assets prior to distributions on subordinate certificates
evidencing interests in a different group of mortgage assets within the trust
fund. The prospectus supplement for a series that includes a cross-support
provision will describe the manner and conditions for applying such provisions.
INSURANCE OR GUARANTEES WITH RESPECT TO MORTGAGE LOANS
If so provided in the prospectus supplement for a series of certificates,
mortgage loans included in the related trust fund will be covered for certain
default risks by insurance policies or guarantees. To the extent material, a
copy of each such instrument will accompany the Current Report on Form 8-K to
be filed with the Securities and Exchange Commission within 15 days of issuance
of the certificates of the related series.
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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 financial institution specified in such prospectus supplement. Under a
letter of credit, the bank or financial institution providing the letter of
credit 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 prospectus supplement of the aggregate principal
balance of the 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 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 prospectus supplement. The obligations of the bank or
financial institution providing the letter of credit for each series of
certificates will expire at the earlier of the date specified in the prospectus
supplement or the termination of the trust fund. A copy of any such letter of
credit will accompany the Current Report on Form 8-K to be filed with the
Securities and Exchange Commission within 15 days of issuance of the
certificates of the related series.
CERTIFICATE INSURANCE AND SURETY BONDS
If so provided in the prospectus supplement for a series of certificates,
deficiencies in amounts otherwise payable on such certificates or certain
classes thereof will be covered by insurance policies and/or surety bonds
provided by one or more insurance companies or sureties. Such instruments may
cover, with respect to one or more classes of certificates of the related
series, timely distributions of interest and/or full distributions of principal
on the basis of a schedule of principal distributions set forth in or
determined in the manner specified in the prospectus supplement. A copy of any
such instrument will accompany the Current Report on Form 8-K to be filed with
the Securities and Exchange Commission within 15 days of issuance of the
certificates of the related series.
RESERVE FUNDS
If so provided in the prospectus supplement for a series of certificates,
deficiencies in amounts otherwise payable on 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 prospectus
supplement, the reserve fund for a series may also be funded over time by a
specified amount of the collections received on the related mortgage assets.
Amounts on deposit in any reserve fund for a series, together with the
reinvestment income thereon, if any, will be applied for the purposes, in the
manner, and to the extent specified in the prospectus supplement. If so
specified in the prospectus supplement, reserve funds may be established to
provide protection only against certain types of losses and shortfalls.
Following each distribution date, amounts in a reserve fund in excess of any
amount required to be maintained in the reserve fund may be released from the
reserve fund under the conditions and to the extent specified in the prospectus
supplement.
If so specified in the prospectus supplement, amounts deposited in any
reserve fund will be invested in permitted investments, such as United States
government securities and other investment grade obligations specified in the
related pooling and servicing agreement. Unless otherwise specified in the
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 prospectus supplement.
CREDIT SUPPORT WITH RESPECT TO CMBS
If so provided in the prospectus supplement for a series of certificates,
any CMBS included in the related trust fund and/or the related underlying
mortgage loans may be covered by one or more of the
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types of credit support described in this prospectus. The prospectus supplement
for any series of certificates evidencing an interest in a trust fund that
includes CMBS will describe to the extent information is available and deemed
material, any similar forms of credit support that are provided by or with
respect to, or are included as part of the trust fund evidenced by or providing
security for, such CMBS. The type, characteristic and amount of credit support
will be determined based on the characteristics of the mortgage assets and
other factors and will be established, in part, on the basis of requirements of
each rating agency rating the certificates of such series. If so specified in
the prospectus supplement, any such credit support may apply only in the event
of certain types of losses or delinquencies and the protection against losses
or delinquencies provided by such credit support will be limited.
CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS AND LEASES
The following discussion contains general summaries of certain legal
aspects of loans secured by commercial and multifamily residential properties.
Because such legal aspects are governed by applicable state law (which laws may
differ substantially), the summaries do not purport to be complete, to reflect
the laws of any particular state, or to encompass the laws of all states in
which the security for the mortgage loans (or mortgage loans underlying any
CMBS) is situated. Accordingly, the summaries are qualified in their entirety
by reference to the applicable laws of those states. See "Description of the
Trust Funds--Mortgage Loans--Leases." For purposes of the following discussion,
"mortgage loan" includes a mortgage loan underlying a CMBS.
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 collectively
referred to as "mortgages" in this prospectus and, unless otherwise specified,
in any prospectus supplement. 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. Additionally, in some states,
mechanic's and materialman's liens have priority over mortgage liens.
The mortgagee's authority under a mortgage, the beneficiary's authority
under a deed of trust and the grantee's authority under a deed to secure debt
are governed by the express provisions of the related instrument, the law of
the state in which the real property is located, certain federal laws
(including, without limitation, the Servicemembers Civil Relief Act) and, in
some deed of trust transactions, the trustee's authority is further limited by
the directions of the beneficiary.
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 a mortgage,
the mortgagor grants a lien on the subject property in favor of the mortgagee.
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 to the trustee, in trust, irrevocably until the
debt is paid, and generally with a power of sale. A deed to secure debt
typically has two parties. 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 to a mortgage instrument because legal title to
the property is held by a land trustee under a land trust agreement for the
benefit of the borrower. At
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origination of a mortgage loan involving a land trust, the borrower generally
executes a separate undertaking to make payments on the mortgage note. The
mortgagee's authority under a mortgage, the trustee's authority under a deed of
trust and the grantee's authority under a deed to secure debt are governed by
the express provisions of the related instrument, the law of the state in which
the real property is located, certain federal laws and, in some deed of trust
transactions, the directions of the beneficiary.
LEASES AND RENTS
Mortgages that encumber income-producing property often contain an
assignment of rents and leases, pursuant to which the borrower assigns to the
lender the borrower's right, title and interest as landlord under each lease
and the income derived therefrom, while (unless rents are to be paid directly
to the lender) retaining a revocable license to collect the rents for so long
as there is no default. If the borrower defaults, the license terminates and
the lender is entitled to collect the rents. Local law may require that the
lender take possession of the property and/or obtain a court-appointed receiver
before becoming entitled to collect the rents. Lenders that actually take
possession of the property, however, may incur potentially substantial risks
attendant to being a mortgagee in possession. Such risks include liability for
environmental clean-up costs and other risks inherent in property ownership.
See "--Environmental Considerations." In most states, hotel and motel room
receipts/revenues are considered accounts receivable under the Uniform
Commercial Code; in cases where hotels or motels constitute loan security, the
receipts/revenues 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 receipts/revenues and must file
continuation statements, generally every five years, to maintain perfection of
such security interest. Even if the lender's security interest in room
receipts/revenues is perfected under the Uniform Commercial Code, it will
generally be required to commence a foreclosure action or otherwise take
possession of the property in order to collect the room receipts/revenues
following a default. 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 Uniform Commercial Code. Accordingly, if
a borrower pledges personal property as security for a mortgage loan, the
lender generally must file Uniform Commercial Code financing statements in
order to perfect its security interest therein, and must file continuation
statements, generally every five years, to maintain that perfection.
COOPERATIVE LOANS
If specified in the prospectus supplement, the mortgage loans may consist
of loans secured by "blanket mortgages" on the property owned by cooperative
housing corporations. If specified in the prospectus supplement, the mortgage
loans may consist of cooperative loans secured by security interests in shares
issued by private cooperative housing corporations and in the related
proprietary leases or occupancy agreements granting exclusive rights to occupy
specific dwelling units in the cooperatives' buildings. The security agreement
will create a lien upon, or grant a title interest in, the property which it
covers, the priority of which will depend on the terms of the particular
security agreement as well as the order of recordation of the agreement in the
appropriate recording office. Such a lien or title interest is not prior to the
lien for real estate taxes and assessments and other charges imposed under
governmental police powers.
A cooperative generally owns in fee or has a leasehold interest in land
and owns in fee or leases the building or buildings thereon and all separate
dwelling units in the buildings. The cooperative is owned by
tenant-stockholders who, through ownership of stock or shares in the
corporation, receive proprietary leases or occupancy agreements which confer
exclusive rights to occupy specific units. Generally, a tenant-stockholder of a
cooperative must make a monthly payment to the cooperative representing such
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tenant-stockholder's pro rata share of the cooperative's payments for its
blanket mortgage, real property taxes, maintenance expenses and other capital
or ordinary expenses. The cooperative is directly responsible for property
management and, in most cases, payment of real estate taxes, other governmental
impositions and hazard and liability insurance. If there is a blanket mortgage
or mortgages on the cooperative apartment building or underlying land, as is
generally the case, or an underlying lease of the land, as is the case in some
instances, the cooperative, as property mortgagor, or lessee, as the case may
be, is also responsible for meeting these mortgage or rental obligations. A
blanket mortgage is ordinarily incurred by the cooperative in connection with
either the construction or purchase of the cooperative's apartment building or
obtaining of capital by the cooperative. The interest of the occupant under
proprietary leases or occupancy agreements as to which that cooperative is the
landlord are generally subordinate to the interest of the holder of a blanket
mortgage and to the interest of the holder of a land lease. If the cooperative
is unable to meet the payment obligations (i) arising under a blanket mortgage,
the mortgagee holding a blanket mortgage could foreclose on that mortgage and
terminate all subordinate proprietary leases and occupancy agreements, or (ii)
arising under its land lease, the holder of the landlord's interest under the
land lease could terminate it and all subordinate proprietary leases and
occupancy agreements. Also, a blanket mortgage on a cooperative may provide
financing in the form of a mortgage that does not fully amortize, with a
significant portion of principal being due in one final payment at maturity.
The inability of the cooperative to refinance a mortgage and its consequent
inability to make such final payment could lead to foreclosure by the mortgagee
and termination of all proprietary leases and occupancy agreements. Similarly,
a land lease has an expiration date and the inability of the cooperative to
extend its term, or, in the alternative, to purchase the land, could lead to
termination of the cooperatives' interest in the property and termination of
all proprietary leases and occupancy agreements. Upon foreclosure of a blanket
mortgage on a cooperative, the lender would normally be required to take the
mortgaged property subject to state and local regulations that afford tenants
who are not shareholders various rent control and other protections. A
foreclosure by the holder of a blanket mortgage or the termination of the
underlying lease could eliminate or significantly diminish the value of any
collateral held by a party who financed the purchase of cooperative shares by
an individual tenant stockholder.
An ownership interest in a cooperative and accompanying occupancy rights
are financed through a cooperative share loan evidenced by a promissory note
and secured by an assignment of and a security interest in the occupancy
agreement or proprietary lease and a security interest in the related
cooperative shares. The lender generally takes possession of the share
certificate and a counterpart of the proprietary lease or occupancy agreement
and financing statements covering the proprietary lease or occupancy agreement
and the cooperative shares are filed in the appropriate state and local offices
to perfect the lender's interest in its collateral. Subject to the limitations
discussed below, upon default of the tenant-stockholder, the lender may sue for
judgment on the promissory note, dispose of the collateral at a public or
private sale or otherwise proceed against the collateral or tenant-stockholder
as an individual as provided in the security agreement covering the assignment
of the proprietary lease or occupancy agreement and the pledge of cooperative
shares. See "--Foreclosure--Cooperative Loans" below.
JUNIOR MORTGAGES; RIGHTS OF SENIOR LENDERS
Some of the mortgage loans included in a trust fund may be secured by
mortgage instruments that are subordinate to mortgage instruments held by other
lenders. The rights of the trust fund (and therefore the certificateholders),
as holder of a junior mortgage instrument, are subordinate to those of the
senior lender, including the prior rights of the senior lender to receive
rents, hazard insurance and condemnation proceeds and to cause the mortgaged
property to be sold upon borrower's default and thereby extinguish the trust
fund's junior lien unless the master servicer or special servicer satisfies the
defaulted senior loan, or, if permitted, asserts its subordinate interest in a
property in foreclosure litigation. As discussed more fully below, in many
states a junior lender may satisfy a defaulted senior loan in full, adding the
amounts expended to the balance due on the junior loan. Absent a provision in
the senior mortgage instrument, no notice of default is required to be given to
the junior lender.
The form of the mortgage instrument used by many institutional lenders
confers on the lender the right both to receive all proceeds collected under
any hazard insurance policy and all awards made in connection with any
condemnation proceedings, and (subject to any limits imposed by applicable
state
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law) to apply such proceeds and awards to any indebtedness secured by the
mortgage instrument in such order as the lender may determine. Thus, if
improvements on a property are damaged or destroyed by fire or other casualty,
or if the property is taken by condemnation, the holder of the senior mortgage
instrument will have the prior right to collect any insurance proceeds payable
under a hazard insurance policy and any award of damages in connection with the
condemnation and to apply the same to the senior indebtedness. Accordingly,
only the proceeds in excess of the amount of senior indebtedness will be
available to be applied to the indebtedness secured by a junior mortgage
instrument.
The form of mortgage instrument used by many institutional lenders
typically contains a "future advance" clause, which provides, in general, that
additional amounts advanced to or on behalf of the mortgagor or trustor by the
mortgagee or beneficiary are to be secured by the mortgage instrument. While
such a clause is valid under the laws of most states, the priority of any
advance made under the clause depends, in some states, on whether the advance
was an "obligatory" or an "optional" advance. If the lender is obligated to
advance the additional amounts, the advance may be entitled to receive the same
priority as the amounts advanced at origination, notwithstanding that
intervening junior liens may have been recorded between the date of recording
of the senior mortgage instrument and the date of the future advance, and
notwithstanding that the senior lender had actual knowledge of such intervening
junior liens at the time of the advance. Where the senior lender is not
obligated to advance the additional amounts and has actual knowledge of the
intervening junior liens, the advance may be subordinate to such intervening
junior liens. Priority of advances under a "future advance" clause rests, in
many other states, on state law giving priority to all advances made under the
loan agreement up to a "credit limit" amount stated in the recorded mortgage.
Another provision typically found in the form of mortgage instrument used
by many institutional lenders permits the lender to itself perform certain
obligations of the borrower (for example, the obligations to pay when due all
taxes and assessments on the property and, when due, all encumbrances, charges
and liens on the property that are senior to the lien of the mortgage
instrument, to maintain hazard insurance on the property, and to maintain and
repair the property) upon a failure of the borrower to do so, with all sums so
expended by the lender becoming part of the indebtedness secured by the
mortgage instrument.
The form of mortgage instrument used by many institutional lenders
typically requires the borrower to obtain the consent of the lender in respect
of actions affecting the mortgaged property, including the execution of new
leases and the termination or modification of existing leases, the performance
of alterations to buildings forming a part of the mortgaged property and the
execution of management and leasing agreements for the mortgaged property.
Tenants will often refuse to execute leases unless the lender executes a
written agreement with the tenant not to disturb the tenant's possession of its
premises in the event of a foreclosure. A senior lender may refuse to consent
to matters approved by a junior lender, with the result that the value of the
security for the junior mortgage instrument is diminished.
FORECLOSURE
General. Foreclosure is a legal procedure that allows the lender to seek
to recover its mortgage debt by enforcing its rights and available legal
remedies under the mortgage in respect of the mortgaged property. If the
borrower defaults in payment or performance of its obligations under the note
or mortgage, the lender has the right to institute foreclosure proceedings to
sell the real property at public auction to satisfy the indebtedness.
Foreclosure Procedures Vary From State to State. Two primary methods of
foreclosing a mortgage are judicial foreclosure, involving court proceedings,
and non-judicial foreclosure pursuant to a power of sale usually 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 years to complete. Moreover, the filing by or against the
borrower-mortgagor of a bankruptcy petition would impose an automatic stay on
such proceedings and could further delay a foreclosure sale.
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
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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 proper
defendants. As stated above, if the lender's right to foreclose is contested by
any defendant, the legal proceedings may be time-consuming. In addition,
judicial foreclosure is a proceeding in equity and, therefore, equitable
defenses may be raised against the foreclosure. Upon successful completion of a
judicial foreclosure proceeding, the court generally issues a judgment of
foreclosure and appoints a referee or other officer to conduct a public sale of
the mortgaged property, the proceeds of which are used to satisfy the judgment.
Such sales are made in accordance with procedures that vary from state to
state.
Non-Judicial Foreclosure/Power of Sale. Foreclosure of a deed of trust is
generally accomplished by a non-judicial trustee's sale pursuant to 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 or mortgage allows a
non-judicial public sale to be conducted generally following a request from the
beneficiary/lender to the trustee to sell the property upon default by the
borrower and after notice of sale is given in accordance with the terms of the
mortgage and applicable state law. In some states, prior to 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 which 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 a junior
lienholder may then have the right, during a reinstatement period required in
some states, to cure the default by paying the entire actual amount in arrears
(without regard to the acceleration of the indebtedness), plus the lender's
expenses incurred in enforcing the obligation. In other states, the borrower or
the junior lienholder is not provided a period to reinstate the loan, but has
only the right to pay off the entire debt to prevent the foreclosure sale. In
addition to such cure rights, in most jurisdictions, the borrower-mortgagor or
a subordinate lienholder can seek to enjoin the non-judicial foreclosure by
commencing a court proceeding. Generally, state law governs the procedure for
public sale, the parties entitled to notice, the method of giving notice and
the applicable time periods.
Both judicial and non-judicial foreclosures may result in the termination
of leases at the mortgaged property, which in turn could result in the
reduction in the income for such property. Some of the factors that will
determine whether or not a lease will be terminated by a foreclosure are: the
provisions of applicable state law, the priority of the mortgage vis-a-vis the
lease in question, the terms of the lease and the terms of any subordination,
non-disturbance and attornment agreement between the tenant under the lease and
the mortgagee.
Equitable Limitations on Enforceability of Certain Provisions. United
States courts have traditionally imposed general equitable principles to limit
the remedies available to lenders in foreclosure actions. These principles are
generally designed to relieve borrowers from the effects of mortgage defaults
perceived as harsh or unfair. Relying on 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 non-monetary default, such as a failure to
adequately maintain the mortgaged property or placing a subordinate mortgage or
other encumbrance upon 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.
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Public Sale. A third party may be unwilling to purchase a mortgaged
property at a public sale for a number of reasons, including 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. For these reasons, 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. 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
involved in a foreclosure process can often be quite expensive; such costs may
include, depending on the jurisdiction involved, legal fees, court
administration fees, referee fees and transfer taxes or fees. 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, including penalty fees and court costs, or
face foreclosure.
Rights of Redemption. The purposes of a foreclosure action are to enable
the lender to realize upon its security and to bar the borrower, and all
persons who have interests in the property that are subordinate to that of the
foreclosing lender, from exercise of their "equity of redemption." The doctrine
of equity of redemption provides that, until the property encumbered by a
mortgage has been sold in accordance with a properly conducted foreclosure and
foreclosure sale, those having interests that are subordinate to that of the
foreclosing lender have an equity of redemption and may redeem the property by
paying the entire debt with interest. Those having an equity of redemption must
generally be made parties and joined in the foreclosure proceeding in order for
their equity of redemption to be terminated.
The equity of redemption is a common-law (non-statutory) right which
should be distinguished from post-sale statutory rights of redemption. In some
states, after sale pursuant to a deed of trust or foreclosure of a mortgage,
the borrower and foreclosed junior lienors are given a statutory period in
which to redeem the property. In some states, statutory redemption may occur
only upon payment of the foreclosure sale price. In other states, redemption
may be permitted if the former borrower pays only a portion of the sums due.
The effect of a statutory right of redemption is to diminish the ability of the
lender to sell the foreclosed property because the exercise of a right of
redemption would defeat the title of any purchaser through a foreclosure.
Consequently, the practical effect of the redemption right is to force the
lender to maintain the property and pay the expenses of ownership until the
redemption period has expired. In some states, a post-sale statutory right of
redemption may exist following a judicial foreclosure, but not following a
trustee's sale under a deed of trust.
Anti-Deficiency Legislation. Some or all of the mortgage loans may be
nonrecourse loans, as to which recourse in the case of default will be limited
to the mortgaged property and 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 a non-judicial foreclosure. 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
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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 judicially determined fair market value of the
property at the time of the sale.
Leasehold Risks. Mortgage loans may be secured by a mortgage on the
borrower's leasehold interest in a ground lease. Leasehold mortgage loans are
subject to certain risks not associated with mortgage loans secured by a lien
on the fee estate of the borrower. The most significant of these risks is that
if the borrower's leasehold were to be terminated upon a lease default or the
bankruptcy of the lessee or the lessor, the leasehold mortgagee would lose its
security. This risk may be substantially lessened if the ground lease contains
provisions protective of the leasehold mortgagee, such as a provision that
requires the ground lessor to give the leasehold mortgagee notices of lessee
defaults and an opportunity to cure them, a provision that permits the
leasehold estate to be assigned to and by the leasehold mortgagee or the
purchaser at a foreclosure sale, a provision that gives the leasehold mortgagee
the right to enter into a new ground lease with the ground lessor on the same
terms and conditions as the old ground lease or a provision that prohibits the
ground lessee/borrower from treating the ground lease as terminated in the
event of the ground lessor's bankruptcy and rejection of the ground lease by
the trustee for the debtor/ground lessor. Certain mortgage loans, however, may
be secured by liens on ground leases that do not contain all or some of these
provisions.
Regulated Healthcare Facilities. A mortgage loan may be secured by a
mortgage on a nursing home or other regulated healthcare facility. In most
jurisdictions, a license (which is nontransferable and may not be assigned or
pledged) granted by the appropriate state regulatory authority is required to
operate a regulated healthcare facility. Accordingly, the ability of a person
acquiring this type of property upon a foreclosure sale to take possession of
and operate the same as a regulated healthcare facility may be prohibited by
applicable law. Notwithstanding the foregoing, however, in certain
jurisdictions the person acquiring this type of property at a foreclosure sale
may have the right to terminate the use of the same as a regulated health care
facility and convert it to another lawful purpose.
Cross-Collateralization. Certain of the mortgage loans may be secured by
more than one mortgage covering mortgaged properties located in more than one
state. 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 a cross-collateralized
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
mortgages is not impaired or released.
Cooperative Loans. The cooperative shares owned by the tenant-stockholder
and pledged to the lender are, in almost all cases, subject to restrictions on
transfer as set forth in the cooperative's certificate of incorporation and
by-laws, as well as the proprietary lease or occupancy agreement, and may be
cancelled by the cooperative for failure by the tenant-stockholder to pay rent
or other obligations or charges owed by such tenant-stockholder, including
mechanics' liens against the cooperative apartment building incurred by such
tenant-stockholder. The proprietary lease or occupancy agreement generally
permit the cooperative to terminate such lease or agreement in the event an
obligor fails to make payments or defaults in the performance of covenants
required thereunder. Typically, the lender and the cooperative enter into a
recognition agreement which establishes the rights and obligations of both
parties in the event of a default by the tenant-stockholder. A default under
the proprietary lease or occupancy agreement will usually constitute a default
under the security agreement between the lender and the tenant-stockholder.
The recognition agreement generally provides that, in the event that the
tenant-stockholder has defaulted under the proprietary lease or the occupancy
agreement is terminated, the cooperative will
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recognize the lender's lien against proceeds from the sale of the cooperative
apartment, subject, however, to the cooperative's right to sums due under such
proprietary lease or occupancy agreement. The total amount owed to the
cooperative by the tenant-stockholder, which the lender generally cannot
restrict and does not monitor, could reduce the value of the collateral below
the outstanding principal balance of the cooperative loan and accrued and
unpaid interest thereon.
Recognition agreements also provide that in the event of a foreclosure on
a cooperative loan, the lender must obtain the approval or consent of the
cooperative as required by the proprietary lease before transferring the
cooperative shares or assigning the proprietary lease. Generally, the lender is
not limited in any rights it may have to dispossess the tenant-stockholders.
In some states, foreclosure on the cooperative shares is accomplished by a
sale in accordance with the provisions of Article 9 of the Uniform Commercial
Code and the security agreement relating to those shares. Article 9 of the
Uniform Commercial Code requires that a sale be conducted in a "commercially
reasonable" manner. Whether a foreclosure sale has been conducted in a
"commercially reasonable" manner will depend on the facts in each case. In
determining commercial reasonableness, a court will look to the notice given
the debtor and the method, manner, time, place and terms of the foreclosure.
Generally, a sale conducted according to the usual practice of banks selling
similar collateral will be considered reasonably conducted.
Article 9 of the Uniform Commercial Code 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. The
recognition agreement, however, generally provides that the lender's right to
reimbursement is subject to the right of the cooperatives to receive sums due
under the proprietary lease or occupancy agreement. If there are proceeds
remaining, the lender must account to the tenant-stockholder for the surplus.
Conversely, if a portion of the indebtedness remains unpaid, the
tenant-stockholder is generally responsible for the deficiency.
BANKRUPTCY LAWS
Operation of 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) to
collect a debt are automatically stayed upon the filing of the bankruptcy
petition and, often, no interest or principal payments are made during the
course of the bankruptcy case. The delay and the consequences thereof caused by
the automatic stay can be significant. Also, under the Bankruptcy Code, the
filing of a petition in bankruptcy by or on behalf of a junior lienholder would
stay the senior lender from proceeding with any foreclosure action.
Under the Bankruptcy Code, provided certain substantive and procedural
safeguards protective of the lender's secured claim 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. For example, if the loan is undersecured,
the outstanding amount of the loan which would remain secured 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, 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 bankruptcy courts 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 federal bankruptcy law, a bankruptcy court may permit a
debtor through its rehabilitative plan to de-accelerate a secured loan and to
reinstate the loan even though the lender accelerated the mortgage loan and
final judgment of foreclosure had been entered in state court (provided no sale
of the property had yet occurred) prior to the filing of the debtor's petition.
This may be done even if the full amount due under the original loan is never
repaid.
Federal bankruptcy law provides generally that rights and obligations
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
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Bankruptcy Code solely on the basis of a provision in the lease to such effect
or because of certain other similar events. This prohibition could limit the
ability of the trustee for a series of certificates to exercise certain
contractual remedies with respect to the leases. 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. This may delay a
trustee's exercise of such remedies for a related series of certificates in the
event that a related lessee or a related mortgagor becomes the subject of a
proceeding under the Bankruptcy Code. For example, a mortgagee would be stayed
from enforcing a lease assignment by a mortgagor related to a mortgaged
property if the related mortgagor 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 a 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 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
thereof if the assignment is not fully perfected under state law prior to
commencement of the bankruptcy proceeding. See "--Leases and Rents."
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. Such remedies may be
insufficient, however, as the lessor may be forced to continue under the lease
with a lessee that is a poor credit risk or an unfamiliar tenant if the lease
was assigned, and any assurances provided to the lessor may, in fact, be
inadequate. If the lease is rejected, such 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 such
lease, such as the mortgagor, as lessor under a lease, would have only an
unsecured claim against the debtor for damages resulting from such 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%
of the remaining term of the lease, but not more than three years.
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 such lease as terminated by such rejection or, in the alternative,
the lessee may remain in possession of the leasehold for the balance of such
term, and for any renewal or extension of such 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 such a rejection of a lease, the
lessee may offset any damages occurring after such date caused by the
nonperformance of any obligation of the lessor under the lease after such date
against rents reserved under the lease. To the extent provided in the related
prospectus supplement, the lessee will agree under certain leases to pay all
amounts owing thereunder to the master servicer without offset. To the extent
that such a contractual obligation remains enforceable against the lessee, the
lessee would not be able to avail itself of the rights of offset generally
afforded to lessees of real property under the Bankruptcy Code.
In a bankruptcy or similar proceeding of a mortgagor, action may be taken
seeking the recovery, as a preferential transfer or on other grounds, of any
payments made by the mortgagor, 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 mortgagor
with means to halt a foreclosure proceeding or sale and to force a
restructuring of a mortgage loan on terms a lender would not otherwise
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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 mortgagors 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 mortgagors 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 agreement
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 partner to
agree within a specified time frame (often 60 days) after such 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 such partnerships triggers the dissolution of such
partnership, the winding up of its affairs and the distribution of its assets.
Such state laws, however, may not be enforceable or effective in a bankruptcy
case. The dissolution of a mortgagor, the winding up of its affairs and the
distribution of its assets could result in an acceleration of its payment
obligation under a related mortgage loan, which may reduce the yield on the
related series of certificates in the same manner as a principal prepayment.
In addition, the bankruptcy of the general partner of a mortgagor that is
a partnership may provide the opportunity for a trustee in bankruptcy for such
general partner, such general partner as a debtor-in-possession, or a creditor
of such general partner to obtain an order from a court consolidating the
assets and liabilities of the general partner with those of the mortgagor
pursuant to the doctrines of substantive consolidation or piercing the
corporate veil. In such a case, the mortgaged property could become property of
the estate of such bankrupt general partner. Not only would the mortgaged
property be available to satisfy the claims of creditors of such general
partner, but an automatic stay would apply to any attempt by the trustee to
exercise remedies with respect to such 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 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, manufacturing, military, disposal or
certain commercial activities. 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 and natural
resource damages 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 such costs.
Superlien Laws. Under certain federal and state laws, 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"
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of contaminated real property for the costs of clean-up. Excluded from CERCLA's
definition of "owner" or "operator," however, is a lender that, "without
participating in the management" of a facility holds indicia of ownership
primarily to protect his security interest in the facility. This secured
creditor exemption is intended to provide a lender certain protections from
liability under CERCLA as an owner or operator of contaminated property.
However, a secured lender may be liable as an "owner" or "operator" of a
contaminated mortgaged property if agents or employees of the lender are deemed
to have actually participated in the management of such mortgaged property or
the operations of the borrower. 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, if incurred, would not be limited to, and could substantially
exceed, the original or unamortized principal balance of a loan or to the value
of the property securing a loan.
In addition, lenders may face potential liability for remediation of
releases of petroleum or hazardous wastes from underground storage tanks under
the federal Resource Conservation and Recovery Act ("RCRA"), if they are deemed
to be the "owners" or "operators" of facilities in which they have a security
interest or upon which they have foreclosed.
The federal Asset Conservation, Lender Liability and Deposit Insurance
Protection Act of 1996 (the "Lender Liability Act") seeks to clarify the
actions a lender may take without incurring liability as an "owner" or
"operator" of contaminated property or underground petroleum storage tanks. The
Lender Liability Act amends CERCLA and RCRA to provide guidance on actions that
do or do not constitute "participation in management." However, the protections
afforded by these amendments are subject to terms and conditions that have not
been clarified by the courts. Moreover, the Lender Liability Act does not,
among other things: (1) eliminate potential liability to lenders under CERCLA
or RCRA, (2) necessarily reduce credit risks associated with lending to
borrowers having significant environmental liabilities or potential
liabilities, (3) eliminate environmental risks associated with taking
possession of contaminated property or underground storage tanks or assuming
control of the operations thereof, or (4) necessarily affect liabilities or
potential liabilities under state environmental laws which may impose liability
on "owners or operators" but do not incorporate the secured creditor exemption.
Certain Other State Laws. Many states have statutes similar to CERCLA and
RCRA, and not all of those statutes provide for a secured creditor exemption.
In a few states, transfers of some types of properties are conditioned
upon cleanup of contamination. 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 enter into an agreement with the state providing for the
cleanup of 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 a party seeking to hold
a lender liable in such cases may face litigation difficulties, unanticipated
or uninsured liabilities of the borrower may jeopardize the borrower's ability
to meet its loan obligations.
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 other potentially liable parties,
but such parties may be bankrupt or otherwise judgment proof. 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
prospectus supplement, the pooling and servicing agreement will provide that
the master servicer, acting on behalf of the trustee, may not take possession
of a mortgaged property or take over its operation unless the master servicer,
based solely on a report (as to environmental matters) prepared by a person who
regularly conducts environmental site assessments, has made the determination
that it is appropriate to do so, as described under "Description of the Pooling
and Servicing Agreements--Realization upon Defaulted Mortgage Loans."
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If a lender forecloses on a mortgage secured by a property, the operations
of which are subject to environmental laws and regulations, the lender may 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 result in the imposition of certain investigation or
remediation requirements and/or 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.
DUE-ON-SALE AND DUE-ON-ENCUMBRANCE
Certain of the mortgage loans may contain "due-on-sale" and
"due-on-encumbrance" clauses that purport to permit the lender to accelerate
the maturity of the loan if the borrower transfers or 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. By virtue, however, of the Garn-St. Germain Depository
Institutions Act of 1982 (the "Garn Act"), effective October 15, 1982 (which
purports to preempt state laws that prohibit the enforcement of due-on-sale
clauses by providing, among other matters, that "due-on-sale" clauses in
certain loans made after the effective date of the Garn Act are enforceable,
within certain limitations as set forth in the Garn Act and the regulations
promulgated thereunder), a master servicer may nevertheless have the right to
accelerate the maturity of a mortgage loan that contains a "due-on-sale"
provision upon transfer of an interest in the property, regardless of the
master servicer's ability to demonstrate that a sale threatens its legitimate
security interest.
SUBORDINATE FINANCING
Certain of the mortgage loans may not restrict the ability of the borrower
to use the mortgaged property as security for one or more additional loans.
Where a borrower encumbers a mortgaged property with one or more junior liens,
the senior lender is subjected to additional risk. First, the borrower may have
difficulty servicing and repaying multiple loans. Moreover, if the subordinate
financing permits recourse to the borrower (as is frequently the case) and the
senior loan does not, a borrower may have more incentive to repay sums due on
the subordinate loan. Second, acts of the senior lender that prejudice the
junior lender or impair the junior lender's security may create a superior
equity in favor of the junior lender. For example, if the borrower and the
senior lender agree to an increase in the principal amount of or the interest
rate payable on the senior loan, the senior lender may lose its priority to the
extent any existing junior lender is harmed or the borrower is additionally
burdened. Third, if the borrower defaults on the senior loan and/or any junior
loan or loans, the existence of junior loans and actions taken by junior
lenders can impair the security available to the senior lender and can
interfere with or delay the taking of action by the senior lender. Moreover,
the bankruptcy of a junior lender may operate to stay foreclosure or similar
proceedings by the senior lender.
DEFAULT INTEREST AND LIMITATIONS ON PREPAYMENTS
Notes and mortgages may contain provisions that obligate the borrower to
pay a late charge or additional interest if payments are not timely made, and
in some circumstances, may prohibit prepayments for a specified period and/or
condition prepayments upon the borrower's payment of prepayment fees or yield
maintenance penalties. In certain states, there are or may be specific
limitations upon the late charges which a lender may collect from a borrower
for delinquent payments. Certain states also limit the amounts that a lender
may collect from a borrower as an additional charge if the loan is prepaid. In
addition, the enforceability of provisions that provide for prepayment fees or
penalties upon an involuntary prepayment is unclear under the laws of many
states.
CERTAIN LAWS AND REGULATIONS; TYPES OF MORTGAGED PROPERTIES
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
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material diminution in the value of a mortgaged property which could, together
with the possibility of limited alternative uses for a particular mortgaged
property (e.g., a nursing or convalescent home or hospital), result in a
failure to realize the full principal amount of the related mortgage loan.
Mortgages on properties which are owned by the mortgagor 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 in that hotels and motels are
typically operated pursuant to franchise, management and operating agreements
which may be limited by the operator. In addition, the transferability of the
hotel's liquor and other licenses to an entity acquiring the hotel either
through purchases or foreclosure is subject to the vagaries of local law
requirements. In addition, mortgaged properties which are multifamily
residential properties may be subject to rent control laws, which could impact
the future cash flows of such properties.
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.
SERVICEMEMBERS CIVIL RELIEF ACT
Under the terms of the Servicemembers Civil Relief Act (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, may not be charged interest (including fees and charges) above an
annual rate of 6% during the period of such borrower's active duty status. In
addition to adjusting 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 any servicer to collect full amounts of interest on certain of the
mortgage loans. Any shortfalls in interest collections resulting from the
application of the Relief Act would result in a reduction of the amounts
distributable to the holders of the related series of certificates, and would
not be covered by advances or, unless otherwise specified in the 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 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.
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
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as hotels, restaurants, shopping centers, hospitals, schools and social service
center establishments) must remove architectural and communication barriers
that are structural in nature from existing places of public accommodation to
the extent "readily achievable." In addition, under the ADA, alterations to a
place of public accommodation or a commercial facility are to be made so that,
to the maximum extent feasible, such altered portions are readily accessible to
and usable by disabled individuals. The "readily achievable" standard takes
into account, among other factors, the financial resources of the affected
site, owner, landlord or other applicable person. The requirements of the ADA
may also be imposed on a foreclosing lender who succeeds to the interest of the
borrower as owner or landlord. 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.
FORFEITURE IN DRUG, RICO AND MONEY LAUNDERING VIOLATIONS
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.
FEDERAL DEPOSIT INSURANCE ACT; COMMERCIAL MORTGAGE LOAN SERVICING
Under the Federal Deposit Insurance Act, federal bank regulatory
authorities, including the Office of the Comptroller of the Currency (OCC),
have the power to determine if any activity or contractual obligation of a bank
constitutes an unsafe or unsound practice or violates a law, rule or regulation
applicable to such bank. If Wachovia Bank, National Association (Wachovia) or
another bank is a servicer and/or a mortgage loan seller for a series and the
OCC, which has primary regulatory authority over Wachovia and other banks, were
to find that any obligation of Wachovia or such other bank under the related
pooling and servicing agreement or other agreement or any activity of Wachovia
or such other bank constituted an unsafe or unsound practice or violated any
law, rule or regulation applicable to it, the OCC could order Wachovia or such
other bank, among other things, to rescind such contractual obligation or
terminate such activity.
In March 2003, the OCC issued a temporary cease and desist order against a
national bank (which was converted to a consent order in April 2003) asserting
that, contrary to safe and sound banking practices, the bank was receiving
inadequate servicing compensation in connection with several credit card
securitizations sponsored by its affiliates because of the size and
subordination of the contractual servicing fee, and ordered the bank, among
other things, to immediately resign as servicer, to cease all servicing
activity within 120 days and to immediately withhold funds from collections in
an amount sufficient to compensate it for its actual costs and expenses of
servicing (notwithstanding the priority of payments in the related
securitization agreements). Although, at the time the 2003 temporary cease and
desist order was issued, no conservator or receiver had been appointed with
respect to the national bank, the national bank was already under a consent
cease and desist order issued in May 2002 covering numerous matters, including
a directive that the bank develop and submit a plan of disposition providing
for the sale or liquidation of the bank, imposing general prohibitions on the
acceptance of new credit card accounts and deposits in general, and placing
significant restrictions on the bank's transactions with its affiliates.
82
While the depositor does not believe that the OCC would consider, with
respect to any series, (i) provisions relating to Wachovia or another bank
acting as a servicer under the related pooling and servicing agreement, (ii)
the payment or amount of the servicing compensation payable to Wachovia or
another bank or (iii) any other obligation of Wachovia or another bank under
the related pooling and servicing agreement or other contractual agreement
under which the depositor may purchase mortgage loans from Wachovia or another
bank, to be unsafe or unsound or violative of any law, rule or regulation
applicable to it, there can be no assurance that the OCC in the future would
not conclude otherwise. If the OCC did reach such a conclusion, and ordered
Wachovia or another bank to rescind or amend any such agreement, payments on
certificates could be delayed or reduced.
83
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
GENERAL
The following is a general discussion of the anticipated material federal
income tax consequences of the purchase, ownership and disposition of offered
certificates. This discussion is directed solely to certificateholders that
hold the certificates as capital assets within the meaning of section 1221 of
the Code and it does not purport to discuss all federal income tax consequences
that may be applicable to particular categories of investors, some of which
(e.g., banks, insurance companies and foreign investors) may be subject to
special rules. Further, the authorities on which this discussion, and the
opinion referred to below, are based are subject to change or differing
interpretations, which could apply retroactively. Taxpayers and preparers of
tax returns (including those filed by any REMIC or other issuer) should be
aware that under applicable Treasury regulations a provider of advice on
specific issues of law is not considered an income tax return preparer unless
the advice is given with respect to the consequences of contemplated actions
and is directly relevant to the determination of an entry on a tax return.
Accordingly, taxpayers should consult their own tax advisors and tax return
preparers regarding the preparation of any item on a tax return, even where the
anticipated tax treatment has been discussed herein. In addition to the federal
income tax consequences described herein, potential investors should consider
the state and local tax consequences, if any, of the purchase, ownership and
disposition of offered certificates. See "State and Other Tax Consequences."
Certificateholders are advised to consult their own tax advisors concerning the
federal, state, local or other tax consequences to them of the purchase,
ownership and disposition of offered certificates.
The following discussion addresses securities of two general types: (i)
REMIC Certificates representing interests in a trust, or a portion thereof,
that the master servicer or the trustee will elect to have treated as a real
estate mortgage investment conduit ("REMIC") under sections 860A through 860G
(the "REMIC Provisions") of the Code and (ii) grantor trust certificates
representing interests in a grantor trust fund as to which no such election
will be made. If no REMIC election is made, the trust fund may elect to be
treated as a financial assets securitization investment trust ("FASIT"). The
prospectus supplement relating to such an election will describe the
requirements for the classification of the trust as a FASIT and the
consequences to a holder of owning certificates in a FASIT. The prospectus
supplement for each series of certificates also will indicate whether a REMIC
election (or elections) will be made for the related trust or applicable
portion thereof and, if such an election is to be made, will identify all
"regular interests" and "residual interests" in each REMIC. For purposes of
this tax discussion, references to a "certificateholder" or a "holder" are to
the beneficial owner of a certificate.
The following discussion is limited in applicability to offered
certificates. Moreover, this discussion applies only to the extent that
mortgage assets held by a trust fund consist solely of mortgage loans. To the
extent that other mortgage assets, including REMIC Certificates and mortgage
pass-through certificates, are to be held by a trust, the tax consequences
associated with the inclusion of such assets will be disclosed in the related
prospectus supplement. In addition, if cash flow agreements, other than
guaranteed investment contracts, are included in a trust, the tax consequences
associated with any cash flow agreements also will be disclosed in the related
prospectus supplement. See "Description of the Trust Funds--Cash Flow
Agreements."
Furthermore, the following discussion is based in part upon the rules
governing original issue discount that are set forth in sections 1271-1273 and
1275 of the Code and in the Treasury regulations issued thereunder (the "OID
Regulations"), and in part upon the REMIC provisions and the Treasury
regulations issued thereunder (the "REMIC Regulations"). The OID regulations do
not adequately address certain issues relevant to, and in some instances
provide that they are not applicable to, securities such as the certificates.
REMICS
Classification of REMICs. It is the opinion of Cadwalader, Wickersham &
Taft LLP, counsel to the depositor, that upon the issuance of each series of
REMIC Certificates, assuming compliance with all provisions of the related
pooling and servicing agreement and based upon the law on the date thereof, for
84
federal income tax purposes the related trust will qualify as one or more
REMICs and the REMIC Certificates offered will be considered to evidence
ownership of "regular interests" ("REMIC Regular Certificates") or "residual
interests" ("REMIC Residual Certificates") under the REMIC provisions.
If an entity electing to be treated as a REMIC fails to comply with one or
more of the ongoing requirements of the Code for such status during any taxable
year, the Code provides that the entity will not be treated as a REMIC for such
year and thereafter. In that event, such entity may be taxable as a corporation
under Treasury regulations, and the related REMIC Certificates may not be
accorded the status or given the tax treatment described below. Although the
Code authorizes the Treasury Department to issue regulations providing relief
in the event of an inadvertent termination of REMIC status, no such regulations
have been issued. Any such relief, moreover, may be accompanied by sanctions,
such as the imposition of a corporate tax on all or a portion of the trust
fund's income for the period during which the requirements for such status are
not satisfied. The pooling and servicing agreement with respect to each REMIC
will include provisions designed to maintain the trust status as a REMIC under
the REMIC provisions. It is not anticipated that the status of any trust as a
REMIC will be terminated.
Characterization of Investments in REMIC Certificates. In general, with
respect to each series of certificates for which a REMIC election is made,
certificates held by a real estate investment trust will constitute "real
estate assets" within the meaning of section 856(c)(5)(B) of the Code, and each
such series of certificates will constitute assets described in section
7701(a)(19)(C) of the Code in the same proportion that the assets of the REMIC
underlying such certificates would be so treated. However, to the extent that
the REMIC assets constitute mortgages on property not used for residential or
certain other prescribed purposes, the REMIC Certificates will not be treated
as assets qualifying under section 7701(a)(19)(C)(v) of the Code. Moreover, if
95% or more of the assets of the REMIC qualify for any of the foregoing
treatments at all times during a calendar year, the REMIC Certificates will
qualify for the corresponding status in their entirety for that calendar year.
Interest on the REMIC Regular Certificates and income allocated to the class of
REMIC Residual Certificates will be interest described in section 856(c)(3)(B)
of the Code to the extent that such certificates are treated as "real estate
assets" within the meaning of section 856(c)(5)(B) of the Code. In addition,
generally the REMIC Regular Certificates will be "qualified mortgages" within
the meaning of section 860G(a)(3) of the Code. The determination as to the
percentage of the REMIC's assets that constitute assets described in the
foregoing sections of the Code will be made with respect to each calendar
quarter based on the average adjusted basis of each category of the assets held
by the REMIC during such calendar quarter. The servicer or the trustee will
report those determinations to certificateholders in the manner and at the
times required by the applicable Treasury regulations.
The assets of the REMIC will include, in addition to mortgage loans,
payments on mortgage loans held pending distribution on the REMIC Certificates
and property acquired by foreclosure held pending sale, and may include amounts
in reserve accounts. It is unclear whether property acquired by foreclosure
held pending sale and amounts in reserve accounts would be considered to be
part of the mortgage loans, or whether such assets otherwise would receive the
same treatment as the mortgage loans for purposes of all of the foregoing
sections. The related prospectus supplement will describe whether any mortgage
loans included in the trust fund will not be treated as assets described in the
foregoing sections. The REMIC regulations do provide that payments on mortgage
loans held pending distribution are considered part of the mortgage.
Tiered REMIC Structures. For certain series of REMIC Certificates, two or
more separate elections may be made to treat designated portions of the related
trust fund as separate or tiered REMICs for federal income tax purposes. Upon
the issuance of any such series of REMIC Certificates, counsel to the depositor
will deliver its opinion generally to the effect that, assuming compliance with
all provisions of the related pooling and servicing agreement, the tiered
REMICs will ach qualify as a REMIC and the REMIC Certificates issued by the
tiered REMICs, respectively, will be considered to evidence ownership of REMIC
Regular Certificates or REMIC Residual Certificates in the related REMIC within
the meaning of the REMIC provisions.
For purposes of determining whether the REMIC Certificates are "real
estate assets" within the meaning of section 856(c)(5)(B) of the Code, "loans
secured by an interest in real property" under
85
section 7701(a)(19)(C) of the Code, and whether the income generated by these
certificates is interest described in section 856(c)(3)(B) of the Code, the
tiered REMICs will be treated as one REMIC.
TAXATION OF OWNERS OF REMIC REGULAR CERTIFICATES
General. Except as otherwise stated in this discussion, REMIC Regular
Certificates will be treated for federal income tax purposes as debt
instruments issued by the REMIC and not as ownership interests in the REMIC or
its assets. Moreover, holders of REMIC Regular Certificates that otherwise
report income under a cash method of accounting will be required to report
income with respect to REMIC Regular Certificates under an accrual method.
Original Issue Discount. Certain REMIC Regular Certificates may be issued
with "original issue discount" within the meaning of section 1273(a) of the
Code. Any holders of REMIC Regular Certificates issued with original issue
discount generally will be required to include original issue discount in
income as it accrues, in accordance with the method described below, in advance
of the receipt of the cash attributable to such income. In addition, section
1272(a)(6) of the Code provides special rules applicable to REMIC Regular
Certificates and certain other debt instruments issued with original issue
discount. Regulations have not been issued under that section.
The Code requires that a prepayment assumption be used with respect to
mortgage loans held by a REMIC in computing the accrual of original issue
discount on REMIC Regular Certificates issued by that REMIC, and that
adjustments be made in the amount and rate of accrual of such discount to
reflect differences between the actual prepayment rate and the prepayment
assumption. The prepayment assumption is to be determined in a manner
prescribed in Treasury regulations; as noted above, those regulations have not
been issued. The conference committee report accompanying the Tax Reform Act of
1986 indicates that the regulations will provide that the prepayment assumption
used with respect to a REMIC Regular Certificate must be the same as that used
in pricing the initial offering. The prepayment assumption used in reporting
original issue discount for each series of REMIC Regular Certificates will be
consistent with this standard and will be disclosed in the related prospectus
supplement. However, neither the depositor nor any other person will make any
representation that the mortgage loans will in fact prepay at a rate conforming
to the prepayment assumption or at any other rate.
The original issue discount, if any, on a REMIC Regular Certificate will
be the excess of its stated redemption price at maturity over its issue price.
The issue price of a particular class of REMIC Regular Certificates will be the
first cash price at which a substantial amount of REMIC Regular Certificates of
that class is sold (excluding sales to bond houses, brokers and underwriters).
If less than a substantial amount of a particular class of REMIC Regular
Certificates is sold for cash on or prior to the date of their initial
issuance, the issue price will be the fair market value on the issuance date.
Under the OID regulations, the stated redemption price of a REMIC Regular
Certificate is equal to the total of all payments to be made on such
certificate other than "qualified stated interest." "Qualified stated interest"
includes interest payable unconditionally at least annually at a single fixed
rate, at a "qualified floating rate," or at an "objective rate," or a
combination of a single fixed rate and one or more "qualified floating rates,"
or one "qualified inverse floating rates," or a combination of "qualified
floating rates" that does not operate in a manner that accelerates or defers
interest payments on such REMIC Regular Certificates.
It is not entirely clear under the Code that interest paid to the REMIC
Regular Certificates that are subject to early termination through prepayments
and that have limited enforcement rights should be considered "qualified stated
interest". However, unless disclosed otherwise in the prospectus supplement,
the trust fund intends to treat stated interest as "qualified stated interest"
for determining if, and to what extent, the REMIC Regular Certificates have
been issued with original issue discount. Nevertheless, holders of the REMIC
Regular Certificates should consult their own tax advisors with respect to
whether interest in the REMIC Regular Certificates qualifies as "qualified
stated interest" under the Code.
In the case of REMIC Regular Certificates bearing adjustable interest
rates, the determination of the total amount of original issue discount and the
timing of the inclusion thereof will vary according to the characteristics of
such REMIC Regular Certificates. If the original issue discount rules apply to
such certificates, the related prospectus supplement will describe the manner
in which these rules will be applied in preparing information returns to the
certificateholders and the Internal Revenue Service (the "IRS").
86
In addition, if the accrued interest to be paid on the first distribution
date is computed with respect to a period that begins prior to the issuance of
the certificates, a portion of the purchase price paid for a REMIC Regular
Certificate will reflect accrued interest. The OID regulations state that all
or some portion of such accrued interest may be treated as a separate asset the
cost of which is recovered entirely out of interest paid on the first
distribution date. It is unclear how an election to do so would be made under
the OID regulations and whether such an election could be made unilaterally by
a certificateholder.
Notwithstanding the general definition of original issue discount,
original issue discount on a REMIC Regular Certificate will be considered to be
de minimis if it is less than 0.25% of the stated redemption price of the REMIC
Regular Certificate multiplied by its weighted average life. For this purpose,
the weighted average life of the REMIC Regular Certificate is computed as the
sum of the amounts determined, as to each payment included in the stated
redemption price of such REMIC Regular Certificate, by multiplying the number
of complete years, rounding down for partial years, from the issue date until
any payment is expected to be made (taking into account the prepayment
assumption) by a fraction, the numerator of which is the amount of the payment,
and the denominator of which is the stated redemption price at maturity. Under
the OID Regulations, original issue discount of only a de minimis amount will
be included in income as each payment of stated principal is made, based on the
product of the total amount of such de minimis original issue discount and a
fraction, the numerator of which is the amount of such principal payment and
the denominator of which is the outstanding stated principal amount of the
REMIC Regular Certificate. The OID regulations also would permit a
certificateholder to elect to accrue de minimis original issue discount into
income currently based on a constant yield method. See "--Taxation of Owners of
REMIC Regular Certificates--Market Discount" for a description of such election
under the OID Regulations.
If original issue discount on a REMIC Regular Certificate is in excess of
a de minimis amount, the holder of such certificate must include in ordinary
gross income the sum of the "daily portions" of original issue discount for
each day during its taxable year on which it held such REMIC Regular
Certificate, including the purchase date but excluding the disposition date. In
the case of an original holder of a REMIC Regular Certificate, the daily
portions of original issue discount will be determined as follows.
As to each "accrual period," that is, each period that ends on a date that
corresponds to a distribution date and begins on the first day following the
immediately preceding accrual period, a calculation will be made of the portion
of the original issue discount that accrued during such accrual period. The
portion of original issue discount that accrues in any accrual period will
equal the excess, if any, of (i) the sum of (a) the present value, as of the
end of the accrual period, of all of the distributions remaining to be made on
the REMIC Regular Certificate, if any, in future periods and (b) the
distributions made on such REMIC Regular Certificate during the accrual period
of amounts included in the stated redemption price, over (ii) the adjusted
issue price of the REMIC Regular Certificate at the beginning of the accrual
period. The present value of the remaining distributions referred to in the
preceding sentence will be calculated assuming that distributions on the REMIC
Regular Certificate will be received in future periods based on the mortgage
loans being prepaid at a rate equal to the prepayment assumption and using a
discount rate equal to the original yield to maturity of the certificate. For
these purposes, the original yield to maturity of the certificate will be
calculated based on its issue price and assuming that distributions on the
certificate will be made in all accrual periods based on the mortgage loans
being prepaid at a rate equal to the prepayment assumption. The adjusted issue
price of a REMIC Regular Certificate at the beginning of any accrual period
will equal the issue price of such certificate, increased by the aggregate
amount of original issue discount that accrued with respect to such certificate
in prior accrual periods, and reduced by the amount of any distributions made
on such REMIC Regular Certificate in prior accrual periods of amounts included
in the stated redemption price. The original issue discount accruing during any
accrual period, computed as described above, will be allocated ratably to each
day during the accrual period to determine the daily portion of original issue
discount for such day.
A subsequent purchaser of a REMIC Regular Certificate that purchases such
certificate at a cost (excluding any portion of such cost attributable to
accrued qualified stated interest) less than its remaining stated redemption
price will also be required to include in gross income the daily portions of
any original issue discount with respect to such certificate. However, each
such daily portion will be reduced, if such cost is in excess of its "adjusted
issue price," in proportion to the ratio such excess bears to the aggregate
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original issue discount remaining to be accrued on such REMIC Regular
Certificate. The adjusted issue price of a REMIC Regular Certificate on any
given day equals the sum of (i) the adjusted issue price (or, in the case of
the first accrual period, the issue price) of the certificate at the beginning
of the accrual period, including the first day and (ii) the daily portions of
original issue discount for all days during the related accrual period up to
the day of determination.
Market Discount. A Certificateholder that purchases a REMIC Regular
Certificate at a market discount, that is, in the case of a REMIC Regular
Certificate issued without original issue discount, at a purchase price less
than its remaining stated principal amount, or in the case of a REMIC Regular
Certificate issued with original issue discount, at a purchase price less than
its adjusted issue price, will recognize gain upon receipt of each distribution
representing stated redemption price. In particular, under section 1276 of the
Code such a certificateholder generally will be required to allocate the
portion of each such distribution representing stated redemption price first to
accrued market discount not previously included in income, and to recognize
ordinary income to that extent. A certificateholder may elect to include market
discount in income currently as it accrues rather than including it on a
deferred basis in accordance with the foregoing. If the election is made, it
will apply to all market discount bonds acquired by such certificateholder on
or after the first day of the taxable year to which the election applies. In
addition, the OID regulations permit a certificateholder to elect to accrue all
interest, discount and premium in income as interest, based on a constant yield
method. If such an election were made with respect to a REMIC Regular
Certificate with market discount, the certificateholder would be deemed to have
made an election to currently include market discount in income with respect to
all other debt instruments having market discount that such certificateholder
acquires during the taxable year of the election or thereafter, and possibly
previously acquired instruments. Similarly, a certificateholder that made this
election for a certificate that is acquired at a premium would be deemed to
have made an election to amortize bond premium with respect to all debt
instruments having amortizable bond premium that such certificateholder owns or
acquires. See "--Taxation of Owners of REMIC Regular Certificates--Premium."
Each of these elections to accrue interest, discount and premium with respect
to a certificate on a constant yield method or as interest would be
irrevocable.
Market discount with respect to a REMIC Regular Certificate will be
considered to be de minimis for purposes of section 1276 of the Code if such
market discount is less than 0.25% of the remaining stated redemption price of
such REMIC Regular Certificate multiplied by the number of full years to
maturity remaining after the date of its purchase. In interpreting a similar
rule with respect to original issue discount on obligations payable in
installments, the OID Regulations refer to the weighted average maturity of
obligations, and it is likely that the same rule will be applied with respect
to market discount, presumably taking into account the prepayment assumption.
If market discount is treated as de minimis under this rule, it appears that
the actual discount would be treated in a manner similar to original issue
discount of a de minimis amount. See "--Taxation of Owners of REMIC Regular
Certificates--Original Issue Discount." Such treatment would result in discount
being included in income at a slower rate than discount would be required to be
included in income using the method described above.
Section 1276(b)(3) of the Code specifically authorizes the Treasury
Department to issue regulations providing for the method for accruing market
discount on debt instruments, the principal of which is payable in more than
one installment. Until regulations are issued, the rules described in the
committee report accompanying the Tax Reform Act of 1986 apply. That committee
report indicates that REMIC Regular Certificates should accrue market discount
either:
o on the basis of a constant yield method;
o in the case of a REMIC Regular Certificate issued without original
issue discount, in an amount that bears the same ratio to the total
remaining market discount as the stated interest paid during the
accrual period bears to the total amount of stated interest remaining
to be paid as of the beginning of the accrual period; or
o in the case of a REMIC Regular Certificate issued with original issue
discount, in an amount that bears the same ratio to the total
remaining market discount as the original issue discount accrued in
the accrual period bears to the total original issue discount
remaining on the REMIC Regular Certificate at the beginning of the
accrual period.
88
Furthermore, the prepayment assumption used in calculating the accrual of
original issue discount is also used in calculating the accrual of market
discount. Because the regulations referred to in this paragraph have not been
issued, it is not possible to predict what effect such regulations might have
on the tax treatment of a REMIC Regular Certificate purchased at a discount in
the secondary market.
To the extent that REMIC Regular Certificates provide for monthly or other
periodic distributions throughout their term, the effect of these rules may be
to require market discount to be includible in income at a rate that is not
significantly slower than the rate at which such discount would accrue if it
were original issue discount. Moreover, in any event a holder of a REMIC
Regular Certificate generally will be required to treat a portion of any gain
on the sale or exchange of such 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.
Further, under section 1277 of the Code a holder of a REMIC Regular
Certificate may be required to defer a portion of its interest deductions for
the taxable year attributable to any indebtedness incurred or continued to
purchase or carry a REMIC Regular Certificate purchased with market discount.
For these purposes, the de minimis rule referred to above applies. Any such
deferred interest expense would not exceed the market discount that accrues
during such taxable year and is, in general, allowed as a deduction not later
than the year in which such market discount is includible in income. If such
holder elects to include market discount in income currently as it accrues on
all market discount instruments acquired by such holder in that taxable year or
thereafter, the interest deferral rule described above will not apply.
Premium. A REMIC Regular Certificate purchased at a cost (excluding
accrued qualified stated interest) greater than its remaining stated redemption
price will be considered to be purchased at a premium. The holder of such a
REMIC Regular Certificate may elect under section 171 of the Code to amortize
such premium against qualified stated interest under the constant yield method
over the life of the certificate. If made, such an election will apply to all
debt instruments having amortizable bond premium that the holder owns or
subsequently acquires. Amortizable premium will be treated as an offset to
interest income on the related debt instrument, rather than as a separate
interest deduction. The OID regulations also permit certificateholders to elect
to include all interest, discount and premium in income based on a constant
yield method, further treating the certificateholder as having made the
election to amortize premium generally. See "--Taxation of Owners of REMIC
Regular Certificates--Market Discount." The committee report accompanying the
Tax Reform Act of 1986 states that the same rules that apply to accrual of
market discount will also apply in amortizing bond premium under section 171 of
the Code.
Realized Losses. Under section 166 of the Code, both noncorporate holders
of the REMIC Regular Certificates that acquire such certificates in connection
with a trade or business and corporate holders of the REMIC Regular
Certificates should be allowed to deduct, as ordinary losses, any losses
sustained during a taxable year in which their certificates become wholly or
partially worthless as the result of one or more realized losses on the
residential loans. However, it appears that a noncorporate holder that does not
acquire a REMIC Regular Certificate in connection with a trade or business will
not be entitled to deduct a loss under section 166 of the Code until such
holder's certificate becomes wholly worthless and that the loss will be
characterized as a short-term capital loss. Losses sustained on the mortgage
loans may be "events which have occurred before the close of the accrued
period" that can be taken into account under Code section 1272(a)(6) for
purposes of determining the amount of OID that accrues on a certificate.
The holder of a REMIC Regular Certificate eventually will recognize a loss
or reduction in income attributable to previously accrued and included income
that as the result of a realized loss ultimately will not be realized, but the
law is unclear with respect to the timing and character of such loss or
reduction in income.
TAXATION OF OWNERS OF REMIC RESIDUAL CERTIFICATES
General. As residual interests, the REMIC Residual Certificates will be
subject to tax rules that differ significantly from those that would apply if
the REMIC Residual Certificates were treated for
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federal income tax purposes as direct ownership interests in the mortgage loans
included in a trust fund or as debt instruments issued by the REMIC.
An original holder of a REMIC Residual Certificate generally will be
required to report its daily portion of the taxable income or, subject to the
limitations noted in this discussion, the net loss of the REMIC for each day
during a calendar quarter that such holder owned such REMIC Residual
Certificate. For this purpose, the taxable income or net loss of the REMIC will
be allocated to each day in the calendar quarter ratably using a "30 days per
month/90 days per quarter/360 days per year" convention unless the related
prospectus supplement states otherwise. The daily amounts so allocated will
then be allocated among the REMIC Residual Certificateholders in proportion to
their respective ownership interests on such day. Any amount included in the
gross income or allowed as a loss of any REMIC Residual Certificateholder by
virtue of this paragraph will be treated as ordinary income or loss. The
taxable income of the REMIC will be determined under the rules described below
in "--Taxable Income of the REMIC" and will be taxable to the REMIC Residual
Certificateholders without regard to the timing or amount of cash distributions
by the REMIC. Ordinary income derived from REMIC Residual Certificates will be
"portfolio income" for purposes of the taxation of taxpayers subject to
limitations under section 469 of the Code on the deductibility of "passive
losses."
A holder of a REMIC Residual Certificate that purchased such certificate
from a prior holder of such certificate also will be required to report on its
federal income tax return amounts representing its daily share of the taxable
income or loss of the REMIC for each day that it holds such REMIC Residual
Certificate. Those daily amounts generally will equal the amounts of taxable
income or net loss determined as described above. The Committee Report
indicates that certain modifications of the general rules may be made, by
regulations, legislation or otherwise, to reduce or increase the income of a
REMIC Residual Certificateholder that purchased such REMIC Residual Certificate
from a prior holder of such certificate at a price greater than (or less than)
the adjusted basis, such REMIC Residual Certificate would have had in the hands
of an original holder of such certificate. The REMIC Regulations, however, do
not provide for any such modifications.
It is uncertain how payments received by a holder of a REMIC Residual
interest in connection with the acquisition of such REMIC Residual Certificate
should be treated and holders of REMIC Residual Certificates should consult
their tax advisors concerning the treatment of such payments for income tax
purposes.
The amount of income REMIC Residual Certificateholders will be required to
report (or the tax liability associated with such income) may exceed the amount
of cash distributions received from the REMIC for the corresponding period.
Consequently, REMIC Residual Certificateholders should have other sources of
funds sufficient to pay any federal income taxes due as a result of their
ownership of REMIC Residual Certificates or unrelated deductions against which
income may be offset, subject to the rules relating to "excess inclusions,"
residual interests without "significant value" and "noneconomic" residual
interests discussed below. The fact that the tax liability associated with the
income allocated to REMIC Residual Certificateholders may exceed the cash
distributions received by such REMIC Residual Certificateholders for the
corresponding period may significantly adversely affect such REMIC Residual
Certificateholders' after-tax rate of return.
Taxable Income of the REMIC. The taxable income of the REMIC will equal
the income from the mortgage loans and other assets of the REMIC plus any
cancellation of indebtedness income due to the allocation of realized losses to
REMIC Regular Certificates, less the deductions allowed to the REMIC for
interest on the REMIC Regular Certificates, amortization of any premium on the
mortgage loans, bad debt losses with respect to the mortgage loans and, except
as described below, for servicing, administrative and other expenses.
For purposes of determining its taxable income, the REMIC will have an
initial aggregate basis in its assets equal to the sum of the issue prices of
all REMIC Certificates (or, if a class of REMIC Certificates is not sold
initially, fair market value). Such aggregate basis will be allocated among the
mortgage loans and the other assets of the REMIC in proportion to their
respective fair market values. The issue price of any REMIC Certificates
offered by this prospectus and the related prospectus supplement will be
determined in the manner described above under "--Taxation of Owners of REMIC
Regular Certificates--
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Original Issue Discount." If one or more classes of REMIC Certificates are
retained initially rather than sold, the master servicer or the trustee may be
required to estimate the fair market value of the REMIC's interests in its
mortgage loans and other property in order to determine the basis to the REMIC
of the mortgage loans and other property held by such REMIC.
Subject to possible application of the de minimis rules, the method of
accrual by the REMIC of original issue discount income and market discount
income with respect to mortgage loans that it holds will be equivalent to the
method for accruing original issue discount income for holders of REMIC Regular
Certificates. However, a REMIC that acquires loans at a market discount must
include such market discount in income currently, as it accrues, on a constant
interest basis. See "--Taxation of Owners of REMIC Regular Certificates" above,
which describes a method for accruing such discount income that is analogous to
that required to be used by a REMIC as to mortgage loans with market discount
that it holds.
A mortgage loan will be deemed to have been acquired with discount (or
premium) if the REMIC's basis in that mortgage loan is less than (or greater
than) its stated redemption price. Any such discount will be includible in the
income of the REMIC as it accrues, under a method similar to the method
described above for accruing original issue discount on the REMIC Regular
Certificates. It is anticipated that each REMIC will elect under section 171 of
the Code to amortize any premium on the mortgage loans. Premium on any mortgage
loan to which such election applies may be amortized under a constant yield
method, presumably taking into account a prepayment assumption. However, this
election would not apply to any mortgage loan originated on or before September
27, 1985. Instead, premium on such a mortgage loan should be allocated among
the principal payments thereon and be deductible by the REMIC as those payments
become due or upon the prepayment of such mortgage loan.
A REMIC will be allowed deductions for interest on the REMIC Regular
Certificates equal to the deductions that would be allowed if the REMIC Regular
Certificates were indebtedness of the REMIC. Original issue discount will be
considered to accrue for this purpose as described above under "--Taxation of
Owners of REMIC Regular Certificate--Original Issue Discount," except that the
de minimis rule and the adjustments for subsequent holders of REMIC Regular
Certificates described therein will not apply.
If a class of REMIC Regular Certificates is issued at a price in excess of
the stated redemption price of such class, the net amount of interest
deductions that are allowed the REMIC in each taxable year with respect to the
REMIC Regular Certificates of such class will be reduced by an amount equal to
the portion of the premium that is considered to be amortized or repaid in that
year. Although the matter is not entirely certain, it is likely that Issue
Premium would be amortized under a constant yield method in a manner analogous
to the method of accruing original issue discount described above under
"--Taxation of Owners of REMIC Regular Certificates--Original Issue Discount."
As a general rule, the taxable income of a REMIC will be determined in the
same manner as if the REMIC were an individual having the calendar year as its
taxable year and using the accrual method of accounting. However, no item of
income, gain, loss or deduction allocable to a prohibited transaction will be
taken into account. See "--Prohibited Transactions Tax and Other Taxes" below.
The limitation on miscellaneous itemized deductions imposed on individuals by
section 67 of the Code will not be applied at the REMIC level so that the REMIC
will be allowed deductions for servicing, administrative and other non-interest
expenses in determining its taxable income. All such expenses will be allocated
as a separate item to the holders of REMIC Certificates, subject to the
limitation of section 67 of the Code. See "--Possible Pass-Through of
Miscellaneous Itemized Deductions." If the deductions allowed to the REMIC
exceed its gross income for a calendar quarter, such excess will be the net
loss for the REMIC for that calendar quarter.
Basis Rules, Net Losses and Distributions. The adjusted basis of a REMIC
Residual Certificate will be equal to the amount paid for such REMIC Residual
Certificate, increased by amounts included in the income of the REMIC Residual
Certificateholder and decreased (but not below zero) by distributions made, and
by net losses allocated, to such REMIC Residual Certificateholder.
A REMIC Residual Certificateholder is not allowed to take into account any
net loss for any calendar quarter to the extent such net loss exceeds such
REMIC Residual Certificateholder's adjusted
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basis in its REMIC Residual Certificate as of the close of such calendar
quarter. Any loss that is not currently deductible by reason of this limitation
may be carried forward indefinitely to future calendar quarters and, subject to
the same limitation, may be used only to offset income from the REMIC Residual
Certificate. The ability of REMIC Residual Certificateholders to deduct net
losses may be subject to additional limitations under the Code, as to which
REMIC Residual Certificateholders should consult their tax advisors.
Any distribution on a REMIC Residual Certificate will be treated as a
nontaxable return of capital to the extent it does not exceed the holder's
adjusted basis in such REMIC Residual Certificate. To the extent a distribution
on a REMIC Residual Certificate exceeds such adjusted basis, it will be treated
as gain from the sale of such REMIC Residual Certificate. Holders of certain
REMIC Residual Certificates may be entitled to distributions early in the term
of the related REMIC under circumstances in which their bases in such REMIC
Residual Certificates will not be sufficiently large that such distributions
will be treated as nontaxable returns of capital. Their bases in such REMIC
Residual Certificates will initially equal the amount paid for such REMIC
Residual Certificates and will be increased by their allocable shares of
taxable income of the trust fund. However, such bases increases may not occur
until the end of the calendar quarter, or perhaps the end of the calendar year,
with respect to which such REMIC taxable income is allocated to the REMIC
Residual Certificateholders. To the extent such REMIC Residual
Certificateholders' initial bases are less than the distributions to such REMIC
Residual Certificateholders, and increases in such initial bases either occur
after such distributions or are less than the amount of such distributions,
gain will be recognized to such REMIC Residual Certificateholders on such
distributions and will be treated as gain from the sale of their REMIC Residual
Certificates.
The effect of these rules is that a REMIC Residual Certificateholder may
not amortize its basis in a REMIC Residual Certificate, but may only recover
its basis through distributions, through the deduction of any net losses of the
REMIC or upon the sale of its REMIC Residual Certificate. See "--Sales of REMIC
Certificates." For a discussion of possible modifications of these rules that
may require adjustments to income of a holder of a REMIC Residual Certificate
other than an original holder in order to reflect any difference between the
cost of such REMIC Residual Certificate to such REMIC Residual
Certificateholder and the adjusted basis such REMIC Residual Certificate would
have in the hands of an original holder, see "--Taxation of Owners of REMIC
Residual Certificates--General."
Excess Inclusions. Any "excess inclusions" with respect to a REMIC
Residual Certificate will be subject to federal income tax in all events.
In general, the "excess inclusions" with respect to a REMIC Residual
Certificate for any calendar quarter will be the excess, if any, of:
o the sum of the daily portions of REMIC taxable income allocable to
such REMIC Residual Certificate; over
o the sum of the "daily accruals" for each day during such quarter that
such REMIC Residual Certificate was held by such REMIC Residual
Certificateholder.
The daily accruals of a REMIC Residual Certificateholder will be
determined by allocating to each day during a calendar quarter its ratable
portion of the product of the "adjusted issue price" of the REMIC Residual
Certificate at the beginning of the calendar quarter and 120% of the "long-term
Federal rate" in effect on the date the certificates were issued. For this
purpose, the adjusted issue price of a REMIC Residual Certificate as of the
beginning of any calendar quarter will be equal to the issue price of the REMIC
Residual Certificate, increased by the sum of the daily accruals for all prior
quarters and decreased (but not below zero) by any distributions made with
respect to such REMIC Residual Certificate before the beginning of such
quarter. The issue price of a REMIC Residual Certificate is the initial
offering price to the public (excluding bond houses and brokers) at which a
substantial amount of the REMIC Residual Certificates were sold. The "long-term
Federal rate" is an average of current yields on Treasury securities with a
remaining term of greater than nine years, computed and published monthly by
the IRS.
For REMIC Residual Certificateholders, an excess inclusion:
o will not be permitted to be offset by deductions, losses or loss
carryovers from other activities;
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o will be treated as "unrelated business taxable income" to an otherwise
tax-exempt organization; and
o will not be eligible for any rate reduction or exemption under any tax
treaty with respect to the 30% United States withholding tax imposed
on distributions to foreign investors. See, however, "--Foreign
Investors in REMIC Certificates" below.
In the case of any REMIC Residual Certificates held by a real estate
investment trust, the aggregate excess inclusions with respect to such REMIC
Residual Certificates, reduced (but not below zero) by the real estate
investment trust taxable income, excluding any net capital gain, will be
allocated among the shareholders of such trust in proportion to the dividends
received by such shareholders from such trust, and any amount so allocated will
be treated as an excess inclusion with respect to a REMIC Residual Certificate
as if held directly by such shareholder. The Treasury could issue regulations
which apply a similar rule to regulated investment companies, common trust
funds and certain cooperatives. The REMIC Regulations currently do not address
this subject.
In addition, there are three rules for determining the effect of excess
inclusions on the alternative minimum taxable income of a REMIC Residual
Certificateholder. First, alternative minimum taxable income for a REMIC
Residual Certificateholder is determined without regard to the special rule
discussed above, that taxable income cannot be less than excess inclusions.
Second, a REMIC 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.
Noneconomic REMIC Residual Certificates. Under the REMIC regulations,
transfers of "noneconomic" REMIC Residual Certificates will be disregarded for
all federal income tax purposes if "a significant purpose of the transfer was
to enable the transferor to impede the assessment or collection of tax". If
such transfer is disregarded, the purported transferor will continue to remain
liable for any taxes due with respect to the income on such "noneconomic" REMIC
Residual Certificate. The REMIC regulations provide that a REMIC Residual
Certificate is noneconomic unless, based on the prepayment assumptions and on
any required or permitted cleanup calls, or required liquidation provisions,
the present value of the expected future distributions discounted at the
"applicable Federal rate" on the REMIC Residual Certificate equals at least the
present value of the expected tax on the anticipated excess inclusions and the
transferor reasonably expects that the transferee will receive distributions
with respect to the REMIC Residual Certificate at or after the time the taxes
accrue on the anticipated excess inclusions in an amount sufficient to satisfy
the accrued taxes. 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. Under the REMIC regulations, a safe harbor is provided if
(1) the transferor conducted, at the time of the transfer, a reasonable
investigation of the financial condition of the transferee and found that the
transferee historically had paid its debts as they came due in the future, (2)
the transferee represents to the transferor that it understands that, as the
holder of the noneconomic residual interest, the transferee may incur tax
liabilities in excess of cash flows generated by the interest and that the
transferee intends to pay taxes associated with holding the residual interest
as they become due and (3) the transferee represents to the transferor that it
will not cause income from the REMIC Residual Certificate to be attributable to
a foreign permanent establishment or fixed base (within the meaning of an
applicable income tax treaty) of the transferee or any other United States
person. Accordingly, all transfers of REMIC Residual Certificates that may
constitute noneconomic residual interests will be subject to certain
restrictions under the terms of the related pooling and servicing agreement
that are intended to reduce the possibility of any such transfer being
disregarded. Such restrictions will require each party to a transfer to provide
an affidavit to certify to the matters in the preceding sentence.
In addition to the three conditions set forth above, a fourth condition
must be satisfied in one of two alternative ways for the transferor to have a
"safe harbor" against ignoring the transfer. Either:
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(a) the present value of the anticipated tax liabilities associated
with holding the noneconomic residual interest not exceed the sum of:
(i) the present value of any consideration given the transferee
to acquire the interest;
(ii) the present value of the expected future distributions on
the interest; and
(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 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 are generally 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 the transfer and the compounding period used by the
transferee; or
(b) the following requirements are satisfied:
(i) the transferee is 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 asset
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 agrees in writing that it will transfer the
residual interest 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 do not reasonably indicate that the
taxes associated with ownership of the residual interest will not be
paid by the transferee.
Prior to purchasing a REMIC Residual Certificate, prospective purchasers
should consider the possibility that a purported transfer of such REMIC
Residual Certificate by such a purchaser to another purchaser at some future
date may be disregarded in accordance with the above-described rules which
would result in the retention of tax liability by such purchaser. The related
prospectus supplement will disclose whether offered REMIC Residual Certificates
may be considered "noneconomic" residual interests under the REMIC Regulations;
provided, however, that any disclosure that a REMIC Residual Certificate will
not be considered "noneconomic" will be based upon certain assumptions, and the
depositor will make no representation that a REMIC Residual Certificate will
not be considered "noneconomic" for purposes of the above-described rules. See
"--Taxation of Owners of REMIC Residual Certificates--Foreign Investors in
REMIC Certificates" below for additional restrictions applicable to transfers
of certain REMIC Residual Certificates to foreign persons.
On July 18, 2003 the Internal Revenue Service issued proposed Treasury
regulations (the "Proposed Treasury Regulations") under Sections 446(b), 860C,
and 863(a) of the Internal Revenue Code relating to the proper method of
accounting for, and source of income from, fees ("inducement fees") received by
taxpayers to induce the acquisition of "noneconomic" REMIC residual interests.
The Proposed Treasury Regulations, if finalized as proposed, would apply to
taxpayers who receive inducement fees in connection with becoming the holder of
a noneconomic REMIC residual interest for taxable years ending on or after the
date such regulations are published in final form.
Proposed Treasury Regulation section 1.863-1(e) provides that an
inducement fee is treated as U.S. source income. Proposed Treasury Regulation
section 1.446-6(c) sets forth a general rule (the "General Rule") which
provides that a taxpayer must recognize in income an inducement fee received
for acquiring a noneconomic REMIC residual interest "over the remaining
expected life of the applicable REMIC in a manner that reasonably reflects the
after-tax costs and benefits of holding that noneconomic residual interest."
Under the Proposed Treasury Regulations, a taxpayer is generally permitted
to adopt an accounting method for the recognition of inducement fees that meets
the General Rule described above. The Proposed Treasury Regulations state,
however, that the treatment of inducement fees received on
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noneconomic REMIC residual interests constitutes a method of accounting for
purposes of Internal Revenue Code sections 446 and 481. Thus, under the
Proposed Treasury Regulations, once an accounting method is adopted it must be
consistently applied to all inducement fees received by the taxpayer in respect
of noneconomic REMIC residual interests, and may not be changed without the
consent of the Commissioner, pursuant to Internal Revenue Code section 446(e)
and the Treasury Regulations and other procedures thereunder.
The Proposed Treasury Regulations set forth two alternative safe harbor
methods of accounting for meeting the General Rule described above. The
Commissioner is authorized to provide additional safe harbor methods by revenue
ruling or revenue procedure.
Under one safe harbor method of accounting set forth in the Proposed
Treasury Regulations (the "Book Method"), a taxpayer includes an inducement fee
in income in accordance with the same accounting method and time period used by
the taxpayer for financial reporting purposes, provided that the period over
which such inducement fee is included in income is not less than the period the
related REMIC is expected to generate taxable income.
Under the second safe harbor accounting method (the "Modified REMIC
Regulatory Method"), a taxpayer recognizes inducement fee income ratably over
the remaining anticipated weighted average life of the REMIC. For this purpose,
the REMIC's remaining anticipated weighted average life is determined as of the
date of acquisition of the noneconomic REMIC residual interest using the
methodology provided in current Treasury Regulation section 1.860E-1(a)(3)(iv).
The Proposed Treasury Regulations also provide that upon a sale or other
disposition of a noneconomic REMIC residual interest (other than in a
transaction to which Internal Revenue Code section 381(c)(4) applies) the
holder must include currently in income the balance of any previously
unrecognized inducement fee amounts attributable to such residual interest.
Mark-to-Market Rules. Section 475 provides a requirement that a securities
dealer mark-to-market securities held for sale to customers. Treasury
regulations provide that for purposes of this mark-to-market requirement, a
REMIC Residual Certificate is not treated as a security and thus cannot be
marked to market.
Possible Pass-Through of Miscellaneous Itemized Deductions. Fees and
expenses of a REMIC generally will be allocated to the holders of the related
REMIC Residual Certificates. The applicable Treasury regulations indicate,
however, that in the case of a REMIC that is similar to a single class grantor
trust, all or a portion of such fees and expenses should be allocated to the
holders of the related REMIC Regular Certificates. Unless otherwise stated in
the related prospectus supplement, such fees and expenses will be allocated to
holders of the related REMIC Residual Certificates in their entirety and not to
the holders of the related REMIC Regular Certificates.
With respect to REMIC Residual Certificates or REMIC Regular Certificates
which receive an allocation of fees and expenses in accordance with the
preceding discussion, if any holder thereof is an individual, estate or trust,
or a certain "pass-through entity," an amount equal to these fees and expenses
will be added to the certificateholder's gross income and the certificateholder
will treat such fees and expenses as a miscellaneous itemized deduction subject
to the limitation of section 67 of the Code to the extent they exceed in the
aggregate two percent of a taxpayer's adjusted gross income. In addition,
section 68 of the Code provides that the amount of itemized deductions
otherwise allowable for an individual whose adjusted gross income exceeds a
specified amount will be reduced by the lesser of:
o 3% of the excess of the individual's adjusted gross income over such
amount; and
o 80% of the amount of itemized deductions otherwise allowable for the
taxable year.
However the section 68 reduction of allowable itemized deductions will be
phased out beginning in 2006 and eliminated after 2009.
In determining the alternative minimum taxable income of such a holder of
a REMIC Certificate that is an individual, estate or trust, or a "pass-through
entity," beneficially owned by one or more individuals, estates or trusts, no
deduction will be allowed for such holder's allocable portion of servicing fees
and
95
other miscellaneous itemized deductions of the REMIC, even though an amount
equal to the amount of such fees and other deductions will be included in such
holder's gross income. Accordingly, such REMIC Certificates may not be
appropriate investments for individuals, estates or trusts, or pass-through
entities beneficially owned by one or more individuals, estates or trusts. Such
prospective investors should carefully consult with their own tax advisors
prior to making an investment in such certificates.
Sales of REMIC Certificates. If a REMIC Certificate is sold, the selling
certificateholder will recognize gain or loss equal to the difference between
the amount realized on the sale and its adjusted basis in the REMIC
Certificate. The adjusted basis of a REMIC Regular Certificate generally will
equal the cost of such REMIC Regular Certificate to such certificateholder,
increased by income reported by such certificateholder with respect to such
REMIC Regular Certificate, including original issue discount and market
discount income, and reduced (but not below zero) by distributions on such
REMIC Regular Certificate received by such certificateholder and by any
amortized premium. The adjusted basis of a REMIC Residual Certificate will be
determined as described under "--Basis Rules, Net Losses and Distributions".
Except as provided in the following two paragraphs, any such gain or loss will
be capital gain or loss, provided such REMIC Certificate is held as a capital
asset within the meaning of section 1221 of the Code. Investors that recognize
a loss on a sale or exchange of the REMIC Regular Certificates 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.
Gain from the sale of a REMIC Regular Certificate that might otherwise be
capital gain will be treated as ordinary income to the extent such gain does
not exceed the excess, if any, of:
o the amount that would have been includible in the seller's income with
respect to such REMIC Regular Certificate assuming that income had
accrued thereon at a rate equal to 110% of the "applicable Federal
rate" determined as of the date of purchase of such REMIC Regular
Certificate, over
o the amount of ordinary income actually includible in the seller's
income prior to such sale.
In addition, gain recognized on the sale of a REMIC Regular Certificate by
a seller who purchased such REMIC Regular Certificate at a market discount will
be taxable as ordinary income in an amount not exceeding the portion of such
discount that accrued during the period such REMIC Certificate was held by such
holder, reduced by any market discount included in income under the rules
described above under "--Taxation of Owners of REMIC Regular
Certificates--Market Discount" and "--Premium."
REMIC Certificates will be "evidences of indebtedness" within the meaning
of section 582(c)(1) of the Code, so that gain or loss recognized from the sale
of a REMIC Certificate by a bank or thrift institution to which such section
applies will be ordinary income or loss.
A portion of any gain from the sale of a REMIC Regular Certificate that
might otherwise be capital gain may be treated as ordinary income to the extent
that such certificate is held as part of a "conversion transaction" within the
meaning of section 1258 of the Code. A conversion transaction generally is one
in which the taxpayer has taken two or more positions in the same or similar
property that reduce or eliminate market risk and substantially all of the
taxpayer's return is attributable to the time value of money. The amount of
gain so realized in a conversion transaction that is recharacterized as
ordinary income generally will not exceed the amount of interest that would
have accrued on the taxpayer's net investment at 120% of the appropriate
"applicable Federal rate" at the time the taxpayer enters into the conversion
transaction, subject to appropriate reduction for prior inclusion of interest
and other ordinary income items from the transaction.
Finally, a taxpayer may elect to have net capital gain taxed at ordinary
income rates rather than capital gains rates in order to include such net
capital gain in total net investment income for the taxable year, for purposes
of the rule that limits the deduction of interest on indebtedness incurred to
purchase or carry property held for investment to a taxpayer's net investment
income.
Except as may be provided in Treasury regulations yet to be issued, if the
seller of a REMIC Residual Certificate reacquires a REMIC Residual Certificate,
or acquires any other residual interest in a REMIC
96
or any similar interest in a "taxable mortgage pool" during the period
beginning six months before, and ending six months after, the date of such
sale, such sale will be subject to the "wash sale" rules of section 1091 of the
Code. In that event, any loss realized by the REMIC Residual Certificateholder
on the sale will not be deductible, but instead will be added to such REMIC
Residual Certificateholder's adjusted basis in the newly acquired asset.
Prohibited Transactions Tax and Other Taxes. The Code imposes a tax on
REMICs equal to 100% of the net income derived from "prohibited transactions".
In general, subject to certain specified exceptions, a prohibited transaction
means:
o the disposition of a mortgage loan;
o the receipt of income from a source other than a mortgage loan or
certain other permitted investments;
o the receipt of compensation for services; or
o gain from the disposition of an asset purchased with the payments on
the mortgage loans for temporary investment pending distribution on
the REMIC Certificates.
It is not anticipated that the REMIC will engage in any prohibited
transactions in which it would recognize a material amount of net income.
In addition, certain contributions to a REMIC made after the day on which
the REMIC issues all of its interests could result in the imposition of a tax
on the REMIC equal to 100% of the value of the contributed property. The
pooling and servicing agreement will include provisions designed to prevent the
acceptance of any contributions that would be subject to such tax.
REMICs also are subject to federal income tax at the highest corporate
rate on "net income from foreclosure property," determined by reference to the
rules applicable to real estate investment trusts. "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. A REMIC may recognize "net income from foreclosure property" subject to
federal income tax if the Trustee or applicable servicer determines that the
recovery to certificateholders is likely to be greater on an after tax basis
than earning qualifying income that is not subject to tax.
Unless otherwise disclosed in the related prospectus supplement, it is not
anticipated that any material state or local income or franchise tax will be
imposed on any REMIC.
Unless otherwise stated in the related prospectus supplement, and to the
extent permitted by then applicable laws, any tax on prohibited transactions,
contributions, "net income from foreclosure property" or state or local tax
imposed on the REMIC will be borne by the related servicer or trustee in any
case out of its own funds, if such tax arose out of a breach of such person's
obligations under the related pooling and servicing agreement and in respect of
compliance with applicable laws and regulations. Any such tax not borne by a
servicer or trustee will be charged against the related trust fund resulting in
a reduction in amounts payable to holders of the related REMIC Certificates.
Tax and Restrictions on Transfers of REMIC Residual Certificates to
Certain Organizations. If a REMIC Residual Certificate is transferred to a
"disqualified organization," a tax would be imposed in an amount equal to the
product of:
o the present value discounted using the "applicable Federal rate" of
the total anticipated excess inclusions with respect to such REMIC
Residual Certificate for periods after the transfer; and
o the highest marginal federal income tax rate applicable to
corporations.
The anticipated excess inclusions must be determined as of the date that
the REMIC Residual Certificate is transferred and must be based on events that
have occurred up to the time of such transfer, the prepayment assumption,
required or permitted cleanup calls, or required liquidation provisions. Such a
tax generally would be imposed on the transferor of the REMIC Residual
Certificate, except that where such transfer is through an agent for a
disqualified organization, the tax would instead be imposed on such
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agent. However, a transferor of a REMIC 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. Moreover, an entity will not
qualify as a REMIC unless there are reasonable arrangements designed to ensure
that residual interests are not held by disqualified organizations and
information necessary for the application of the tax are made available.
Restrictions on the transfer of REMIC Residual Certificates and certain other
provisions that are intended to meet this requirement will be included in each
pooling and servicing agreement, and will be discussed more fully in any
prospectus supplement relating to the offering of any REMIC Residual
Certificate.
In addition, if a "pass-through entity" includes in income excess
inclusions with respect to a REMIC Residual Certificate, and disqualified
organization is the record holder of an interest in such entity, then a tax
will be imposed on such entity equal to the product of the amount of excess
inclusions allocable to the interest in the pass-through entity held by such
disqualified organization and the highest marginal federal income tax rate
imposed on corporations. A pass-through entity will not be subject to this tax
for any period, however, if each record holder of an interest in such
pass-through entity furnishes to such pass-through entity such holder's social
security number and a statement under penalty of perjury that such social
security number is that of the recordholder or a statement under penalty of
perjury that such record holder is not a disqualified organization.
For these purposes, a "disqualified organization" generally means:
o the United States, any State or political subdivision thereof, any
foreign government, any international organization, or any agency or
instrumentality of the foregoing (but would exclude as
instrumentalities entities not treated as instrumentalities under
section 168(h)(2)(D) of the Code or the Freddie Mac), or any
organization (other than a cooperative described in section 521 of the
Code);
o any organization that is exempt from federal income tax, unless it is
subject to the tax imposed by section 511 of the Code; or
o any organization described in section 1381(a)(2)(C) of the Code.
For these purposes, a "pass-through entity" means any regulated investment
company, real estate investment trust, trust, partnership or certain other
entities described in section 860E(e)(6) of the Code. In addition, a person
holding an interest in a pass-through entity as a nominee for another person
will, with respect to such interest, be treated as a pass-through entity.
Termination. A REMIC will terminate immediately after the distribution
date following receipt by the REMIC of the final payment in respect of the
mortgage loans or upon a sale of the REMIC's assets following the adoption by
the REMIC of a plan of complete liquidation. The last distribution on a REMIC
Regular Certificate will be treated as a payment in retirement of a debt
instrument. In the case of a REMIC Residual Certificate, if the last
distribution on such REMIC Residual Certificate is less than the REMIC Residual
Certificateholder's adjusted basis in such REMIC Residual Certificate, such
REMIC Residual Certificateholder should be treated as realizing a loss equal to
the amount of such difference. Such loss may be treated as a capital loss and
may be subject to the "wash sale" rules of section 1091 of the Code.
Reporting and Other Administrative Matters. Solely for purposes of the
administrative provisions of the Code, the REMIC will be treated as a
partnership and REMIC Residual Certificateholders will be treated as partners.
Unless otherwise stated in the related prospectus supplement, either the
trustee or the servicer generally will hold at least a nominal amount of REMIC
Residual Certificates, will file REMIC federal income tax returns on behalf of
the related REMIC, and will be designated as and will act as the "tax matters
person" with respect to the REMIC in all respects.
As the tax matters person, the trustee or the servicer, as the case may
be, will, subject to certain notice requirements and various restrictions and
limitations, generally have the authority to act on behalf of the REMIC and the
REMIC Residual Certificateholders in connection with the administrative and
judicial review of items of income, deduction, gain or loss of the REMIC, as
well as the REMIC's classification.
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REMIC Residual Certificateholders will generally be required to report such
REMIC items consistently with their treatment on the related REMIC's tax return
and may in some circumstances be bound by a settlement agreement between the
trustee or the servicer, as the case may be, as tax matters person, and the IRS
concerning any such REMIC item. Adjustments made to the REMIC tax return may
require a REMIC Residual Certificateholder to make corresponding adjustments on
its return, and an audit of the REMIC's tax return, or the adjustments
resulting from such an audit, could result in an audit of a REMIC Residual
Certificateholder's return. No REMIC will be registered as a tax shelter
pursuant to section 6111 of the Code because it is not anticipated that any
REMIC will have a net loss for any of the first five taxable years of its
existence. Any person that holds a REMIC Residual Certificate as a nominee for
another person may be required to furnish to the related REMIC, in a manner to
be provided in Treasury regulations, the name and address of such person and
other information.
Reporting of interest income, including any original issue discount, with
respect to REMIC Regular Certificates is required annually, and may be required
more frequently under Treasury regulations. These information reports generally
are required to be sent to individual holders of REMIC Regular Interests and
the IRS; holders of REMIC Regular Certificates that are corporations, trusts,
securities dealers and certain other non-individuals will be provided interest
and original issue discount income information and the information set forth in
the following paragraph upon request in accordance with the requirements of the
applicable regulations. The information must be provided by the later of 30
days after the end of the quarter for which the information was requested, or
two weeks after the receipt of the request. The REMIC must also comply with
rules requiring that information relating to be reported to the IRS. Reporting
with respect to the REMIC Residual Certificates, including income, excess,
inclusions, investment expenses and relevant information regarding
qualification of the REMIC's assets will be made as required under the Treasury
regulations, generally on a quarterly basis.
As applicable, the REMIC Regular Certificate information reports will
include a statement of the adjusted issue price of the REMIC Regular
Certificate at the beginning of each accrual period. In addition, the reports
will include information required by regulations with respect to computing the
accrual of any market discount. Because exact computation of the accrual of
market discount on a constant yield method would require information relating
to the holder's purchase price that the REMIC may not have, such regulations
only require that information pertaining to the appropriate proportionate
method of accruing market discount be provided. See "--Taxation of Owners of
REMIC Regular Certificates--Market Discount."
The responsibility for complying with the foregoing reporting rules will
be borne by either the trustee or the servicer, unless otherwise stated in the
related prospectus supplement.
Backup Withholding with Respect to REMIC Certificates. Payments of
interest and principal, and proceeds from the sale of REMIC Certificates, may
be subject to the "backup withholding tax" at a rate of 28% (increasing to 31%
after 2010) if recipients of such payments fail to furnish to the payor certain
information, including their taxpayer identification numbers, or otherwise fail
to establish an exemption from such tax. Any amounts deducted and withheld from
a distribution to a recipient would be allowed as a credit against such
recipient's federal income tax. Furthermore, certain penalties may be imposed
by the IRS on a recipient of payments that is required to supply information
but that does not do so in the proper manner.
Foreign Investors in REMIC Certificates. A REMIC Regular Certificateholder
that is not a "United States Person" and is not subject to federal income tax
as a result of any direct or indirect connection to the United States in
addition to its ownership of a REMIC Regular Certificate will not, unless
otherwise stated in the related prospectus supplement, be subject to United
States federal income or withholding tax in respect of a distribution on a
REMIC Regular Certificate, provided that the holder complies to the extent
necessary with certain identification requirements (including delivery of a
statement, signed under penalties of perjury, certifying that such
certificateholder is not a United States Person and providing the name and
address of such certificateholder. For these purposes, "United States Person"
means:
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o a citizen or resident of the United States;
o a corporation or partnership (or other entity treated as a corporation
or a partnership for United States Federal income tax purposes created
or organized in, or under the laws of, the United States, any State
thereof or the District of Columbia (unless, in the case of a
partnership, Treasury regulations are enacted that provide otherwise);
o an estate whose income is includible in gross income for United States
federal income tax purposes regardless of its source; and
o a trust if a court within the United States is able to exercise
primary supervision over the administration of the trust, and one or
more United States persons have the authority to control all
substantial decisions of the trust.
It is possible that the IRS may assert that the foregoing tax exemption
should not apply with respect to interest distributed on a REMIC Regular
Certificate that is held by:
o a REMIC Residual Certificateholder that owns directly or indirectly a
10% or greater interest in the REMIC Residual Certificates; or
o to the extent of the amount of interest paid by the related mortgagor
on a particular mortgage loan, a REMIC Regular Certificateholder that
owns a 10% or greater ownership interest in such mortgage or a
controlled foreign corporation of which such mortgagor is a "United
States shareholder" within the meaning of section 951(b) of the Code.
If the holder does not qualify for exemption, distributions of interest,
including distributions in respect of accrued original issue discount, to such
holder may be subject to a tax rate of 30%, subject to reduction under any
applicable tax treaty. In addition, the foregoing rules will not apply to
exempt a United States shareholder of a controlled foreign corporation from
taxation on such United States shareholder's allocable portion of the interest
income received by such controlled foreign corporation. Further, it appears
that a REMIC Regular Certificate would not be included in the estate of a
nonresident alien individual and would not be subject to United States estate
taxes. However, certificateholders who are non-resident alien individuals
should consult their tax advisors concerning this question. Transfers of REMIC
Residual Certificates to investors that are not United States persons will be
prohibited under the related pooling and servicing agreement.
The Treasury Department issued final regulations which make certain
modifications to the withholding, backup withholding and information reporting
rules described above. Prospective investors are urged to consult their own tax
advisors regarding these regulations.
GRANTOR TRUST FUNDS
Classification of Grantor Trust Funds. With respect to each series of
grantor trust certificates, counsel to the depositor will deliver its opinion
to the effect that, assuming compliance with the pooling and servicing
agreement, the grantor trust fund will be classified as a grantor trust under
subpart E, part I of subchapter J of the Code and not as a partnership or an
association taxable as a corporation. Accordingly, each holder of a grantor
trust certificate generally will be treated as the owner of an interest in the
mortgage loans included in the grantor trust fund.
For purposes of the following discussion, a grantor trust certificate
represents an undivided equitable ownership interest in the principal of the
mortgage loans constituting the related grantor trust fund, together with
interest thereon at a pass-through rate, will be referred to as a "grantor
trust fractional interest certificate." A grantor trust certificate
representing ownership of all or a portion of the difference between interest
paid on the mortgage loans constituting the related grantor trust fund less
normal administration fees and any spread and interest paid to the holders of
grantor trust fractional interest certificates issued with respect to a grantor
trust fund will be referred to as a "grantor trust strip certificate." A
grantor trust strip certificate may also evidence a nominal ownership interest
in the principal of the mortgage loans constituting the related grantor trust
fund.
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CHARACTERIZATION OF INVESTMENTS IN GRANTOR TRUST CERTIFICATES
Grantor Trust Fractional Interest Certificates. Except as discussed in the
related prospectus supplement, in the case of grantor trust fractional interest
certificates, counsel to the depositor will deliver an opinion that, in
general, grantor trust fractional interest certificates will represent
interests in:
o assets described in section 7701(a)(19)(C) of the Code;
o "obligation[s] which...[are] principally secured by an interest in
real property" within the meaning of section 860G(a)(3)(A) of the
Code; and
o "real estate assets" within the meaning of section 856(c)(5)(B) of the
Code.
In addition, counsel to the depositor will deliver an opinion that
interest on grantor trust fractional interest certificates will to the same
extent be considered "interest on obligations secured by mortgages on real
property or on interests in real property" within the meaning of section
856(c)(3)(B) of the Code.
Grantor Trust Strip Certificates. Even if grantor trust strip certificates
evidence an interest in a grantor trust fund consisting of mortgage loans that
are assets described in section 7701(a)(19)(C) of the Code, "real estate
assets" within the meaning of section 856(c)(5)(B) of the Code, and the
interest on which is "interest on obligations secured by mortgages on real
property" within the meaning of section 856(c)(3)(B) of the Code, it is unclear
whether the grantor trust strip certificates, and the income they produce, will
be so characterized. Although the policies underlying such sections may suggest
that such characterization is appropriate, counsel to the depositor will not
deliver any opinion on the characterization of these certificates. Prospective
purchasers of grantor trust strip certificates should consult their tax
advisors regarding whether the grantor trust strip certificates, and the income
they produce, will be so characterized.
The grantor trust strip certificates will be "obligation[s] (including any
participation or certificate of beneficial ownership therein) which[are]
principally secured by an interest in real property" within the meaning of
section 860G(a)(3)(A) of the Code.
TAXATION OF OWNERS OF GRANTOR TRUST FRACTIONAL INTEREST CERTIFICATES
General. Holders of a particular series of grantor trust fractional
interest certificates generally will be required to report on their federal
income tax returns their shares of the entire income from the mortgage loans
(including reasonable servicing fees and other expenses) and will be entitled
to deduct their shares of any such reasonable servicing fees and other
expenses. In some situations, the taxpayer's deduction may be subject to
itemized deduction limitations and be limited if the taxpayer is subject to the
corporate alternative minimum tax. For a more detailed discussion of these
limitations, see "--Taxation of Owners of REMIC Residual Certificates--Possible
Pass-Through of Miscellaneous Itemized Deductions".
Although it is not entirely clear, it appears that in transactions in
which multiple classes of grantor trust certificates are issued, such fees and
expenses should be allocated among the classes of grantor trust certificates
using a method that recognizes that each such class benefits from the related
services. In the absence of further guidance, it is intended to base
information returns or reports on a method that allocates such expenses among
classes of grantor trust certificates with respect to each period based on the
distributions made to each such class during that period.
The federal income tax treatment of grantor trust fractional interest
certificates of any series will depend on whether they are subject to the
"stripped bond" rules of section 1286 of the Code. Grantor trust fractional
interest certificates may be subject to those rules if a class of grantor trust
strip certificates is issued as part of the same series of Certificates or the
depositor or any of its affiliates retains a right to receive a specified
portion of the interest payable on a mortgage asset. Further, the IRS has ruled
that an unreasonably high servicing fee retained by a seller or servicer will
be treated as a retained ownership interest in mortgages that constitutes a
stripped coupon. For purposes of determining what constitutes reasonable
servicing fees for various types of mortgages the IRS has established certain
"safe harbors." The servicing fees paid with respect to the mortgage loans for
certain series of grantor trust certificates may be higher than the "safe
harbors" and, accordingly, may not constitute reasonable servicing
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compensation. The related prospectus supplement will include information
regarding servicing fees paid to a servicer or their respective affiliates
necessary to determine whether the preceding "safe harbor" rules apply.
If Stripped Bond Rules Apply. If the stripped bond rules apply, each
grantor trust fractional interest certificate will be treated as having been
issued with "original issue discount" within the meaning of section 1273(a) of
the Code, subject, however, to the discussion below regarding the treatment of
certain stripped bonds as market discount bonds and de minimis market discount
discussion below. See "--Taxation of Owners of Grantor Trust Fractional
Interest Certificates--Market Discount." Under the stripped bond rules, the
holder of a grantor trust fractional interest certificate will be required to
report "qualified stated interest" from its grantor trust fractional interest
certificate for each month, as such amounts are received or accrued (based on
the holder's method of accounting) and will be required to report an amount
equal to the original issue discount income that accrues on such certificate in
that month calculated under a constant yield method, in accordance with the
rules of the Code relating to original issue discount.
The original issue discount on a grantor trust fractional interest
certificate will be the excess of such certificate's stated redemption price
over its issue price. The issue price of a grantor trust fractional interest
certificate as to any purchaser will be equal to the price paid by such
purchaser for the grantor trust fractional interest certificate. The stated
redemption price of a grantor trust fractional interest certificate will be the
sum of all payments to be made on such certificate, other than "qualified
stated interest," and the certificate's share of reasonable servicing and other
expenses. See "--Taxation of Owners of Grantor Trust Fractional Interest
Certificates--If Stripped Bond Rules Do Not Apply" for a definition of
"qualified stated interest." In general, the amount of such income that accrues
in any month would equal the product of such holder's adjusted basis in such
grantor trust fractional interest certificate at the beginning of such month
(see "--Sales of Grantor Trust Certificates") and the yield of such grantor
trust fractional interest certificate to such holder. Such yield would be
computed at the rate that, if used to discount the holder's share of future
payments on the mortgage loans, would cause the present value of those future
payments to equal the price at which the holder purchased such certificate. In
computing yield under the stripped bond rules, a certificateholder's share of
future payments on the mortgage loans will not include any payments made in
respect of any spread or any other ownership interest in the mortgage loans
retained by the depositor, a servicer, or their respective affiliates, but will
include such certificateholder's share of any reasonable servicing fees and
other expenses.
With respect to certain categories of debt instruments, section 1272(a)(6)
of the Code requires the use of a reasonable prepayment assumption and conforms
to the prepayment assumption used in pricing the instrument. Regulations could
be adopted applying those provisions to the grantor trust fractional interest
certificates. It is unclear whether those provisions would be applicable to the
grantor trust fractional interest certificates or whether use of a reasonable
prepayment assumption may be required or permitted without reliance on these
rules. It is also uncertain, if a prepayment assumption is used, whether the
assumed prepayment rate would be determined based on conditions at the time of
the first sale of the grantor trust fractional interest certificate or, with
respect to any holder, at the time of purchase of the grantor trust fractional
interest certificate by that holder. Certificateholders are advised to consult
their own tax advisors concerning reporting original issue discount in general
and, in particular, whether a prepayment assumption should be used in reporting
original issue discount with respect to grantor trust fractional interest
certificates.
In the case of a grantor trust fractional interest certificate acquired at
a price equal to the principal amount of the mortgage loans allocable to such
certificate, the use of a prepayment assumption generally would not have any
significant effect on the yield used in calculating accruals of interest
income. In the case, however, of a grantor trust fractional interest
certificate acquired at a discount or premium, the use of a reasonable
prepayment assumption would increase or decrease such yield, and thus
accelerate or decelerate, respectively, the reporting of income.
If a prepayment assumption is not used, then when a mortgage loan prepays
in full, the holder of a grantor trust fractional interest certificate acquired
at a discount or a premium generally will recognize income or loss, which under
amendments to the Code adopted in 1997 would be capital except to the
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extent of any accrued market discount equal to the difference between the
portion of the prepaid principal amount of the mortgage loan that is allocable
to such certificate and the portion of the adjusted basis of such certificate
that is allocable to such certificateholder's interest in the mortgage loan. If
a prepayment assumption is used, although there is no guidance, logically that
no separate item of income or loss should be recognized upon a prepayment.
Instead, a prepayment should be treated as a partial payment of the stated
redemption price of the grantor trust fractional interest certificate and
accounted for under a method similar to that described for taking account of
original issue discount on REMIC Regular Certificates. See "--Taxation of
Owners of REMIC Regular Certificates--Original Issue Discount." It is unclear
whether any other adjustments would be required to reflect differences between
an assumed prepayment rate and the actual rate of prepayments.
In the absence of statutory or administrative clarification, it is
currently intended to base information reports or returns to the IRS and
certificateholders in transactions subject to the stripped bond rules on a
prepayment assumption that will be disclosed in the related prospectus
supplement and on a constant yield computed using a representative initial
offering price for each class of certificates. However, neither the depositor
nor any other person will make any representation that the mortgage loans will
in fact prepay at a rate conforming to such stripped bond prepayment assumption
or any other rate and certificateholders should bear in mind that the use of a
representative initial offering price will mean that such information returns
or reports, even if otherwise accepted as accurate by the IRS, will in any
event be accurate only as to the initial certificateholders of each series who
bought at that price.
Under Treasury regulation section 1.1286-1(b), certain stripped bonds are
to be treated as market discount bonds and, accordingly, any purchaser of such
a bond is to account for any discount on the bond as market discount rather
than original issue discount. This treatment only applies, however, if
immediately after the most recent disposition of the bond by a person stripping
one or more coupons from the bond and disposing of the bond or coupon, there is
less than a de minimis amount of original issue discount or the annual stated
rate of interest payable on the original bond is no more than one percentage
point lower than the gross interest rate payable on the original mortgage loan
before subtracting any servicing fee or any stripped coupon. Original issue
discount or market discount on a grantor trust fractional interest certificate
are de minimis if less than 0.25% of the stated redemption price multiplied by
the weighted average maturity of the mortgage loans. Original issue discount or
market discount of only a de minimis amount will be included in income in the
same manner as de minimis original issue discount and market discount described
in "--If Stripped Bond Rules Do Not Apply" and "--Market Discount."
If Stripped Bond Rules Do Not Apply. Subject to the discussion below on
original issue discount, if the stripped bond rules do not apply to a grantor
trust fractional interest certificate, the certificateholder will be required
to report its share of the interest income on the mortgage loans in accordance
with such certificateholder's normal method of accounting. The original issue
discount rules will apply to a grantor trust fractional interest certificate to
the extent it evidences an interest in mortgage loans issued with original
issue discount.
The original issue discount, if any, on the mortgage loans will equal the
difference between the stated redemption price of such mortgage loans and their
issue price. Under the OID regulations, the stated redemption price is equal to
the total of all payments to be made on such mortgage loan other than
"qualified stated interest." "Qualified stated interest" generally includes
interest that is unconditionally payable at least annually at a single fixed
rate, at a "qualified floating rate" or at an "objective rate." In general, the
issue price of a mortgage loan will be the amount received by the borrower from
the lender under the terms of the mortgage loan, less any "points" paid by the
borrower, and the stated redemption price of a mortgage loan will equal its
principal amount, unless the mortgage loan provides for an initial below-market
rate of interest or the acceleration or the deferral of interest payments.
In the case of mortgage loans bearing adjustable or variable interest
rates, the related prospectus supplement will describe the manner in which such
rules will be applied with respect to those mortgage loans in preparing
information returns to the certificateholders and the IRS.
Notwithstanding the general definition of original issue discount,
original issue discount will be considered to be de minimis if such original
issue discount is less than 0.25% of the stated redemption price
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multiplied by the weighted average maturity of the mortgage loan. For this
purpose, the weighted average maturity of the mortgage loan will be computed by
multiplying the number of full years from the issue date until such payment is
expected to be made by a fraction, the numerator of which is the amount of the
payment and the denominator of which is the stated redemption price of the
mortgage loan. Under the OID regulations, original issue discount of only a de
minimis amount will generally be included in income as each payment of stated
principal price is made, based on the product of the total amount of such de
minimis original issue discount and a fraction, the numerator of which is the
amount of each such payment and the denominator of which is the outstanding
stated principal amount of the mortgage loan. The OID Regulations also permit a
certificateholder to elect to accrue de minimis original issue discount into
income currently based on a constant yield method. See "--Market Discount"
below.
If original issue discount is in excess of a de minimis amount, all
original issue discount with respect to a mortgage loan will be required to be
accrued and reported in income each month, based on a constant yield. The OID
regulations suggest that no prepayment assumption is appropriate in computing
the yield on prepayable obligations issued with original issue discount. In the
absence of statutory or administrative clarification, it currently is not
intended to base information reports or returns to the IRS and
certificateholders on the use of a prepayment assumption in transactions not
subject to the stripped bond rules. However, section 1272(a)(6) of the Code may
require that a prepayment assumption be made in computing yield with respect to
all mortgage-backed securities. Certificateholders are advised to consult their
own tax advisors concerning whether a prepayment assumption should be used in
reporting original issue discount with respect to grantor trust fractional
interest certificates. Certificateholders should refer to the related
prospectus supplement with respect to each series to determine whether and in
what manner the original issue discount rules will apply to mortgage loans in
such series.
A purchaser of a grantor trust fractional interest certificate that
purchases such grantor trust fractional interest certificate at a cost less
than such certificate's allocable portion of the aggregate remaining stated
redemption price of the mortgage loans held in the related trust fund will also
be required to include in gross income such certificate's daily portions of any
original issue discount with respect to such mortgage loans. However, each such
daily portion will be reduced, if the cost of such grantor trust fractional
interest certificate to such purchaser is in excess of such certificate's
allocable portion of the aggregate "adjusted issue prices" of the mortgage
loans held in the related trust fund, approximately in proportion to the ratio
such excess bears to such certificate's allocable portion of the aggregate
original issue discount remaining to be accrued on such mortgage loans. The
adjusted issue price of a mortgage loan on any given day equals the sum of the
adjusted issue price of such mortgage loan at the beginning of the accrual
period that includes such day plus the daily portions of original issue
discount for all days during such accrual period prior to such day. The
adjusted issue price of a mortgage loan at the beginning of any accrual period
will equal the issue price of such mortgage loan, increased by the aggregate
amount of original issue discount with respect to such mortgage loan that
accrued in prior accrual periods, and reduced by the amount of any payments
made on such mortgage loan in prior accrual periods of amounts included in its
stated redemption price.
The trustee or servicer, as applicable, will provide to any holder of a
grantor trust fractional interest certificate such information as such holder
may reasonably request from time to time with respect to original issue
discount accruing on grantor trust fractional interest certificates. See
"--Grantor Trust Reporting" below.
Market Discount. If the stripped bond rules do not apply to the grantor
trust fractional interest certificate, a certificateholder may be subject to
the market discount rules of sections 1276 through 1278 of the Code to the
extent an interest in a mortgage loan is considered to have been purchased at a
"market discount." If market discount is in excess of a de minimis amount, the
holder generally will be required to include in income in each month the amount
of such discount that has accrued through such month that has not previously
been included in income, but limited, in the case of the portion of such
discount that is allocable to any mortgage loan, to the payment of stated
redemption price on such mortgage loan that is received by or due to the trust
fund in that month. A certificateholder may elect to include market discount in
income currently as it accrues under a constant yield method rather than
including it on a deferred basis in accordance with the foregoing. If made,
such election will apply to all market discount bonds acquired by such
certificateholder during or after the first taxable year to which such election
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applies. In addition, the OID regulations would permit a certificateholder to
elect to accrue all interest, discount and premium in income as interest, based
on a constant yield method. If such an election were made with respect to a
mortgage loan with market discount, the certificateholder would be deemed to
have made an election to currently include market discount in income with
respect to all other debt instruments having market discount that such
certificateholder acquires during the taxable year of the election and
thereafter and, possibly, previously acquired instruments. Similarly, a
certificateholder that made this election for a certificate acquired at a
premium would be deemed to have made an election to amortize bond premium with
respect to all debt instruments having amortizable bond premium that such
certificateholder owns or acquires. See "--Taxation of Owners of REMIC Regular
Certificates-- Premium." Each of these elections to accrue interest, discount
and premium with respect to a certificate on a constant yield method or as
interest is irrevocable.
Section 1276(b)(3) of the Code authorized the Treasury Department to issue
regulations providing for the method for accruing market discount on debt
instruments where principal is payable in more than one installment. Until such
time as regulations are issued by the Treasury Department, certain rules
described in the Committee Report apply. For a more detailed discussion of the
treatment of market discount, see "Taxation of Owners of REMIC Regular
Certificates--Market Discount".
Because the mortgage loans will provide for periodic payments of stated
redemption price, such discount may be required to be included in income at a
rate that is not significantly lower than the rate at which such discount would
be included in income if it were original issue discount. Market discount with
respect to mortgage loans generally will be considered to be de minimis if it
is less than 0.25% of the stated redemption price of the mortgage loans
multiplied by the number of full years to maturity remaining after the date of
its purchase. In interpreting a similar rule with respect to original issue
discount on obligations payable in installments, the OID regulations refer to
the weighted average maturity of obligations, and it is likely that the same
rule will be applied with respect to market discount, presumably taking into
account the prepayment assumption used, if any. The effect of using a
prepayment assumption could be to accelerate the reporting of such discount
income. If market discount is treated as de minimis under the foregoing rule,
it appears that actual discount would be treated in a manner similar to
original issue discount of a de minimis amount. See "--If Stripped Bond Rules
Do Not Apply." Further, under the rules described in "--Taxation of Owners of
REMIC Regular Certificates--Market Discount," any discount that is not original
issue discount and exceeds a de minimis amount may require the deferral of
interest expense deductions attributable to accrued market discount not yet
includible in income, unless an election has been made to report market
discount currently as it accrues. This rule applies without regard to the
origination dates of the mortgage loans.
Premium. If a certificateholder is treated as acquiring the underlying
mortgage loans at a premium, that is, at a price in excess of their remaining
stated redemption price, such certificateholder may elect under section 171 of
the Code to amortize using a constant yield method. Amortizable premium is
treated as an offset to interest income on the related debt instrument, rather
than as a separate interest deduction.
It is unclear whether a prepayment assumption should be used in computing
amortization of premium allowable under section 171 of the Code. If premium is
not subject to amortization using a prepayment assumption and a mortgage loan
prepays in full, the holder of a grantor trust fractional interest certificate
acquired at a premium should recognize a loss, equal to the difference between
the portion of the prepaid principal amount of the mortgage loan that is
allocable to the certificate and the portion of the adjusted basis of the
certificate that is allocable to the mortgage loan. If a prepayment assumption
is used to amortize such premium, it appears that such a loss would be
unavailable. Instead, if a prepayment assumption is used, a prepayment should
be treated as a partial payment of the stated redemption price of the grantor
trust fractional interest certificate and accounted for under a method similar
to that described for taking account of original issue discount on REMIC
Regular Certificates. See "--Taxation of Owners of REMIC Regular
Certificates--Original Issue Discount." It is unclear whether any other
adjustments would be required to reflect differences between the prepayment
assumption used, if any, and the actual rate of prepayments.
Taxation of Owners of Grantor Trust Strip Certificates. The "stripped
coupon" rules of section 1286 of the Code will apply to the grantor trust strip
certificates. Except as described above in "--If Stripped
105
Bond Rules Apply," no regulations or published rulings under section 1286 of
the Code have been issued and some uncertainty exists as to how it will be
applied to securities such as the grantor trust strip certificates.
Accordingly, holders of grantor trust strip certificates should consult their
own tax advisors concerning the method to be used in reporting income or loss
with respect to such certificates.
The OID regulations insofar as they describe the application of the
constant yield method, do not apply to instruments to which section 1272(a)(6)
applies, which may include grantor trust strip certificates as well as grantor
trust fractional interest certificates, although they provide general guidance
as to how the original issue discount sections of the Code will be applied. In
addition, the discussion below is subject to the discussion under "--Possible
Application of Contingent Payment Rules" below and assumes that the holder of a
grantor trust strip certificate will not own any grantor trust fractional
interest certificates.
Under the stripped coupon rules, it appears that original issue discount
will be required to be accrued in each month on the grantor trust strip
certificates based on a constant yield method. In effect, each holder of
grantor trust strip certificates would include as interest income in each month
an amount equal to the product of such holder's adjusted basis in such grantor
trust strip certificate at the beginning of such month and the yield of such
grantor trust strip certificate to such holder. Such yield would be calculated
based on the price paid for that grantor trust strip certificate by its holder
and the payments remaining to be made thereon at the time of the purchase, plus
an allocable portion of the servicing fees and expenses to be paid with respect
to the mortgage loans. See "--If Stripped Bond Rules Apply" above.
As noted above, section 1272(a)(6) of the Code requires that a prepayment
assumption be used in computing the accrual of original issue discount with
respect to certain categories of debt instruments, and that adjustments be made
in the amount and rate of accrual of such discount when prepayments do not
conform to such prepayment assumption. Regulations could be adopted applying
those provisions to the grantor trust strip certificates. It is unclear whether
those provisions would be applicable to the grantor trust strip certificates or
whether use of a prepayment assumption may be required or permitted in the
absence of such regulations. It is also uncertain, if a prepayment assumption
is used, whether the assumed prepayment rate would be determined based on
conditions at the time of the first sale of the grantor trust strip certificate
or, with respect to any subsequent holder, at the time of purchase of the
grantor trust strip certificate by that holder.
The accrual of income on the grantor trust strip certificates will be
significantly slower if a prepayment assumption is permitted to be made than if
yield is computed assuming no prepayments. In the absence of statutory or
administrative guidance, it is intended to base information returns or reports
to the IRS and certificateholders on the stripped bond prepayment assumption
disclosed in the related prospectus supplement and on a constant yield computed
using a representative initial offering price for each class of certificates.
However, neither the depositor nor any other person will make any
representation that the mortgage loans will in fact prepay at a rate conforming
to the stripped bond prepayment assumption. Prospective purchasers of the
grantor trust strip certificates should consult their own tax advisors
regarding the use of the stripped bond prepayment assumption.
It is unclear under what circumstances, if any, the prepayment of a
mortgage loan will give rise to a loss to the holder of a grantor trust strip
certificate. If a grantor trust strip certificate is treated as a single
instrument and the effect of prepayments is taken into account in computing
yield with respect to such grantor trust strip certificate, it appears that no
loss may be available as a result of any particular prepayment unless
prepayments occur at a rate faster than the stripped bond prepayment
assumption. However, if a grantor trust strip certificate is treated as an
interest in discrete mortgage loans, or if the stripped bond prepayment
assumption is not used, then when a mortgage loan is prepaid, the holder of a
grantor trust strip certificate should be able to recognize a loss equal to the
portion of the adjusted issue price of the grantor trust strip certificate that
is allocable to such mortgage loan. In addition, any loss may be treated as a
capital loss.
Possible Application of Contingent Payment Rules. The coupon stripping
rules' general treatment of stripped coupons is to regard them as newly issued
debt instruments in the hands of each purchaser. To the extent that payments on
the grantor trust strip certificates would cease if the mortgage loans were
prepaid in full, the grantor trust strip certificates could be considered to be
debt instruments providing for contingent payments. Under the OID regulations,
debt instruments providing for contingent payments
106
are not subject to the same rules as debt instruments providing for
non-contingent payments. Final regulations have been promulgated with respect
to contingent payment debt instruments. However, these regulations do not
specifically address the grantor trust strip certificates or other securities
subject to the stripped bond rules of section 1286 of the Code.
Certificateholders should consult their tax advisors concerning the possible
application of the contingent payment rules to the grantor trust strip
certificates.
Sales of Grantor Trust Certificates. Any gain or loss, equal to the
difference between the amount realized on the sale or exchange of a grantor
trust certificate and its adjusted basis, recognized on such sale or exchange
of a grantor trust certificate by an investor who holds such grantor trust
certificate as a capital asset, will be capital gain or loss, except to the
extent of accrued and unrecognized market discount, which will be treated as
ordinary income. The adjusted basis of a grantor trust certificate generally
will equal its cost, increased by any income reported by the seller and reduced
(but not below zero) by any previously reported losses, any amortized premium
and by any distributions with respect to such grantor.
Gain or loss from the sale of a grantor trust certificate may be partially
or wholly ordinary and not capital in certain circumstances. Gain attributable
to accrued and unrecognized market discount will be treated as ordinary income,
as will gain or loss recognized by banks and other financial institutions
subject to section 582(c) of the Code. Furthermore, a portion of any gain that
might otherwise be capital gain may be treated as ordinary income to the extent
that the grantor trust certificate is held as part of a "conversion
transaction" within the meaning of section 1258 of the Code. A conversion
transaction generally is one in which the taxpayer has taken two or more
positions in the same or similar property that reduce or eliminate market risk
and the taxpayer's return is substantially attributable to the time value of
money. The amount of gain realized in a conversion transaction that is
recharacterized as ordinary income generally will not exceed the amount of
interest that would have accrued on the taxpayer's net investment at 120% of
the appropriate "applicable Federal rate" at the time the taxpayer enters into
the conversion transaction, subject to appropriate reduction for prior
inclusion of interest and other ordinary income items from the transaction.
Finally, a taxpayer may elect to have net capital gain taxed at ordinary income
rates rather than capital gains rates in order to include such net capital gain
in total net investment income for that taxable year, for purposes of the rule
that limits the deduction of interest on indebtedness incurred to purchase or
carry property held for investment to a taxpayer's net investment income.
Investors that recognize a loss on a sale or exchange of the grantor trust
certificates 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.
Grantor Trust Reporting. As may be provided in the related prospectus
supplement, the trustee or servicer, as applicable, will furnish to each holder
of a grantor trust certificate, with each distribution, a statement setting
forth the amount of such distribution allocable to principal on the underlying
mortgage loans and to interest thereon at the related pass-through interest
rate. In addition, within a reasonable time after the end of each calendar
year, the trustee or servicer will furnish to each certificateholder during
such year such customary factual information as the depositor or the reporting
party deems necessary or desirable to enable holders of grantor trust
certificates to prepare their tax returns and will furnish comparable
information to the IRS as and when required by law to do so. Because the rules
for accruing discount and amortizing premium with respect to the grantor trust
certificates are uncertain in various respects, there is no assurance the IRS
will agree with the trustee's or servicer's information reports. Moreover, such
information reports, even if otherwise accepted as accurate by the IRS, will in
any event be accurate only as to the initial certificateholders that bought
their certificates at the representative initial offering price used in
preparing such reports.
Backup Withholding. In general, the rules described in "--Taxation of
Owners of REMIC Residual Certificates--Backup Withholding with Respect to REMIC
Certificates" will also apply to grantor trust certificates.
Foreign Investor. In general, the discussion with respect to REMIC Regular
Certificates in "--Taxation of Owners of REMIC Residual Certificates--Foreign
Investors in REMIC Certificates" applies to grantor trust certificates except
that grantor trust certificates will, unless otherwise disclosed in the related
prospectus supplement, be eligible for exemption from United States withholding
tax, subject to the conditions described in such discussion, only to the extent
the related mortgage loans were
107
originated after July 18, 1984. However, to the extent the grantor trust
certificate represents an interest in real property (e.g., because of
foreclosures), it would be treated as representing a United States real
property interest for United States federal income tax purposes. This could
result in withholding consequences to non-U.S. certificateholders and potential
U.S. taxation.
To the extent that interest on a grantor trust certificate would be exempt
under sections 871(h)(1) and 881(c) of the Code from United States withholding
tax, and the grantor trust certificate is not held in connection with a
certificateholder's trade or business in the United States, such grantor trust
certificate will not be subject to United States estate taxes in the estate of
a non-resident alien individual.
On June 20, 2002, the IRS published regulations which will, when
effective, and if finalized in their proposed form, establish a reporting
framework for interests in "widely held fixed investment trusts" that will
place the responsibility of reporting on the person in the ownership chain who
holds an interest for a beneficial owner. A widely-held fixed investment trust
is defined as an entity classified as a "trust" under Treasury Regulation
Section 301.7701-4(c), in which any interest is held by a middleman, which
includes, but is not limited to (i) a custodian of a person's account, (ii) a
nominee and (iii) a broker holding an interest for a customer in street name.
These regulations were proposed to be effective beginning January 1, 2004 but
such date has passed and the regulations have not been finalized. It is unclear
when, or if, these regulations will become final.
STATE AND OTHER TAX CONSEQUENCES
In addition to the federal income tax consequences described in "Material
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 tax 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 own tax advisors with
respect to the various tax consequences of investments in the offered
certificates.
108
ERISA CONSIDERATIONS
GENERAL
ERISA and the Code impose certain requirements on retirement plans and
other employee benefit plans or arrangements, including individual retirement
accounts, individual retirement annuities, medical savings accounts, Keogh
plans, collective investment funds and separate and general accounts in which
such plans, accounts or arrangements are invested that are subject to the
fiduciary responsibility provisions of ERISA and Section 4975 of the Code (all
of which are referred to in this prospectus as "Plans"), and on persons who are
fiduciaries with respect to Plans, in connection with the investment of Plan
assets. Certain employee benefit plans, such as governmental plans (as defined
in ERISA Section 3(32)), and, if no election has been made under Section 410(d)
of the Code, church plans (as defined in Section 3(33) of ERISA) are not
subject to ERISA requirements. However, such plans may be subject to the
provisions of other applicable federal, state or local law (which may contain
restrictions substantially similar to those in ERISA and the Code).
ERISA generally imposes on Plan fiduciaries certain general fiduciary
requirements, including those of investment prudence and diversification and
the requirement that a Plan's investments be made in accordance with the
documents governing the Plan. In addition, ERISA and the Code prohibit a broad
range of transactions involving assets of a Plan and persons
("Parties-in-Interest") who have certain specified relationships to the Plan,
unless a statutory or administrative exemption is available. Certain
Parties-in-Interest that participate in a prohibited transaction may be subject
to an excise tax imposed pursuant to Section 4975 of the Code, unless a
statutory or administrative exemption is available. These prohibited
transactions generally are set forth in Section 406 of ERISA and Section 4975
of the Code.
Plan Asset Regulations. A Plan's investment in offered certificates may
cause the trust assets to be deemed "plan assets" of a Plan. Section 2510.3-101
of the regulations of the United States Department of Labor (the "DOL")
provides that 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
to this discussion apply, or unless the equity participation in the entity by
"benefit plan investors" (defined to include Plans and certain employee benefit
plans not subject to ERISA, including foreign and governmental plans) is not
"significant." For this purpose, in general, equity participation in a trust
fund will be "significant" on any date if, immediately after the most recent
acquisition of any certificate, 25% or more of any class of certificates is
held by benefit plan investors (excluding for this calculation any person,
other than a benefit plan investor, who has discretionary authority or control,
or provides investment advice (direct or indirect) for a fee with respect to
the assets of the trust fund).
Any person who has discretionary authority or control respecting the
management or disposition of plan assets of a Plan, and any person who provides
investment advice with respect to such assets for a fee, will generally be a
fiduciary of the investing plan. If the trust assets constitute plan assets,
then any party exercising management or discretionary control regarding those
assets, such as a master servicer, a special servicer or any sub-servicer, may
be deemed to be a Plan "fiduciary" with respect to the investing Plan, and thus
subject to the fiduciary responsibility provisions and prohibited transaction
provisions of ERISA and the Code. In addition, if the trust assets constitute
plan assets, the purchase of certificates by a Plan, as well as the operation
of the trust fund, may constitute or involve a prohibited transaction under
ERISA and the Code.
PROHIBITED TRANSACTION EXEMPTIONS
Wachovia Corporation ("Wachovia") has received from the DOL an individual
prohibited transaction exemption (the "Exemption"), which generally exempts
from the application of the prohibited transaction provisions of sections
406(a) and (b) and 407(a) 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 purchase, sale and holding of mortgage pass-through
certificates underwritten by an underwriter, provided that certain conditions
set forth in the Exemption application are satisfied. For purposes of this
Section, "ERISA Considerations,"
109
the term "underwriter" includes (i) Wachovia, (ii) any person directly or
indirectly, through one or more intermediaries, controlling, controlled by or
under common control with Wachovia, and (iii) any member of the underwriting
syndicate or selling group of which Wachovia or a person described in (ii) is a
manager or co-manager with respect to a class of certificates. See "Method of
Distribution."
The Exemption sets forth five general conditions which, among others, must
be satisfied for a transaction involving the purchase, sale and holding of
offered certificates by a Plan to be eligible for exemptive relief under the
Exemption:
First, the acquisition of offered certificates by a Plan must be on terms
that are at least as favorable to the Plan as they would be in an arm's-length
transaction with an unrelated party.
Second, the offered certificates at the time of acquisition by the Plan
must be rated in one of the four highest generic rating categories by Standard
& Poor's Rating Services, a division of The McGraw-Hill Companies, Inc.
("Standard & Poor's"), Moody's Investors Service, Inc. ("Moody's"), or Fitch,
Inc. ("Fitch").
Third, the trustee cannot be an affiliate of any other member of the
Restricted Group other than an underwriter. The "Restricted Group" consists of
any underwriter, the depositor, the trustee, the master servicer, the special
servicer, any sub-servicer, the provider of any credit support and any obligor
with respect to mortgage assets (including mortgage loans underlying a CMBS not
issued by Fannie Mae, Freddie Mac or Ginnie Mae) constituting more than 5% of
the aggregate unamortized principal balance of the mortgage assets in the
related 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)
in connection with the distribution or placement of certificates must represent
not more than reasonable compensation for underwriting or placing the
certificates; the sum of all payments made to and retained by the depositor
pursuant to the assignment of the mortgage 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 pooling and servicing agreement and
reimbursement of such person's reasonable expenses in connection therewith.
Fifth, the investing Plan must be an accredited investor as defined in
Rule 501(a)(1) of Regulation D of the Securities and Exchange Commission under
the Securities Act of 1933, as amended.
In the event the obligations used to fund the trust fund have not all been
transferred to the trust fund on the closing date, additional obligations
meeting certain requirements as specified in the Exemption may be transferred
to the trust fund in exchange for the amounts credited to the Pre-Funding
Account during a period required by the Exemption, commencing on the closing
date and ending no later than the earliest to occur of: (i) the date the amount
on deposit in the Pre-Funding Account (as defined in the Exemption) is less
than the minimum dollar amount specified in the pooling and servicing
agreement; (ii) the date on which an event of default occurs under the pooling
and servicing agreement; or (iii) the date which is the later of three months
or 90 days after the closing date. In addition, the amount in the Pre-Funding
Account may not exceed 25% of the aggregate principal amount of the offered
certificates. Certain other conditions of the Exemption relating to pre-funding
accounts must also be met, in order for the exemption to apply. The prospectus
supplement will discuss whether pre-funding accounts will be used.
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 in such other
investment pools must have been rated in one of the four highest categories of
Standard & Poor's, Moody's, or Fitch for at least one year prior to the Plan's
acquisition of certificates; and (iii) certificates 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 certificates.
The Exemption generally applies to mortgage loans such as the mortgage
loans to be included in any trust fund. It is not clear whether the Exemption
applies to participant directed plans as described in Section 404(c) of ERISA
or plans that are subject to Section 4975 of the Code but that are not subject
110
to Title I of ERISA, such as certain Keogh plans and certain individual
retirement accounts. If mortgage loans are secured by leasehold interests, each
lease term must be at least 10 years longer than the term of the relevant
mortgage loan.
If the general conditions set forth in the Exemption are satisfied, the
Exemption may provide an exemption from the restrictions imposed by Sections
406(a) and 407(a) of ERISA (as well as the excise taxes imposed by Sections
4975(a) and (b) of the Code by reason of Sections 4975(c)(1)(A) through (D) of
the Code) in connection with (i) the direct or indirect sale, exchange or
transfer of offered certificates acquired by a Plan upon issuance from the
depositor or underwriter when the depositor, underwriter, master servicer,
special servicer, sub-servicer, trustee, provider of credit support, or obligor
with respect to mortgage assets is a "Party in Interest" under ERISA with
respect to the investing Plan, (ii) the direct or indirect acquisition or
disposition in the secondary market of offered certificates by a Plan and (iii)
the holding of offered certificates by a Plan. However, no exemption is
provided from the restrictions of Sections 406(a)(1)(E), 406(a)(2) and 407 of
ERISA for the acquisition or holding of a 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 this purpose, an
Excluded Plan is a Plan sponsored by any member of the Restricted Group.
If certain specific conditions set forth in the Exemption are also
satisfied, the Exemption may provide relief from the restrictions imposed by
Sections 406(b)(1) and (b)(2) of ERISA and the taxes imposed by Sections
4975(a) and (b) of the Code by reason of Section 4975(c)(1)(E) of the Code to
an obligor acting as a fiduciary with respect to the investment of a Plan's
assets in the certificates (or such obligor's affiliate) only if, among other
requirements (i) such obligor (or its affiliate) is an obligor with respect to
5% percent or less of the fair market value of the assets contained in the
trust fund and is otherwise not a member of the Restricted Group, (ii) a Plan's
investment in certificates does not exceed 25% of all of the certificates
outstanding at the time of the acquisition, (iii) immediately after the
acquisition, no more than 25% of the assets of the Plan are invested in
certificates representing an interest in trusts (including the trust fund)
containing assets sold or serviced by the depositor or a servicer and (iv) in
the case of the acquisition of the certificates in connection with their
initial issuance, at least 50% of the certificates are acquired by persons
independent of the Restricted Group and at least 50% of the aggregate interest
in the trust fund is acquired by persons independent of the Restricted Group.
The Exemption also applies to transactions in connection with the
servicing, management and operation of the trust fund, provided that, in
addition to the general requirements described above, (a) such transactions are
carried out in accordance with the terms of a binding pooling and servicing
agreement, (b) the pooling and servicing agreement is provided to, or described
in all material respects in the prospectus or private placement memorandum
provided to, investing Plans before their purchase of certificates issued by
the trust fund and (c) the terms and conditions for the defeasance of a
mortgage obligation and substitution of a new mortgage obligation, as so
directed, have been approved by an NRSRO and do not result in any certificates
receiving a lower credit rating from the NRSRO than the current rating. The
pooling and servicing agreements will each be a "Pooling and Servicing
Agreement" as defined in the Exemption. Each pooling and servicing agreement
will provide that all transactions relating to the servicing, management and
operations of the trust fund must be carried out in accordance with the pooling
and servicing agreement.
The DOL has issued a Prohibited Transaction Class Exemption 95-60 (the
"Class Exemption"), which provides relief from the application of the
prohibited transaction provisions of Sections 406(a), 406(b) and 407(a) of
ERISA and Section 4975 of the Code for transactions in connection with the
servicing, management and operation of a trust in which an insurance company
general account has an interest as a result of its acquisition of certificates
issued by such trust, provided that certain conditions are satisfied. Insurance
company general accounts meeting the specified conditions may generally
purchase, in reliance on the Class Exemption, classes of certificates that do
not meet the requirements of the Exemption solely because they have not
received a rating at the time of the acquisition in one of the four highest
rating categories from Standard & Poor's, Moody's, or Fitch. In addition to the
foregoing Class Exemption, relief may be available to certain insurance company
general accounts, which support
111
policies issued by any insurer on or before December 31, 1998 to or for the
benefit of employee benefit plans, under regulations published by the DOL under
Section 401(c) of ERISA, that became applicable on July 5, 2001.
Any Plan fiduciary considering the purchase of certificates should consult
with its counsel with respect to the applicability of the Exemption and other
issues and determine on its own whether all conditions have been satisfied and
whether the certificates are an appropriate investment for a Plan under ERISA
and the Code (or, in the case of governmental plans or church plans, under
applicable federal, state or local law). The prospectus supplement will specify
the representations required by purchasers of certificates, but generally, each
purchaser using the assets of one or more Plans to purchase a certificate shall
be deemed to represent that each such Plan qualifies as an "accredited
investor" as defined in Rule 501(a)(1) of Regulation D under the Securities Act
of 1933, and no Plan will be permitted to purchase or hold such certificates
unless such certificates are rated in one of the top four rating categories by
at least one rating agency at the time of such purchase, unless such Plan is an
insurance company general account that represents and warrants that it is
eligible for, and meets all of the requirements of, Sections I and III of
Prohibited Transaction Class Exemption 95-60. Each purchaser of classes of
certificates that are not rated at the time of purchase in one of the top four
rating categories by at least one rating agency shall be deemed to represent
that it is eligible for, and meets all of the requirements of, Sections I and
III of Prohibited Transaction Class Exemption 95-60. The prospectus supplement
with respect to a series of certificates may contain additional information
regarding the application of the Exemption or any other exemption, with respect
to the certificates offered thereby.
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, the only classes of offered certificates which
will qualify as "mortgage related securities" will be those that (1) are rated
in one of the two highest rating categories by at least one nationally
recognized statistical rating organization and (2) are part of a series
evidencing interests in a trust fund consisting of loans originated by certain
types of originators specified in SMMEA and secured by first liens on real
estate. 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, investors whose investment activities are subject to 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.
Those classes of offered certificates qualifying as "mortgage related
securities" will constitute legal investments for persons, trusts,
corporations, partnerships, associations, business trusts and business entities
(including depository institutions, insurance companies, trustees and pension
funds) created pursuant to or existing under the laws of the United States or
of any state, including the District of Columbia and Puerto Rico, whose
authorized investments are subject to state regulation, to the same extent
that, under applicable law, obligations issued by or guaranteed as to principal
and interest by the United States or any of its agencies or instrumentalities
constitute legal investments for such entities.
Under SMMEA, a number of states enacted legislation, on or before the
October 3, 1991 cutoff for such enactments, limiting to various extents the
ability of certain entities (in particular, insurance companies) to invest in
"mortgage related securities" secured by liens on residential, or mixed
residential and commercial properties, in most cases by requiring the affected
investors to rely solely upon existing state law, and not SMMEA. Pursuant to
Section 347 of the Riegle Community Development and Regulatory Improvement Act
of 1994, which amended the definition of "mortgage related security" to
include, in relevant part, offered certificates satisfying the rating and
qualified originator requirements for "mortgage related securities," but
evidencing interests in a trust fund consisting, in whole or in part, of first
liens on one or more parcels of real estate upon which are located one or more
commercial structures, states were authorized to enact legislation, on or
before September 23, 2001, specifically referring to Section 347 and
prohibiting or restricting the purchase, holding or investment by
state-regulated entities
112
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 that legislation.
SMMEA also amended the legal investment authority of federally-chartered
depository institutions as follows: federal savings and loan associations and
federal savings banks may invest in, sell or otherwise deal in "mortgage
related securities" without limitation as to the percentage of their assets
represented thereby, federal credit unions may invest in those securities, and
national banks may purchase those securities for their own account without
regard to the limitations generally applicable to investment securities set
forth in 12 U.S.C. Section 24 (Seventh), subject in each case to those
regulations as the applicable federal regulatory authority may prescribe. In
this connection, the Office of the Comptroller of the Currency (the "OCC") has
amended 12 C.F.R. Part 1 to authorize national banks to purchase and sell for
their own account, without limitation as to a percentage of the bank's capital
and surplus (but subject to compliance with certain general standards in 12
C.F.R. Section 1.5 concerning "safety and soundness" and retention of credit
information), certain "Type IV securities," defined in 12 C.F.R. Section
1.2(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 of
the 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; however, credit unions approved for the
NCUA's "investment pilot program" under 12 C.F.R. Section 703.19 may be able
to invest in those prohibited forms of securities, while "RegFlex credit
unions" may invest in commercial mortgage related securities under certain
conditions pursuant to 12 C.F.R. Section 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 "1998 Policy Statement")
of the Federal Financial Institutions Examination Council, which has been
adopted by the Board of Governors of the Federal Reserve System, the Federal
Deposit Insurance Corporation, the OCC and the OTS, effective May 26, 1998, and
by the NCUA effective October 1, 1998. The 1998 Policy Statement sets forth
general guidelines which depository institutions must follow in managing risks
(including market, credit, liquidity, operational (transaction), and legal
risks) applicable to all securities (including mortgage pass-through securities
and mortgage-derivative products) used for investment purposes.
Investors whose investment activities are subject to regulation by federal
and state authorities should review rules, policies and guidelines adopted from
time to time by those authorities before purchasing any offered certificates,
as certain classes may be deemed unsuitable investments, or may otherwise be
restricted, under those rules, policies or guidelines (in certain instances
irrespective of SMMEA).
The foregoing does not take into consideration the applicability of
statutes, rules, regulations, orders, guidelines or agreements generally
governing investments made by a particular investor, including, but not limited
to, "prudent investor" provisions, percentage-of-assets limits, provisions
which may restrict or prohibit investment in securities which are not
"interest-bearing" or "income-paying," and, with regard
113
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 constitute
legal investments or are subject to investment, capital or other restrictions
and, if applicable, whether SMMEA has been overridden in any jurisdiction
relevant to such investor.
METHOD OF DISTRIBUTION
The offered certificates offered by the prospectus and the related
prospectus supplements will be offered in series. The distribution of the
offered certificates may be effected from time to time in one or more
transactions, including negotiated transactions, at a fixed public offering
price or at varying prices to be determined at the time of sale or at the time
of commitment therefor. The prospectus supplement for the offered certificates
of each series will, as to each class of such certificates, set forth the
method of the offering, either the initial public offering price or the method
by which the price at which the certificates of such class will be sold to the
public can be determined, any class or classes of offered certificates, or
portions thereof, that will be sold to affiliates of the depositor, the amount
of any underwriting discounts, concessions and commissions to underwriters, any
discounts or commissions to be allowed to dealers and the proceeds of the
offering to the depositor. If so specified in the prospectus supplement, the
offered certificates of a series will be distributed in a firm commitment
underwriting, subject to the terms and conditions of the underwriting
agreement, by Wachovia Capital Markets, LLC, acting as underwriter with other
underwriters, if any, named in the prospectus supplement. Alternatively, the
prospectus supplement may specify that offered certificates will be distributed
by Wachovia Capital Markets, LLC acting as agent. If Wachovia Capital Markets,
LLC acts as agent in the sale of offered certificates, Wachovia Capital
Markets, LLC will receive a selling commission with respect to such offered
certificates, depending on market conditions, expressed as a percentage of the
aggregate certificate balance or notional amount of such offered certificates
as of the date of issuance. The exact percentage for each series of
certificates will be disclosed in the prospectus supplement. To the extent that
Wachovia Capital Markets, LLC elects to purchase offered certificates as
principal, Wachovia Capital Markets, LLC may realize losses or profits based
upon the difference between its purchase price and the sales price. The
prospectus supplement with respect to any series offered other than through
underwriters will contain information regarding the nature of such offering and
any agreements to be entered into between the depositor or any affiliate of the
depositor and purchasers of offered certificates of such series.
This prospectus and prospectus supplements also may be used by the
depositor, Wachovia Capital Markets, LLC, an affiliate of the depositor, and
any other affiliate of the depositor when required under the federal securities
laws in connection with offers and sales of offered certificates in furtherance
of market-making activities in offered certificates. Wachovia Capital Markets,
LLC or any such other affiliate may act as principal or agent in such
transactions. Such sales will be made at prices related to prevailing market
prices at the time of sale or otherwise.
If so specified in a prospectus supplement, all or a portion of one or
more classes of the offered certificates identified in the prospectus
supplement may be retained or sold by the depositor either directly or
indirectly through an underwriter, including Wachovia Capital Markets, LLC to
one or more affiliates of the depositor. This prospectus and prospectus
supplements may be used by any such affiliate to resell offered certificates
publicly or privately to affiliated or unaffiliated parties either directly or
indirectly through an underwriter, including Wachovia Capital Markets, LLC.
114
The depositor will agree to indemnify Wachovia Capital Markets, LLC and
any underwriters and their respective controlling persons against certain civil
liabilities, including liabilities under the Securities Act of 1933, as
amended, or will contribute to payments that any such person may be required to
make in respect thereof.
In the ordinary course of business, Wachovia Capital Markets, LLC and the
depositor may engage in various securities and financing transactions,
including repurchase agreements to provide interim financing of the depositor's
mortgage loans pending the sale of such mortgage loans or interests therein,
including the certificates.
The depositor anticipates that the offered certificates will be sold
primarily to institutional investors which may include affiliates of the
depositor. 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.
Certificateholders should consult with their legal advisors in this regard
prior to any such reoffer or sale.
As to each series of certificates, only those classes rated in an
investment grade rating category by any rating agency will be offered hereby.
Any class of certificates not offered by this prospectus may be initially
retained by the depositor, and may be sold by the depositor at any time to one
or more institutional investors.
Underwriters or agents and their associates may be customers of (including
borrowers from), engage in transactions with, and/or perform services for the
depositor, its affiliates, and the trustee in the ordinary course of business.
LEGAL MATTERS
Unless otherwise specified in the 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, Charlotte, North Carolina.
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 prospectus supplement.
RATINGS
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 commercial 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 commercial 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 in extreme cases might fail to recoup their initial
investments.
There can be no assurance that any rating agency not requested to rate the
offered certificates will not nonetheless issue a rating to any or all classes
thereof and, if so, what such rating or ratings would be. A rating assigned to
any class of offered certificates by a rating agency that has not been
requested by the depositor to do so may be lower than the rating assigned to a
class of offered certificates by one or more of the rating agencies that has
been requested by the depositor to rate the offered certificates.
115
A security rating is not a recommendation to buy, sell or hold securities
and may be subject to qualification, revision or withdrawal at any time by the
assigning rating organization. Each security rating should be evaluated
independently of another security rating.
INDEX OF PRINCIPAL DEFINITIONS
"Accrual Certificates" means certificates which provide for distributions
of accrued interest thereon commencing only following the occurrence of certain
events, such as the retirement of one or more other classes of certificates of
such series.
"Accrued Certificate Interest" means, with respect to each class of
certificates and each distribution date, other than certain classes of Stripped
Interest Certificates and REMIC Residual certificates, the amount equal to the
interest accrued for a specified period (generally the period between
distribution dates) on the outstanding certificate balance of those
certificates immediately prior to such distribution date, at the applicable
pass-through rate, as described under "Distributions of Interest on the
Certificates" in this prospectus.
"Available Distribution Amount" means, for any series of certificates and
any distribution date, 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 certificateholders of that series on that date. The
particular components of the Available Distribution Amount for any series on
each distribution date will be more specifically described in the prospectus
supplement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Constant Prepayment Rate" or "CPR" means a rate that represents an
assumed constant rate of prepayment each month (which is expressed on a per
annum basis) relative to the outstanding principal balance of a pool of
mortgage loans for the life of such mortgage loans.
"Cut-Off Date" means the date on which the ownership of the mortgage loans
of a related series of certificates and rights to payment thereon are deemed
transferred to the trust fund, as specified in the related prospectus
supplement.
"Debt Service Coverage Ratio" means, with respect to a mortgage loan at
any given time and as more fully set forth in the prospectus supplement, the
ratio of (i) the Net Operating Income of the mortgaged property for a
twelve-month period to (ii) the annualized scheduled payments on the mortgage
loan and on any other loan that is secured by a lien on the mortgaged property
prior to the lien of the mortgage.
"DTC" means The Depository Trust Company.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Farmer Mac" or "FAMC" means the Federal Agricultural Mortgage
Corporation.
"Loan-to-Value Ratio" means, as more fully set forth in the prospectus
supplement, the ratio (expressed as a percentage) of (i) the then outstanding
principal balance of the mortgage loan and the outstanding principal balance of
any loan secured by a lien on the mortgaged property prior to the lien of the
mortgage, to (ii) the value of the mortgaged property, which is generally its
fair market value determined in an appraisal obtained by the originator at the
origination of such loan.
"Net Operating Income" means, as more fully set forth in the prospectus
supplement and for any given period, the total operating revenues derived from
a mortgaged property, minus the total operating expenses incurred in respect of
the mortgaged property other than (i) non-cash items such as depreciation and
amortization, (ii) capital expenditures and (iii) debt service on loans
(including the mortgage loan) secured by liens on the mortgaged property.
"REMIC" means a "real estate mortgage investment conduit" under the Code.
"REMIC Certificate" means a certificate issued by a trust fund relating to
a series of certificate where an election is made to treat the trust fund as a
REMIC.
"REO Property" means any mortgaged property acquired on behalf of the
trust fund in respect of a defaulted mortgage loan through foreclosure, deed in
lieu of foreclosure or otherwise.
116
"SMMEA" means the Secondary Mortgage Market Enhancement Act of 1984, as
amended.
"Standard Prepayment Assumption" or "SPA" means a rate that represents an
assumed variable rate of prepayment each month (which is expressed on a per
annum basis) relative to the then outstanding principal balance of a pool of
loans, with different prepayment assumptions often expressed as percentages of
SPA.
"Stripped Interest Certificates" means certificates which are entitled to
interest distributions with disproportionately small, nominal or no principal
distributions.
"Stripped Principal Certificates" means certificates which are entitled to
principal distributions with disproportionately small, nominal or no interest
distributions.
117
The file "WBCMT 2004-C10 Prospectus Annexes A1-5.xls", which is a
Microsoft Excel*, Version 5.0 spreadsheet, that provides in electronic format
certain information shown in Annexes A-1, A-1A, A-1B, A-2, A-3, A-4 and A-5. In
addition, the spreadsheet provides certain Mortgage Loan and Mortgaged Property
information contained in Annex A-1 and information detailing the changes in the
amount of monthly payments with regard to certain Mortgage Loans. As described
under "DESCRIPTION OF THE CERTIFICATES--Reports to Certificateholders;
Available Information" in the prospectus supplement, each month the Paying
Agent will make available through its internet website an electronic file in
CMSA format updating and supplementing the information contained in the "WBCMT
2004-C10 Prospectus Annexes A1-5.xls" file.
To open the file, insert the diskette into your floppy drive. Copy the
file "WBCMT 2004-C10 Prospectus Annexes A1-5.xls" to your hard drive or network
drive. Copy the file "WBCMT 2004-C10 Prospectus Annexes A1-5.xls" as you would
normally open any spreadsheet in Microsoft Excel. After the file is opened, a
securities law legend will be displayed. READ THE LEGEND CAREFULLY. To view the
data, see the worksheets labeled "Disclaimer", "A-1 Loan and Property Schedule"
or "A-2 Multifamily Data" or "A-3 Reserve Accounts" or "A-4 Commercial Tenant
Schedule" or "A-5 Cross-Collateralized Pool", respectively.
*Microsoft Excel is a registered trademark of Microsoft Corporation.
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UNTIL MAY 27, 2004, ALL DEALERS THAT EFFECT TRANSACTIONS IN THE OFFERED
CERTIFICATES, WHETHER OR NOT PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO
DELIVER A PROSPECTUS SUPPLEMENT OR PROSPECTUS. THIS IS IN ADDITION TO THE
DEALERS' OBLIGATION TO DELIVER A PROSPECTUS SUPPLEMENT AND PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
SUMMARY OF PROSPECTUS SUPPLEMENT ....................... S-5
RISK FACTORS ........................................... S-44
DESCRIPTION OF THE MORTGAGE POOL ....................... S-92
SERVICING OF THE MORTGAGE LOANS ........................ S-188
DESCRIPTION OF THE CERTIFICATES ........................ S-204
YIELD AND MATURITY CONSIDERATIONS ...................... S-238
USE OF PROCEEDS ........................................ S-245
MATERIAL FEDERAL INCOME TAX
CONSEQUENCES ......................................... S-245
ERISA CONSIDERATIONS ................................... S-247
LEGAL INVESTMENT ....................................... S-249
METHOD OF DISTRIBUTION ................................. S-250
LEGAL MATTERS .......................................... S-251
RATINGS ................................................ S-251
INDEX OF DEFINED TERMS ................................. S-253
Annex A-1 .............................................. A-1
Annex A-1A ............................................. A-1A
Annex A-1B ............................................. A-1B
Annex A-2 .............................................. A-2
Annex A-3 .............................................. A-3
Annex A-4 .............................................. A-4
Annex A-5 .............................................. A-5
Annex B ................................................ B-1
Annex C ................................................ C-1
PROSPECTUS
Additional Information ................................. 6
Incorporation of Certain Information By Reference ...... 6
Summary of Prospectus .................................. 7
Risk Factors ........................................... 14
Description of the Trust Funds ......................... 34
Yield Considerations ................................... 40
The Depositor .......................................... 45
Use of Proceeds ........................................ 45
Description of the Certificates ........................ 46
Description of the Pooling and Servicing Agreements..... 53
Description of Credit Support .......................... 67
Certain Legal Aspects of Mortgage Loans and
Leases ............................................... 69
Material Federal Income Tax Consequences ............... 84
State and Other Tax Consequences ....................... 108
ERISA Considerations ................................... 109
Legal Investment ....................................... 112
Method of Distribution ................................. 114
Legal Matters .......................................... 115
Financial Information .................................. 115
Ratings ................................................ 115
Index of Principal Definitions ......................... 116
$924,858,000
(APPROXIMATE)
WACHOVIA COMMERCIAL
MORTGAGE SECURITIES, INC.
(DEPOSITOR)
WACHOVIA BANK COMMERCIAL
MORTGAGE TRUST
COMMERCIAL MORTGAGE
PASS-THROUGH
CERTIFICATES SERIES 2004-C10
----------------
PROSPECTUS SUPPLEMENT
----------------
WACHOVIA SECURITIES
CITIGROUP
BANC OF AMERICA SECURITIES LLC
GOLDMAN, SACHS & CO.
FEBRUARY 12, 2004
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
$924,858,000 (APPROXIMATE)
WACHOVIA BANK COMMERCIAL MORTGAGE TRUST
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES SERIES 2004-C10