Filed Pursuant to Rule 424(b)(5)
Registration File No.: 333-108944
PROSPECTUS SUPPLEMENT
(TO ACCOMPANY PROSPECTUS DATED APRIL 9, 2004)
$798,454,000 (APPROXIMATE)
(OFFERED CERTIFICATES)
WACHOVIA BANK COMMERCIAL MORTGAGE TRUST
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2004-C11
WACHOVIA COMMERCIAL MORTGAGE SECURITIES, INC.
(DEPOSITOR)
YOU SHOULD CAREFULLY CONSIDER THE RISK FACTORS BEGINNING ON PAGE S-45 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 April 9, 2004.
THE TRUST FUND:
o As of April 11, 2004, the mortgage loans included in the trust fund will
have an aggregate principal balance of approximately $1,041,488,309.
o The trust fund will consist of a pool of 54 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 or acquired by Wachovia Bank,
National Association, Artesia Mortgage Capital Corporation, Eurohypo AG,
New York Branch and Citigroup Global Markets Realty Corp.
THE CERTIFICATES:
o The trust fund will issue twenty-five classes of certificates.
o Only the nine classes of offered certificates described in the 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 ......... $ 56,200,000 5.396% 3.3330% March 15, 2009 929766 QR 7 AAA/Aaa
Class A-2 ......... $ 70,000,000 6.721% 4.2600% April 15, 2009 929766 QS 5 AAA/Aaa
Class A-3 ......... $ 87,715,000 8.422% 4.7190% April 15, 2011 929766 QT 3 AAA/Aaa
Class A-4 ......... $ 52,829,000 5.072% 5.0300% June 15, 2013 929766 QU 0 AAA/Aaa
Class A-5 ......... $454,900,000 43.678% 5.2150%(4) April 15, 2014 929766 QV 8 AAA/Aaa
Class B ........... $ 28,641,000 2.750% 5.3060%(4) April 15, 2014 929766 QW 6 AA/Aa2
Class C ........... $ 13,018,000 1.250% 5.3450%(4) April 15, 2014 929766 QX 4 AA-/Aa3
Class D ........... $ 23,434,000 2.250% 5.2867%(5) April 15, 2014 929766 QY 2 A/A2
Class E ........... $ 11,717,000 1.125% 5.3367%(6) April 15, 2014 929766 QZ 9 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 16.90% of the Class A-5 certificates.
Wachovia Capital Markets, LLC is acting as sole bookrunner with respect to the
remainder of the Class A-5 certificates and all other classes of offered
certificates. J.P. Morgan Securities Inc. and Goldman, Sachs & Co. are acting as
co-managers for the offering. Wachovia Capital Markets, LLC, Citigroup Global
Markets Inc., J.P. Morgan Securities Inc. 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 April 1, 2004 before deducting expenses.
We expect that delivery of the offered certificates will be made in
book-entry form on or about April 30, 2004.
WACHOVIA SECURITIES CITIGROUP
JPMORGAN GOLDMAN, SACHS & CO.
April 21, 2004
WACHOVIA BANK COMMERCIAL MORTGAGE TRUST
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES WBCMT 2004-C11
GEOGRAPHIC OVERVIEW OF MORTGAGE POOL (1)
[MAP OMITTED]
WASHINGTON CONNECTICUT ARIZONA
3 properties 2 properties 4 properties
$18,001,798 $134,300,000 $44,189,193
1.7% of total 12.9% of total 4.2% of total
IDAHO NEW JERSEY SOUTHERN CALIFORNIA(2)
1 property 5 properties 6 properties
$1,897,937 $4,410,440 $88,907,997
0.2% of total 0.4% of total 8.5% of total
UTAH VIRGINIA CALIFORNIA
3 properties 4 properties 9 properties
$15,088,514 $20,708,030 $129,805,997
1.4% of total 2.0% of total 12.5% of total
WYOMING NORTH CAROLINA NORTHERN CALIFORNIA(2)
1 property 2 properties 3 properties
$3,127,360 $99,905,806 $40,898,000
0.3% of total 9.6% of total 3.9% of total
KANSAS SOUTH CAROLINA NEVADA
4 properties 5 properties 1 property
$43,946,376 $7,183,351 $1,742,232
4.2% of total 0.7% of total 0.2% of total
MISSOURI GEORGIA
1 property 3 properties
$2,494,636 $13,712,719
0.2% of total 1.3% of total
ILLINOIS FLORIDA
1 property 10 properties
$3,264,000 $172,041,889
0.3% of total 16.5% of total
MICHIGAN ALABAMA
1 property 2 properties
$26,082,959 $28,224,940
2.5% of total 2.7% of total
OHIO TENNESSEE
2 properties 1 property
$6,218,902 $4,100,000
0.6% of total 0.4% of total
PENNSYLVANIA TEXAS
5 properties 6 properties
$11,657,309 $13,199,777
1.1% of total 1.3% of total
NEW YORK OKLAHOMA
5 properties 1 property
$168,300,197 $18,240,000
16.2% of total 1.8% of total
MASSACHUSETTS COLORADO
1 property 3 properties
$11,456,334 $38,187,612
1.1% of total 3.7% of total
MORTGAGED PROPERTIES BY PROPERTY TYPE [GRAPHIC OMITTED] (greater than) 10.0%
[GRAPHIC OMITTED] of Initial Pool Balance
Mobile Home Park 6.6% [GRAPHIC OMITTED] (greater than) 5.0% - 10.0%
Mixed Use 0.3% of Initial Pool Balance
Multifamily 13.1%
Retail 49.9% [GRAPHIC OMITTED] (greater than) 1.0% - 5.0%
Industrial 1.3% of Initial Pool Balance
Self Storage 0.6%
Office 28.1% [GRAPHIC OMITTED] (less than or equal to) 1.0%
of Initial Pool Balance
GEOGRAPHIC OVERVIEW OF MORTGAGED PROPERTIES
(1) Because this table presents information relating to the Mortgaged Properties
and not the Mortgage Loans, the information for the Mortgage Loans secured by
more than one Mortgaged Property is based on allocated amounts(allocating
the Mortgage Loan principal balance to each of those properties by the appraised
values of the Mortgaged Properties or the allocated loan amount as detailed in
the related Mortgaged Loan documents).
(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.
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-45 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-273 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 January 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.
(4) The pass-through rates applicable to the Class A-5, Class B and Class C
certificates for any distribution date will be subject to a maximum rate of
the applicable weighted average net mortgage rate (calculated as described
herein) for such date.
(5) The pass-through rate applicable to the Class D certificates for any
distribution date will be equal to the applicable weighted average net
mortgage rate (calculated as described herein) for such date less 0.05% per
annum.
(6) The pass-through rate applicable to the Class E certificates for any
distribution date will be equal to the applicable weighted average net
mortgage rate (calculated as described herein) for such date.
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-12
THE CERTIFICATES ................................................................... S-12
THE MORTGAGE LOANS ................................................................. S-32
RISK FACTORS ....................................................................... S-45
DESCRIPTION OF THE MORTGAGE POOL ................................................... S-93
General ........................................................................... S-93
Mortgage Loan History ............................................................. S-94
Certain Terms and Conditions of the Mortgage Loans ................................ S-95
Assessments of Property Condition ................................................. S-99
Co-Lender Loans ................................................................... S-100
Mezzanine Loans ................................................................... S-111
Additional Mortgage Loan Information .............................................. S-111
Twenty Largest Mortgage Loans ..................................................... S-150
The Mortgage Loan Sellers ......................................................... S-199
Underwriting Standards ............................................................ S-200
Assignment of the Mortgage Loans; Repurchases and Substitutions ................... S-201
Representations and Warranties; Repurchases and Substitutions ..................... S-203
Repurchase or Substitution of Cross-Collateralized Mortgage Loans ................. S-207
Changes in Mortgage Pool Characteristics .......................................... S-207
SERVICING OF THE MORTGAGE LOANS .................................................... S-208
General ........................................................................... S-208
The Master Servicer and the Special Servicer ...................................... S-209
Servicing of the 11 Madison Avenue Loan and the Starrett-Lehigh Building Loan ..... S-213
Servicing and Other Compensation and Payment of Expenses .......................... S-214
Modifications, Waivers and Amendments ............................................. S-217
The Controlling Class Representative .............................................. S-218
Defaulted Mortgage Loans; REO Properties; Purchase Option ......................... S-222
Inspections; Collection of Operating Information .................................. S-224
DESCRIPTION OF THE CERTIFICATES .................................................... S-225
General ........................................................................... S-225
Registration and Denominations .................................................... S-225
Certificate Balances and Notional Amount .......................................... S-227
Pass-Through Rates ................................................................ S-230
Distributions ..................................................................... S-233
Subordination; Allocation of Losses and Certain Expenses .......................... S-243
P&I Advances ...................................................................... S-246
Appraisal Reductions .............................................................. S-248
Reports to Certificateholders; Available Information .............................. S-250
Assumed Final Distribution Date; Rated Final Distribution Date .................... S-254
Voting Rights ..................................................................... S-255
Termination ....................................................................... S-255
The Trustee ....................................................................... S-256
YIELD AND MATURITY CONSIDERATIONS .................................................. S-258
Yield Considerations .............................................................. S-258
Weighted Average Life ............................................................. S-261
S-3
PAGE
------
USE OF PROCEEDS .................................................................... S-265
MATERIAL FEDERAL INCOME TAX CONSEQUENCES ........................................... S-265
General ........................................................................... S-265
Taxation of the Offered Certificates .............................................. S-266
ERISA CONSIDERATIONS ............................................................... S-267
LEGAL INVESTMENT ................................................................... S-270
METHOD OF DISTRIBUTION ............................................................. S-270
LEGAL MATTERS ...................................................................... S-271
RATINGS ............................................................................ S-272
INDEX OF DEFINED TERMS ............................................................. S-273
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, CLASS A-5 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 APRIL 1, 2004 WITH RESPECT TO 6
MORTGAGE LOANS AND APRIL 11, 2004 WITH RESPECT TO 48 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-C11, 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, 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 WEIGHTED CASH FLOW
BALANCE OR OF CUT-OFF PASS-THROUGH INITIAL AVERAGE OR PRINCIPAL EXPECTED
NOTIONAL DATE POOL CREDIT RATE PASS-THROUGH LIFE WINDOW S&P/MOODY'S
CLASS AMOUNT(1) BALANCE SUPPORT DESCRIPTION RATE (YEARS)(2) (MON./YR.)(2) RATING(3)
- ------------- ------------------ ------------ ---------- -------------- -------------- ------------ ------------------ ------------
Class A-1 ... $ 56,200,000 5.396% 15.250% Fixed 3.3330% 2.70 05/04 - 03/09 AAA/Aaa
Class A-2 ... $ 70,000,000 6.721% 15.250% Fixed 4.2600% 4.90 03/09 - 04/09 AAA/Aaa
Class A-3 ... $ 87,715,000 8.422% 15.250% Fixed 4.7190% 6.50 04/09 - 04/11 AAA/Aaa
Class A-4 ... $ 52,829,000 5.072% 15.250% Fixed 5.0300% 8.29 04/11 - 06/13 AAA/Aaa
Class A-5 ... $ 454,900,000 43.678% 15.250% Fixed(4) 5.2150% 9.77 06/13 - 04/14 AAA/Aaa
Class B ..... $ 28,641,000 2.750% 12.500% Fixed(4) 5.3060% 9.96 04/14 - 04/14 AA/Aa2
Class C ..... $ 13,018,000 1.250% 11.250% Fixed(4) 5.3450% 9.96 04/14 - 04/14 AA-/Aa3
Class D ..... $ 23,434,000 2.250% 9.000% WAC(5) 5.2867% 9.96 04/14 - 04/14 A/A2
Class E ..... $ 11,717,000 1.125% 7.875% WAC(6) 5.3367% 9.96 04/14 - 04/14 A-/A3
Class A-1A.. $ 161,017,000 15.460% 15.250% Fixed(4) 4.9860% (7) (7) AAA/Aaa
Class F .... $ 14,320,000 1.375% 6.500% WAC(6) 5.3367% (7) (7) BBB+/Baa1
Class G .... $ 13,019,000 1.250% 5.250% WAC(6) 5.3367% (7) (7) BBB/Baa2
Class H .... $ 10,415,000 1.000% 4.250% WAC(6) 5.3367% (7) (7) BBB-/Baa3
Class J .... $ 16,924,000 1.625% 2.625% Fixed(4) 5.3100% (7) (7) BB+/Ba1
Class K .... $ 5,207,000 0.500% 2.125% Fixed(4) 5.3100% (7) (7) BB/Ba2
Class L .... $ 2,604,000 0.250% 1.875% Fixed(4) 5.3100% (7) (7) BB-/Ba3
Class M .... $ 2,604,000 0.250% 1.625% Fixed(4) 5.3100% (7) (7) B+/B1
Class N .... $ 2,603,000 0.250% 1.375% Fixed(4) 5.3100% (7) (7) B/B2
Class O .... $ 2,604,000 0.250% 1.125% Fixed(4) 5.3100% (7) (7) B-/B3
Class P .... $ 11,717,309 1.125% 0.000% Fixed(4) 5.3100% (7) (7) NR
Class X-P .. $ 1,010,357,000 N/A N/A WAC-IO(8) 0.3338% (8) (8) AAA/Aaa
Class X-C .. $ 1,041,488,309 N/A N/A WAC-IO(8) 0.0347% (8) (8) AAA/Aaa
- ----------
(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) The pass-through rates applicable to the Class A-5, Class A-1A, Class B,
Class C, Class J, Class K, Class L, Class M, Class N, Class O and Class P
certificates for any distribution date will be subject to a maximum rate of
the applicable weighted average net mortgage rate (calculated as described
herein) for such date.
(5) The pass-through rate applicable to the Class D certificates for any
distribution date will be equal to the applicable weighted average net
mortgage rate (calculated as described herein) for such date less 0.05% per
annum.
S-6
(6) The pass-through rates applicable to the Class E, Class F, Class G and
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.
(7) 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.
(8) 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
[GRAPHIC OMITTED]
- --- 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 April 1, 2004,
by and among the depositor, the master
servicer, the special servicer 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, the
special servicer of the 11 Madison Avenue loan
under the pooling and servicing agreement
entered into in connection with the issuance of
the Wachovia Bank Commercial Mortgage Trust,
Commercial Mortgage Pass-Through Certificates,
Series 2004-C10, 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, Eurohypo AG, New
York Branch 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
or acquired 35 of the mortgage loans to be
included in the trust fund representing 75.8%
of the mortgage pool (29 mortgage loans in loan
group 1 or 82.8% and 6 mortgage loans in loan
group 2 or 37.5%). Artesia Mortgage Capital
Corporation originated 14 of the mortgage loans
to be included in the trust fund representing
8.6% of the mortgage pool (8 mortgage loans in
loan group 1 or 2.9% and 6 mortgage loans in
loan group 2 or 40.2%). Eurohypo AG, New York
Branch originated 2 of the mortgage loans to be
included in the trust fund
S-8
representing 8.2% of the mortgage pool (2
mortgage loans in loan group 1 or 9.6%).
Citigroup Global Markets Realty Corp.
originated 3 of the mortgage loans to be
included in the trust fund representing 7.4% of
the mortgage pool (2 mortgage loans in loan
group 1 or 4.6% and 1 mortgage loan in loan
group 2 or 22.4%).
THE MASTER SERVICER........... Wachovia Bank, National Association. Wachovia
Bank, National Association is our affiliate,
one of the mortgage loan sellers 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 and the companion
loans which are not part of the trust fund;
provided, however, the 11 Madison Avenue
mortgage loan, the Starrett-Lehigh Building
mortgage loan, the 11 Madison Avenue companion
loans and the Starrett-Lehigh Building
companion loans will be serviced under the
pooling and servicing agreement entered into in
connection with the issuance of the Wachovia
Bank Commercial Mortgage Trust, Commercial
Mortgage Pass-Through Certificates, Series
2004-C10. The master servicer under the
2004-C10 pooling and servicing agreement is
Wachovia Bank, National Association.
See "SERVICING OF THE MORTGAGE LOANS--The
Master Servicer and the Special Servicer" and
"--Servicing of the 11 Madison Avenue Loan and
the Starrett-Lehigh Building Loan" in this
prospectus supplement.
THE SPECIAL SERVICER.......... Initially, Lennar Partners, Inc. The special
servicer will be responsible for performing
certain servicing functions with respect to the
mortgage loans included in the trust fund and
three (3) companion loans which are not part of
the trust fund that, in general, are in default
or as to which default is imminent; provided,
however, the 11 Madison Avenue mortgage loan,
the Starrett-Lehigh Building mortgage loan, the
11 Madison Avenue companion loans and the
Starrett-Lehigh Building companion loans will
be specially serviced under the pooling and
servicing agreement entered into in connection
with the issuance of the Wachovia Bank
Commercial Mortgage Trust, Commercial Mortgage
Pass-Through Certificates, Series 2004-C10. The
special servicer under the 2004-C10 pooling and
servicing agreement is (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.
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
S-9
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 issued
under the pooling and servicing agreement
entered into in connection with the issuance
of the Wachovia Bank Commercial Mortgage
Trust, Commercial Mortgage Pass-Through
Certificates, Series 2004-C10, may appoint or
remove the special servicer with respect to
the Starrett-Lehigh Building mortgage loan.
With respect to the Brass Mill Center &
Commons mortgage loan and the Four Seasons
Town Centre mortgage loan, except during the
continuance of a control appraisal period
under the related intercreditor agreement, the
holder of the subordinate companion loan
related to the Brass Mill Center & Commons
mortgage loan and the Four Seasons Town Centre
mortgage loan, as applicable, may appoint or
remove the special servicer with respect to
Brass Mill Center & Commons mortgage loan and
the Four Seasons Town Centre mortgage loan, as
applicable. 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 CDP Capital Real Estate
Advisory Inc., or an affiliate, will purchase
certain non-offered classes of certificates
(including the Class P certificates).
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., J.P. Morgan Securities
Inc. 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, the
special servicer of the 11 Madison Avenue
mortgage loan under the 2004-C10 pooling and
servicing agreement 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
S-10
loan sellers. Wachovia Capital Markets, LLC
and Citigroup Global Markets Inc. are acting
as co-lead managers for this offering. J.P.
Morgan Securities Inc. and Goldman, Sachs &
Co. are acting as co-managers for this
offering. Citigroup Global Markets Inc. is
acting as sole bookrunner with respect to
16.90% of the Class A-5 certificates. Wachovia
Capital Markets, LLC is acting as sole
bookrunner with respect to the remainder of
the Class A-5 certificates and all other
classes of offered certificates.
S-11
IMPORTANT DATES AND PERIODS
CLOSING DATE.................. On or about April 30, 2004.
CUT-OFF DATE.................. For 48 mortgage loans, representing 83.2% of
the mortgage pool (36 mortgage loans in loan
group 1 or 84.2% and 12 mortgage loans in loan
group 2 or 77.6%), April 11, 2004; and for 6 of
the mortgage loans, representing 16.8% of the
mortgage pool (5 mortgage loans in loan group 1
or 15.8% and 1 mortgage loan in loan group 2 or
22.4%), April 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 May 2004.
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 9
classes of certificates of our Commercial
Mortgage Pass-Through Certificates, Series
2004-C11 pursuant to this prospectus
supplement:
Class A-1
Class A-2
Class A-3
Class A-4
Class A-5
Class B
Class C
Class D
Class E
S-12
PRIORITY OF DISTRIBUTIONS..... On each distribution date, the owners of the
certificates will be entitled to distributions
of payments or other collections on the
mortgage loans 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, Class A-5 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) 1 mortgage loan that
is secured by a multifamily property and
(iii) 2 mortgage loans that are secured by
mobile home park properties.
o Loan group 2 will consist of 12 mortgage
loans that are secured by multifamily
properties and 1 mortgage loan that is
secured by a pool of mobile home park
properties.
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:
----------------------------------------------
Interest, concurrently (i) pro rata, on the
Class A-1, Class A-2, Class A-3, Class A-4 and
Class A-5 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.
----------------------------------------------
S-13
----------------------------------------------
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.
----------------------------------------------
----------------------------------------------
Principal of the Class A-5 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-1A certificates, up to
the principal distribution amount relating to
loan group 2 and, after the Class A-5
certificate balance has been reduced to zero,
the principal distribution amount relating to
loan group 1 remaining after payments to the
Class A-5 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, Class A-5 and Class A-1A
certificates, pro rata, for any realized loss
and trust fund expenses borne by such classes.
----------------------------------------------
S-14
----------------------------------------------
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.
----------------------------------------------
----------------------------------------------
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.
----------------------------------------------
S-15
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, Class A-5 and 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, Class A-5 and Class A-1A
certificates. See "DESCRIPTION OF THE
CERTIFICATES--Distributions" in this prospectus
supplement.
INTEREST...................... On each distribution date, each class of
certificates (other than the Class Z, Class R-I
and Class R-II 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
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.
o 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-5, Class
A-1A, Class X-C and Class X-P certificates,
interest distributions on the Class A-1,
Class A-2, Class A-3, Class A-4 and Class
A-5 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.
S-16
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:
(i) until the distribution date in October
2004, the sum of (a) the lesser of
$52,751,000 and the certificate balance
of the Class A-1 certificates, (b) the
lesser of $160,674,000 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 A-5, Class
B, Class C, Class D, Class E, Class F,
Class G, Class H and Class J
certificates;
(ii) after the distribution date in October
2004, through and including the
distribution date in April 2005, the sum
of (a) the lesser of $48,322,000 and the
certificate balance of the Class A-1
certificates, (b) the lesser of
$160,227,000 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 A-5, Class B, Class C, Class D,
Class E, Class F, Class G, Class H and
Class J certificates;
(iii) after the distribution date in April
2005, through and including the
distribution date in October 2005, the
sum of (a) the lesser of $29,639,000 and
the certificate balance of the Class A-1
certificates, (b) the lesser of
$157,050,000 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 A-5, Class B, Class C, Class D,
Class E, Class F, Class G, Class H and
Class J certificates;
(iv) after the distribution date in October
2005, through and including the
distribution date in April 2006, the sum
of (a) the lesser of $8,278,000 and the
certificate balance of the Class A-1
certificates, (b) the lesser of
$153,363,000 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 A-5, Class B, Class C, Class D,
Class E, Class F, Class G, Class H and
Class J certificates;
(v) after the distribution date in April
2006, through and including the
distribution date in October 2006, the
sum of (a) the lesser of $57,010,000 and
the certificate balance of the Class A-2
certificates, (b) the lesser of
$149,455,000 and the certificate balance
of the Class
S-17
A-1A certificates, (c) the aggregate
certificate balances of the Class A-3,
Class A-4, Class A-5, Class B, Class C,
Class D, Class E, Class F, Class G and
Class H certificates and (d) the lesser
of $13,852,000 and the certificate
balance of the Class J certificates;
(vi) after the distribution date in October
2006, through and including the
distribution date in April 2007, the sum
of (a) the lesser of $35,940,000 and the
certificate balance of the Class A-2
certificates, (b) the lesser of
$145,595,000 and the certificate balance
of the Class A-1A certificates, (c) the
aggregate certificate balances of the
Class A-3, Class A-4, Class A-5, Class
B, Class C, Class D, Class E, Class F,
Class G and Class H certificates and (d)
the lesser of $3,833,000 and the
certificate balance of the Class J
certificates;
(vii) after the distribution date in April
2007, through and including the
distribution date in October 2007, the
sum of (a) the lesser of $15,470,000 and
the certificate balance of the Class A-2
certificates, (b) the lesser of
$141,906,000 and the certificate balance
of the Class A-1A certificates, (c) the
aggregate certificate balances of the
Class A-3, Class A-4, Class A-5, Class
B, Class C, Class D, Class E, Class F
and Class G certificates and (d) the
lesser of $4,593,000 and the certificate
balance of the Class H certificates;
(viii) after the distribution date in October
2007, through and including the
distribution date in April 2008, the sum
of (a) the lesser of $83,127,000 and the
certificate balance of the Class A-3
certificates, (b) the lesser of
$138,287,000 and the certificate balance
of the Class A-1A certificates, (c) the
aggregate certificate balances of the
Class A-4, Class A-5, Class B, Class C,
Class D, Class E and Class F
certificates and (d) the lesser of
$8,315,000 and the certificate balance
of the Class G certificates;
(ix) after the distribution date in April
2008, through and including the
distribution date in October 2008, the
sum of (a) the lesser of $63,256,000 and
the certificate balance of the Class A-3
certificates, (b) the lesser of
$134,808,000 and the certificate balance
of the Class A-1A certificates, (c) the
aggregate certificate balances of the
Class A-4, Class A-5, Class B, Class C,
Class D and Class E certificates and (d)
the lesser of $13,689,000 and the
certificate balance of the Class F
certificates;
(x) after the distribution date in October
2008, through and including the
distribution date in April 2009, the sum
of (a) the lesser of $44,234,000 and the
certificate balance of the Class A-4
certificates, (b) the lesser of
S-18
$125,015,000 and the certificate balance
of the Class A-1A certificates, (c) the
aggregate certificate balances of the
Class A-5, Class B, Class C, Class D and
Class E certificates and (d) the lesser
of $5,087,000 and the certificate
balance of the Class F certificates;
(xi) after the distribution date in April
2009, through and including the
distribution date in October 2009, the
sum of (a) the lesser of $26,720,000 and
the certificate balance of the Class A-4
certificates, (b) the lesser of
$121,838,000 and the certificate balance
of the Class A-1A certificates, (c) the
aggregate certificate balances of the
Class A-5, Class B, Class C and Class D
certificates and (d) the lesser of
$9,125,000 and the certificate balance
of the Class E certificates;
(xii) after the distribution date in October
2009, through and including the
distribution date in April 2010, the sum
of (a) the lesser of $9,510,000 and the
certificate balance of the Class A-4
certificates, (b) the lesser of
$118,726,000 and the certificate balance
of the Class A-1A certificates, (c) the
aggregate certificate balances of the
Class A-5, Class B, Class C and Class D
certificates and (d) the lesser of
$1,785,000 and the certificate balance
of the Class E certificates;
(xiii) after the distribution date in April
2010, through and including the
distribution date in October 2010, the
sum of (a) the lesser of $447,928,000
and the certificate balance of the Class
A-5 certificates, (b) the lesser of
$115,748,000 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 $18,172,000 and the
certificate balance of the Class D
certificates;
(xiv) after the distribution date in October
2010, through and including the
distribution date in April 2011, the sum
of (a) the lesser of $393,398,000 and
the certificate balance of the Class A-5
certificates, (b) the lesser of
$73,724,000 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 $11,504,000 and the
certificate balance of the Class D
certificates;
(xv) after the distribution date in April
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, Class
R-I and Class R-II certificates) will accrue
interest on the basis of a 360-day year
consisting of twelve 30-day months.
S-19
The interest accrual period with respect to any
distribution date and any class of certificates
(other than the Class Z, 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-13 above, on
each distribution date, the trustee will
distribute interest to the holders of the
offered certificates and the Class X
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, Class A-5 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 Z, Class R-I and Class R-II
certificates) on each distribution date is set
forth under "OVERVIEW OF THE CERTIFICATES" in
this prospectus supplement.
The pass-through rate applicable to the Class
X-C certificates for the initial distribution
date will equal approximately 0.0347% 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,
S-20
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
April 2011, the Class X-C strip rate for each
Class X-C component will be calculated as
follows:
(i) 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;
(ii) 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;
(iii) 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
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(iv) 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 April 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 0.3338% 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
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
April 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).
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After the distribution date in April 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
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
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.
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PRINCIPAL DISTRIBUTIONS....... On the closing date, each class of
certificates (other than the Class X-C, Class
X-P, Class Z, 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, Class A-4 and Class A-5 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-5 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
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
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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, Class A-5 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 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,
Class A-5 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 or
the special servicer 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 pursuant to 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, 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, Class R-I and Class
R-II certificates) is provided by the
subordination of payments and allocation of any
losses to
S-25
such classes of certificates which have a later
alphabetical class designation (other than the
Class X-C and Class X-P certificates). The
certificate balance of a class of certificates
(other than the Class X-C, Class X-P, Class Z,
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, 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.
PERCENTAGE ORDER OF
ORIGINAL OF CUT-OFF APPLICATION
CERTIFICATE DATE POOL OF LOSSES
CLASS DESIGNATION BALANCE BALANCE AND EXPENSES
- -------------------------------- --------------- ------------ -------------
Class A-1 .................... $ 56,200,000 5.396% 6
Class A-2 .................... $ 70,000,000 6.721% 6
Class A-3 .................... $ 87,715,000 8.422% 6
Class A-4 .................... $ 52,829,000 5.072% 6
Class A-5 .................... $454,900,000 43.678% 6
Class A-1A ................... $161,017,000 15.460% 6
Class B ...................... $ 28,641,000 2.750% 5
Class C ...................... $ 13,018,000 1.250% 4
Class D ...................... $ 23,434,000 2.250% 3
Class E ...................... $ 11,717,000 1.125% 2
Other non-offered certificates
(excluding the Class X
certificates) ................ $ 82,017,309 7.875% 1
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 A-5, Class B,
Class C, Class D, Class E, Class F, Class G,
Class H and Class J 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, to the
most subordinate companion loan secured by the
related mortgaged property, second, to the
second most subordinate
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companion loan secured by the related mortgaged
property, third, to the third most subordinate
companion loan secured by the related mortgaged
property and fourth, pro rata, among the 4 pari
passu mortgage loans secured by the related
mortgaged property. The portion of those losses
and expenses that is allocated to the mortgage
loan that is included in the trust fund will be
allocated among the Series 2004-C11
certificates in the manner described above.
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 (2) pari passu mortgage
loans secured by the related mortgaged
property. The portion of those losses and
expenses that is allocated to the mortgage loan
that is included in the trust fund will be
allocated among the Series 2004-C11
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
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:
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
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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 April 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 ON OR BEFORE APRIL 2011
Mortgage interest rate .......................... 8%
Pass-through rate for applicable class .......... 6%
Discount rate ................................... 5%
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%)
------- = 33 1/3% = 10% x
8% - 5% 85% = 56 2/3%
See "DESCRIPTION OF THE CERTIFICATES--
Distributions--Allocation of Prepayment
Premiums and Yield Maintenance Charges" in this
prospectus supplement.
S-28
ALLOCATION OF
ADDITIONAL INTEREST........... On each distribution date, any additional
interest collected on a mortgage loan in the
trust with an anticipated repayment date during
the related collection period will be
distributed to the holders of the Class Z
certificates and will not be available to
provide credit support for other classes of
certificates or offset any interest shortfalls.
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 or 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 or interest.
With respect to the 11 Madison Avenue mortgage
loan and the Starrett-Lehigh Building mortgage
loan, in the event the master servicer under
the 2004-C10 pooling and servicing agreement
fails to receive one or more scheduled payments
of principal or interest (other than balloon
payments) on the 11 Madison Avenue mortgage
loan or the Starrett-Lehigh Building mortgage
loan by the last day of the related collection
period and such master servicer determines that
such scheduled payment of principal and
interest will be ultimately recoverable from
the 11 Madison Avenue mortgage loan or the
Starrett-Lehigh Building mortgage loan, as
applicable, the master servicer under the
2004-C10 pooling and servicing agreement, or if
it fails to do so, the trustee under the
2004-C10 pooling and servicing agreement, or if
it fails to do so, the master servicer under
the pooling and servicing agreement (so long as
it has received all information necessary to
make a recoverability determination), and if it
fails to do so, the trustee under the pooling
and servicing agreement is required to make a
principal or interest cash advance of such
scheduled payment of principal and interest to
the extent described in this prospectus
supplement.
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 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 the related scheduled payment)
and
S-29
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. 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 is less than
1.0% of the aggregate principal balance of the
pool of mortgage loans included in the trust
fund as of the cut-off date. See "DESCRIPTION
OF THE CERTIFICATES--Termination" in this
prospectus supplement and in the accompanying
prospectus.
The trust fund may also be terminated when the
Class A-1, Class A-2, Class A-3, Class A-4,
Class A-5, Class A-1A, Class B, Class C, Class
D and Class E certificates have been paid in
full and all of the remaining certificates are
held by a single certificateholder. See
"DESCRIPTION OF THE CERTIFICATES-- Termination"
in this prospectus supplement.
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 A-5, 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 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
S-30
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.
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 A-5
Class B
Class C
Class D
Class E
This is based on individual prohibited
transaction exemp tions granted to each of
Wachovia Capital Markets, LLC, Citigroup Global
Markets Inc., J.P. Morgan Securities Inc. and
Goldman, Sachs & Co. by the US Department of
Labor. See "ERISA CONSIDERATIONS" in this
prospectus supplement and in the accompanying
prospectus.
LEGAL INVESTMENT.............. 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.
S-31
See "LEGAL INVESTMENT" in this prospectus
supplement and in the accompanying prospectus.
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 A-5 ................... 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 5
mortgage loans with subordinate companion loans
is calculated without regard to the related
subordinate companion loans. With respect to
loan number 3 (the 11 Madison Avenue mortgage
loan) and loan number 5 (the Starrett-Lehigh
Building mortgage loan) 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 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.
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ALL MORTGAGE LOAN LOAN
LOANS GROUP 1 GROUP 2
-------------------- -------------------- --------------------
Number of mortgage loans ................ 54 41 13
Number of crossed loan pools ............ 2 1 1
Number of mortgaged properties .......... 86 66 20
Aggregate balance of all mortgage
loans ................................... $1,041,488,309 $ 880,470,720 $ 161,017,589
Number of mortgage loans with
balloon payments(1) ..................... 23 15 8
Aggregate balance of mortgage loans
with balloon payments(1) ................ $ 531,247,650 $ 412,297,941 $ 118,949,708
Number of mortgage loans with
anticipated repayment dates(2) .......... 27 23 4
Aggregate balance of mortgage loans
with anticipated repayment
dates(2) ................................ $ 456,182,879 $ 422,264,998 $ 33,917,881
Number of fully amortizing mortgage
loans ................................... 1 1 0
Aggregate balance of fully amortizing
mortgage loans .......................... $ 1,694,781 $ 1,694,781 $ 0
Number of non-amortizing mortgage
loans ................................... 3 2 1
Aggregate balance of non-amortizing
mortgage loans .......................... $ 52,363,000 $ 44,213,000 $ 8,150,000
Average mortgage loan balance ........... $ 19,286,821 $ 21,474,896 $ 12,385,968
Minimum mortgage loan balance ........... $ 802,330 $ 802,330 $ 1,991,423
Maximum mortgage loan balance ........... $ 130,000,000 $ 130,000,000 $ 36,033,285
Maximum balance for a group of
cross-collateralized and
cross-defaulted loans ................... $ 24,777,228(3) $ 24,777,228(3) $ 19,285,000(4)
Weighted average cut-off date
loan-to-value ratio ..................... 67.6% 66.4% 74.0%
Minimum cut-off date loan-to-value
ratio ................................... 45.7% 45.7% 62.2%
Maximum cut-off date loan-to-value
ratio ................................... 82.4% 82.4% 80.0%
Weighted average loan-to-value ratio
at stated maturity or anticipated
repayment date .......................... 57.1% 55.6% 65.1%
Weighted average underwritten debt
service coverage ratio .................. 1.60x 1.64x 1.40x
Minimum underwritten debt service
coverage ratio .......................... 1.20x 1.20x 1.20x
Maximum underwritten debt service
coverage ratio .......................... 2.66x 2.66x 1.94x
Weighted average mortgage interest
rate .................................... 5.380% 5.406% 5.242%
Minimum mortgage interest rate .......... 4.550% 4.550% 4.590%
Maximum mortgage interest rate .......... 6.420% 6.420% 5.850%
Weighted average remaining term to
maturity or anticipated repayment
date (months) ........................... 112 113 102
Minimum remaining term to maturity
or anticipated repayment date
(months) ................................ 54 54 60
Maximum remaining term to
maturity or anticipated repayment
date (months) ........................... 191 191 120
Weighted average occupancy rate ......... 92.4% 92.4% 92.1%
----------
(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 2 individual
mortgage loans (loan numbers 16 and 37).
(4) Consists of a group of 2 individual
mortgage loans (loan numbers 27 and 28).
S-33
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.
o All of the mortgage loans included in the
trust fund are secured by first lien fee
mortgages and/or leasehold mortgages on
commercial properties, multifamily
properties or mobile home 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 OF
NUMBER OF AGGREGATE OF CUT-OFF DATE CUT-OFF DATE
MORTGAGED CUT-OFF DATE POOL GROUP 1 GROUP 2
PROPERTY TYPE PROPERTIES DATE BALANCE BALANCE BALANCE BALANCE
- ------------------------------------- ------------ ----------------- ------------ ------------ --------------
Retail ............................ 39 $ 520,126,003 49.9% 59.1% 0.0%
Retail--Anchored ................ 27 492,367,587 47.3 55.9 0.0
Retail--Unanchored .............. 10 16,233,538 1.6 1.8 0.0
Retail--Shadow Anchored(1) ...... 2 11,524,878 1.1 1.3 0.0
Office ............................ 10 293,177,195 28.1 33.3 0.0
Multifamily ....................... 13 136,440,638 13.1 1.3 77.6
Mobile Home Park .................. 17 69,118,082 6.6 3.8 22.4
Industrial ........................ 1 13,413,050 1.3 1.5 0.0
Self Storage ...................... 5 6,588,342 0.6 0.7 0.0
Mixed Use ......................... 1 2,625,000 0.3 0.3 0.0
-- -------------- ----- ----- -----
TOTAL ............................. 86 $1,041,488,309 100.0% 100.0% 100.0%
== ============== ===== ===== =====
[GRAPHIC OMITTED]
MIXED USE 0.3%
SELF STORAGE 0.6%
INDUSTRIAL 1.3%
MOBILE HOME PARK 6.6%
MULTIFAMILY 13.1%
OFFICE 28.1%
RETAIL 49.9%
----------
(1) A mortgaged property is considered
shadow anchored if it is in close
proximity to an anchored retail
property.
GEOGRAPHIC CONCENTRATIONS..... The mortgaged properties are located
throughout 27 states. The following table
describes the number and percentage of
mortgaged properties in states which have
concentrations of mortgaged properties above
5.0%:
S-34
MORTGAGED PROPERTIES BY GEOGRAPHIC CONCENTRATION(1)
NUMBER OF AGGREGATE PERCENTAGE OF
MORTGAGED CUT-OFF DATE CUT-OFF DATE
STATE PROPERTIES BALANCE POOL BALANCE
- ----------------------- ------------ ----------------- --------------
FL .................. 10 $ 172,041,889 16.5%
NY .................. 5 168,300,197 16.2
CT .................. 2 134,300,000 12.9
CA .................. 9 129,805,997 12.5
Southern(2) ....... 6 88,907,997 8.5
Northern(2) ....... 3 40,898,000 3.9
NC .................. 2 99,905,806 9.6
Other ............... 58 337,134,420 32.4
-- -------------- -----
TOTAL ............... 86 $1,041,488,309 100.0%
== ============== =====
----------
(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) or
the allocated loan amount as detailed in
the related mortgage loan documents.
(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 OF
NUMBER OF AGGREGATE CUT-OFF DATE
MORTGAGED CUT-OFF DATE GROUP 1
STATE PROPERTIES BALANCE BALANCE
- ----------------------- ------------ -------------- --------------
NY .................. 3 $160,855,556 18.3%
FL .................. 8 158,556,104 18.0
CT .................. 2 134,300,000 15.3
CA .................. 6 108,080,131 12.3
Southern(2) ....... 5 86,467,131 9.8
Northern(2) ....... 1 21,613,000 2.5
NC .................. 2 99,905,806 11.3
Other ............... 45 218,773,124 24.8
-- ------------ -----
TOTAL ............... 66 $880,470,720 100.0%
== ============ =====
----------
(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) or
the allocated loan amount as detailed in
the related mortgage loan documents.
(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-35
LOAN GROUP 2
MORTGAGED PROPERTIES BY GEOGRAPHIC CONCENTRATION(1)
PERCENTAGE OF
NUMBER OF AGGREGATE CUT-OFF DATE
MORTGAGED CUT-OFF DATE GROUP 2
STATE PROPERTIES BALANCE BALANCE
- ----------------------- ------------ -------------- --------------
KS .................. 3 $ 43,400,000 27.0%
CO .................. 2 22,250,000 13.8
CA .................. 3 21,725,866 13.5
Northern(2) ....... 2 19,285,000 12.0
Southern(2) ....... 1 2,440,866 1.5
OK .................. 1 18,240,000 11.3
UT .................. 3 15,088,514 9.4
FL .................. 2 13,485,785 8.4
AZ .................. 1 11,000,000 6.8
Other ............... 5 15,827,424 9.8
- ------------ -----
TOTAL ............... 20 $161,017,589 100.0%
== ============ =====
----------
(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) or
the allocated loan amount as detailed in
the related mortgage loan documents.
(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 6 mortgage
loans, representing 16.8% of the mortgage
pool (5 mortgage loans in loan group 1 or
15.8% and 1 mortgage loan in loan group 2
or 22.4%), 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, all of the mortgage
loans accrue interest on an actual/360
basis. Thirteen (13) of the mortgage loans,
representing 41.2% of the mortgage pool (7
mortgage loans in loan group 1 or 38.9% and
6 mortgage loans in loan group 2 or 53.9%),
have periods during which only interest is
due and periods in which principal and
interest are due. Three (3) mortgage loans,
representing 5.0% of the mortgage pool (2
mortgage loans in loan group 1 or 5.0% and
1 mortgage loan in group 2 or 5.1%),
provide that only interest is due until
maturity or the anticipated repayment date.
S-36
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 OF PERCENTAGE OF
AGGREGATE OF CUT-OFF CUT-OFF DATE CUT-OFF DATE
RANGE OF CUT-OFF DATE NUMBER OF CUT-OFF DATE DATE POOL GROUP 1 GROUP 2
BALANCES ($) LOANS BALANCE BALANCE BALANCE BALANCE
- --------------------------------- ----------- ----------------- ------------ --------------- --------------
[LESS THAN OR EQUAL TO] 2,000,000 5 $ 8,179,011 0.8% 0.7% 1.2%
2,000,001 - 3,000,000 3 8,597,086 0.8 1.0 0.0
3,000,001 - 4,000,000 3 9,544,898 0.9 0.7 2.0
4,000,001 - 5,000,000 3 13,293,561 1.3 1.5 0.0
5,000,001 - 6,000,000 3 16,841,610 1.6 1.3 3.4
6,000,001 - 7,000,000 2 12,455,090 1.2 1.4 0.0
7,000,001 - 8,000,000 3 22,595,188 2.2 2.6 0.0
8,000,001 - 9,000,000 4 33,600,797 3.2 2.9 5.1
9,000,001 - 10,000,000 2 19,285,000 1.9 0.0 12.0
10,000,001 - 15,000,000 7 83,073,261 8.0 4.0 29.9
15,000,001 - 20,000,000 5 90,288,306 8.7 8.2 11.3
20,000,001 - 25,000,000 4 89,537,796 8.6 7.9 12.7
25,000,001 - 30,000,000 3 80,942,959 7.8 9.2 0.0
35,000,001 - 40,000,000 1 36,033,285 3.5 0.0 22.4
55,000,001 - 60,000,000 2 118,800,000 11.4 13.5 0.0
70,000,001 - 75,000,000 1 75,000,000 7.2 8.5 0.0
80,000,001 - 130,000,000 3 323,420,461 31.1 36.7 0.0
- -------------- ----- ----- -----
TOTAL ................ 54 $1,041,488,309 100.0% 100.0% 100.0%
== ============== ===== ===== =====
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
- ------------------------- ----------- ------------------- ------------ ------------ -----------
4.550 - 5.249 ......... 13 $ 340,278,593 32.7% 31.8% 37.5%
5.250 - 5.499 ......... 12 221,599,212 21.3 18.7 35.4
5.500 - 5.749 ......... 11 220,699,464 21.2 20.3 25.8
5.750 - 5.999 ......... 13 131,792,153 12.7 14.7 1.2
6.000 - 6.249 ......... 3 108,147,193 10.4 12.3 0.0
6.250 - 6.499 ......... 2 18,971,694 1.8 2.2 0.0
-- -------------- ----- ----- -----
TOTAL ................ 54 $1,041,488,309 100.0% 100.0% 100.0%
== ============== ===== ===== =====
S-37
RANGE OF UNDERWRITTEN DSC RATIOS
PERCENTAGE PERCENTAGE
PERCENTAGE OF CUT-OFF OF CUT-OFF
OF CUT-OFF DATE DATE
NUMBER OF AGGREGATE CUT-OFF DATE POOL GROUP 1 GROUP 2
RANGE OF DSCR (X) LOANS DATE BALANCE BALANCE BALANCE BALANCE
- ----------------------- ----------- ------------------- ------------ ------------ -----------
1.20 - 1.24 ......... 8 $ 88,673,048 8.5% 9.1% 5.5%
1.25 - 1.29 ......... 5 88,816,550 8.5 5.0 27.9
1.30 - 1.34 ......... 4 49,063,877 4.7 4.2 7.8
1.35 - 1.39 ......... 6 56,642,432 5.4 2.3 22.4
1.40 - 1.44 ......... 5 24,834,904 2.4 1.6 6.8
1.45 - 1.49 ......... 6 65,740,081 6.3 5.4 11.3
1.50 - 1.54 ......... 5 192,908,466 18.5 20.8 6.1
1.55 - 1.59 ......... 4 109,981,979 10.6 11.2 7.1
1.65 - 1.69 ......... 2 24,447,071 2.3 2.8 0.0
1.75 - 1.79 ......... 2 138,490,797 13.3 15.7 0.0
1.85 - 1.89 ......... 1 58,800,000 5.6 6.7 0.0
1.90 - 1.94 ......... 2 15,659,002 1.5 0.9 5.1
2.00 - 2.04 ......... 1 26,082,959 2.5 3.0 0.0
2.05 - 2.09 ......... 1 60,000,000 5.8 6.8 0.0
2.20 - 2.24 ......... 1 21,613,000 2.1 2.5 0.0
2.30 - 3.79 ......... 1 19,734,143 1.9 2.2 0.0
- -------------- ----- ----- -----
TOTAL .............. 54 $1,041,488,309 100.0% 100.0% 100.0%
== ============== ===== ===== =====
RANGE OF CUT-OFF DATE LTV RATIOS
PERCENTAGE PERCENTAGE
PERCENTAGE OF CUT-OFF OF CUT-OFF
OF CUT-OFF DATE DATE
RANGE OF CUT-OFF NUMBER OF AGGREGATE CUT-OFF DATE POOL GROUP 1 GROUP 2
DATE LTV RATIOS (%) LOANS DATE BALANCE BALANCE BALANCE BALANCE
- ------------------------- ----------- ------------------- ------------ ------------ -----------
40.01 - 50.00 ......... 1 $ 60,000,000 5.8% 6.8% 0.0%
50.01 - 55.00 ......... 1 19,734,143 1.9 2.2 0.0
60.01 - 65.00 ......... 11 397,589,529 38.2 43.0 12.0
65.01 - 70.00 ......... 7 125,900,577 12.1 13.1 6.5
70.01 - 75.00 ......... 16 201,123,359 19.3 18.2 25.1
75.01 - 80.00 ......... 17 225,684,367 21.7 15.3 56.4
80.01 - 82.42 ......... 1 11,456,334 1.1 1.3 0.0
-- -------------- ----- ----- -----
TOTAL ................ 54 $1,041,488,309 100.0% 100.0% 100.0%
== ============== ===== ===== =====
S-38
RANGE OF REMAINING TERMS TO MATURITY
OR ANTICIPATED REPAYMENT DATE*
PERCENTAGE PERCENTAGE
PERCENTAGE OF CUT-OFF OF CUT-OFF
OF CUT-OFF DATE DATE
RANGE OF REMAINING NUMBER OF AGGREGATE CUT-OFF DATE POOL GROUP 1 GROUP 2
TERMS (MONTHS) LOANS DATE BALANCE BALANCE BALANCE BALANCE
- --------------------- ----------- ------------------- ------------ ------------ -----------
0 - 60 ......... 5 $ 78,090,127 7.5% 7.9% 5.1%
61 - 84 ......... 5 120,440,000 11.6 6.7 38.3
85 - 108 ......... 2 24,777,228 2.4 2.8 0.0
109 - 120 ......... 39 780,814,418 75.0 78.3 56.7
169 - 180 ......... 2 35,671,756 3.4 4.1 0.0
181 - 192 ......... 1 1,694,781 0.2 0.2 0.0
-- -------------- ----- ----- -----
TOTAL ............ 54 $1,041,488,309 100.0% 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.
AMORTIZATION TYPES
PERCENTAGE PERCENTAGE
OF CUT-OFF OF CUT-OFF
PERCENTAGE OF DATE DATE
NUMBER OF AGGREGATE CUT-OFF CUT-OFF DATE GROUP 1 GROUP 2
AMORTIZATION TYPE LOANS DATE BALANCE POOL BALANCE BALANCE BALANCE
- ------------------------ ----------- ------------------- --------------- ------------ -----------
Amortizing Balloon.... 16 $ 387,847,650 37.2% 37.5% 35.6%
Interest-only,
Amortizing
ARD* ................. 6 285,415,556 27.4 29.6 15.6
Amortizing ARD ....... 21 170,767,323 16.4 18.4 5.5
Interest-only,
Amortizing
Balloon* ............. 7 143,400,000 13.8 9.3 38.3
Interest-only, ARD ... 2 44,213,000 4.2 5.0 0.0
Interest-only,
Balloon .............. 1 8,150,000 0.8 0.0 5.1
Fully Amortizing ..... 1 1,694,781 0.2 0.2 0.0
-- -------------- ----- ----- -----
TOTAL ............... 54 $1,041,488,309 100.0% 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 24
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
S-39
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 all 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.
TYPES OF PREPAYMENT RESTRICTIONS
PERCENTAGE PERCENTAGE
PERCENTAGE OF CUT-OFF OF CUT-OFF
OF CUT-OFF DATE DATE
PREPAYMENT RESTRICTION NUMBER OF AGGREGATE CUT-OFF DATE POOL GROUP 1 GROUP 2
TYPE LOANS DATE 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* .......... 51 $ 942,400,697 90.5% 89.7% 94.9%
Prohibit prepayment
until date specified in
related mortgage note
and then impose a
yield maintenance
charge for most of the
remaining term* .......... 2 90,937,612 8.7 10.3 0.0
Prohibit prepayment
until a date specified
in the related
mortgage note, and
then, at the election of
the borrower, permits
defeasance or
prepayment with a
yield maintenance
charge ................... 1 8,150,000 0.8 0.0 5.1
-- -------------- ----- ----- -----
TOTAL ................... 54 $1,041,488,309 100.0% 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
S-40
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.................... Fifty-two (52) of the mortgage loans included
in the trust fund as of the cut-off date,
representing 91.3% of the mortgage pool (39
mortgage loans in loan group 1 or 89.7% and all
of 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. Of the 52 mortgage
loans that permit defeasance, 1 mortgage loan,
representing 0.8% of the mortgage pool (1
mortgage loan in loan group 2 or 5.1%),
prohibits prepayment until a date specified in
the related mortgage note, and then, at the
election of the borrower, permits defeasance or
prepayment with a yield maintenance charge.
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 the related mortgage loan. The
payments on the 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
S-41
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 loan(s) (but
not any subordinate companion loan) which, in
each case, is(are) pari passu in the right of
entitlement to payment with each of the 11
Madison Avenue mortgage loan and the
Starrett-Lehigh Building mortgage loan, as
applicable. In each case, the related companion
loans are not included in the trust fund.
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
- ----------------------- ----------- ------------ ------- --------------- --------- ------------
Brass Mill Center
& Commons ............ Wachovia 1/1 1 $130,000,000 12.5% 14.8%
Four Seasons Town
Centre ............... Wachovia 1/1 1 97,864,906 9.4 11.1%
11 Madison
Avenue ............... Wachovia 1/1 1 95,555,556 9.2 10.9%
Bank of America
Tower ................ Wachovia 1/1 1 75,000,000 7.2 8.5%
Starrett-Lehigh
Building ............. Wachovia 1/1 1 60,000,000 5.8 6.8%
Westland Mall ......... Eurohypo 1/1 1 58,800,000 5.6 6.7%
ARC Portfolio
10-1 ................. Citigroup 1/8 2 36,033,285 3.5 22.4%
Amargosa
Commons
Shopping
Center ............... Wachovia 1/1 1 29,760,000 2.9 3.4%
Bay City Mall ......... Eurohypo 1/1 1 26,082,959 2.5 3.0%
The Shoppes at
Gilbert
Commons .............. Wachovia 1/1 1 25,100,000 2.4 2.9%
----- ------------ ----
SUBTOTAL/WTD. AVG...... 10/17 $634,196,705 60.9%
===== ============ ====
ARC Portfolio 5-4...... Citigroup 1/8 1 $ 24,924,796 2.4% 2.8%
AFRT Portfolio ........ Wachovia 2/17 1 24,777,228 2.4 2.8%
Valley Corporate
Center ............... Wachovia 1/1 1 22,600,000 2.2 2.6%
Home Depot -
Colma, CA ............ Wachovia 1/1 1 21,613,000 2.1 2.5%
Essex Place
Apartments ........... Artesia 1/1 2 20,400,000 2.0 12.7%
University Mall ....... Wachovia 1/1 1 19,734,143 1.9 2.2%
Stonegate
Apartments/
Cedar Ridge
Apartments ........... Artesia 2/2 2 19,285,000 1.9 12.0%
Deep Deuce at
Bricktown ............ Wachovia 1/1 2 18,240,000 1.8 11.3%
Poway Shopping
Center ............... Wachovia 1/1 1 17,660,000 1.7 2.0%
Sports Authority
Corporate
Headquarters ......... Citigroup 1/1 1 15,937,612 1.5 1.8%
----- ------------ ----
SUBTOTAL/WTD. AVG...... 12/34 $205,171,780 19.7%
===== ============ ====
TOTAL/WTD. AVG. ....... 22/51 $839,368,485 80.6%
===== ============ ====
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/ PAD DSCR RATIO OR ARD RATE
- ----------------------- ---------------------------- --------------- ---------- ---------- ---------- -----------
Brass Mill Center
& Commons ............ Retail - Anchored $ 150 1.77x 62.1% 45.6% 4.550%
Four Seasons Town
Centre ............... Retail - Anchored $ 105 1.54x 60.8% 47.0% 5.600%
11 Madison
Avenue ............... Office - CBD $ 191 1.55x 63.7% 59.0% 5.304%
Bank of America
Tower ................ Office - CBD $ 108 1.51x 69.2% 61.5% 6.160%
Starrett-Lehigh
Building ............. Office - CBD $ 69 2.08x 45.7% 38.3% 5.760%
Westland Mall ......... Retail - Anchored $ 254 1.89x 72.6% 68.2% 4.952%
ARC Portfolio
10-1 ................. Mobile Home Park $ 24,380 1.37x 76.3% 63.8% 5.530%
Amargosa
Commons
Shopping
Center ............... Retail - Anchored $ 172 1.21x 80.0% 70.2% 5.570%
Bay City Mall ......... Retail - Anchored $ 72 2.02x 64.7% 54.0% 5.302%
The Shoppes at
Gilbert
Commons .............. Retail - Anchored $ 151 1.25x 79.6% 66.3% 5.430%
---- ---- ---- -----
SUBTOTAL/WTD. AVG...... 1.65X 64.8% 54.5% 5.337%
===== ==== ==== =====
ARC Portfolio 5-4...... Mobile Home Park $ 13,740 1.46x 71.9% 66.4% 5.050%
AFRT Portfolio ........ Various - Retail/Office $ 127 1.32x 72.9% 51.0% 5.830%
Valley Corporate
Center ............... Office - Suburban $ 132 1.65x 71.6% 71.6% 5.160%
Home Depot -
Colma, CA ............ Retail - Anchored $ 216 2.23x 65.2% 65.2% 4.800%
Essex Place
Apartments ........... Multifamily - Conventional $ 57,955 1.29x 73.5% 68.1% 5.320%
University Mall ....... Retail - Anchored $ 30 2.66x 51.5% 37.8% 6.120%
Stonegate
Apartments/
Cedar Ridge
Apartments ........... Multifamily - Conventional $ 34,315 1.54x 63.3% 52.6% 5.310%
Deep Deuce at
Bricktown ............ Multifamily - Conventional $ 62,041 1.46x 80.0% 71.5% 4.750%
Poway Shopping
Center ............... Retail - Anchored $ 165 1.32x 78.1% 67.3% 5.690%
Sports Authority
Corporate
Headquarters ......... Office - Suburban $ 76 1.24x 73.5% 45.2% 6.420%
---- ---- ---- -----
SUBTOTAL/WTD. AVG...... 1.62X 70.1% 60.0% 5.419%
==== ==== ==== =====
TOTAL/WTD. AVG. ....... 1.64X 66.1% 55.8% 5.357%
==== ==== ==== =====
----------
* In the case of a concentration of
cross-collateralized mortgage loans, the
aggregate principal balance.
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.
S-42
CO-LENDER LOANS............... Five (5) mortgage loans to be included in the
trust that were originated by Wachovia Bank,
National Association, representing
approximately 38.6% of the mortgage pool (4
mortgage loans in loan group 1 or 43.5% and 1
mortgage loan in loan group 2 or 11.3%), are,
in each case, evidenced by one of two or more
notes which are secured by a single mortgaged
real property. In each case, the related
companion loan(s) will not be part of the trust
fund. One (1) mortgage loan, loan number 3 (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 5 (the
Starrett-Lehigh Building mortgage 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 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 three (3)
mortgage loans, loan numbers 1, 2 and 17 (the
Brass Mill Center & Commons mortgage loan, the
Four Seasons Towne Centre mortgage loan and the
Deep Deuce at Bricktown mortgage loan), are
each 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 each of
the three (3) mortgage loans 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 servicer will
service and administer these mortgage loans and
their related companion loans (other than the
11 Madison Avenue mortgage loan and the
Starrett-Lehigh Building mortgage loan 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. The 11 Madison Avenue mortgage loan and
the Starrett-Lehigh Building mortgage loan and
their related companion loans will be serviced
under the pooling and servicing agreement
entered into in connection with the issuance of
S-43
the Wachovia Bank Commercial Mortgage Trust,
Commercial Mortgage Pass-Through Certificates,
Series 2004-C10. The master servicer and, with
respect to the 11 Madison Avenue mortgage loan,
the special servicer under the 2004-C10 pooling
and servicing agreement is Wachovia Bank,
National Association and the special servicer,
except with respect to the 11 Madison Avenue
mortgage loan, under the 2004-C10 pooling and
servicing agreement is Lennar Partners, Inc.
The terms of the 2004-C10 pooling and servicing
agreement are generally similar to the terms of
the pooling and servicing agreement for this
transaction. See "SERVICING OF THE MORTGAGE
LOANS--Servicing of the 11 Madison Avenue Loan
and the Starrett-Lehigh Building Loan" in this
prospectus supplement. With respect to one (1)
mortgage loan (loan number 17), the related
intercreditor agreement allows the trust fund
and the related companion loan to receive
separate collections of principal and interest
prior to any material defaults.
Amounts attributable to any companion 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.
S-44
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-45
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, Class A-5 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, Class A-4 and Class A-5
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 A-5, Class A-1A, 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
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
equal to, 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
S-46
obtaining certain performance objectives. In
general, such 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
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
S-47
group. Because principal on the certificates
(other than the Class X-C, Class X-P, Class Z,
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 the offered certificates
to which all or a portion of such loss
S-48
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 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.
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 A-5, Class
A-1A, 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.
S-49
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 a companion loan,
mezzanine loan 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.
Two (2) of the mortgage loans, the 11 Madison
Avenue mortgage loan and the Starrett-Lehigh
Building mortgage loan (loan numbers 3 and 5),
which collectively represent 14.9% of the
mortgage pool (17.7% of loan group 1), are
evidenced by multiple promissory notes. For
each mortgage loan, several of the promissory
notes are pari passu in right of payment. In
addition, each of the mortgage loans has at
least one promissory note that is subordinate
in right of payment to the notes that are pari
passu in right of payment. For each of these
mortgage loans, only one of the promissory
notes is included in the trust fund. One of
the pari passu companion notes for each
mortgage loan is owned by the trust fund
relating to the Wachovia Bank Commercial
Mortgage Trust, Commercial Mortgage
Pass-Through Certificates, Series 2004-C10.
Both of the mortgage loans, and the related
companion loans, will be serviced pursuant to
the 2004-C10 pooling and servicing agreement.
The 2004-C10 controlling class representative
may have certain control rights with respect
to each of these loans.
With respect to both the 11 Madison Avenue
mortgage loan and the Starrett-Lehigh Building
mortgage loan, the subordinate companion
holder, controlling class representative
S-50
and/or the 2004-C10 controlling class
representative will have decision making
authority regarding consents and other
determinations. The interests of these parties
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" in this
prospectus supplement and "DESCRIPTION OF THE
CERTIFICATES--Voting Rights" in this
prospectus supplement and 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. Wachovia
Bank, National Association is also acting as
the initial special servicer for the 11 Madison
Avenue mortgage loan under the pooling and
servicing agreement entered into in connection
with the issuance of the Wachovia Bank
Commercial Mortgage Trust, Commercial Mortgage
Pass-Through Certificates, Series 2004-C10.
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.
In addition, SL Green Funding LLC will be
appointed by Wachovia Bank, National
Association as a sub-servicer with respect to
the 11 Madison Avenue mortgage loan under the
S-51
pooling and servicing agreement entered into
in connection with the issuance of the
Wachovia Bank Commercial Mortgage Trust,
Commercial Mortgage Pass-Through Certificates,
Series 2004-C10. 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 and the Class
Z 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 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;
S-52
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 an affiliate of one of
the mortgage loan sellers.
In addition, with respect to one (1) mortgage
loan (loan number 21), representing 1.3% of
the mortgage pool (1.5% of loan group 1), the
mortgage loan was originated by CDP Capital
Real Estate Advisory Inc. or its affiliates.
CDP Capital Real Estate Advisory Inc., or an
affiliate, will be the initial controlling
class representative.
TERRORIST ATTACKS AND MILITARY
CONFLICTS 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 those 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.
Terrorist attacks in the United States,
incidents of terrorism occurring outside the
United States and military conflict in Iraq
and elsewhere may significantly reduce air
travel throughout the United States, and,
therefore, continue to have a negative effect
on revenues in areas heavily dependent on
tourism. Any 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.
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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 country, will have on domestic and
world financial markets, economies, real
estate markets, insurance costs or business
segments. Foreign or domestic 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;
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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;
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 one (1) mortgage
loan, the 11 Madison Avenue mortgage loan,
representing 9.2% of the mortgage pool (10.9%
of loan group 1), 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
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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, 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 may be 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.
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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 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 Mobile
Home Park Properties" 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.
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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:
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 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. For example, with respect to the Brass
Mill Center & Commons mortgage loan (loan
number 1), representing 12.5% of the mortgage
pool (14.8% of loan group 1), the lease for
the largest tenant, J.C. Penney Company, Inc.,
occupying approximately 14.5% of the net
rentable area, contains a provision obligating
the tenant to remain open if certain tenants
open within three months of J.C. Penney. One
of these tenants did not open, and as a
result, it appears J.C. Penney is not bound by
the operating covenant, although they remain
open. See "DESCRIPTION OF THE MORTGAGE
POOL--Twenty Largest Mortgage Loans--Brass
Mill Center & Commons" in this prospectus
supplement. In addition, in the case of the
Westland Mall mortgage loan (loan number 6),
representing 5.6% of the mortgage pool (6.7%
of loan group 1), the largest in-line tenant,
Piccadilly Cafeteria, representing 4.3% of the
net rentable area of this mortgaged property,
with a lease
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expiring in June 2004, has ceased operations
and "gone dark". Although the tenant is
currently paying rent, no income was
attributed to the Piccadilly Cafeteria space
for purposes of the underwriting of the
Westland Mall mortgage loan. See "--The
Failure of a Tenant Will Have a Negative
Impact on Single Tenant and Tenant
Concentration Properties" and "DESCRIPTION OF
THE MORTGAGE POOL--Twenty Largest Mortgage
Loans--Westland Mall" in this prospectus
supplement.
In addition, certain of the mortgage loans
secured by retail mortgaged properties, such
as the Brass Mill Center & Commons mortgage
loan and the Bay City Mall mortgage loan (loan
numbers 1 and 9), representing 15.0% of the
mortgage pool (17.7% of loan group 1), have
movie theaters as tenants. These mortgaged
properties are exposed to certain unique
risks. 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 27 of the mortgage loans included in
the trust fund as of the cut-off date,
representing 49.9% of the mortgage pool (59.1%
of loan group 1) (based on the primary
property type for combined office/retail
properties).
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
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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 properties for new
tenants.
Office properties secure 8 of the mortgage
loans included in the trust fund as of the
cut-off date, representing 28.1% of the
mortgage pool (33.3% of loan group 1) (based
on the primary property type for combined
office/retail properties).
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 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.
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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 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 13 of the
mortgage loans included in the trust fund as
of the cut-off date, representing 13.1% of the
mortgage pool (1 mortgage loan in loan group 1
or 1.3% and 12 mortgage loans in loan group 2
or 77.6%).
SPECIAL RISKS ASSOCIATED WITH
MOBILE HOME PARK PROPERTIES.. Mortgage loans secured by liens on mobile
home park properties pose risks not associated
with mortgage loans secured by liens on other
types of income-producing real estate.
The successful operation of a mobile home park
property may depend upon the number of other
competing residential developments in the
local market, such as:
o other mobile home park properties;
o apartment buildings; and
o site-built single family homes.
Other factors may also include:
o the physical attributes of the community,
including its age and appearance;
o location of the mobile home park property;
o the ability of management to provide
adequate maintenance and insurance;
o the types of services or amenities it
provides;
o the property's reputation; and
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o state and local regulations, including rent
control and rent stabilization.
The mobile home park properties are "special
purpose" properties that could not be readily
converted to general residential, retail or
office use. Thus, if the operation of any of
the mobile home park properties becomes
unprofitable due to competition, age of the
improvements or other factors such that the
borrower becomes unable to meet its
obligations on the related mortgage loan, the
liquidation value of that mobile home park
property may be substantially less, relative
to the amount owing on the related mortgage
loan, than would be the case if the mobile
home park property were readily adaptable to
other uses.
Mobile home park properties secure 3 of the
mortgage loans included in the trust fund as
of the cut-off date, representing 6.6% of the
mortgage pool (2 mortgage loans in loan group
1 or 3.8% and 1 mortgage loan in loan group 2
or 22.4%).
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
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 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.
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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 (or
updated a previously conducted environmental
site assessment) with respect to each
mortgaged property securing a mortgage loan
included in the trust fund. Such assessments
do not generally include invasive
environmental testing. In each case where the
environmental site assessment or update
revealed a material adverse environmental
condition or circumstance at any mortgaged
property, then (depending on the nature of the
condition or circumstance) 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
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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 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
42 and 50), representing 0.6% of the mortgage
pool (1 mortgage loan in loan group 1 or 0.5%
and 1 mortgage loan in loan group 2 or 1.2%),
the related borrower was required to obtain
(or the related 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 5), representing 5.8% of the
mortgage pool (6.8% of loan group 1), an
environmental site assessment revealed that
the mortgaged property is listed on an
environmental
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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.
With respect to the Brass Mill Center &
Commons mortgage loan (loan number 1),
representing 12.5% of the mortgage pool (14.8%
of loan group 1), a release of PCBs impacted
the soil at the mortgaged property. A removal
action is proposed by the environmental
consultant hired by the lender at an estimated
cost of $200,000. In addition, there is
documented impact to groundwater which was the
subject of investigation and delineation. A
protocol of long-term monitoring is estimated
to cost about $150,000. This total estimated
cost of $350,000 will be borne by the
borrower. GGP/Homart, Inc., the parent of the
borrower, has provided an environmental
indemnity with respect to environmental
matters at the property. See "DESCRIPTION OF
THE MORTGAGE POOL--Twenty Largest Mortgage
Loans--Brass Mill Center & Commons" in this
prospectus supplement.
With respect to the Home Depot-Colma mortgage
loan (loan number 13), representing 2.1% of
the mortgage pool (2.5% of loan group 1), a
passive methane gas mitigation system was put
in place, and is required to be maintained as
part of the development of the mortgaged
property on the former Junipero Serra
landfill. The related borrower and its
principals, jointly and severally, have
provided an environmental indemnity with
respect to such maintenance. See "DESCRIPTION
OF THE MORTGAGE POOL--Twenty Largest Mortgage
Loans--Home Depot-Colma" in this prospectus
supplement.
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 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
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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......... Fifty-three (53) of the mortgage loans,
representing 99.8% of the mortgage pool (40
mortgage loans in loan group 1 or 99.8% and all
of the mortgage loans in loan group 2), 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.
Twenty-nine (29) of these mortgage loans,
representing 48.0% of the mortgage pool (25
mortgage loans in loan group 1 or 53.0% and 4
mortgage loans in loan group 2 or 21.1%), 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
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.
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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 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
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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 GGP concentration consists of 3 mortgage
loans (loan numbers 1, 2 and 9), which
collectively represent 24.4% of the mortgage
pool (28.8% of loan group 1). These mortgage
loans are not cross-collateralized or
cross-defaulted with each other, but have a
common sponsor. The sponsor of each mortgage
loan in the GGP concentration is General
Growth Properties, Inc. See "--Poor Property
Management Will Lower the Performance of the
Related Mortgaged Property" and "DESCRIPTION
OF THE MORTGAGE POOL--Twenty Largest Mortgage
Loans" in this prospectus supplement.
The ARC concentration consists of 2 mortgage
loans (loan numbers 7 and 11), which
collectively represent 5.9% of the mortgage
pool (1 mortgage loan in loan group 1 or 2.8%
and 1 mortgage loan in loan group 2 or 22.4%).
These mortgage loans are not
cross-collateralized or cross-defaulted with
each other, but have common sponsors. The
sponsors of each of the mortgage loans in the
ARC concentration are Affordable Residential
Communities Inc and Affordable Residential
Communities LP.
The McCarthy/Palmer concentration consists of
3 mortgage loans (loan numbers 14, 22 and 25),
which collectively represent 4.2% of the
mortgage pool (27.0% of loan group 2). The
sponsors of each mortgage loan in the
McCarthy/Palmer concentration are Luke V.
McCarthy and Michael W. Palmer. These three
(3) mortgage loans are not cross-defaulted and
cross-collateralized with each other.
The AFRT concentration consists of 2 mortgage
loan pools (loan numbers 16 and 37), which
collectively represent 2.4% of the mortgage
pool (2.8% of loan group 1). The sponsor of
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each of the mortgage loan pools in the AFRT
concentration is American Financial Realty
Company. Each of these mortgage loan pools is
cross-defaulted and cross-collateralized.
The Stonegate/Cedar Ridge concentration
consists of 2 mortgage loans (loan numbers 27
and 28), which collectively represent 1.9% of
the mortgage pool (12.0% of loan group 2). The
sponsors of each mortgage loan in the
Stonegate concentration are Daisy Afrooz and
Peter E. Taylor. Each of these mortgage loans
is cross-defaulted and cross-collateralized.
No group or borrower concentration represents
more than 24.4% of the mortgage pool (28.8% 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.
MORTGAGED PROPERTIES BY GEOGRAPHIC CONCENTRATION(1)
NUMBER OF AGGREGATE PERCENTAGE OF
MORTGAGED CUT-OFF DATE CUT-OFF DATE
STATE PROPERTIES BALANCE POOL BALANCE
- ----------------------- ------------ ----------------- --------------
FL .................. 10 $ 172,041,889 16.5%
NY .................. 5 168,300,197 16.2
CT .................. 2 134,300,000 12.9
CA .................. 9 129,805,997 12.5
Southern(2) ....... 6 88,907,997 8.5
Northern(2) ....... 3 40,898,000 3.9
NC .................. 2 99,905,806 9.6
Other ............... 58 337,134,420 32.4
-- -------------- -----
TOTAL ............... 86 $1,041,488,309 100.0%
== ============== =====
----------
(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 or
the allocated loan amount as detailed in
the related mortgage loan documents).
(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.
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LOAN GROUP 1
MORTGAGED PROPERTIES BY GEOGRAPHIC CONCENTRATION(1)
PERCENTAGE OF
NUMBER OF AGGREGATE CUT-OFF DATE
MORTGAGED CUT-OFF DATE GROUP 1
STATE PROPERTIES BALANCE BALANCE
- ----------------------- ------------ -------------- --------------
NY .................. 3 $160,855,556 18.3%
FL .................. 8 158,556,104 18.0
CT .................. 2 134,300,000 15.3
CA .................. 6 108,080,131 12.3
Southern(2) ....... 5 86,467,131 9.8
Northern(2) ....... 1 21,613,000 2.5
NC .................. 2 99,905,806 11.3
Other ............... 45 218,773,124 24.8
-- ------------ -----
TOTAL ............... 66 $880,470,720 100.0%
== ============ =====
----------
(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 or
the allocated loan amount as detailed in
the related mortgage loan documents).
(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)
PERCENTAGE OF
NUMBER OF AGGREGATE CUT-OFF DATE
MORTGAGED CUT-OFF DATE GROUP 2
STATE PROPERTIES BALANCE BALANCE
- ----------------------- ------------ -------------- --------------
KS .................. 3 $ 43,400,000 27.0%
CO .................. 2 22,250,000 13.8
CA .................. 3 21,725,866 13.5
Northern(2) ....... 2 19,285,000 12.0
Southern(2) ....... 1 2,440,866 1.5
OK .................. 1 18,240,000 11.3
UT .................. 3 15,088,514 9.4
FL .................. 2 13,485,785 8.4
AZ .................. 1 11,000,000 6.8
Other ............... 5 15,827,424 9.8
- ------------ -----
TOTAL ............... 20 $161,017,589 100.0%
== ============ =====
----------
(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 or
the allocated loan amount as detailed in
the related mortgage loan documents).
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(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
o other factors which are beyond the
control of the mortgagors.
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 12.5% of the
mortgage pool (14.8% 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 2.4% of the mortgage pool
(2.8% of loan group 1).
o The 5 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, 44.0% of the mortgage pool
(5 mortgage loans in loan group 1 or
52.1%).
o The 10 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, 60.9% of the mortgage pool
(9 mortgage loans in loan group 1 or
67.9% and 1 mortgage loan in loan group
2 or 22.4%).
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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 retail properties
represent as of the cut-off date 49.9%
of the mortgage pool or 59.1% of loan
group 1 (based on the primary property
type for combined office/retail
properties);
o mortgage loans included in the trust
fund and secured by office properties
represent as of the cut-off date 28.1%
of the mortgage pool or 33.3% of loan
group 1 (based on the primary property
type for combined office/retail
properties);
o mortgage loans included in the trust
fund and secured by multifamily
properties represent as of the cut-off
date 13.1% of the mortgage pool (1
mortgage loan in loan group 1 or 1.3%
and 12 mortgage loans in loan group 2
or 77.6%); and
o mortgage loans included in the trust
fund and secured by mobile home
properties represent as of the cut-off
date 6.6% of the mortgage pool (2
mortgage loans in loan group 1 or 3.8%
and 1 mortgage loan in loan group 2 or
22.4%).
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 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
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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.
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:
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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.
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
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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 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
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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.
Three (3) mortgage loans (loan number 15, 20
and 24), representing 4.3% of the mortgage
pool (1 mortgage loan in loan group 1 or 2.2%
and 2 mortgage loans in loan group 2 or
15.6%), provide that the related borrower,
under certain specified circumstances, may
encumber the related mortgaged property with
subordinate debt in the future.
With respect to 3 mortgage loans (loan numbers
5, 12 and 18), representing 9.6% of the
mortgage pool (3 mortgage loans in loan group
1 or 11.4%), 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 entered into in favor
of the lender. In addition, in the case of 3
mortgage loans (loan numbers 2, 15 and 30)
representing 12.1% of the mortgage
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pool (14.3% of loan group 1), the related
mortgage loan documents provide that, under
certain circumstances, the entities with a
controlling ownership 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.
One (1) mortgage loan (loan number 41),
representing 0.5% of the mortgage pool (0.6%
of loan group 1), does 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
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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 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
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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.
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 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 the
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.
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In addition, although 5 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 14.9% of the mortgage pool (17.7%
of loan group 1), also have companion loan(s)
that are pari passu with such mortgage 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.
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In addition, with respect to 8 mortgage loans
(loan numbers 14, 20, 22, 24, 25, 32, 43 and
54), representing 7.8% of the mortgage pool (2
mortgage loans in loan group 1 or 0.6% and 6
mortgage loans in loan group 2 or 47.6%), the
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 special servicer's
ability to enforce lockbox requirements. The
legal proceedings necessary to resolve these
issues can be time consuming and costly and
may
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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.
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 may 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
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such report, and may not reveal all necessary
or desirable repairs, maintenance or capital
improvement items.
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. In addition, certain of
the mortgage loans do not restrict the transfer
of limited partnership interests or
non-managing member interests in the related
borrower.
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
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terminates and the lender is entitled to
collect the rents. Such assignments are
typically not perfected as security interests
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 (loan
numbers 16 and 37 and loan numbers 27 and 28),
representing in the aggregate 4.2% of the
mortgage pool (2 mortgage loans in loan group 1
or 2.8% and 2 mortgage loans in loan group 2 or
12.0%), are groups of mortgage loans that are
cross-collateralized and cross-defaulted with
each of the other mortgage loans in their
respective groups. In addition, some mortgage
loans are secured by first lien deeds of trust
or mortgages, as applicable, on multiple
properties securing the joint and several
obligations of multiple borrowers. 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 such 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
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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) 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-one (21) of the mortgaged properties
securing mortgage loans included in the trust
fund, representing 7.5% of the mortgage pool
(8.9% of loan group 1), are leased wholly to a
single tenant or are wholly owner occupied.
These mortgage loans include the Home
Depot-Colma, CA mortgage loan (loan number 13)
and the Sports Authority Corporate Headquarters
mortgage loan (loan number 19). See
"DESCRIPTION OF THE MORTGAGE POOL--Twenty
Largest Mortgage Loans" in this prospectus
supplement. 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
9.2% of the mortgage pool (10.9% of loan group
1), 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
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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 LLC.
With respect to 1 mortgage loan, the Bank of
America Tower mortgage loan, representing 7.2%
of the mortgage pool (8.5% of loan group 1),
the lease for the largest tenant, Bank of
America, N.A., occupying approximately 188,032
square feet, or approximately 27.0% of the net
rentable area, expires in July 2009. A tenant
improvement and leasing commission escrow has
been set up and will be funded with $4,160,000
at the time of the lease expiration to protect
against this rollover risk. Upon satisfaction
of certain conditions, the lender is required
to release the funds held in the escrow after
the expiration date, but may require an
ongoing TI/LC escrow of $500,000 per year to
offset the costs incurred to lease the space.
See "DESCRIPTION OF THE MORTGAGE POOL--Twenty
Largest Mortgage Loans--Bank of America Tower"
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 Bank of America, N.A.
With respect to 1 mortgage loan, the
Starrett-Lehigh Building mortgage loan,
representing 5.8% of the mortgage pool (6.8%
of loan group 1), the second largest tenant is
Martha Stewart Living Omnimedia, Inc.
occupying approximately 159,500 square feet,
or approximately 6.9% of the net rentable
area. Martha Stewart, former director and
Chief Creative Officer, and current Founding
Editorial Director, was found guilty of
conspiracy, obstruction of an agency
proceeding, and making false statements to
federal investigators concerning a personal
sale of stock in an outside company. Her
sentencing is scheduled for June 17, 2004. The
conviction and sentencing of Martha Stewart
may have a negative impact on this tenant,
which may adversely affect its ability to
perform its obligations under the lease.
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 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
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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
EFFECT 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:
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.
General Growth Properties, Inc., the related
borrower or another affiliate of General
Growth Properties, Inc., is managing the
mortgaged properties for 3 mortgage loans
(loan numbers 1, 2 and 9) which collectively
represent 24.4% of the mortgage pool (28.8% of
loan group 1).
ARC Management Services, Inc., a Delaware
corporation and an affiliate of the borrower,
is managing the mortgaged properties for 2
mortgage loans (loan numbers 7 and 11), which
collectively represent 5.9% of the mortgage
pool (1 mortgage loan in loan group 1 or 2.8%
and 1 mortgage loan in loan group 2 or 22.4%).
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Real Property Systems, Inc., a California
corporation, an affiliate of the borrower, is
managing the mortgaged properties for 3
mortgage loans (loan numbers 14, 22 and 25),
which collectively represent 4.2% of the
mortgage pool (27.0% of loan group 2).
PPC Property Management, Inc., an affiliate of
the borrower, is managing the mortgaged
properties for 2 mortgage loans (loan numbers
27 and 28), which collectively represent 1.9%
of the mortgage pool (12.0% of loan group 2).
The failure of a property manager that manages
a number of mortgaged properties as described
above to properly manage the related
properties or any financial difficulties with
respect to this property manager could have a
significant negative impact on the continued
income generation from these mortgaged
properties and therefore the performance of
the related mortgage loans. See "--Adverse
Consequences Associated with Borrower
Concentration, Borrowers Under Common Control
and Related Borrowers" and "DESCRIPTION OF THE
MORTGAGE POOL--Twenty Largest Mortgage Loans"
in this prospectus supplement.
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.
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.
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THE STATUS OF A GROUND LEASE
MAY BE UNCERTAIN IN A BANKRUPTCY
PROCEEDING................... One (1) mortgage loan, as of the cut-off
date, representing 1.9% of the mortgage pool
(2.2% of loan group 1), is 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 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
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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
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.
In addition, one or more of the mortgage loan
sellers has acquired a portion of the mortgage
loans included in the trust fund in one or
more secondary market purchases. Such
purchases may be challenged as fraudulent
conveyances. Such a challenge if successful,
may have a negative impact on the
distributions on your certificates. See
"DESCRIPTION OF THE MORTGAGE POOL--Assignment
of the Mortgage Loans; Repurchases and
Substitutions" and "--Representations and
Warranties; Repurchases and Substitutions" in
this prospectus supplement and "DESCRIPTION OF
THE POOLING AND SERVICING AGREEMENTS--
Representations and Warranties; Repurchases" in
the accompanying prospectus.
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
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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
"CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS AND
LEASES--Foreclosure" in the accompanying
prospectus.
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DESCRIPTION OF THE MORTGAGE POOL
GENERAL
The pool of mortgage loans (each, a "Mortgage Loan") included in the Trust
Fund (the "Mortgage Pool") is expected to consist of 54 fixed rate mortgage
loans (the "Mortgage Loans"), with an aggregate principal balance (the "Cut-Off
Date Pool Balance") of $1,041,488,309. The "Cut-Off Date" for (i) 48 of the
Mortgage Loans is April 11, 2004 and (ii) 6 of the Mortgage Loans is April 1,
2004. The "Cut-Off Date Balance" of each Mortgage Loan will equal the unpaid
principal balance thereof as of the related 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, 1 Mortgage Loan that is secured
by a multifamily property and 2 Mortgage Loans that are secured by mobile home
park properties. Loan Group 1 is expected to consist of 41 Mortgage Loans, with
an aggregate Cut-Off Date Balance of $880,470,720 (the "Cut-Off Date Group 1
Balance"). Loan Group 2 will consist of 12 Mortgage Loans that are secured by
Mortgaged Properties that are multifamily properties and 1 Mortgage Loan that
is secured by mobile home park properties. Loan Group 2 is expected to consist
of 13 Mortgage Loans, with an aggregate Cut-Off Date Balance of $161,017,589
(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 $802,330 to $130,000,000. The Mortgage Loans in the Mortgage
Pool have an average Cut-Off Date Balance of $19,286,821. The Cut-Off Date
Balances of the Mortgage Loans in Loan Group 1 range from $802,330 to
$130,000,000. The Mortgage Loans in Loan Group 1 have an average Cut-Off Date
Balance of $21,474,896. The Cut-Off Date Balances of the Mortgage Loans in Loan
Group 2 range from $1,991,423 to $36,033,285. The Mortgage Loans in Loan Group
2 have an average Cut-Off Date Balance of $12,385,968. 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 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 Loan; provided that, with respect to the 11 Madison Avenue Loan (loan
number 3) and the Starrett-Lehigh Building Loan (loan number 5), 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 Companion Loan (but not any related Subordinate Companion
Loans) as well as such Mortgage Loan.
All of the Mortgage Loans are evidenced by a promissory note (each a
"Mortgage Note") and are secured by a mortgage, deed of trust or other similar
security instrument (each, a "Mortgage") that creates a first mortgage lien on
a fee simple estate (or, with respect to 1 Mortgage Loan, representing 1.9% of
the Cut-Off Date Pool Balance and 2.2% 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.
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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
- ------------------------------------- ------------ ----------------- --------------- --------------- --------------
Retail .............................. 39 $ 520,126,003 49.9% 59.1% 0.0%
Retail--Anchored ................... 27 492,367,587 47.3 55.9 0.0
Retail--Unanchored ................. 10 16,233,538 1.6 1.8 0.0
Retail--Shadow Anchored(1) ......... 2 11,524,878 1.1 1.3 0.0
Office .............................. 10 293,177,195 28.1 33.3 0.0
Multifamily ......................... 13 136,440,638 13.1 1.3 77.6
Mobile Home Park .................... 17 69,118,082 6.6 3.8 22.4
Industrial .......................... 1 13,413,050 1.3 1.5 0.0
Self Storage ........................ 5 6,588,342 0.6 0.7 0.0
Mixed Use ........................... 1 2,625,000 0.3 0.3 0.0
-- -------------- ----- ----- -----
TOTAL .............................. 86 $1,041,488,309 100.0% 100.0% 100.0%
== ============== ===== ===== =====
- ----------
(1) A Mortgaged Property is classified as shadow anchored if it is in close
proximity to an anchored retail property.
[GRAPHIC OMITTED]
MIXED USE 0.6%
SELF STORAGE 0.6%
INDUSTRIAL 1.3%
MOBILE HOME PARK 6.6%
MULTIFAMILY 13.1%
OFFICE 28.1%
RETAIL 49.9%
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 or acquired
35 of the Mortgage Loans to be included in the Trust Fund representing 75.8% of
the Cut-Off Date Pool Balance (29 Mortgage Loans in Loan Group 1 or 82.8% of
the Cut-Off Date Group 1 Balance and 6 Mortgage Loans in Loan Group 2 or 37.5%
of the Cut-Off Date Group 2 Balance). Artesia Mortgage Capital Corporation
("Artesia") originated 14 of the Mortgage Loans to be included in the Trust
Fund representing 8.6% of the Cut-Off Date Pool Balance (8 Mortgage Loans in
Loan Group 1 or 2.9% of the Cut-Off Date Group 1 Balance and 6 Mortgage Loans
in Loan Group 2 or 40.2% of the Cut-Off Date Group 2 Balance). Eurohypo AG, New
York Branch ("Eurohypo") originated 2 of the Mortgage Loans to be included in
the Trust Fund representing 8.2% of the Cut-Off Date Pool Balance (9.6% of the
Cut-Off Date Group 1 Balance). Citigroup Global Markets Realty Corp.
("Citigroup") originated 3 of the Mortgage Loans to be included in the Trust
Fund representing 7.4% of
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the Cut-Off Date Pool Balance (2 Mortgage Loans in Loan Group 1 or 4.6% of the
Cut-Off Date Group 1 Balance and 1 Mortgage Loan in Loan Group 2 or 22.4% of
the Cut-Off Date Group 2 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. All of the
Mortgage Loans accrue interest on the basis (an "Actual/360 basis") of the
actual number of days elapsed over a 360 day year. Thirteen (13) of the
Mortgage Loans, representing 41.2% of the Cut-Off Date Pool Balance (7 Mortgage
Loans in Loan Group 1 or 38.9% of the Cut-Off Date Group 1 Balance and 6
Mortgage Loans in Loan Group 2 or 53.9% 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. Three (3) of the Mortgage Loans, representing 5.0% of the
Cut-Off Date Pool Balance (2 Mortgage Loans in Loan Group 1 or 5.0% of the
Cut-Off Date Group 1 Balance and 1 Mortgage Loan in Loan Group 2 or 5.1% of the
Cut-Off Date Group 2 Balance), are interest-only for their entire term.
Mortgage Loan Payments. Scheduled payments of principal and/or interest
other than Balloon Payments (the "Periodic Payments") on all of the Mortgage
Loans 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 6 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. Fifty-three (53) of the Mortgage Loans (the "Balloon
Loans"), representing 99.8% of the Cut-Off Date Pool Balance (40 Mortgage Loans
in Loan Group 1 or 99.8% of the Cut-Off Date Group 1 Balance and all of the
Mortgage Loans in Loan Group 2), 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"). Three (3) of the
Mortgage Loans, representing 5.0% of the Cut-Off Date Pool Balance (2 Mortgage
Loans in Loan Group 1 or 5.0% of the Cut-Off Date Group 1 Balance and 1
Mortgage Loan in Loan Group 2 or 5.1% of the Cut-Off Date Group 2 Balance),
provide for interest-only Periodic Payments for the entire term and do not
amortize. One (1) of the Mortgage Loans (the "Fully Amortizing Loan"),
representing 0.2% of the Cut-Off Date Pool Balance (1 Mortgage Loan in Loan
Group 1 or 0.2% of the Cut-Off Date Group 1 Balance), fully or substantially
amortizes through its respective remaining term to maturity. In addition,
because the fixed periodic payments on the Fully Amortizing Loan is determined
assuming interest is calculated on a 30/360 basis, but interest actually
accrues and is applied on the Fully Amortizing Loan on an Actual/360 basis,
there will be less amortization, absent prepayments, of the related principal
balances during the term of the Fully Amortizing Loan, resulting in a higher
final payment on the Fully Amortizing Loan.
Twenty-nine (29) of the Balloon Loans (the "ARD Loans"), representing
48.0% of the Cut-Off Date Pool Balance (25 Mortgage Loans in Loan Group 1 or
53.0% of the Cut-Off Date Group 1 Balance and 4 Mortgage Loans in Loan Group 2
or 21.1% 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.
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Two (2) of the ARD Loans, representing 4.2% of the Cut-Off Date Pool Balance
(5.0% 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 the holders of the Class Z 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.
Thirteen (13) of the Balloon Loans and ARD Loans, representing 41.2% of
the Cut-Off Date Pool Balance (7 Mortgage Loans in Loan Group 1 or 38.9% of the
Cut-Off Date Group 1 Balance and 6 Mortgage Loans in Loan Group 2 or 53.9% of
the Cut-Off Date Group 2 Balance), provide for monthly payments of interest
only for the first 12 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. Three
(3) of the Balloon Loans and ARD Loans, representing 5.0% of the Cut-Off Date
Pool Balance (2 Mortgage Loans in Loan Group 1 or 5.0% of the Cut-Off Date
Group 1 Balance and 1 Mortgage Loan in Loan Group 2 or 5.1% of the Cut-Off Date
Group 2 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
(51 Mortgage Loans, or 90.5% of the Cut-Off Date Pool Balance (39 Mortgage
Loans in Loan Group 1 or 89.7% of the Cut-Off Date Group 1 Balance and 12
Mortgage Loans in Loan Group 2 or 94.9% of the Cut-Off Date Group 2 Balance)),
(ii) prohibit voluntary prepayment of principal for a period ending on a date
specified in the related Mortgage Note, and thereafter impose a Yield
Maintenance Charge for most of the remaining term (2 Mortgage Loans, or 8.7% of
the Cut-Off Date Pool Balance (10.3% of the Cut-Off Date Group 1 Balance)), or
(iii) prohibit prepayment until a date specified in the related Mortgage Note,
and then, at the election of the borrower, permits defeasance or prepayment
with a Yield Maintenance Charge (1 Mortgage Loan, or 0.8% of the Cut-Off Date
Pool Balance (5.1% of the Cut-Off Date Group 2 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.
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
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
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service payment of such Mortgage Loan will remain unchanged. See "RISK
FACTORS--Prepayments Will Affect Your Yield" in this prospectus supplement.
Fifty-two (52) of the Mortgage Loans, or 91.3% of the Cut-Off Date Pool
Balance (89.7% of the Cut-Off Date Group 1 Balance or all of the Cut-Off Date
Group 2 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. One
(1) Mortgage Loan, representing 0.8% of the Cut-Off Date Pool Balance (5.1% of
the Cut-Off Date Group 2 Balance), provides that, in addition to the option to
defease the Mortgage Loan as described in the preceding sentence, the related
borrower may prepay the Mortgage Loan upon payment of a Yield Maintenance
Charge. Mortgage Loans secured by more than one Mortgaged Property which
provide for partial defeasance generally require that, among other things, (i)
prior to the release of a related Mortgaged Property (or a portion thereof), a
specified percentage (generally 125%) of the allocated loan amount for such
Mortgaged Property be defeased and (ii) that certain debt service coverage
ratios and loan-to-value ratio tests be satisfied with respect to the remaining
Mortgaged Properties after the defeasance. 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 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. Three (3) Mortgage
Loans (loan numbers 15, 20 and 24) representing 4.3% of the Cut-Off Date Pool
Balance (1 Mortgage Loan in Loan Group 1 or 2.2% of the Cut-Off Date Group 1
Balance and 2 Mortgage Loans in Loan Group 2 or 15.6% of the Cut-Off Date Group
2 Balance), provide that the related borrower, under certain circumstances, may
encumber the related Mortgaged Property with subordinate debt in the future.
With respect to 3 Mortgage Loans (loan numbers 5, 12 and 18), representing
9.6% of the Cut-Off Date Pool Balance (11.4% 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
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the terms of an intercreditor agreement or a subordination and standstill
agreement. With respect to 3 Mortgage Loans (loan numbers 2, 15 and 30),
representing 12.1% of the Cut-Off Date Pool Balance (14.3% 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--Additional Debt on Some Mortgage Loans Creates Additional Risks"
in this prospectus supplement. 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, 1 Mortgage Loan included in the trust fund as of the
Cut-Off Date (loan number 41), representing 0.5% of the Cut-Off Date Pool
Balance (0.6% of the Cut-Off-Date Group 1 Balance), does 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.
In addition, with respect to the Co-Lender Loans, the related Mortgaged
Property also secures one or more Companion Loans. See "--Co-Lender Loans" in
this prospectus supplement.
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.
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 the
approval of the mortgagee and certain Mortgage Loans do not prohibit transfers
of limited partnership interests or non-managing member interests in the
related borrowers. 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 16 and 37, and loan numbers 27 and 28), representing 4.2% of the
Cut-Off Date Pool Balance (2 Mortgage Loans in Loan Group 1 or 2.8% of the
Cut-Off Date Group 1 Balance and 2 Mortgage Loans in Loan Group 2 or 12.0% of
the Cut-Off Date Group 2 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.
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Two (2) of the Mortgage Loans, representing 1.9% of the Cut-Off Date Pool
Balance (12.0% of the Cut-Off Date Group 2 Balance), provide that the
cross-default and cross-collateralization provisions may be terminated in the
event one of the Mortgage Loans is defeased or assumed without a simultaneous
defeasance or assumption of the other, provided that a no-downgrade letter is
received from the applicable rating agencies, certain loan-to-value ratio and
debt service coverage ratio tests are satisfied, and funds equal to 25% of the
appraised value of the Mortgaged Property primarily securing the defeased or
released Mortgage Loan are deposited as additional security for the remaining
undefeased or unreleased Mortgage Loan.
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. With respect to 6 Mortgage Loans (loan numbers
1, 2, 9, 15, 30 and 44), representing 27.4% of the Cut-Off Date Pool Balance (5
Mortgage Loans in Loan Group 1 or 32.0% of the Cut-Off Date Group 1 Balance and
1 Mortgage Loan in Loan Group 2 or 2.0% of the Cut-Off Date Group 2 Balance),
the lender has agreed to release a portion of the related Mortgaged Property,
provided certain conditions are satisfied, which conditions may include: (i)
evidence that the released property may be separated from the Mortgaged
Property without a material diminution in the value of the Mortgaged Property;
(ii) the released property will be vacant, non-income producing and unimproved
(or improved only by surface parking areas); and (iii) a Rating Agency
confirmation that the release will not result in a downgrade, withdrawal or
qualification of the then current rating assigned to any Class of Certificates.
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. "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.
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
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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, 1 Mortgaged Property securing 1
Mortgage Loan, representing 0.3% of the Cut-Off Date Pool Balance (1 Mortgage
Loan in Loan Group 1 or 0.3% of the Cut-Off Date Group 1 Balance), is 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 described above have earthquake insurance in place.
Lease Enhancement Policies. One (1) Mortgage Loan (loan number 13),
representing approximately 2.1% of the Cut-Off Date Pool Balance (2.5% of the
Cut-Off Date Group 1 Balance), provides the tenant with termination and
abatement rights arising from certain condemnations and casualties
("Condemnation Rights") and has the benefit of a noncancellable lease
enhancement policy issued by Lexington Insurance Company, a member company of
American International Group, Inc. (the "Enhancement Insurer"), which as of
April 21, 2004, had a rating of "AAA" by S&P. The lease enhancement policy
provides, subject to customary exclusions, that in the event of a permitted
termination by a tenant of its lease as a result of a condemnation, the
Enhancement Insurer will pay to the Master Servicer on behalf of the Trust Fund
the "Loss of Rents" (i.e., a lump sum payment of all outstanding principal
plus, subject to the limitation below, accrued interest on the related Mortgage
Loan). If the lease permits the tenant to abate all or a portion of the rent in
the event of a condemnation, the "Loss of Rents" will be in an amount equal to
the portion of any rescheduled monthly rental payments not made by such tenant
for the period from the date the abatement commences until the earlier of the
date the abatement ceases or the expiration date of the initial term of such
lease; provided that in the event such payments would exceed the limits of
liability under the policy, then the Enhancement Insurer may, at its option,
pay the present value of the stream of partial abatement payments in a lump
sum. The Enhancement Insurer is not required to pay amounts due under the
related Mortgage Loan other than principal and, subject to the limitation
above, accrued interest, and therefore is not required to pay any Prepayment
Premium or Yield Maintenance Charge due thereunder or any amounts the mortgagor
is obligated to pay thereunder to reimburse the Master Servicer or the Trustee
for outstanding advances.
The lease enhancement policy contains certain exclusions from coverage,
including loss arising from damage or destruction directly or indirectly caused
by war, insurrection, rebellion, revolution, usurped power, pollutants or
radioactive matter, or from a taking other than a condemnation by reason of
public health, public safety or the environment.
CO-LENDER LOANS
General. Two (2) Mortgage Loans (loan number 1, the "Brass Mill Center &
Commons Loan" and loan number 2, the "Four Seasons Town Centre Loan") are each
represented by the senior note of two notes. With respect to the Brass Mill
Center & Commons Loan, the related subordinate companion loan (the "Brass Mill
Center & Commons Subordinate Loan") is not part of the Trust Fund. The Brass
Mill Center & Commons Loan and the Brass Mill Center & Commons Subordinate Loan
are referred to collectively herein as the "Brass Mill Center & Commons Whole
Loan". The Brass Mill Center & Commons Loan has a Cut-Off Date Balance of
$130,000,000, representing 12.5% of the Cut-Off Date Pool Balance (14.8% of the
Cut-Off Date Group 1 Balance). With respect to the Four Seasons Town Centre
Loan, the related subordinate companion loan (the "Four Seasons Town Centre
Subordinate Loan") is not part of the Trust Fund. The Four Seasons Town Centre
Loan and the Four Seasons Town Centre Subordinate Loan are referred to
collectively herein as the "Four Seasons Town Centre Whole Loan". The Four
Seasons Town Centre Loan has a Cut-Off Date Balance of $97,864,906,
representing 9.4% of the Cut-Off Date Pool Balance (11.1% of the Cut-Off Date
Group 1 Balance).
Two (2) Mortgage Loans (loan number 3, the "11 Madison Avenue Loan" and
loan number 5, 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 companion loans that are part of
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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 $95,555,556, representing 9.2% of the
Cut-Off Date Pool Balance (10.9% 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 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 $60,000,000,
representing 5.8% of the Cut-Off Date Pool Balance (6.8% of the Cut-Off Date
Group 1 Balance).
One (1) Mortgage Loan (loan number 17, the "Deep Deuce at Bricktown Loan"
and, together with the 11 Madison Avenue Loan, the Starrett-Lehigh Building
Loan, the Brass Mill Center & Commons Loan and the Four Seasons Town Centre
Loan, the "Co-Lender Loans") is represented by the senior note of two notes.
The related subordinate companion loan (the "Deep Deuce at Bricktown
Subordinate Loan") is not part of the Trust Fund. The Deep Deuce at Bricktown
Subordinate Loan, the 11 Madison Avenue Companion Loans, the Starrett-Lehigh
Building Companion Loans, the Brass Mill Center & Commons Subordinate Loan and
the Four Seasons Town Centre Subordinate Loan are referred to hereunder as the
"Companion Loans". The 11 Madison Avenue Subordinate Loans, the Starrett-Lehigh
Building Subordinate Loan, the Brass Mill Center & Commons Subordinate Loan,
the Four Seasons Town Centre Subordinate Loan and the Deep Deuce at Bricktown
Subordinate Loan are collectively referred to herein as the "Subordinate
Companion Loans". The Deep Deuce at Bricktown Subordinate Loan and the Deep
Deuce at Bricktown Loan are referred to collectively herein as the "Deep Deuce
at Bricktown Whole Loan". The Deep Deuce at Bricktown Loan has a Cut-Off Date
Balance of $18,240,000, representing 1.8% of the Cut-Off Date Pool Balance
(11.3% of the Cut-Off Date Group 2 Balance).
The trust created pursuant to the 2004-C10 Pooling and Servicing Agreement
is the holder of one of the 11 Madison Avenue Pari Passu Loans, the
Starrett-Lehigh Building Pari Passu Loan and the Starrett-Lehigh Building
Subordinate Loan. Wachovia Bank, National Association will initially be the
holder of the remaining 11 Madison Avenue Pari Passu Loans. The remaining
Companion Loans are held by unaffiliated entities. The holders of the Companion
Loans may only sell each such Companion Loan with the prior written consent of
the Master Servicer or the Special Servicer (or with respect to the 11 Madison
Avenue Loan or the Starrett-Lehigh Building Loan, the 2004-C10 Master Servicer
or the applicable 2004-C10 Special Servicer) or, without such consent, to
certain institutional lenders or other parties named in the related
Intercreditor Agreement, in each case after receiving prior confirmation from
each Rating Agency that such sale will not result in the withdrawal, downgrade
or qualification of the ratings assigned by the Rating Agency to any Class of
Certificates then rated by the Rating Agency.
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
Loan and the 11 Madison Avenue Pari Passu 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
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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 both the Starrett-Lehigh Building Loan and the
Starrett-Lehigh Building Pari Passu Loan. With respect to the Brass Mill Center
& Commons Loan, under the terms of the related intercreditor and servicing
agreement among noteholders (the "Brass Mill Center & Commons Intercreditor
Agreement"), the holder of the Brass Mill Center & Commons Subordinate Loan has
agreed to subordinate its interest in certain respects to the Brass Mill Center
& Commons Loan. With respect to the Four Seasons Town Centre Loan, under the
terms of an intercreditor and servicing agreement among noteholders (the "Four
Seasons Town Centre Intercreditor Agreement"), the holder of the Four Seasons
Town Centre Subordinate Loan has agreed to subordinate its interest in certain
respects to the Four Seasons Town Centre Loan. With respect to the Deep Deuce
at Bricktown Loan, under the terms of the related intercreditor and servicing
agreements among noteholders (the "Deep Deuce at Bricktown Intercreditor
Agreement" and, collectively with the 11 Madison Avenue Intercreditor
Agreement, the Starrett-Lehigh Building Intercreditor Agreement, the Brass Mill
Center & Commons Intercreditor Agreement and the Four Seasons Town Centre
Intercreditor Agreement, the "Intercreditor Agreements"), the holder of the
Deep Deuce at Bricktown Subordinate Loan has agreed to subordinate its interest
in certain respects to the Deep Deuce at Bricktown Loan. Except with respect to
the 11 Madison Avenue Loan and the Starrett-Lehigh Building Loan and their
related Companion Loans (which will be serviced under the 2004-C10 Pooling and
Servicing Agreement), the Master Servicer and the Special Servicer will
undertake to perform the obligations of the holder of the Co-Lender Loans under
the related Intercreditor Agreements.
The following table presents certain information with respect to the
Co-Lender Loans:
CO-LENDER LOANS
CUT-OFF
DATE
PRINCIPAL CUT-OFF DATE COMBINED
BALANCE PRINCIPAL BALANCE CUT-OFF DATE COMBINED CUT-OFF
OF MORTGAGE OF SENIOR PRINCIPAL BALANCE UNDERWRITTEN DATE
MORTGAGE LOAN LOAN COMPONENTS OF WHOLE LOAN DSCR LTV
- -------------------------------------- --------------- ------------------- ------------------- -------------- ---------
Brass Mill Center & Commons Loan ..... $130,000,000 $130,000,000 $140,000,000 1.65x 66.8%
Four Seasons Town Centre Loan ........ $ 97,864,906 $ 97,864,906 $111,845,606 1.35x 69.5%
11 Madison Avenue Loan ............... $ 95,555,556 $430,000,000 $515,000,000 1.20x 76.3%
Starrett-Lehigh Building Loan ........ $ 60,000,000 $160,000,000 $184,000,000 1.81x 52.6%
Deep Deuce at Bricktown Loan ......... $ 18,240,000 $ 18,240,000 $ 19,000,000 1.34x 83.3%
Brass Mill Center & Commons Loan and Four Seasons Town Centre Loan
Servicing Provisions of the Brass Mill Center & Commons Intercreditor
Agreement and the Four Seasons Town Centre Intercreditor Agreement. With
respect to the Brass Mill Center & Commons Loan and the Four Seasons Town
Centre Loan, the Master Servicer and the Special Servicer will service and
administer the Brass Mill Center & Commons Loan, the Brass Mill Center &
Commons Subordinate Loan, the Four Seasons Town Centre Loan and the Four
Seasons Town Centre Subordinate Loan, in each case pursuant to the Pooling and
Servicing Agreement and the related Intercreditor Agreement for so long as the
Brass Mill Center & Commons Loan or the Four Seasons Town Centre Loan, as
applicable, is part of the trust. If the principal amount of the Brass Mill
Center & Commons Subordinate Loan or the Four Seasons Town Centre Subordinate
Loan, as applicable, less any existing related Appraisal Reduction Amount, is
at least equal to 25% of the original principal amount of the Brass Mill Center
& Commons Subordinate Loan or the Four Seasons Town Centre Subordinate Loan, as
applicable, the holder of the Brass Mill Center & Commons Subordinate Loan or
the Four Seasons Town Centre Subordinate Loan, as applicable, or an advisor on
its behalf, will be entitled to advise and direct the Master Servicer and/or
the Special Servicer with respect to certain matters, including, among other
things, foreclosure or material modifications of the Brass Mill Center &
Commons Loan or the Four Seasons Town Centre Loan, as applicable. 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,
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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 any default under the Brass Mill Center & Commons Loan,
the Brass Mill Center & Commons Subordinate Loan, the Four Seasons Town Centre
Loan or the Four Seasons Town Centre Subordinate Loan, the holder of the
related Subordinate Companion Loan will be entitled to (i) cure such default
within five business days of receipt of notice from the Master Servicer with
respect to monetary defaults and within thirty days of receipt of notice from
the Master Servicer with respect to non-monetary defaults and/or (ii) purchase
the related Co-Lender Loan from the trust after the expiration of the cure
period subject to the conditions contained in the related Intercreditor
Agreement. The purchase price will generally equal the unpaid principal balance
of the related Co-Lender Loan, together with all unpaid interest on such
Co-Lender Loan (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 related Co-Lender Loan is responsible. No
prepayment consideration will be payable in connection with such a purchase of
either the Brass Mill Center & Commons Loan or the Four Seasons Town Centre
Loan.
Application of Payments. Pursuant to the related Intercreditor Agreement,
to the extent described below, the right of the holder of the Brass Mill Center
& Commons Subordinate Loan and the Four Seasons Town Centre Subordinate Loan to
receive payments with respect to the related Subordinate Companion Loan is
subordinate to the payment rights of the trust to receive payments with respect
to the related Co-Lender Loan. Prior to the occurrence of an event of default
with respect to the Brass Mill Center & Commons Loan or the Four Seasons Town
Centre Loan or prior to a Servicing Transfer Event related to either such
Mortgage Loan, after payment or reimbursement of any advances (other than P&I
Advances made by the holder of the related Subordinate Companion Loan), advance
interest or other costs, fees or expenses related to or allocable to such
Co-Lender Loan or its related Subordinate Companion Loan, all payments and
proceeds (of whatever nature) received with respect to the such Co-Lender Loan
and the related Subordinate Companion Loan will be paid first, to the trust in
an amount equal to interest due with respect to such Co-Lender Loan; second, to
the trust in an amount equal to its pro rata share (based upon the outstanding
principal balance of the related Co-Lender Loan) of principal payments on such
Mortgage Loan; third, to the holder of the related Subordinate Companion Loan
in an amount equal to interest due with respect to such Subordinate Companion
Loan; fourth, to the holder of the related Subordinate Companion Loan in an
amount equal to its pro rata share (based upon the outstanding principal
balance of such Subordinate Companion Loan) of principal payments on such
Mortgage Loan; fifth, to the trust and the holder of the related Subordinate
Companion Loan, pro rata (based upon the outstanding principal balances of such
Co-Lender Loan and its related Subordinate Companion Loan), in an amount equal
to any prepayment premium, to the extent actually paid; sixth, to the trust and
the holder of the related Subordinate Companion Loan, pro rata, based upon any
unreimbursed costs and expenses owing to the trust or the holder of the related
Subordinate Companion Loan, respectively, up to the amount of any such
unreimbursed costs and expenses; and seventh, to the trust and the holder of
the related Subordinate Companion Loan, pro rata, based upon the default
interest respectively accrued under such Co-Lender Loan and its related
Subordinate Companion Loan, to the extent actually paid. If any excess amount
is paid by the related borrower, and not otherwise applied in accordance with
the foregoing seven clauses, such amount will be paid to the trust and the
holder of the related Subordinate Companion Loan on a pro rata basis.
Following the occurrence and during the continuance of an event of default
with respect to the Brass Mill Center & Commons Loan or the Four Seasons Town
Centre Loan or such mortgage loan becoming a specially serviced mortgage loan
pursuant to the related Intercreditor Agreement, and subject to the holder of
the related Subordinate Companion Loan holder's right to purchase the related
Co-Lender Loan from the trust, after payment or reimbursement of any advances
(other than P&I Advances made by the holder of the related Subordinate
Companion Loan), advance interest or other costs, fees or expenses related to
or allocable to the Co-Lender Loan or its related Subordinate Companion Loan,
all payments and proceeds (of whatever nature) on such Subordinate Companion
Loan will be subordinate to all payments due on the related Co-Lender Loan and
the amounts with respect to such Co-Lender
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Loan and the related Subordinate Companion Loan will be paid first, to the
trust in an amount equal to interest due with respect to the Co-Lender Loan;
second, to the trust in an amount equal to the principal balance of the
Co-Lender Loan until paid in full; third, to the holder of the related
Subordinate Companion Loan in an amount equal to interest due with respect to
such related Subordinate Companion Loan; fourth, to the holder of the related
Subordinate Companion Loan in an amount equal to the principal balance of such
related Subordinate Companion Loan until paid in full; fifth, with respect to
the Co-Lender Loan, to the trust in an amount equal to any prepayment premium,
to the extent actually paid, allocable to such Co-Lender Loan; sixth, with
respect to the Co-Lender Loan, to the trust in an amount equal to any unpaid
default interest accrued on such Co-Lender Loan; seventh, to the holder of the
related Subordinate Companion Loan in an amount equal to any prepayment
premium, to the extent actually paid, allocable to the related Subordinate
Companion Loan; eighth, to the holder of the related Subordinate Companion Loan
in an amount equal to any unpaid default interest accrued on such Subordinate
Companion Loan; ninth, to the trust and the holder of the related Subordinate
Companion Loan, pro rata, based upon the amount of any unreimbursed costs and
expenses, respectively, up to the amount of any such unreimbursed costs and
expenses; and tenth, any excess, to the trust and the holder of the related
Subordinate Companion Loan, pro rata, based upon the outstanding principal
balances; provided that if the principal balance of the related Subordinate
Companion Loan is equal to zero, then based upon the initial principal
balances.
11 Madison Avenue Loan
Servicing Provisions of the 11 Madison Avenue Intercreditor Agreement. The
11 Madison Avenue Loan and its related Companion Loans will be serviced under
the pooling and servicing agreement (the "2004-C10 Pooling and Servicing
Agreement") entered into in connection with the issuance of the Wachovia Bank
Commercial Mortgage Trust, Commercial Mortgage Pass-Through Certificates,
Series 2004-C10. The master servicer under the 2004-C10 Pooling and Servicing
Agreement is Wachovia Bank, National Association (the "2004-C10 Master
Servicer"), the special servicer under the 2004-C10 Pooling and Servicing
Agreement is Wachovia Bank, National Association with respect to the 11 Madison
Avenue mortgage loan, and Lennar Partners, Inc. with respect to each other
mortgage loan (together, the "2004-C10 Special Servicer"), and the trustee
under the 2004-C10 Pooling and Servicing Agreement is Wells Fargo Bank, N.A.
(the "2004-C10 Trustee"). The terms of the 2004-C10 Pooling and Servicing
Agreement provide for servicing arrangements that are generally similar to
those under the Pooling and Servicing Agreement. Subject to the exceptions
described herein under "SERVICING OF THE MORTGAGE LOANS--The Controlling Class
Representative", the Controlling Class Representative will generally share with
the controlling class representative under the 2004-C10 Pooling and Servicing
Agreement (the "2004-C10 Controlling Class Representative") the rights given to
the 2004-C10 Controlling Class Representative under the 2004-C10 Pooling and
Servicing Agreement to direct the servicing of the 11 Madison Avenue Loan and
the Starrett-Lehigh Building Loan. See "SERVICING OF THE MORTGAGE LOANS--The
Controlling Class Representative" and "--Servicing of the 11 Madison Avenue
Loan and the Starrett-Lehigh Building Loan" in this prospectus supplement. 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 2004-C10 Master Servicer
and 2004-C10 Special Servicer will service and administer the 11 Madison Avenue
Loan and each of the 11 Madison Avenue Companion Loans pursuant to the 2004-C10
Pooling and Servicing Agreement and the 11 Madison Avenue Intercreditor
Agreement for so long as the 11 Madison Avenue Loan is part of the 2004-C10
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 Madison Avenue Companion Loan, or an advisor on its behalf,
will be entitled to advise and direct the 2004-C10 Master Servicer and/or
2004-C10 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 2004-C10 Master
Servicer or the 2004-C10 Special Servicer to violate any provision of the
2004-C10 Pooling and Servicing Agreement, including the 2004-C10 Master
Servicer's and the 2004-C10 Special Servicer's obligation to act
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in accordance with the Servicing Standard (as set forth in the 2004-C10 Pooling
and Servicing Agreement). See "SERVICING OF THE MORTGAGE LOANS--The Controlling
Class Representative" and "--Servicing of the 11 Madison Avenue Loan and the
Starrett-Lehigh Building Loan" 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 2004-C10 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 2004-C10 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 2004-C10 Special Servicer pursuant to the 2004-C10 Pooling
and Servicing Agreement but shall include, in the event the purchase price is
being calculated in connection with the purchase of an 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 under the 2004-C10 Pooling and
Servicing Agreement 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 (including payments or reimbursements to the
2004-C10 Master Servicer, the 2004-C10 Special Servicer and/or the 2004-C10
Trustee pursuant to the 2004-C10 Pooling and Servicing Agreement), 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, among 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,
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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; 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 clauses 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 (including payments or
reimbursements to the 2004-C10 Master Servicer, the 2004-C10 Special Servicer
and/or the 2004-C10 Trustee pursuant to the 2004-C10 Pooling and Servicing
Agreement), 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, among 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
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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 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
clauses 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. The Starrett-Lehigh Building Loan and its related Companion Loans
will be serviced under the 2004-C10 Pooling and Servicing Agreement. The terms
of the 2004-C10 Pooling and Servicing Agreement provide for servicing
arrangements that are generally similar to those under the Pooling and
Servicing Agreement. Subject to the exceptions described herein under
"SERVICING OF THE MORTGAGE LOANS--The Controlling Class Representative", the
Controlling Class Representative will generally share with the 2004-C10
Controlling Class Representative the rights given to the 2004-C10 Controlling
Class Representative under the 2004-C10 Pooling and Servicing Agreement to
direct the servicing of the Starrett-Lehigh Building Loan. See "SERVICING OF
THE MORTGAGE LOANS--The Controlling Class Representative" and "--Servicing of
the 11 Madison Avenue Loan and the Starrett-Lehigh Building Loan" in this
prospectus supplement. 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, pro rata and pari
passu, to the Starrett-Lehigh Building Senior Loans.
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 2004-C10 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 (as defined
in the 2004-C10 Pooling and Servicing Agreement) 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 the 2004-C10 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
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Starrett-Lehigh Building Loan together with the Starrett-Lehigh Building Pari
Passu Loan from the Trust Fund and the 2004-C10 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 (including any advances by the
2004-C10 Master Servicer or the 2004-C10 Trustee), together with accrued and
unpaid interest on all Advances and all accrued Special Servicing Fees (as
defined in the 2004-C10 Pooling and Servicing Agreement) 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 2004-C10 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 the
2004-C10 prospectus supplement.
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 2004-C10 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, Trustee, 2004-C10 Master Servicer, 2004-C10 Special Servicer,
2004-C10 Trustee and any other appropriate person for all unreimbursed Advances
(including advances by the 2004-C10 Master Servicer or the 2004-C10 Trustee)
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 (as defined in the
2004-C10 Pooling and Servicing Agreement) has cured such a default), after
payment of amounts payable or reimbursable under the Pooling and Servicing
Agreement (including payments or reimbursements to the 2004-C10 Master
Servicer, the 2004-C10 Special Servicer and/or the 2004-C10 Trustee pursuant to
the 2004-C10 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
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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 (as defined in the 2004-C10 Pooling and Servicing Agreement)
has cured such a default), after payment of all amounts then payable or
reimbursable under the Pooling and Servicing Agreement and the 2004-C10 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 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.
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Deep Deuce at Bricktown Loan
Servicing Provisions of the Deep Deuce at Bricktown Intercreditor
Agreement. With respect to the Deep Deuce at Bricktown Loan, the Master
Servicer and Special Servicer will service and administer such loan and the
Deep Deuce at Bricktown Subordinate Loan pursuant to the Pooling and Servicing
Agreement and the related Intercreditor Agreement for so long as the Deep Deuce
at Bricktown Loan is part of the trust. The Master Servicer and/or Special
Servicer may not enter into amendments, modifications or extensions of the Deep
Deuce at Bricktown Loan and the Deep Deuce at Bricktown Subordinate Loan
without the consent of the holder of the Deep Deuce at Bricktown Subordinate
Loan if the proposed amendment, modification or extension adversely affects the
holder of the related Deep Deuce at Bricktown 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 the Deep
Deuce at Bricktown Loan or the Deep Deuce at Bricktown Subordinate Loan becomes
90 or more days delinquent, (ii) the principal balance of such Deep Deuce at
Bricktown Loan or the Deep Deuce at Bricktown Subordinate Loan has been
accelerated, (iii) the principal balance of such Deep Deuce at Bricktown Loan
or the Deep Deuce at Bricktown Subordinate Loan is not paid at maturity, (iv)
the borrower declares bankruptcy or (v) any other event where the cash flow
payment under a Deep Deuce at Bricktown Subordinate Loan has been interrupted
and payments are made pursuant to the event of default waterfall, the holder of
the Deep Deuce at Bricktown Subordinate Loan will be entitled to purchase the
Deep Deuce at Bricktown 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 Deep Deuce at Bricktown Loan, together with
all unpaid interest on the Deep Deuce at Bricktown 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 Deep Deuce
at Bricktown Loan is responsible. Unless the borrower or an affiliate is
purchasing the Deep Deuce at Bricktown Loan, no prepayment consideration will
be payable in connection with the purchase of the Deep Deuce at Bricktown Loan.
Application of Payments. Pursuant to the related Deep Deuce at Bricktown
Intercreditor Agreement and prior to the occurrence of (i) the acceleration of
the related Deep Deuce at Bricktown Loan or the Deep Deuce at Bricktown
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 Deep Deuce at Bricktown Subordinate Loan. Any escrow
and reserve payments required in respect of such Deep Deuce at Bricktown Loan
or the related Deep Deuce at Bricktown Subordinate Loan will be paid to the
Master Servicer.
Following the occurrence and during the continuance of (i) the
acceleration of a Deep Deuce at Bricktown Loan or the Deep Deuce at Bricktown
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 Deep Deuce at Bricktown Subordinate Loan to purchase the Deep
Deuce at Bricktown Loan from the trust, all payments and proceeds (of whatever
nature) on the Deep Deuce at Bricktown Subordinate Loan will be subordinated to
all payments due on the Deep Deuce at Bricktown 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 Deep Deuce at
Bricktown Loan; fourth, to the trust, in an amount equal to the principal
balance of the Deep Deuce at Bricktown 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 Deep Deuce at Bricktown Loan; sixth, to the holder of
the Deep Deuce at Bricktown Subordinate Loan, up to the amount of any
unreimbursed costs and expenses paid by the holder of the Deep Deuce at
Bricktown Subordinate Loan; seventh, to the holder of the Deep Deuce at
Bricktown Subordinate Loan, in an amount equal to interest due with respect to
the Deep Deuce at Bricktown Subordinate Loan;
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eighth, to the holder of the Deep Deuce at Bricktown Subordinate Loan, in an
amount equal to the principal balance of the Deep Deuce at Bricktown
Subordinate Loan until paid in full; ninth, to the holder of the Deep Deuce at
Bricktown Subordinate Loan, in an amount equal to any prepayment premium, to
the extent actually paid, allocable to the Deep Deuce at Bricktown Subordinate
Loan; tenth, to the trust and the holder of the Deep Deuce at Bricktown
Subordinate Loan, in that order, in an amount equal to any unpaid default
interest accrued on the Deep Deuce at Bricktown Loan and Deep Deuce at
Bricktown Subordinate Loan, respectively; and eleventh, any excess, to the
trust and the holder of the Deep Deuce at Bricktown Subordinate Loan, pro rata,
based upon the outstanding principal balances; provided that if the principal
balance of the Deep Deuce at Bricktown 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,
and, in the case of the 11 Madison Avenue Loan and the Starrett-Lehigh Building
Loan, will be applied and distributed in accordance with the 2004-C10 Pooling
and Servicing Agreement.
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 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, such
numerical and statistical information excludes the Deep Deuce at Bricktown
Subordinate Loan, the Brass Mill Center & Commons Subordinate Loan and the Four
Seasons Town Centre Subordinate Loan relating to the Deep Deuce at Bricktown
Loan, Brass Mill Center & Commons Loan and the Four Seasons Town Centre Loan,
respectively. 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 Loan(s) (but excluding the
related Subordinate Loan(s)). 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 and Cross Defaulted Loan Flag" 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
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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 provided herein with
respect to 13 Mortgage Loans (loan numbers 3, 4, 5, 6, 8, 14, 17, 18, 20,
22, 24, 25 and 40), representing 41.2% of the Cut-Off Date Pool Balance (7
Mortgage Loans in Loan Group 1 or 38.9% of the Cut-Off Date Group 1 Balance
and 6 Mortgage Loans in Loan Group 2 or 53.9% 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. In general, the
Mortgage Loan Sellers relied on either 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
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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" in this prospectus supplement. 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.
(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.
(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.
(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, 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) 0.00235%, 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.
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(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 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, 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.
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MORTGAGED PROPERTIES BY PROPERTY TYPE FOR ALL MORTGAGE LOANS(1)
NUMBER OF AGGREGATE % OF AVERAGE HIGHEST
MORTGAGED CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
PROPERTY TYPE PROPERTIES BALANCE POOL BALANCE BALANCE BALANCE
- --------------------- ------------ ----------------- -------------- -------------- ----------------
Retail .............. 39 $ 520,126,003 49.9% $13,336,564 $ 130,000,000
Retail --
Anchored .......... 27 492,367,587 47.3 $18,235,837 $ 130,000,000
Retail --
Unanchored ........ 10 16,233,538 1.6 $ 1,623,354 $ 4,100,000
Retail -- Shadow
Anchored(4) ....... 2 11,524,878 1.1 $ 5,762,439 $ 8,490,797
Office .............. 10 293,177,195 28.1 $29,317,720 $ 95,555,556
Multifamily ......... 13 136,440,638 13.1 $10,495,434 $ 20,400,000
Mobile Home
Park ............... 17 69,118,082 6.6 $ 4,065,770 $ 10,434,702
Industrial .......... 1 13,413,050 1.3 $13,413,050 $ 13,413,050
Self Storage ........ 5 6,588,342 0.6 $ 1,317,668 $ 1,723,937
Mixed Use ........... 1 2,625,000 0.3 $ 2,625,000 $ 2,625,000
-- -------------- -----
86 $1,041,488,309 100.0% $12,110,329 $ 130,000,000
== ============== =====
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(2) (MOS.)(2) RATIO RATIO RATIO RATE(3) RATE
- --------------------- -------------- ------------- ----------- ----------- --------- --------- ----------- ----------
Retail .............. 67.2% 54.8% 114 1.67x 1.20x 2.66x 95.7% 5.224%
Retail --
Anchored .......... 67.0% 54.8% 114 1.68x 1.20x 2.66x 95.6% 5.206%
Retail --
Unanchored ........ 73.3% 56.1% 110 1.39x 1.27x 1.65x 100.0% 5.735%
Retail -- Shadow
Anchored(4) ....... 66.9% 54.2% 118 1.69x 1.47x 1.77x 96.9% 5.278%
Office .............. 63.2% 55.5% 117 1.64x 1.24x 2.08x 87.5% 5.703%
Multifamily ......... 74.1% 65.3% 99 1.39x 1.20x 1.94x 91.8% 5.223%
Mobile Home
Park ............... 75.1% 65.0% 97 1.40x 1.36x 1.46x 92.1% 5.312%
Industrial .......... 74.5% 63.8% 113 1.20x 1.20x 1.20x 76.9% 6.090%
Self Storage ........ 62.8% 34.7% 138 1.45x 1.20x 1.53x 90.9% 5.827%
Mixed Use ........... 77.2% 64.5% 120 1.40x 1.40x 1.40x 100.0% 5.500%
67.6% 57.1% 112 1.60X 1.20X 2.66X 92.4% 5.380%
- -------
(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 amounts
(allocating the Mortgage Loan principal balance to each of those properties
by the appraised values of the Mortgaged Properties or the allocated loan
amount as detailed in the related Mortgage Loan documents).
(2) Calculated with respect to the Anticipated Repayment Date for ARD Loans.
(3) 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.
(4) A Mortgaged Property is considered "shadow anchored" if it is in close
proximity to the anchored property.
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MORTGAGED PROPERTIES BY PROPERTY TYPE FOR LOAN GROUP 1 MORTGAGE LOANS(1)
% OF
NUMBER OF AGGREGATE CUT-OFF DATE AVERAGE HIGHEST
MORTGAGED CUT-OFF DATE GROUP 1 CUT-OFF DATE CUT-OFF DATE
PROPERTY TYPE PROPERTIES BALANCE BALANCE BALANCE BALANCE
- --------------------- ------------ -------------- -------------- -------------- --------------
Retail .............. 39 $520,126,003 59.1% $13,336,564 $130,000,000
Retail --
Anchored .......... 27 492,367,587 55.9 $18,235,837 $130,000,000
Retail --
Unanchored ........ 10 16,233,538 1.8 $ 1,623,354 $ 4,100,000
Retail -- Shadow
Anchored(4) ....... 2 11,524,878 1.3 $ 5,762,439 $ 8,490,797
Office .............. 10 293,177,195 33.3 $29,317,720 $ 95,555,556
Mobile Home
Park ............... 9 33,084,796 3.8 $ 3,676,088 $ 8,160,000
Industrial .......... 1 13,413,050 1.5 $13,413,050 $ 13,413,050
Multifamily ......... 1 11,456,334 1.3 $11,456,334 $ 11,456,334
Self Storage ........ 5 6,588,342 0.7 $ 1,317,668 $ 1,723,937
Mixed Use ........... 1 2,625,000 0.3 $ 2,625,000 $ 2,625,000
-- ------------ -----
66 $880,470,720 100.0% $13,340,465 $130,000,000
== ============ =====
WTD. AVG.
STATED
WTD. AVG. WTD. AVG. REMAINING
CUT-OFF DATE LTV TERM TO WTD. AVG. MINIMUM MAXIMUM WTD. AVG. WTD. AVG.
LTV RATIO AT MATURITY DSC DSC DSC OCCUPANCY MORTGAGE
PROPERTY TYPE RATIO MATURITY(2) (MOS.)(2) RATIO RATIO RATIO RATE(3) RATE
- --------------------- -------------- ------------- ----------- ----------- --------- --------- ----------- ----------
Retail .............. 67.2% 54.8% 114 1.67x 1.20x 2.66x 95.7% 5.224%
Retail --
Anchored .......... 67.0% 54.8% 114 1.68x 1.20x 2.66x 95.6% 5.206%
Retail --
Unanchored ........ 73.3% 56.1% 110 1.39x 1.27x 1.65x 100.0% 5.735%
Retail -- Shadow
Anchored(4) ....... 66.9% 54.2% 118 1.69x 1.47x 1.77x 96.9% 5.278%
Office .............. 63.2% 55.5% 117 1.64x 1.24x 2.08x 87.5% 5.703%
Mobile Home
Park ............... 73.9% 66.3% 74 1.44x 1.36x 1.46x 87.3% 5.075%
Industrial .......... 74.5% 63.8% 113 1.20x 1.20x 1.20x 76.9% 6.090%
Multifamily ......... 82.4% 63.8% 118 1.20x 1.20x 1.20x 100.0% 5.920%
Self Storage ........ 62.8% 34.7% 138 1.45x 1.20x 1.53x 90.9% 5.827%
Mixed Use ........... 77.2% 64.5% 120 1.40x 1.40x 1.40x 100.0% 5.500%
66.4% 55.6% 113 1.64X 1.20X 2.66X 92.4% 5.406%
- -------
(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 amounts
(allocating the Mortgage Loan principal balance to each of those
properties by the appraised values of the Mortgaged Properties or the
allocated loan amount as detailed in the related Mortgage Loan
documents).
(2) Calculated with respect to the Anticipated Repayment Date for ARD Loans.
(3) 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.
(4) A Mortgaged Property is considered "shadow anchored" if it is in close
proximity to an anchored property.
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MORTGAGED PROPERTIES BY PROPERTY TYPE FOR LOAN GROUP 2 MORTGAGE LOANS(1)
% OF
NUMBER OF AGGREGATE CUT-OFF DATE AVERAGE HIGHEST
MORTGAGED CUT-OFF DATE GROUP 2 CUT-OFF DATE CUT-OFF DATE
PROPERTY TYPE PROPERTIES BALANCE BALANCE BALANCE BALANCE
- ------------------ ------------ -------------- -------------- -------------- --------------
Multifamily ...... 12 $124,984,304 77.6% $10,415,359 $20,400,000
Mobile Home
Park ............ 8 36,033,285 22.4 $ 4,504,161 $10,434,702
-- ------------ -----
20 $161,017,589 100.0% $ 8,050,879 $20,400,000
== ============ =====
WTD. AVG.
STATED
WTD. AVG. WTD. AVG. REMAINING
CUT-OFF DATE LTV TERM TO WTD. AVG. MINIMUM MAXIMUM WTD. AVG. WTD. AVG.
LTV RATIO AT MATURITY DSC DSC DSC OCCUPANCY MORTGAGE
PROPERTY TYPE RATIO MATURITY(1) (MOS.)(2) RATIO RATIO RATIO RATE(3) RATE
- ------------------ -------------- ------------- ----------- ----------- --------- --------- ----------- ----------
Multifamily ...... 73.4% 65.5% 98 1.41x 1.20x 1.94x 91.0% 5.159%
Mobile Home
Park ............ 76.3% 63.8% 119 1.37x 1.37x 1.37x 96.5% 5.530%
74.0% 65.1% 102 1.40X 1.20X 1.94X 92.1% 5.242%
- -------
(1) Because this table presents information relating to the Mortgaged
Properties and not the Mortgage Loans, the information for Mortgage Loans
secured by more than one Mortgaged Property is based on allocated amounts
(allocating the Mortgage Loan principal balance to each of those
properties by the appraised values of the Mortgaged Properties or the
allocated loan amount as detailed in the related Mortgage Loan
documents).
(2) Calculated with respect to the Anticipated Repayment Date for ARD Loans.
(3) Occupancy Rates were calculated based upon rent rolls made available to
the applicable Mortgage Loan Seller by the related borrowers as of the
rent roll date set forth on Annex A-1 to this prospectus supplement.
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RANGE OF CUT-OFF DATE BALANCES FOR ALL MORTGAGE LOANS
AGGREGATE % OF AVERAGE
RANGE OF CUT-OFF NUMBER OF CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
DATE BALANCES ($) LOANS BALANCE POOL BALANCE BALANCE
- ------------------------------- ----------- ----------------- -------------- --------------
[LESS THAN OR EQUAL TO] 2,000,000 .. 5 $ 8,179,011 0.8% $ 1,635,802
2,000,001 -- 3,000,000 .......... 3 8,597,086 0.8 $ 2,865,695
3,000,001 -- 4,000,000 .......... 3 9,544,898 0.9 $ 3,181,633
4,000,001 -- 5,000,000 .......... 3 13,293,561 1.3 $ 4,431,187
5,000,001 -- 6,000,000 .......... 3 16,841,610 1.6 $ 5,613,870
6,000,001 -- 7,000,000 .......... 2 12,455,090 1.2 $ 6,227,545
7,000,001 -- 8,000,000 .......... 3 22,595,188 2.2 $ 7,531,729
8,000,001 -- 9,000,000 .......... 4 33,600,797 3.2 $ 8,400,199
9,000,001 -- 10,000,000 .......... 2 19,285,000 1.9 $ 9,642,500
10,000,001 -- 15,000,000 .......... 7 83,073,261 8.0 $ 11,867,609
15,000,001 -- 20,000,000 .......... 5 90,288,306 8.7 $ 18,057,661
20,000,001 -- 25,000,000 .......... 4 89,537,796 8.6 $ 22,384,449
25,000,001 -- 30,000,000 .......... 3 80,942,959 7.8 $ 26,980,986
35,000,001 -- 40,000,000 .......... 1 36,033,285 3.5 $ 36,033,285
55,000,001 -- 60,000,000 .......... 2 118,800,000 11.4 $ 59,400,000
70,000,001 -- 75,000,000 .......... 1 75,000,000 7.2 $ 75,000,000
80,000,001 -- 130,000,000 .......... 3 323,420,461 31.1 $107,806,820
- -------------- -----
54 $1,041,488,309 100.0% $ 19,286,821
== ============== =====
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 OR EQUAL TO] 2,000,000 .. $ 1,991,423 70.3% 44.4% 127 1.46x 5.806%
2,000,001 -- 3,000,000 .......... $ 3,000,000 73.0% 61.0% 120 1.48x 5.497%
3,000,001 -- 4,000,000 .......... $ 3,264,000 76.2% 62.4% 118 1.36x 5.690%
4,000,001 -- 5,000,000 .......... $ 4,893,561 69.3% 56.4% 120 1.43x 5.636%
5,000,001 -- 6,000,000 .......... $ 5,987,730 73.5% 62.5% 119 1.39x 5.550%
6,000,001 -- 7,000,000 .......... $ 6,394,412 69.6% 54.3% 112 1.46x 5.844%
7,000,001 -- 8,000,000 .......... $ 7,593,390 70.0% 56.7% 118 1.54x 5.547%
8,000,001 -- 9,000,000 .......... $ 8,800,000 74.8% 65.1% 105 1.60x 5.061%
9,000,001 -- 10,000,000 .......... $ 9,850,000 63.3% 52.6% 120 1.54x 5.310%
10,000,001 -- 15,000,000 .......... $ 14,100,000 75.4% 65.2% 108 1.29x 5.502%
15,000,001 -- 20,000,000 .......... $ 19,734,143 71.4% 54.8% 133 1.62x 5.748%
20,000,001 -- 25,000,000 .......... $ 24,924,796 70.6% 67.8% 64 1.66x 5.079%
25,000,001 -- 30,000,000 .......... $ 29,760,000 74.9% 63.8% 119 1.48x 5.440%
35,000,001 -- 40,000,000 .......... $ 36,033,285 76.3% 63.8% 119 1.37x 5.530%
55,000,001 -- 60,000,000 .......... $ 60,000,000 59.0% 53.1% 100 1.99x 5.360%
70,000,001 -- 75,000,000 .......... $ 75,000,000 69.2% 61.5% 120 1.51x 6.160%
80,000,001 -- 130,000,000 .......... $130,000,000 62.2% 50.0% 118 1.64x 5.091%
$130,000,000 67.6% 57.1% 112 1.60X 5.380%
- -------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-118
RANGE OF CUT-OFF DATE BALANCES FOR LOAN GROUP 1 MORTGAGE LOANS
AGGREGATE % OF AVERAGE
RANGE OF CUT-OFF NUMBER OF CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
DATE BALANCES ($) LOANS BALANCE GROUP 1 BALANCE BALANCE
- ------------------------------- ----------- ---------------- ----------------- ----------------
[LESS THAN OR EQUAL TO] 2,000,000 .. 4 $ 6,187,588 0.7% $ 1,546,897
2,000,001 -- 3,000,000 .......... 3 8,597,086 1.0 $ 2,865,695
3,000,001 -- 4,000,000 .......... 2 6,280,898 0.7 $ 3,140,449
4,000,001 -- 5,000,000 .......... 3 13,293,561 1.5 $ 4,431,187
5,000,001 -- 6,000,000 .......... 2 11,287,730 1.3 $ 5,643,865
6,000,001 -- 7,000,000 .......... 2 12,455,090 1.4 $ 6,227,545
7,000,001 -- 8,000,000 .......... 3 22,595,188 2.6 $ 7,531,729
8,000,001 -- 9,000,000 .......... 3 25,450,797 2.9 $ 8,483,599
10,000,001 -- 15,000,000 .......... 3 34,973,261 4.0 $ 11,657,754
15,000,001 -- 20,000,000 .......... 4 72,048,306 8.2 $ 18,012,076
20,000,001 -- 25,000,000 .......... 3 69,137,796 7.9 $ 23,045,932
25,000,001 -- 30,000,000 .......... 3 80,942,959 9.2 $ 26,980,986
55,000,001 -- 60,000,000 .......... 2 118,800,000 13.5 $ 59,400,000
70,000,001 -- 75,000,000 .......... 1 75,000,000 8.5 $ 75,000,000
80,000,001 -- 130,000,000 .......... 3 323,420,461 36.7 $ 107,806,820
- ------------- -----
41 $ 880,470,720 100.0% $ 21,474,896
== ============= =====
WTD. AVG.
STATED
WTD. AVG. WTD. AVG. REMAINING
HIGHEST CUT-OFF DATE LTV TERM TO WTD. AVG. WTD. AVG.
RANGE OF CUT-OFF CUT-OFF DATE LTV RATIO AT MATURITY DSC MORTGAGE
DATE BALANCES ($) BALANCE RATIO MATURITY* (MOS.)* RATIO RATE
- ------------------------------- ---------------- -------------- ----------- ---------- ----------- ----------
[LESS THAN OR EQUAL TO] 2,000,000 .. $ 1,847,071 70.0% 41.0% 130 1.42x 5.792%
2,000,001 -- 3,000,000 .......... $ 3,000,000 73.0% 61.0% 120 1.48x 5.497%
3,000,001 -- 4,000,000 .......... $ 3,246,816 74.2% 60.1% 118 1.42x 5.794%
4,000,001 -- 5,000,000 .......... $ 4,893,561 69.3% 56.4% 120 1.43x 5.636%
5,000,001 -- 6,000,000 .......... $ 5,987,730 73.3% 62.7% 118 1.49x 5.530%
6,000,001 -- 7,000,000 .......... $ 6,394,412 69.6% 54.3% 112 1.46x 5.844%
7,000,001 -- 8,000,000 .......... $ 7,593,390 70.0% 56.7% 118 1.54x 5.547%
8,000,001 -- 9,000,000 .......... $ 8,800,000 74.7% 61.9% 120 1.49x 5.212%
10,000,001 -- 15,000,000 .......... $ 13,413,050 77.2% 63.6% 116 1.24x 5.942%
15,000,001 -- 20,000,000 .......... $ 19,734,143 69.2% 50.6% 145 1.66x 6.000%
20,000,001 -- 25,000,000 .......... $ 24,924,796 69.7% 67.7% 59 1.76x 5.008%
25,000,001 -- 30,000,000 .......... $ 29,760,000 74.9% 63.8% 119 1.48x 5.440%
55,000,001 -- 60,000,000 .......... $ 60,000,000 59.0% 53.1% 100 1.99x 5.360%
70,000,001 -- 75,000,000 .......... $ 75,000,000 69.2% 61.5% 120 1.51x 6.160%
80,000,001 -- 130,000,000 .......... $ 130,000,000 62.2% 50.0% 118 1.64x 5.091%
$ 130,000,000 66.4% 55.6% 113 1.64X 5.406%
- -------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-119
RANGE OF CUT-OFF DATE BALANCES FOR LOAN GROUP 2 MORTGAGE LOANS
AGGREGATE % OF 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 OR EQUAL TO] 2,000,000 .. 1 $ 1,991,423 1.2% $ 1,991,423
3,000,001 -- 4,000,000 ........... 1 3,264,000 2.0 $ 3,264,000
5,000,001 -- 6,000,000 ........... 1 5,553,881 3.4 $ 5,553,881
8,000,001 -- 9,000,000 ........... 1 8,150,000 5.1 $ 8,150,000
9,000,001 -- 10,000,000 ........... 2 19,285,000 12.0 $ 9,642,500
10,000,001 -- 15,000,000 ........... 4 48,100,000 29.9 $12,025,000
15,000,001 -- 20,000,000 ........... 1 18,240,000 11.3 $18,240,000
20,000,001 -- 25,000,000 ........... 1 20,400,000 12.7 $20,400,000
35,000,001 -- 40,000,000 ........... 1 36,033,285 22.4 $36,033,285
- ------------ -----
13 $161,017,589 100.0% $12,385,968
== ============ =====
WTD. AVG.
STATED
WTD. AVG. WTD. AVG. REMAINING
HIGHEST CUT-OFF DATE LTV TERM TO WTD. AVG. WTD. AVG.
RANGE OF CUT-OFF CUT-OFF DATE LTV RATIO AT MATURITY DSC MORTGAGE
DATE BALANCES ($) BALANCE RATIO MATURITY* (MOS.)* RATIO RATE
- ------------------------------ -------------- -------------- ----------- ---------- ----------- ----------
[LESS THAN OR EQUAL TO] 2,000,000 .. $ 1,991,423 71.1% 55.0% 117 1.57x 5.850%
3,000,001 -- 4,000,000 ........... $ 3,264,000 80.0% 66.8% 120 1.23x 5.490%
5,000,001 -- 6,000,000 ........... $ 5,553,881 73.8% 61.9% 119 1.20x 5.590%
8,000,001 -- 9,000,000 ........... $ 8,150,000 75.1% 75.1% 60 1.94x 4.590%
9,000,001 -- 10,000,000 ........... $ 9,850,000 63.3% 52.6% 120 1.54x 5.310%
10,000,001 -- 15,000,000 ........... $14,100,000 74.1% 66.4% 102 1.32x 5.182%
15,000,001 -- 20,000,000 ........... $18,240,000 80.0% 71.5% 84 1.46x 4.750%
20,000,001 -- 25,000,000 ........... $20,400,000 73.5% 68.1% 82 1.29x 5.320%
35,000,001 -- 40,000,000 ........... $36,033,285 76.3% 63.8% 119 1.37x 5.530%
$36,033,285 74.0% 65.1% 102 1.40X 5.242%
- -------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-120
MORTGAGED PROPERTIES BY STATE FOR ALL MORTGAGE LOANS(1)
NUMBER OF AGGREGATE % OF AVERAGE
MORTGAGED CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
STATE PROPERTIES BALANCE POOL BALANCE BALANCE
- ------------------- ------------ ----------------- -------------- --------------
FL ................ 10 $ 172,041,889 16.5% $17,204,189
NY ................ 5 168,300,197 16.2 $33,660,039
CT ................ 2 134,300,000 12.9 $67,150,000
CA ................ 9 129,805,997 12.5 $14,422,889
Southern(3) ...... 6 88,907,997 8.5 $14,818,000
Northern(3) ...... 3 40,898,000 3.9 $13,632,667
NC ................ 2 99,905,806 9.6 $49,952,903
AZ ................ 4 44,189,193 4.2 $11,047,298
KS ................ 4 43,946,376 4.2 $10,986,594
CO ................ 3 38,187,612 3.7 $12,729,204
AL ................ 2 28,224,940 2.7 $14,112,470
MI ................ 1 26,082,959 2.5 $26,082,959
VA ................ 4 20,708,030 2.0 $ 5,177,007
OK ................ 1 18,240,000 1.8 $18,240,000
WA ................ 3 18,001,798 1.7 $ 6,000,599
UT ................ 3 15,088,514 1.4 $ 5,029,505
GA ................ 3 13,712,719 1.3 $ 4,570,906
TX ................ 6 13,199,777 1.3 $ 2,199,963
PA ................ 5 11,657,309 1.1 $ 2,331,462
MA ................ 1 11,456,334 1.1 $11,456,334
SC ................ 5 7,183,351 0.7 $ 1,436,670
OH ................ 2 6,218,902 0.6 $ 3,109,451
NJ ................ 5 4,410,440 0.4 $ 882,088
TN ................ 1 4,100,000 0.4 $ 4,100,000
IL ................ 1 3,264,000 0.3 $ 3,264,000
WY ................ 1 3,127,360 0.3 $ 3,127,360
MO ................ 1 2,494,636 0.2 $ 2,494,636
ID ................ 1 1,897,937 0.2 $ 1,897,937
NV ................ 1 1,742,232 0.2 $ 1,742,232
-- -------------- -----
86 $1,041,488,309 100.0% $12,110,329
== ============== =====
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
STATE BALANCE LTV RATIO MATURITY(2) (MOS.)(2) RATIO RATE
- ------------------- -------------- -------------- -------------- ----------- ----------- ----------
FL ................ $ 75,000,000 72.2% 63.8% 106 1.59x 5.623%
NY ................ $ 95,555,556 57.9% 51.8% 118 1.73x 5.472%
CT ................ $130,000,000 62.3% 46.0% 120 1.76x 4.582%
CA ................ $ 29,760,000 72.6% 65.5% 99 1.53x 5.418%
Southern(3) ...... $ 29,760,000 76.4% 68.4% 103 1.36x 5.591%
Northern(3) ...... $ 21,613,000 64.3% 59.3% 88 1.90x 5.040%
NC ................ $ 97,864,906 61.1% 47.1% 116 1.53x 5.604%
AZ ................ $ 25,100,000 77.8% 63.4% 123 1.32x 5.431%
KS ................ $ 20,400,000 72.3% 66.9% 82 1.30x 5.181%
CO ................ $ 15,937,612 75.1% 59.7% 131 1.40x 5.649%
AL ................ $ 19,734,143 55.3% 42.3% 161 2.39x 5.759%
MI ................ $ 26,082,959 64.7% 54.0% 116 2.02x 5.302%
VA ................ $ 10,103,877 75.9% 63.6% 118 1.40x 5.774%
OK ................ $ 18,240,000 80.0% 71.5% 84 1.46x 4.750%
WA ................ $ 7,509,002 66.6% 55.8% 119 1.69x 5.563%
UT ................ $ 5,553,881 75.4% 63.1% 119 1.31x 5.552%
GA ................ $ 7,764,286 72.4% 64.8% 65 1.44x 5.144%
TX ................ $ 4,572,302 73.1% 63.1% 76 1.41x 5.355%
PA ................ $ 8,160,000 75.1% 59.7% 115 1.40x 5.372%
MA ................ $ 11,456,334 82.4% 63.8% 118 1.20x 5.920%
SC ................ $ 2,289,791 65.4% 48.7% 115 1.45x 5.837%
OH ................ $ 3,246,816 72.3% 60.2% 119 1.41x 5.340%
NJ ................ $ 1,847,071 64.0% 45.7% 111 1.56x 5.840%
TN ................ $ 4,100,000 79.6% 66.4% 120 1.35x 5.470%
IL ................ $ 3,264,000 80.0% 66.8% 120 1.23x 5.490%
WY ................ $ 3,127,360 76.3% 63.8% 119 1.37x 5.530%
MO ................ $ 2,494,636 71.9% 66.4% 59 1.46x 5.050%
ID ................ $ 1,897,937 71.9% 66.4% 59 1.46x 5.050%
NV ................ $ 1,742,232 76.0% 53.1% 106 1.27x 5.810%
$130,000,000 67.6% 57.1% 112 1.60X 5.380%
- -------
(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 amounts
(allocating the Mortgage Loan principal balance to each of those
properties by the appraised values of the Mortgaged Properties or the
allocated loan amount as detailed in the related Mortgage Loan
documents).
(2) Calculated with respect to the Anticipated Repayment Date for ARD Loans.
(3) 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-121
MORTGAGED PROPERTIES BY STATE FOR LOAN GROUP 1 MORTGAGE LOANS(1)
NUMBER OF AGGREGATE % OF AVERAGE
MORTGAGED CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
STATE PROPERTIES BALANCE GROUP 1 BALANCE BALANCE
- ---------------- ------------ ---------------- ----------------- --------------
NY ............. 3 $ 160,855,556 18.3% $ 53,618,519
FL ............. 8 158,556,104 18.0 $ 19,819,513
CT ............. 2 134,300,000 15.3 $ 67,150,000
CA ............. 6 108,080,131 12.3 $ 18,013,355
Southern(3) ... 5 86,467,131 9.8 $ 17,293,426
Northern(3) ... 1 21,613,000 2.5 $ 21,613,000
NC ............. 2 99,905,806 11.3 $ 49,952,903
AZ ............. 3 33,189,193 3.8 $ 11,063,064
AL ............. 2 28,224,940 3.2 $ 14,112,470
MI ............. 1 26,082,959 3.0 $ 26,082,959
VA ............. 3 18,716,607 2.1 $ 6,238,869
WA ............. 3 18,001,798 2.0 $ 6,000,599
CO ............. 1 15,937,612 1.8 $ 15,937,612
GA ............. 3 13,712,719 1.6 $ 4,570,906
TX ............. 6 13,199,777 1.5 $ 2,199,963
PA ............. 5 11,657,309 1.3 $ 2,331,462
MA ............. 1 11,456,334 1.3 $ 11,456,334
SC ............. 5 7,183,351 0.8 $ 1,436,670
OH ............. 2 6,218,902 0.7 $ 3,109,451
NJ ............. 5 4,410,440 0.5 $ 882,088
TN ............. 1 4,100,000 0.5 $ 4,100,000
MO ............. 1 2,494,636 0.3 $ 2,494,636
ID ............. 1 1,897,937 0.2 $ 1,897,937
NV ............. 1 1,742,232 0.2 $ 1,742,232
KS ............. 1 546,376 0.1 $ 546,376
- ------------- -----
66 $ 880,470,720 100.0% $ 13,340,465
== ============= =====
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
STATE BALANCE LTV RATIO MATURITY(2) (MOS.)(2) RATIO RATE
- ---------------- ---------------- -------------- -------------- ----------- ----------- ----------
NY ............. $ 95,555,556 57.1% 51.2% 117 1.75x 5.469%
FL ............. $ 75,000,000 71.9% 63.8% 105 1.61x 5.630%
CT ............. $ 130,000,000 62.3% 46.0% 120 1.76x 4.582%
CA ............. $ 29,760,000 74.2% 67.9% 94 1.53x 5.434%
Southern(3) ... $ 29,760,000 76.4% 68.6% 103 1.36x 5.593%
Northern(3) ... $ 21,613,000 65.2% 65.2% 60 2.23x 4.800%
NC ............. $ 97,864,906 61.1% 47.1% 116 1.53x 5.604%
AZ ............. $ 25,100,000 78.2% 62.4% 123 1.28x 5.518%
AL ............. $ 19,734,143 55.3% 42.3% 161 2.39x 5.759%
MI ............. $ 26,082,959 64.7% 54.0% 116 2.02x 5.302%
VA ............. $ 10,103,877 76.4% 64.5% 118 1.38x 5.766%
WA ............. $ 7,509,002 66.6% 55.8% 119 1.69x 5.563%
CO ............. $ 15,937,612 73.5% 45.2% 177 1.24x 6.420%
GA ............. $ 7,764,286 72.4% 64.8% 65 1.44x 5.144%
TX ............. $ 4,572,302 73.1% 63.1% 76 1.41x 5.355%
PA ............. $ 8,160,000 75.1% 59.7% 115 1.40x 5.372%
MA ............. $ 11,456,334 82.4% 63.8% 118 1.20x 5.920%
SC ............. $ 2,289,791 65.4% 48.7% 115 1.45x 5.837%
OH ............. $ 3,246,816 72.3% 60.2% 119 1.41x 5.340%
NJ ............. $ 1,847,071 64.0% 45.7% 111 1.56x 5.840%
TN ............. $ 4,100,000 79.6% 66.4% 120 1.35x 5.470%
MO ............. $ 2,494,636 71.9% 66.4% 59 1.46x 5.050%
ID ............. $ 1,897,937 71.9% 66.4% 59 1.46x 5.050%
NV ............. $ 1,742,232 76.0% 53.1% 106 1.27x 5.810%
KS ............. $ 546,376 71.9% 66.4% 59 1.46x 5.050%
$ 130,000,000 66.4% 55.6% 113 1.64X 5.406%
- -------
(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 amounts
(allocating the Mortgage Loan principal balance to each of those
properties by the appraised values of the Mortgaged Properties or the
allocated loan amount as detailed in the related Mortgage Loan
documents).
(2) Calculated with respect to the Anticipated Repayment Date for ARD Loans.
(3) 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-122
MORTGAGED PROPERTIES BY STATE FOR LOAN GROUP 2 MORTGAGE LOANS(1)
NUMBER OF AGGREGATE % OF AVERAGE
MORTGAGED CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
STATE PROPERTIES BALANCE GROUP 2 BALANCE BALANCE
- ---------------- ------------ -------------- ----------------- --------------
KS ............. 3 $ 43,400,000 27.0% $14,466,667
CO ............. 2 22,250,000 13.8 $11,125,000
CA ............. 3 21,725,866 13.5 $ 7,241,955
Northern(3) ... 2 19,285,000 12.0 $ 9,642,500
Southern(3) ... 1 2,440,866 1.5 $ 2,440,866
OK ............. 1 18,240,000 11.3 $18,240,000
UT ............. 3 15,088,514 9.4 $ 5,029,505
FL ............. 2 13,485,785 8.4 $ 6,742,892
AZ ............. 1 11,000,000 6.8 $11,000,000
NY ............. 2 7,444,641 4.6 $ 3,722,321
IL ............. 1 3,264,000 2.0 $ 3,264,000
WY ............. 1 3,127,360 1.9 $ 3,127,360
VA ............. 1 1,991,423 1.2 $ 1,991,423
- ------------ -----
20 $161,017,589 100.0% $ 8,050,879
== ============ =====
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
STATE BALANCE LTV RATIO MATURITY(2) (MOS.)(2) RATIO RATE
- ---------------- -------------- -------------- -------------- ----------- ----------- ----------
KS ............. $20,400,000 72.3% 66.9% 83 1.30x 5.182%
CO ............. $14,100,000 76.3% 70.2% 97 1.52x 5.097%
CA ............. $ 9,850,000 64.8% 53.9% 120 1.52x 5.335%
Northern(3) ... $ 9,850,000 63.3% 52.6% 120 1.54x 5.310%
Southern(3) ... $ 2,440,866 76.3% 63.8% 119 1.37x 5.530%
OK ............. $18,240,000 80.0% 71.5% 84 1.46x 4.750%
UT ............. $ 5,553,881 75.4% 63.1% 119 1.31x 5.552%
FL ............. $10,434,702 76.3% 63.8% 119 1.37x 5.530%
AZ ............. $11,000,000 76.4% 66.4% 120 1.42x 5.170%
NY ............. $ 4,881,732 76.3% 63.8% 119 1.37x 5.530%
IL ............. $ 3,264,000 80.0% 66.8% 120 1.23x 5.490%
WY ............. $ 3,127,360 76.3% 63.8% 119 1.37x 5.530%
VA ............. $ 1,991,423 71.1% 55.0% 117 1.57x 5.850%
$20,400,000 74.0% 65.1% 102 1.40X 5.242%
- -------
(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 amounts
(allocating the Mortgage Loan principal balance to each of those
properties by the appraised values of the Mortgaged Properties or the
allocated loan amount as detailed in the related Mortgage Loan
documents).
(2) Calculated with respect to the Anticipated Repayment Date for ARD Loans.
(3) 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-123
RANGE OF UNDERWRITTEN DSC RATIOS FOR ALL MORTGAGE LOANS
AGGREGATE % OF AVERAGE
NUMBER CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
RANGE OF DSC RATIOS (X) OF LOANS BALANCE POOL BALANCE BALANCE
- -------------------------- ---------- ----------------- -------------- --------------
1.20 -- 1.24 ............. 8 $ 88,673,048 8.5% $11,084,131
1.25 -- 1.29 ............. 5 88,816,550 8.5 $17,763,310
1.30 -- 1.34 ............. 4 49,063,877 4.7 $12,265,969
1.35 -- 1.39 ............. 6 56,642,432 5.4 $ 9,440,405
1.40 -- 1.44 ............. 5 24,834,904 2.4 $ 4,966,981
1.45 -- 1.49 ............. 6 65,740,081 6.3 $10,956,680
1.50 -- 1.54 ............. 5 192,908,466 18.5 $38,581,693
1.55 -- 1.59 ............. 4 109,981,979 10.6 $27,495,495
1.65 -- 1.69 ............. 2 24,447,071 2.3 $12,223,536
1.75 -- 1.79 ............. 2 138,490,797 13.3 $69,245,398
1.85 -- 1.89 ............. 1 58,800,000 5.6 $58,800,000
1.90 -- 1.94 ............. 2 15,659,002 1.5 $ 7,829,501
2.00 -- 2.04 ............. 1 26,082,959 2.5 $26,082,959
2.05 -- 2.09 ............. 1 60,000,000 5.8 $60,000,000
2.20 -- 2.24 ............. 1 21,613,000 2.1 $21,613,000
2.30 -- 3.79 ............. 1 19,734,143 1.9 $19,734,143
- -------------- -----
54 $1,041,488,309 100.0% $19,286,821
== ============== =====
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 ............. $ 29,760,000 77.6% 61.1% 130 1.21x 5.847%
1.25 -- 1.29 ............. $ 25,100,000 75.9% 63.9% 104 1.27x 5.435%
1.30 -- 1.34 ............. $ 17,660,000 76.3% 66.2% 110 1.32x 5.521%
1.35 -- 1.39 ............. $ 36,033,285 76.3% 63.8% 118 1.37x 5.465%
1.40 -- 1.44 ............. $ 11,000,000 75.4% 64.3% 120 1.42x 5.437%
1.45 -- 1.49 ............. $ 24,924,796 73.8% 64.4% 85 1.47x 5.218%
1.50 -- 1.54 ............. $ 97,864,906 64.4% 53.3% 118 1.53x 5.797%
1.55 -- 1.59 ............. $ 95,555,556 63.9% 58.3% 117 1.55x 5.324%
1.65 -- 1.69 ............. $ 22,600,000 71.1% 69.8% 64 1.65x 5.206%
1.75 -- 1.79 ............. $130,000,000 62.2% 46.1% 120 1.77x 4.573%
1.85 -- 1.89 ............. $ 58,800,000 72.6% 68.2% 82 1.89x 4.952%
1.90 -- 1.94 ............. $ 8,150,000 69.1% 64.3% 88 1.94x 5.108%
2.00 -- 2.04 ............. $ 26,082,959 64.7% 54.0% 116 2.02x 5.302%
2.05 -- 2.09 ............. $ 60,000,000 45.7% 38.3% 118 2.08x 5.760%
2.20 -- 2.24 ............. $ 21,613,000 65.2% 65.2% 60 2.23x 4.800%
2.30 -- 3.79 ............. $ 19,734,143 51.5% 37.8% 179 2.66x 6.120%
$130,000,000 67.6% 57.1% 112 1.60X 5.380%
- -------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-124
RANGE OF UNDERWRITTEN DSC RATIOS FOR LOAN GROUP 1 MORTGAGE LOANS
AGGREGATE % OF AVERAGE
NUMBER CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
RANGE OF DSC RATIOS (X) OF LOANS BALANCE GROUP 1 BALANCE BALANCE
- ------------------------- ---------- ---------------- ----------------- --------------
1.20 -- 1.24 ............ 6 $ 79,855,167 9.1% $ 13,309,195
1.25 -- 1.29 ............ 2 43,816,550 5.0 $ 21,908,275
1.30 -- 1.34 ............ 3 36,563,877 4.2 $ 12,187,959
1.35 -- 1.39 ............ 5 20,609,147 2.3 $ 4,121,829
1.40 -- 1.44 ............ 4 13,834,904 1.6 $ 3,458,726
1.45 -- 1.49 ............ 5 47,500,081 5.4 $ 9,500,016
1.50 -- 1.54 ............ 4 183,058,466 20.8 $ 45,764,617
1.55 -- 1.59 ............ 2 98,555,556 11.2 $ 49,277,778
1.65 -- 1.69 ............ 2 24,447,071 2.8 $ 12,223,536
1.75 -- 1.79 ............ 2 138,490,797 15.7 $ 69,245,398
1.85 -- 1.89 ............ 1 58,800,000 6.7 $ 58,800,000
1.90 -- 1.94 ............ 1 7,509,002 0.9 $ 7,509,002
2.00 -- 2.04 ............ 1 26,082,959 3.0 $ 26,082,959
2.05 -- 2.09 ............ 1 60,000,000 6.8 $ 60,000,000
2.20 -- 2.24 ............ 1 21,613,000 2.5 $ 21,613,000
2.30 -- 3.79 ............ 1 19,734,143 2.2 $ 19,734,143
- ------------- -----
41 $ 880,470,720 100.0% $ 21,474,896
== ============= =====
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 ............ $ 29,760,000 77.8% 60.8% 131 1.21x 5.879%
1.25 -- 1.29 ............ $ 25,100,000 78.0% 60.7% 114 1.26x 5.592%
1.30 -- 1.34 ............ $ 17,660,000 77.7% 66.0% 119 1.33x 5.678%
1.35 -- 1.39 ............ $ 8,160,000 76.4% 63.6% 117 1.37x 5.352%
1.40 -- 1.44 ............ $ 6,394,412 74.6% 62.6% 119 1.42x 5.650%
1.45 -- 1.49 ............ $ 24,924,796 71.4% 61.7% 85 1.47x 5.398%
1.50 -- 1.54 ............ $ 97,864,906 64.4% 53.3% 118 1.53x 5.823%
1.55 -- 1.59 ............ $ 95,555,556 63.9% 59.0% 117 1.55x 5.315%
1.65 -- 1.69 ............ $ 22,600,000 71.1% 69.8% 64 1.65x 5.206%
1.75 -- 1.79 ............ $ 130,000,000 62.2% 46.1% 120 1.77x 4.573%
1.85 -- 1.89 ............ $ 58,800,000 72.6% 68.2% 82 1.89x 4.952%
1.90 -- 1.94 ............ $ 7,509,002 62.6% 52.7% 118 1.94x 5.670%
2.00 -- 2.04 ............ $ 26,082,959 64.7% 54.0% 116 2.02x 5.302%
2.05 -- 2.09 ............ $ 60,000,000 45.7% 38.3% 118 2.08x 5.760%
2.20 -- 2.24 ............ $ 21,613,000 65.2% 65.2% 60 2.23x 4.800%
2.30 -- 3.79 ............ $ 19,734,143 51.5% 37.8% 179 2.66x 6.120%
$ 130,000,000 66.4% 55.6% 113 1.64X 5.406%
- -------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-125
RANGE OF UNDERWRITTEN DSC RATIOS FOR LOAN GROUP 2 MORTGAGE LOANS
AGGREGATE % OF 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 ............ 2 $ 8,817,881 5.5% $ 4,408,940
1.25 -- 1.29 ............ 3 45,000,000 27.9 $15,000,000
1.30 -- 1.34 ............ 1 12,500,000 7.8 $12,500,000
1.35 -- 1.39 ............ 1 36,033,285 22.4 $36,033,285
1.40 -- 1.44 ............ 1 11,000,000 6.8 $11,000,000
1.45 -- 1.49 ............ 1 18,240,000 11.3 $18,240,000
1.50 -- 1.54 ............ 1 9,850,000 6.1 $ 9,850,000
1.55 -- 1.59 ............ 2 11,426,423 7.1 $ 5,713,211
1.90 -- 1.94 ............ 1 8,150,000 5.1 $ 8,150,000
- ------------ -----
13 $161,017,589 100.0% $12,385,968
== ============ =====
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 ............ $ 5,553,881 76.1% 63.7% 119 1.21x 5.553%
1.25 -- 1.29 ............ $20,400,000 73.8% 67.0% 94 1.29x 5.281%
1.30 -- 1.34 ............ $12,500,000 72.3% 66.7% 83 1.31x 5.060%
1.35 -- 1.39 ............ $36,033,285 76.3% 63.8% 119 1.37x 5.530%
1.40 -- 1.44 ............ $11,000,000 76.4% 66.4% 120 1.42x 5.170%
1.45 -- 1.49 ............ $18,240,000 80.0% 71.5% 84 1.46x 4.750%
1.50 -- 1.54 ............ $ 9,850,000 64.4% 53.5% 120 1.53x 5.310%
1.55 -- 1.59 ............ $ 9,435,000 63.8% 52.3% 119 1.55x 5.404%
1.90 -- 1.94 ............ $ 8,150,000 75.1% 75.1% 60 1.94x 4.590%
$36,033,285 74.0% 65.1% 102 1.40X 5.242%
- -------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-126
RANGE OF LTV RATIOS FOR ALL MORTGAGE LOANS AS OF THE CUT-OFF DATE
AGGREGATE % OF AVERAGE
NUMBER CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
RANGE OF LTV RATIOS (%) OF LOANS BALANCE POOL BALANCE BALANCE
- ---------------------------- ---------- ----------------- -------------- --------------
40.01 -- 50.00 ............. 1 $ 60,000,000 5.8% $60,000,000
50.01 -- 55.00 ............. 1 19,734,143 1.9 $19,734,143
60.01 -- 65.00 ............. 11 397,589,529 38.2 $36,144,503
65.01 -- 70.00 ............. 7 125,900,577 12.1 $17,985,797
70.01 -- 75.00 ............. 16 201,123,359 19.3 $12,570,210
75.01 -- 80.00 ............. 17 225,684,367 21.7 $13,275,551
80.01 -- 82.42 ............. 1 11,456,334 1.1 $11,456,334
-- -------------- -----
54 $1,041,488,309 100.0% $19,286,821
== ============== =====
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
- ---------------------------- -------------- -------------- -------------- ---------- ----------- ----------
40.01 -- 50.00 ............. $ 60,000,000 45.7% 38.3% 118 2.08x 5.760%
50.01 -- 55.00 ............. $ 19,734,143 51.5% 37.8% 179 2.66x 6.120%
60.01 -- 65.00 ............. $130,000,000 62.4% 50.3% 118 1.66x 5.147%
65.01 -- 70.00 ............. $ 75,000,000 68.5% 61.1% 107 1.61x 5.722%
70.01 -- 75.00 ............. $ 58,800,000 72.8% 65.0% 92 1.53x 5.345%
75.01 -- 80.00 ............. $ 36,033,285 78.1% 65.9% 113 1.34x 5.439%
80.01 -- 82.42 ............. $ 11,456,334 82.4% 63.8% 118 1.20x 5.920%
$130,000,000 67.6% 57.1% 112 1.60X 5.380%
- -------
* 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 CUT-OFF DATE
AGGREGATE % OF AVERAGE
NUMBER CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
RANGE OF LTV RATIOS (%) OF LOANS BALANCE GROUP 1 BALANCE BALANCE
- ------------------------- ---------- ---------------- ----------------- --------------
40.01 -- 50.00 .......... 1 $ 60,000,000 6.8% $ 60,000,000
50.01 -- 55.00 .......... 1 19,734,143 2.2 $ 19,734,143
60.01 -- 65.00 .......... 9 378,304,529 43.0 $ 42,033,837
65.01 -- 70.00 .......... 6 115,400,577 13.1 $ 19,233,429
70.01 -- 75.00 .......... 12 160,678,055 18.2 $ 13,389,838
75.01 -- 80.00 .......... 11 134,897,082 15.3 $ 12,263,371
80.01 -- 82.42 .......... 1 11,456,334 1.3 $ 11,456,334
-- ------------- -----
41 $ 880,470,720 100.0% $ 21,474,896
== ============= =====
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
- ------------------------- ---------------- -------------- -------------- ---------- ----------- ----------
40.01 -- 50.00 .......... $ 60,000,000 45.7% 38.3% 118 2.08x 5.760%
50.01 -- 55.00 .......... $ 19,734,143 51.5% 37.8% 179 2.66x 6.120%
60.01 -- 65.00 .......... $ 130,000,000 62.4% 50.2% 118 1.67x 5.139%
65.01 -- 70.00 .......... $ 75,000,000 68.3% 60.8% 110 1.64x 5.782%
70.01 -- 75.00 .......... $ 58,800,000 72.8% 64.7% 93 1.59x 5.356%
75.01 -- 80.00 .......... $ 29,760,000 78.7% 65.0% 118 1.29x 5.585%
80.01 -- 82.42 .......... $ 11,456,334 82.4% 63.8% 118 1.20x 5.920%
$ 130,000,000 66.4% 55.6% 113 1.64X 5.406%
- -------
* 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 CUT-OFF DATE
AGGREGATE % OF AVERAGE
NUMBER CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
RANGE OF LTV RATIOS (%) OF LOANS BALANCE GROUP 2 BALANCE BALANCE
- ------------------------- ---------- -------------- ----------------- --------------
60.01 -- 65.00 .......... 2 $ 19,285,000 12.0% $ 9,642,500
65.01 -- 70.00 .......... 1 10,500,000 6.5 $10,500,000
70.01 -- 75.00 .......... 4 40,445,304 25.1 $10,111,326
75.01 -- 80.00 .......... 6 90,787,285 56.4 $15,131,214
- ------------ -----
13 $161,017,589 100.0% $12,385,968
== ============ =====
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
- ------------------------- -------------- -------------- -------------- ---------- ----------- ----------
60.01 -- 65.00 .......... $ 9,850,000 63.3% 52.6% 120 1.54x 5.310%
65.01 -- 70.00 .......... $10,500,000 70.0% 64.6% 83 1.29x 5.060%
70.01 -- 75.00 .......... $20,400,000 73.0% 66.2% 89 1.30x 5.303%
75.01 -- 80.00 .......... $36,033,285 77.2% 67.3% 107 1.43x 5.222%
$36,033,285 74.0% 65.1% 102 1.40X 5.242%
- -------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-129
RANGE OF LTV RATIOS FOR ALL MORTGAGE LOANS AS OF THE MATURITY DATE
AGGREGATE % OF 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 -- 30.00 ................ 1 $ 1,694,781 0.2% $ 1,694,781
30.01 -- 40.00 ................ 2 79,734,143 7.7 $39,867,072
40.01 -- 50.00 ................ 6 256,603,828 24.6 $42,767,305
50.01 -- 55.00 ................ 6 80,084,308 7.7 $13,347,385
55.01 -- 60.00 ................ 8 123,645,942 11.9 $15,455,743
60.01 -- 65.00 ................ 13 184,565,782 17.7 $14,197,368
65.01 -- 70.00 ................ 14 236,409,526 22.7 $16,886,395
70.01 -- 75.00 ................ 3 70,600,000 6.8 $23,533,333
75.01 -- 80.00 ................ 1 8,150,000 0.8 $ 8,150,000
-- -------------- -----
54 $1,041,488,309 100.0% $19,286,821
== ============== =====
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 -- 30.00 ................ $ 1,694,781 69.5% 0.0% 191 1.20x 5.760%
30.01 -- 40.00 ................ $ 60,000,000 47.1% 38.1% 133 2.22x 5.849%
40.01 -- 50.00 ................ $130,000,000 62.3% 46.1% 122 1.64x 5.132%
50.01 -- 55.00 ................ $ 26,082,959 66.7% 53.2% 115 1.70x 5.417%
55.01 -- 60.00 ................ $ 95,555,556 65.1% 58.8% 117 1.54x 5.355%
60.01 -- 65.00 ................ $ 75,000,000 73.1% 62.6% 116 1.39x 5.850%
65.01 -- 70.00 ................ $ 58,800,000 74.4% 67.0% 93 1.56x 5.197%
70.01 -- 75.00 ................ $ 29,760,000 77.3% 71.0% 91 1.42x 5.227%
75.01 -- 80.00 ................ $ 8,150,000 75.1% 75.1% 60 1.94x 4.590%
$130,000,000 67.6% 57.1% 112 1.60X 5.380%
- -------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-130
RANGE OF LTV RATIOS FOR LOAN GROUP 1 MORTGAGE LOANS AS OF THE MATURITY DATE
AGGREGATE % OF 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 -- 30.00 ............. 1 $ 1,694,781 0.2% $ 1,694,781
30.01 -- 40.00 ............. 2 79,734,143 9.1 $ 39,867,072
40.01 -- 50.00 ............. 6 256,603,828 29.1 $ 42,767,305
50.01 -- 55.00 ............. 4 60,799,308 6.9 $ 15,199,827
55.01 -- 60.00 ............. 7 121,654,519 13.8 $ 17,379,217
60.01 -- 65.00 ............. 10 132,478,616 15.0 $ 13,247,862
65.01 -- 70.00 ............. 9 175,145,526 19.9 $ 19,460,614
70.01 -- 75.00 ............. 2 52,360,000 5.9 $ 26,180,000
-- ------------- -----
41 $ 880,470,720 100.0% $ 21,474,896
== ============= =====
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 -- 30.00 ............. $ 1,694,781 69.5% 0.0% 191 1.20x 5.760%
30.01 -- 40.00 ............. $ 60,000,000 47.1% 38.1% 133 2.22x 5.849%
40.01 -- 50.00 ............. $ 130,000,000 62.3% 46.1% 122 1.64x 5.132%
50.01 -- 55.00 ............. $ 26,082,959 67.8% 53.3% 114 1.74x 5.450%
55.01 -- 60.00 ............. $ 95,555,556 65.0% 58.9% 117 1.54x 5.347%
60.01 -- 65.00 ............. $ 75,000,000 72.5% 62.2% 118 1.41x 6.010%
65.01 -- 70.00 ............. $ 58,800,000 74.2% 66.9% 91 1.64x 5.173%
70.01 -- 75.00 ............. $ 29,760,000 76.4% 70.8% 94 1.40x 5.393%
$ 130,000,000 66.4% 55.6% 113 1.64X 5.406%
- -------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-131
RANGE OF LTV RATIOS FOR LOAN GROUP 2 MORTGAGE LOANS AS OF THE MATURITY DATE
AGGREGATE % OF AVERAGE
RANGE OF MATURITY DATE LTV NUMBER CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
RATIOS (%)* OF LOANS BALANCE GROUP 2 BALANCE BALANCE
- ---------------------------- ---------- -------------- ----------------- --------------
50.01 -- 55.00 ............. 2 $ 19,285,000 12.0% $ 9,642,500
55.01 -- 60.00 ............. 1 1,991,423 1.2 $ 1,991,423
60.01 -- 65.00 ............. 3 52,087,166 32.3 $17,362,389
65.01 -- 70.00 ............. 5 61,264,000 38.0 $12,252,800
70.01 -- 75.00 ............. 1 18,240,000 11.3 $18,240,000
75.01 -- 80.00 ............. 1 8,150,000 5.1 $ 8,150,000
- ------------ -----
13 $161,017,589 100.0% $12,385,968
== ============ =====
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
- ---------------------------- -------------- -------------- -------------- ---------- ----------- ----------
50.01 -- 55.00 ............. $ 9,850,000 63.3% 52.6% 120 1.54x 5.310%
55.01 -- 60.00 ............. $ 1,991,423 71.1% 55.0% 117 1.57x 5.850%
60.01 -- 65.00 ............. $36,033,285 74.8% 63.8% 112 1.34x 5.442%
65.01 -- 70.00 ............. $20,400,000 74.9% 67.3% 100 1.31x 5.265%
70.01 -- 75.00 ............. $18,240,000 80.0% 71.5% 84 1.46x 4.750%
75.01 -- 80.00 ............. $ 8,150,000 75.1% 75.1% 60 1.94x 4.590%
$36,033,285 74.0% 65.1% 102 1.40X 5.242%
- -------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-132
RANGE OF MORTGAGE RATES FOR ALL MORTGAGE LOANS AS OF THE CUT-OFF DATE
AGGREGATE % OF AVERAGE
NUMBER CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
RANGE OF MORTGAGE RATES (%) OF LOANS BALANCE POOL BALANCE BALANCE
- -------------------------------- ---------- ----------------- -------------- --------------
4.550 -- 5.249 ................. 13 $ 340,278,593 32.7% $26,175,276
5.250 -- 5.499 ................. 12 221,599,212 21.3 $18,466,601
5.500 -- 5.749 ................. 11 220,699,464 21.2 $20,063,588
5.750 -- 5.999 ................. 13 131,792,153 12.7 $10,137,858
6.000 -- 6.249 ................. 3 108,147,193 10.4 $36,049,064
6.250 -- 6.499 ................. 2 18,971,694 1.8 $ 9,485,847
-- -------------- -----
54 $1,041,488,309 100.0% $19,286,821
== ============== =====
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 MORTGAGE RATES (%) BALANCE LTV RATIO MATURITY* (MOS.)* RATIO RATE
- -------------------------------- -------------- -------------- -------------- ---------- ----------- ----------
4.550 -- 5.249 ................. $130,000,000 68.3% 59.0% 95 1.72x 4.811%
5.250 -- 5.499 ................. $ 95,555,556 68.3% 60.3% 115 1.51x 5.336%
5.500 -- 5.749 ................. $ 97,864,906 69.6% 56.9% 118 1.43x 5.589%
5.750 -- 5.999 ................. $ 60,000,000 61.3% 48.0% 116 1.68x 5.801%
6.000 -- 6.249 ................. $ 75,000,000 66.6% 57.5% 130 1.68x 6.144%
6.250 -- 6.499 ................. $ 15,937,612 73.6% 47.3% 167 1.28x 6.398%
$130,000,000 67.6% 57.1% 112 1.60X 5.380%
- -------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-133
RANGE OF MORTGAGE RATES FOR LOAN GROUP 1 MORTGAGE LOANS AS OF THE CUT-OFF DATE
AGGREGATE % OF AVERAGE
NUMBER CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
RANGE OF MORTGAGE RATES (%) OF LOANS BALANCE GROUP 1 BALANCE BALANCE
- ----------------------------- ---------- ---------------- ----------------- --------------
4.550 -- 5.249 .............. 8 $ 279,888,593 31.8% $ 34,986,074
5.250 -- 5.499 .............. 7 164,550,212 18.7 $ 23,507,173
5.500 -- 5.749 .............. 9 179,112,298 20.3 $ 19,901,366
5.750 -- 5.999 .............. 12 129,800,730 14.7 $ 10,816,728
6.000 -- 6.249 .............. 3 108,147,193 12.3 $ 36,049,064
6.250 -- 6.499 .............. 2 18,971,694 2.2 $ 9,485,847
-- ------------- -----
41 $ 880,470,720 100.0% $ 21,474,896
== ============= =====
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 MORTGAGE RATES (%) BALANCE LTV RATIO MATURITY* (MOS.)* RATIO RATE
- ----------------------------- ---------------- -------------- -------------- ---------- ----------- ----------
4.550 -- 5.249 .............. $ 130,000,000 66.8% 56.9% 97 1.78x 4.787%
5.250 -- 5.499 .............. $ 95,555,556 67.2% 59.5% 118 1.57x 5.334%
5.500 -- 5.749 .............. $ 97,864,906 68.1% 55.3% 118 1.45x 5.600%
5.750 -- 5.999 .............. $ 60,000,000 61.1% 47.9% 116 1.69x 5.800%
6.000 -- 6.249 .............. $ 75,000,000 66.6% 57.5% 130 1.68x 6.144%
6.250 -- 6.499 .............. $ 15,937,612 73.6% 47.3% 167 1.28x 6.398%
$ 130,000,000 66.4% 55.6% 113 1.64X 5.406%
- -------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-134
RANGE OF MORTGAGE RATES FOR LOAN GROUP 2 MORTGAGE LOANS AS OF THE CUT-OFF DATE
AGGREGATE % OF AVERAGE
NUMBER CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
RANGE OF MORTGAGE RATES (%) OF LOANS BALANCE GROUP 2 BALANCE BALANCE
- ----------------------------- ---------- -------------- ----------------- --------------
4.590 -- 5.249 .............. 5 $ 60,390,000 37.5% $12,078,000
5.250 -- 5.499 .............. 5 57,049,000 35.4 $11,409,800
5.500 -- 5.749 .............. 2 41,587,166 25.8 $20,793,583
5.750 -- 5.999 .............. 1 1,991,423 1.2 $ 1,991,423
- ------------ -----
13 $161,017,589 100.0% $12,385,968
== ============ =====
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 MORTGAGE RATES (%) BALANCE LTV RATIO MATURITY* (MOS.)* RATIO RATE
- ----------------------------- -------------- -------------- -------------- ---------- ----------- ----------
4.590 -- 5.249 .............. $18,240,000 75.3% 68.9% 87 1.46x 4.923%
5.250 -- 5.499 .............. $20,400,000 71.3% 62.6% 106 1.37x 5.344%
5.500 -- 5.749 .............. $36,033,285 76.0% 63.6% 119 1.35x 5.538%
5.750 -- 5.999 .............. $ 1,991,423 71.1% 55.0% 117 1.57x 5.850%
$36,033,285 74.0% 65.1% 102 1.40X 5.242%
- -------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-135
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 % OF 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 ................. 5 $ 78,090,127 7.5% $15,618,025
61 -- 84 ................. 5 120,440,000 11.6 $24,088,000
85 -- 108 ................. 2 24,777,228 2.4 $12,388,614
109 -- 120 ................. 38 720,814,418 69.2 $18,968,800
121 -- 156 ................. 1 60,000,000 5.8 $60,000,000
169 -- 180 ................. 2 35,671,756 3.4 $17,835,878
181 -- 192 ................. 1 1,694,781 0.2 $ 1,694,781
-- -------------- -----
54 $1,041,488,309 100.0% $19,286,821
== ============== =====
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 ................. $ 24,924,796 70.3% 68.5% 59 1.78x 4.972%
61 -- 84 ................. $ 58,800,000 73.6% 68.2% 82 1.61x 5.004%
85 -- 108 ................. $ 18,716,550 72.9% 51.0% 106 1.32x 5.830%
109 -- 120 ................. $130,000,000 68.3% 56.7% 119 1.53x 5.396%
121 -- 156 ................. $ 60,000,000 45.7% 38.3% 118 2.08x 5.760%
169 -- 180 ................. $ 19,734,143 61.3% 41.1% 178 2.03x 6.254%
181 -- 192 ................. $ 1,694,781 69.5% 0.0% 191 1.20x 5.760%
$130,000,000 67.6% 57.1% 112 1.60X 5.380%
- -------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-136
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 % OF 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 ................. 4 $ 69,940,127 7.9% $ 17,485,032
61 -- 84 ................. 1 58,800,000 6.7 $ 58,800,000
85 -- 108 ................. 2 24,777,228 2.8 $ 12,388,614
109 -- 120 ................. 30 629,586,829 71.5 $ 20,986,228
121 -- 156 ................. 1 60,000,000 6.8 $ 60,000,000
169 -- 180 ................. 2 35,671,756 4.1 $ 17,835,878
181 -- 192 ................. 1 1,694,781 0.2 $ 1,694,781
-- ------------- -----
41 $ 880,470,720 100.0% $ 21,474,896
== ============= =====
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 ................. $ 24,924,796 69.8% 67.7% 59 1.76x 5.017%
61 -- 84 ................. $ 58,800,000 72.6% 68.2% 82 1.89x 4.952%
85 -- 108 ................. $ 18,716,550 72.9% 51.0% 106 1.32x 5.830%
109 -- 120 ................. $ 130,000,000 67.5% 55.9% 118 1.55x 5.392%
121 -- 156 ................. $ 60,000,000 45.7% 38.3% 118 2.08x 5.760%
169 -- 180 ................. $ 19,734,143 61.3% 41.1% 178 2.03x 6.254%
181 -- 192 ................. $ 1,694,781 69.5% 0.0% 191 1.20x 5.760%
$ 130,000,000 66.4% 55.6% 113 1.64X 5.406%
- -------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-137
RANGE OF ORIGINAL TERMS TO MATURITY OR ANTICIPATED REPAYMENT DATE
FOR LOAN GROUP 2 MORTGAGE LOANS AS OF THE CUT-OFF DATE
% OF
RANGE OF ORIGINAL TERMS TO AGGREGATE CUT-OFF DATE AVERAGE
MATURITY OR ANTICIPATED NUMBER CUT-OFF DATE GROUP 2 CUT-OFF DATE
REPAYMENT DATE (MONTHS) OF LOANS BALANCE BALANCE BALANCE
- ---------------------------- ---------- -------------- -------------- --------------
0 - 60 .................. 1 $ 8,150,000 5.1% $ 8,150,000
61 - 84 .................. 4 61,640,000 38.3 $15,410,000
109 - 120 .................. 8 91,227,589 56.7 $11,403,449
- ------------ -----
13 $161,017,589 100.0% $12,385,968
== ============ =====
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 .................. $ 8,150,000 75.1% 75.1% 60 1.94x 4.590%
61 - 84 .................. $20,400,000 74.6% 68.2% 83 1.34x 5.054%
109 - 120 .................. $36,033,285 73.5% 62.1% 119 1.39x 5.428%
$36,033,285 74.0% 65.1% 102 1.40X 5.242%
- -------
* 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 % OF 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 ................... 5 $ 78,090,127 7.5% $15,618,025
61 - 84 ................... 5 120,440,000 11.6 $24,088,000
85 - 108 ................... 2 24,777,228 2.4 $12,388,614
109 - 120 ................... 39 780,814,418 75.0 $20,020,883
169 - 180 ................... 2 35,671,756 3.4 $17,835,878
181 - 192 ................... 1 1,694,781 0.2 $ 1,694,781
-- -------------- -----
54 $1,041,488,309 100.0% $19,286,821
== ============== =====
WTD. AVG.
STATED
REMAINING
RANGE OF REMAINING 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 ................... $ 24,924,796 70.3% 68.5% 59 1.78x 4.972%
61 - 84 ................... $ 58,800,000 73.6% 68.2% 82 1.61x 5.004%
85 - 108 ................... $ 18,716,550 72.9% 51.0% 106 1.32x 5.830%
109 - 120 ................... $130,000,000 66.5% 55.3% 118 1.57x 5.424%
169 - 180 ................... $ 19,734,143 61.3% 41.1% 178 2.03x 6.254%
181 - 192 ................... $ 1,694,781 69.5% 0.0% 191 1.20x 5.760%
$130,000,000 67.6% 57.1% 112 1.60X 5.380%
- -------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-138
RANGE OF REMAINING TERMS TO MATURITY OR ANTICIPATED REPAYMENT DATE
FOR LOAN GROUP 1 MORTGAGE LOANS AS OF THE CUT-OFF DATE
% OF
RANGE OF REMAINING TERMS TO AGGREGATE CUT-OFF DATE AVERAGE
MATURITY OR ANTICIPATED NUMBER CUT-OFF DATE GROUP 1 CUT-OFF DATE
REPAYMENT DATE (MONTHS) OF LOANS BALANCE BALANCE BALANCE
- ----------------------------- ---------- ---------------- -------------- --------------
0 - 60 ................... 4 $ 69,940,127 7.9% $ 17,485,032
61 - 84 ................... 1 58,800,000 6.7 $ 58,800,000
85 - 108 ................... 2 24,777,228 2.8 $ 12,388,614
109 - 120 ................... 31 689,586,829 78.3 $ 22,244,736
169 - 180 ................... 2 35,671,756 4.1 $ 17,835,878
181 - 192 ................... 1 1,694,781 0.2 $ 1,694,781
-- ------------- -----
41 $ 880,470,720 100.0% $ 21,474,896
== ============= =====
WTD. AVG.
STATED
REMAINING
RANGE OF REMAINING 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 ................... $ 24,924,796 69.8% 67.7% 59 1.76x 5.017%
61 - 84 ................... $ 58,800,000 72.6% 68.2% 82 1.89x 4.952%
85 - 108 ................... $ 18,716,550 72.9% 51.0% 106 1.32x 5.830%
109 - 120 ................... $ 130,000,000 65.6% 54.3% 118 1.59x 5.424%
169 - 180 ................... $ 19,734,143 61.3% 41.1% 178 2.03x 6.254%
181 - 192 ................... $ 1,694,781 69.5% 0.0% 191 1.20x 5.760%
$ 130,000,000 66.4% 55.6% 113 1.64X 5.406%
- -------
* 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 % OF 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 ...................... 1 $ 8,150,000 5.1% $ 8,150,000
61 - 84 ..................... 4 61,640,000 38.3 $15,410,000
109 - 120 ................... 8 91,227,589 56.7 $11,403,449
- ------------ -----
13 $161,017,589 100.0% $12,385,968
== ============ =====
WTD. AVG.
STATED
REMAINING
RANGE OF REMAINING 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 ...................... $ 8,150,000 75.1% 75.1% 60 1.94x 4.590%
61 - 84 ..................... $20,400,000 74.6% 68.2% 83 1.34x 5.054%
109 - 120 ................... $36,033,285 73.5% 62.1% 119 1.39x 5.428%
$36,033,285 74.0% 65.1% 102 1.40X 5.242%
- -------
* Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-139
RANGE OF REMAINING AMORTIZATION TERMS FOR
ALL MORTGAGE LOANS AS OF THE CUT-OFF DATE
RANGE OF AGGREGATE % OF AVERAGE
REMAINING AMORTIZATION NUMBER CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
TERMS (MONTHS)(1) OF LOANS BALANCE POOL BALANCE BALANCE
- ------------------------- ---------- ----------------- -------------- --------------
181 - 192 ............... 1 $ 1,694,781 0.2% $ 1,694,781
229 - 264 ............... 3 25,579,558 2.5 $ 8,526,519
265 - 300 ............... 9 274,618,379 26.4 $30,513,153
301 - 348 ............... 2 78,240,000 7.5 $39,120,000
349 - 360 ............... 36 608,992,591 58.5 $16,916,461
Interest only ........... 3 52,363,000 5.0 $17,454,333
-- -------------- -----
54 $1,041,488,309 100.0% $19,286,821
== ============== =====
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
- ------------------------- -------------- -------------- -------------- ----------- ----------- ----------
181 - 192 ............... $ 1,694,781 69.5% 0.0% 191 1.20x 5.760%
229 - 264 ............... $ 18,716,550 72.9% 51.4% 104 1.33x 5.829%
265 - 300 ............... $130,000,000 63.8% 47.5% 122 1.61x 5.177%
301 - 348 ............... $ 60,000,000 53.7% 46.0% 110 1.94x 5.525%
349 - 360 ............... $ 95,555,556 70.7% 62.1% 112 1.53x 5.473%
Interest only ........... $ 22,600,000 69.5% 69.5% 60 1.93x 4.923%
$130,000,000 67.6% 57.1% 112 1.60X 5.380%
The weighted average remaining amortization term for all Mortgage Loans
(excluding non-amortizing loans) is 336 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-140
RANGE OF REMAINING AMORTIZATION TERMS FOR
LOAN GROUP 1 MORTGAGE LOANS AS OF THE CUT-OFF DATE
% OF
RANGE OF AGGREGATE CUT-OFF DATE AVERAGE
REMAINING AMORTIZATION NUMBER CUT-OFF DATE GROUP 1 CUT-OFF DATE
TERMS (MONTHS)(1) OF LOANS BALANCE BALANCE BALANCE
- -------------------------- ---------- ---------------- -------------- --------------
181 - 192 ................ 1 $ 1,694,781 0.2% $ 1,694,781
229 - 264 ................ 3 25,579,558 2.9 $ 8,526,519
265 - 300 ................ 8 272,626,956 31.0 $ 34,078,369
301 - 348 ................ 1 60,000,000 6.8 $ 60,000,000
349 - 360 ................ 26 476,356,425 54.1 $ 18,321,401
Interest only ............ 2 44,213,000 5.0 $ 22,106,500
-- ------------- -----
41 $ 880,470,720 100.0% $ 21,474,896
== ============= =====
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
- -------------------------- ---------------- -------------- -------------- ----------- ----------- ----------
181 - 192 ................ $ 1,694,781 69.5% 0.0% 191 1.20x 5.760%
229 - 264 ................ $ 18,716,550 72.9% 51.4% 104 1.33x 5.829%
265 - 300 ................ $ 130,000,000 63.7% 47.4% 122 1.61x 5.173%
301 - 348 ................ $ 60,000,000 45.7% 38.3% 118 2.08x 5.760%
349 - 360 ................ $ 95,555,556 70.1% 61.7% 113 1.59x 5.509%
Interest only ............ $ 22,600,000 68.5% 68.5% 59 1.93x 4.984%
$ 130,000,000 66.4% 55.6% 113 1.64X 5.406%
The weighted average remaining amortization term for all Loan Group 1
Mortgage Loans (excluding non-amortizing loans) is 332 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 2 MORTGAGE LOANS AS OF THE CUT-OFF DATE
% OF
RANGE OF AGGREGATE CUT-OFF DATE AVERAGE
REMAINING AMORTIZATION NUMBER CUT-OFF DATE GROUP 2 CUT-OFF DATE
TERMS (MONTHS)(1) OF LOANS BALANCE BALANCE BALANCE
- -------------------------- ---------- -------------- -------------- --------------
265 - 300 ................ 1 $ 1,991,423 1.2% $ 1,991,423
301 - 348 ................ 1 18,240,000 11.3 $18,240,000
349 - 360 ................ 10 132,636,166 82.4 $13,263,617
Interest only ............ 1 8,150,000 5.1 $ 8,150,000
-- ------------ -----
13 $161,017,589 100.0% $12,385,968
== ============ =====
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
- -------------------------- -------------- -------------- -------------- ----------- ----------- ----------
265 - 300 ................ $ 1,991,423 71.1% 55.0% 117 1.57x 5.850%
301 - 348 ................ $18,240,000 80.0% 71.5% 84 1.46x 4.750%
349 - 360 ................ $36,033,285 73.2% 63.8% 107 1.35x 5.341%
Interest only ............ $ 8,150,000 75.1% 75.1% 60 1.94x 4.590%
$36,033,285 74.0% 65.1% 102 1.40X 5.242%
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-141
AMORTIZATION TYPES FOR ALL MORTGAGE LOANS
AGGREGATE % OF AVERAGE
NUMBER CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
AMORTIZATION TYPES OF LOANS BALANCE POOL BALANCE BALANCE
- ----------------------------- ---------- ----------------- -------------- --------------
Amortizing Balloon .......... 16 $ 387,847,650 37.2% $24,240,478
Interest-only, Amortizing
ARD(2) ..................... 6 285,415,556 27.4 $47,569,259
Amortizing ARD .............. 21 170,767,323 16.4 $ 8,131,777
Interest-only, Amortizing
Balloon(2) ................. 7 143,400,000 13.8 $20,485,714
Interest-only, ARD .......... 2 44,213,000 4.2 $22,106,500
Interest-only ............... 1 8,150,000 0.8 $ 8,150,000
Fully Amortizing ............ 1 1,694,781 0.2 $ 1,694,781
-- -------------- -----
54 $1,041,488,309 100.0% $19,286,821
== ============== =====
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
- ----------------------------- -------------- -------------- -------------- ----------- ----------- ----------
Amortizing Balloon .......... $130,000,000 65.7% 51.6% 117 1.60x 5.234%
Interest-only, Amortizing
ARD(2) ..................... $ 95,555,556 64.2% 57.2% 119 1.60x 5.652%
Amortizing ARD .............. $ 25,100,000 71.7% 57.1% 124 1.53x 5.635%
Interest-only, Amortizing
Balloon(2) ................. $ 58,800,000 73.9% 67.7% 88 1.57x 5.094%
Interest-only, ARD .......... $ 22,600,000 68.5% 68.5% 59 1.93x 4.984%
Interest-only ............... $ 8,150,000 75.1% 75.1% 60 1.94x 4.590%
Fully Amortizing ............ $ 1,694,781 69.5% 0.0% 191 1.20x 5.760%
$130,000,000 67.6% 57.1% 112 1.60X 5.380%
- -------
(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.
AMORTIZATION TYPES FOR LOAN GROUP 1 MORTGAGE LOANS
% OF
AGGREGATE CUT-OFF DATE AVERAGE
NUMBER CUT-OFF DATE GROUP 1 CUT-OFF DATE
AMORTIZATION TYPES OF LOANS BALANCE BALANCE BALANCE
- ----------------------------- ---------- ---------------- -------------- --------------
Amortizing Balloon .......... 12 $ 330,537,941 37.5% $ 27,544,828
Interest-only, Amortizing
ARD(2) ..................... 4 260,315,556 29.6 $ 65,078,889
Amortizing ARD .............. 19 161,949,442 18.4 $ 8,523,655
Interest-only, Amortizing
Balloon(2) ................. 3 81,760,000 9.3 $ 27,253,333
Interest-only, ARD .......... 2 44,213,000 5.0 $ 22,106,500
Fully Amortizing ............ 1 1,694,781 0.2 $ 1,694,781
-- ------------- -----
41 $ 880,470,720 100.0% $ 21,474,896
== ============= =====
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
- ----------------------------- ---------------- -------------- -------------- ----------- ----------- ----------
Amortizing Balloon .......... $ 130,000,000 64.7% 50.2% 116 1.63x 5.194%
Interest-only, Amortizing
ARD(2) ..................... $ 95,555,556 63.0% 56.2% 118 1.62x 5.686%
Amortizing ARD .............. $ 25,100,000 71.4% 56.8% 124 1.54x 5.640%
Interest-only, Amortizing
Balloon(2) ................. $ 58,800,000 73.4% 67.3% 93 1.74x 5.124%
Interest-only, ARD .......... $ 22,600,000 68.5% 68.5% 59 1.93x 4.984%
Fully Amortizing ............ $ 1,694,781 69.5% 0.0% 191 1.20x 5.760%
$ 130,000,000 66.4% 55.6% 113 1.64X 5.406%
- -------
(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-142
AMORTIZATION TYPES FOR LOAN GROUP 2 MORTGAGE LOANS
AGGREGATE % OF AVERAGE
NUMBER OF CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
AMORTIZATION TYPES LOANS BALANCE GROUP 2 BALANCE BALANCE
- ----------------------------- ----------- -------------- ----------------- --------------
Interest-only, Amortizing
Balloon(2) ................. 4 $ 61,640,000 38.3% $15,410,000
Amortizing Balloon .......... 4 57,309,708 35.6 $14,327,427
Interest-only, Amortizing
ARD(2) ..................... 2 25,100,000 15.6 $12,550,000
Amortizing ARD .............. 2 8,817,881 5.5 $ 4,408,940
Interest-only ............... 1 8,150,000 5.1 $ 8,150,000
- ------------ -----
13 $161,017,589 100.0% $12,385,968
== ============ =====
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
Balloon(2) ................. $20,400,000 74.6% 68.2% 83 1.34x 5.054%
Amortizing Balloon .......... $36,033,285 71.7% 59.7% 119 1.43x 5.467%
Interest-only, Amortizing
ARD(2) ..................... $14,100,000 76.8% 66.9% 119 1.34x 5.294%
Amortizing ARD .............. $ 5,553,881 76.1% 63.7% 119 1.21x 5.553%
Interest-only ............... $ 8,150,000 75.1% 75.1% 60 1.94x 4.590%
$36,033,285 74.0% 65.1% 102 1.40X 5.242%
- -------
(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 24 months from origination prior to the commencement of payments of
principal and interest.
S-143
RANGE OF OCCUPANCY RATES FOR ALL MORTGAGE LOANS(1)
AGGREGATE % OF AVERAGE
NUMBER OF CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
RANGE OF OCCUPANCY RATES (%) LOANS BALANCE POOL BALANCE BALANCE
- ------------------------------ ----------- ----------------- -------------- --------------
70.00 - 74.99 .............. 1 $ 60,000,000 5.8% $60,000,000
75.00 - 79.99 .............. 2 88,413,050 8.5 $44,206,525
80.00 - 84.99 .............. 3 53,919,209 5.2 $17,973,070
85.00 - 89.99 .............. 6 115,324,984 11.1 $19,220,831
90.00 - 94.99 .............. 11 115,297,529 11.1 $10,481,594
95.00 - 99.99 .............. 13 468,466,470 45.0 $36,035,882
100.00 - 100.00 .............. 18 140,067,069 13.4 $ 7,781,504
-- -------------- -----
54 $1,041,488,309 100.0% $19,286,821
== ============== =====
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
- ------------------------------ -------------- -------------- -------------- --------------------- ----------- ----------
70.00 - 74.99 .............. $ 60,000,000 45.7% 38.3% 118 2.08x 5.760%
75.00 - 79.99 .............. $ 75,000,000 70.0% 61.9% 119 1.46x 6.149%
80.00 - 84.99 .............. $ 24,924,796 72.2% 68.3% 66 1.54x 5.185%
85.00 - 89.99 .............. $ 58,800,000 73.7% 67.4% 88 1.65x 5.060%
90.00 - 94.99 .............. $ 26,082,959 70.3% 61.2% 107 1.56x 5.326%
95.00 - 99.99 .............. $130,000,000 65.4% 53.1% 121 1.61x 5.229%
100.00 - 100.00 .............. $ 21,613,000 73.8% 59.2% 114 1.47x 5.621%
$130,000,000 67.6% 57.1% 112 1.60X 5.380%
- -------
(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.
(2) Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-144
RANGE OF OCCUPANCY RATES FOR LOAN GROUP 1 MORTGAGE LOANS(1)
AGGREGATE % OF AVERAGE
NUMBER OF CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
RANGE OF OCCUPANCY RATES (%) LOANS BALANCE GROUP 1 BALANCE BALANCE
- -------------------------------- ----------- ---------------- ----------------- --------------
70.00 - 74.99 ................ 1 $ 60,000,000 6.8% $ 60,000,000
75.00 - 79.99 ................ 2 88,413,050 10.0 $ 44,206,525
80.00 - 84.99 ................ 3 53,919,209 6.1 $ 17,973,070
85.00 - 89.99 ................ 2 63,693,561 7.2 $ 31,846,780
90.00 - 94.99 ................ 4 45,208,648 5.1 $ 11,302,162
95.00 - 99.99 ................ 11 429,169,184 48.7 $ 39,015,380
100.00 - 100.00 ................ 18 140,067,069 15.9 $ 7,781,504
-- ------------- -----
41 $ 880,470,720 100.0% $ 21,474,896
== ============= =====
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
- -------------------------------- ---------------- -------------- -------------- ----------- ----------- ----------
70.00 - 74.99 ................ $ 60,000,000 45.7% 38.3% 118 2.08x 5.760%
75.00 - 79.99 ................ $ 75,000,000 70.0% 61.9% 119 1.46x 6.149%
80.00 - 84.99 ................ $ 24,924,796 72.2% 68.3% 66 1.54x 5.185%
85.00 - 89.99 ................ $ 58,800,000 71.7% 66.5% 85 1.86x 5.021%
90.00 - 94.99 ................ $ 26,082,959 69.5% 58.0% 117 1.75x 5.548%
95.00 - 99.99 ................ $ 130,000,000 64.4% 52.1% 121 1.63x 5.202%
100.00 - 100.00 ................ $ 21,613,000 73.8% 59.2% 114 1.47x 5.621%
$ 130,000,000 66.4% 55.6% 113 1.64X 5.406%
- -------
(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.
(2) Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-145
RANGE OF OCCUPANCY RATES FOR LOAN GROUP 2 MORTGAGE LOANS(1)
AGGREGATE % OF AVERAGE
NUMBER OF CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
RANGE OF OCCUPANCY RATES (%) LOANS BALANCE GROUP 2 BALANCE BALANCE
- ------------------------------ ----------- -------------- ----------------- --------------
85.00 - 89.99 ................ 4 $ 51,631,423 32.1% $12,907,856
90.00 - 94.99 ................ 7 70,088,881 43.5 $10,012,697
95.00 - 99.99 ................ 2 39,297,285 24.4 $19,648,643
- ------------ -----
13 $161,017,589 100.0% $12,385,968
== ============ =====
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
- ------------------------------ -------------- -------------- -------------- ----------- ----------- ----------
85.00 - 89.99 ................ $20,400,000 76.3% 68.4% 92 1.39x 5.107%
90.00 - 94.99 ................ $14,100,000 70.9% 63.2% 101 1.43x 5.183%
95.00 - 99.99 ................ $36,033,285 76.6% 64.1% 119 1.36x 5.527%
$36,033,285 74.0% 65.1% 102 1.40X 5.242%
- -------
(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.
(2) Calculated with respect to the Anticipated Repayment Date for ARD Loans.
S-146
PERCENTAGE OF MORTGAGE POOL BY PREPAYMENT RESTRICTION(1)(2)(3)
PREPAYMENT RESTRICTION APR-04 APR-05 APR-06 APR-07 APR-08
- ------------------------------------------- --------------- --------------- --------------- --------------- -------------
Lockout ................................... 100.00% 100.00% 46.57% 17.62% 0.00%
Defeasance ................................ 0.00 0.00 51.93 72.70 90.29
Yield Maintenance ......................... 0.00 0.00 1.51 9.68 9.71
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) ....................... $ 1,041.49 $ 1,032.06 $ 1,021.27 $ 1,006.91 $ 991.19
Percent of Cut-Off Date Pool Balance ...... 100.00% 99.10% 98.06% 96.68% 95.17%
PREPAYMENT RESTRICTION APR-09 APR-10 APR-11 APR-12 APR-13 APR-14
- ------------------------------------------- ------------- ------------- ------------- ------------- ------------- ------------
Lockout ................................... 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Defeasance ................................ 90.33 90.28 88.78 88.70 88.34 58.57
Yield Maintenance ......................... 9.67 9.72 11.22 11.30 11.66 41.43
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) ....................... $ 898.10 $ 879.64 $ 748.79 $ 730.51 $ 693.95 $ 30.04
Percent of Cut-Off Date Pool Balance ...... 86.23% 84.46% 71.90% 70.14% 66.63% 2.88%
- -------
(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) Based upon the assumptions set forth in footnote (1) above, after April
2014, the outstanding loan balances represent less than 2.88% of the
Cut-Off Date Pool Balance.
(3) Assumes yield maintenance for 1 Mortgage Loan which has the option to
defease or pay yield maintenance.
S-147
PERCENTAGE OF LOAN GROUP 1 BY PREPAYMENT RESTRICTION(1)(2)(3)
PREPAYMENT RESTRICTION APR-04 APR-05 APR-06 APR-07 APR-08
- ------------------------------------------ ------------ ------------ ------------- ------------- -------------
Lockout .................................. 100.00% 100.00% 40.79% 14.89% 0.00%
Defeasance ............................... 0.00 0.00 57.42 74.61 89.47
Yield Maintenance ........................ 0.00 0.00 1.79 10.50 10.53
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) .............. $ 880.47 $ 871.90 $ 862.39 $ 850.22 $ 836.78
Percent of Cut-Off Date Group 1 Balance .. 100.00% 99.03% 97.95% 96.56% 95.04%
PREPAYMENT RESTRICTION APR-09 APR-10 APR-11 APR-12 APR-13 APR-14
- ------------------------------------------ ------------- ------------- ------------- ------------- ------------- ------------
Lockout .................................. 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Defeasance ............................... 88.49 88.42 87.39 87.30 86.85 58.57
Yield Maintenance ........................ 11.51 11.58 12.61 12.70 13.15 41.43
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) .............. $ 754.27 $ 738.37 $ 666.56 $ 649.95 $ 615.19 $ 30.04
Percent of Cut-Off Date Group 1 Balance .. 85.67% 83.86% 75.70% 73.82% 69.87% 3.41%
- -------
(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 April
2014, the outstanding loan balances represent less than 3.41% of the
Cut-Off Date Group 1 Balance.
S-148
PERCENTAGE OF LOAN GROUP 2 BY PREPAYMENT RESTRICTION(1)(2)(3)
PREPAYMENT RESTRICTION APR-04 APR-05 APR-06 APR-07 APR-08
- ------------------------------------------ ------------ ------------ ------------- ------------- -------------
Lockout .................................. 100.00% 100.00% 77.91% 32.46% 0.00%
Defeasance ............................... 0.00 0.00 22.09 62.33 94.72
Yield Maintenance ........................ 0.00 0.00 0.00 5.20 5.28
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) .............. $161.02 $160.16 $158.88 $156.70 $154.41
Percent of Cut-Off Date Group 2 Balance .. 100.00% 99.47% 98.67% 97.32% 95.90%
PREPAYMENT RESTRICTION APR-09 APR-10 APR-11 APR-12 APR-13
- ------------------------------------------ ------------- ------------- ------------- ------------- -------------
Lockout .................................. 0.00% 0.00% 0.00% 0.00% 0.00%
Defeasance ............................... 100.00 100.00 100.00 100.00 100.00
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) .............. $143.83 $141.27 $ 82.24 $ 80.55 $ 78.76
Percent of Cut-Off Date Group 2 Balance .. 89.33% 87.74% 51.07% 50.03% 48.91%
- -------
(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) Assumes yield maintenance for 1 Mortgage Loan which has the option to
defease or pay yield maintenance.
S-149
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 APPLICABLE
LOANS/ % OF CUT-OFF
NUMBER OF CUT-OFF INITIAL DATE LOAN
MORTGAGE MORTGAGED LOAN DATE POOL GROUP
LOAN NAME LOAN SELLER PROPERTIES GROUP BALANCE(1) BALANCE BALANCE
- ------------------------------------- ------------- ------------ ------- --------------- --------- ------------
Brass Mill Center & Commons ......... Wachovia 1/1 1 $130,000,000 12.5% 14.8%
Four Seasons Town Centre ............ Wachovia 1/1 1 97,864,906 9.4 11.1%
11 Madison Avenue ................... Wachovia 1/1 1 95,555,556 9.2 10.9%
Bank of America Tower ............... Wachovia 1/1 1 75,000,000 7.2 8.5%
Starrett-Lehigh Building ............ Wachovia 1/1 1 60,000,000 5.8 6.8%
Westland Mall ....................... Eurohypo 1/1 1 58,800,000 5.6 6.7%
ARC Pool 10-1 ....................... Citigroup 1/8 2 36,033,285 3.5 22.4%
Amargosa Commons Shopping Center..... Wachovia 1/1 1 29,760,000 2.9 3.4%
Bay City Mall ....................... Eurohypo 1/1 1 26,082,959 2.5 3.0%
The Shoppes at Gilbert Commons ...... Wachovia 1/1 1 25,100,000 2.4 2.9%
----- ------------ ----
SUBTOTAL/WTD. AVG. .................. 10/17 $634,196,705 60.9%
===== ============ ====
ARC Pool 5-4 ........................ Citigroup 1/8 1 $ 24,924,796 2.4% 2.8%
AFRT Portfolio ...................... Wachovia 2/17 1 24,777,228 2.4 2.8%
Valley Corporate Center ............. Wachovia 1/1 1 22,600,000 2.2 2.6%
Home Depot - Colma, CA .............. Wachovia 1/1 1 21,613,000 2.1 2.5%
Essex Place Apartments .............. Artesia 1/1 2 20,400,000 2.0 12.7%
University Mall ..................... Wachovia 1/1 1 19,734,143 1.9 2.2%
Stonegate Apts/Cedar Ridge Apts ..... Artesia 2/2 2 19,285,000 1.9 12.0%
Deep Deuce at Bricktown ............. Wachovia 1/1 2 18,240,000 1.8 11.3%
Poway Shopping Center ............... Wachovia 1/1 1 17,660,000 1.7 2.0%
Sports Authority Corporate
Headquarters ....................... Citigroup 1/1 1 15,937,612 1.5 1.8%
----- ------------ ----
SUBTOTAL/WTD. AVG. .................. 12/34 $205,171,780 19.7%
===== ============ ====
TOTAL/WTD. AVG. ..................... 22/51 $839,368,485 80.6%
===== ============ ====
WEIGHTED
LOAN WEIGHTED AVERAGE
BALANCE AVERAGE LTV WEIGHTED
PER SF/ WEIGHTED CUT-OFF RATIO AT AVERAGE
PROPERTY UNIT/ AVERAGE DATE MATURITY MORTGAGE
LOAN NAME TYPE PAD DSCR LTV RATIO OR ARD RATE
- ------------------------------------- ---------------------------- --------- ---------- ----------- ---------- -----------
Brass Mill Center & Commons ......... Retail - Anchored $ 150 1.77x 62.1% 45.6% 4.550%
Four Seasons Town Centre ............ Retail - Anchored $ 105 1.54x 60.8% 47.0% 5.600%
11 Madison Avenue ................... Office - CBD $ 191 1.55x 63.7% 59.0% 5.304%
Bank of America Tower ............... Office - CBD $ 108 1.51x 69.2% 61.5% 6.160%
Starrett-Lehigh Building ............ Office - CBD $ 69 2.08x 45.7% 38.3% 5.760%
Westland Mall ....................... Retail - Anchored $ 254 1.89x 72.6% 68.2% 4.952%
ARC Pool 10-1 ....................... Mobile Home Park $24,380 1.37x 76.3% 63.8% 5.530%
Amargosa Commons Shopping Center..... Retail - Anchored $ 172 1.21x 80.0% 70.2% 5.570%
Bay City Mall ....................... Retail - Anchored $ 72 2.02x 64.7% 54.0% 5.302%
The Shoppes at Gilbert Commons ...... Retail - Anchored $ 151 1.25x 79.6% 66.3% 5.430%
SUBTOTAL/WTD. AVG. .................. 1.65X 64.8% 54.5% 5.337%
ARC Pool 5-4 ........................ Mobile Home Park $13,740 1.46x 71.9% 66.4% 5.050%
AFRT Portfolio ...................... Various - Retail/Office $ 127 1.32x 72.9% 51.0% 5.830%
Valley Corporate Center ............. Office - Suburban $ 132 1.65x 71.6% 71.6% 5.160%
Home Depot - Colma, CA .............. Retail - Anchored $ 216 2.23x 65.2% 65.2% 4.800%
Essex Place Apartments .............. Multifamily - Conventional $57,955 1.29x 73.5% 68.1% 5.320%
University Mall ..................... Retail - Anchored $ 30 2.66x 51.5% 37.8% 6.120%
Stonegate Apts/Cedar Ridge Apts ..... Multifamily - Conventional $34,315 1.54x 63.3% 52.6% 5.310%
Deep Deuce at Bricktown ............. Multifamily - Conventional $62,041 1.46x 80.0% 71.5% 4.750%
Poway Shopping Center ............... Retail - Anchored $ 165 1.32x 78.1% 67.3% 5.690%
Sports Authority Corporate
Headquarters ....................... Office - Suburban $ 76 1.24x 73.5% 45.2% 6.420%
SUBTOTAL/WTD. AVG. .................. 1.62X 70.1% 60.0% 5.419%
TOTAL/WTD. AVG. ..................... 1.64X 66.1% 55.8% 5.357%
- ----------
(1) In the case of a concentration of cross-collateralized mortgage loans,
the aggregate principal balance.
S-150
Brass Mill Center & Commons
- --------------------------------------------------------------------------------
LOAN INFORMATION
- --------------------------------------------------------------------------------
MORTGAGE LOAN SELLER Wachovia
CUT-OFF DATE BALANCE $130,000,000
PERCENTAGE OF CUT-OFF DATE POOL BALANCE 12.5%
NUMBER OF MORTGAGE LOANS 1
LOAN PURPOSE Refinance
SPONSOR GGP/Homart, Inc.
TYPE OF SECURITY Fee
MORTGAGE RATE 4.550%
MATURITY DATE April 11, 2014
AMORTIZATION TYPE Balloon
INTEREST ONLY PERIOD None
ORIGINAL TERM / AMORTIZATION 120 / 300
REMAINING TERM / AMORTIZATION 120 / 300
LOCKBOX Soft-Upfront
SHADOW RATING (S&P/MOODY'S)(1) BBB+/Baa3
UP-FRONT RESERVES
TAX/INSURANCE No
ONGOING MONTHLY RESERVES
TAX/INSURANCE(2) Springing
TI/LC(3) Springing
REPLACEMENT(3) Springing
ADDITIONAL FINANCING(4) Subordinate Debt $ 10,000,000
WHOLE
TRUST ASSET MORTGAGE LOAN
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CUT-OFF DATE BALANCE $130,000,000 $140,000,000
CUT-OFF DATE BALANCE/SF $ 150 $ 162
CUT-OFF DATE LTV 62.1% 66.8%
MATURITY DATE LTV 45.6% 49.1%
UW DSCR ON NCF 1.77x 1.65x
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(1) S&P and Moody's have confirmed that the Brass Mill Center & Commons Loan,
in the context of its inclusion in the trust, has credit characteristics
consistent with an investment-grade rated obligation.
(2) Monthly reserves for taxes and insurance are required if (i) an event of
default occurs and is continuing or (ii) the debt service coverage ratio,
as computed by the mortgagee, for any preceding 12-month period is less
than 1.20x.
(3) Monthly reserves for tenant improvements, leasing commissions and
replacement reserves are required in the amount of $72,016 up to a
maximum amount of $848,157 if (i) an event of default occurs and is
continuing or (ii) the debt service coverage ratio, as computed by the
mortgagee, for any preceding 12-month period is less than 1.20x.
(4) As of the Cut-Off Date.
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PROPERTY INFORMATION
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NUMBER OF MORTGAGED PROPERTIES 1
LOCATION Waterbury, CT
PROPERTY TYPE Retail - Anchored
SIZE (SF) 864,187
OCCUPANCY AS OF FEBRUARY 20, 2004* 96.8%
YEAR BUILT / YEAR RENOVATED 1997 / NA
APPRAISED VALUE $209,500,000
GGP-Brass Mill,
PROPERTY MANAGEMENT Inc.
UW ECONOMIC OCCUPANCY 95.0%
UW REVENUES $ 27,153,895
UW TOTAL EXPENSES $ 11,238,617
UW NET OPERATING INCOME (NOI) $ 15,915,278
UW NET CASH FLOW (NCF) $ 15,456,332
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* Includes tenants who have executed leases but not yet taken occupancy.
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TENANT SUMMARY
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NET
RATINGS(1) RENTABLE % OF NET
TENANT MOODY'S/S&P/FITCH AREA (SF) RENTABLE AREA
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BRASS MILL CENTER
Anchor Tenants - Anchor Owned
Filene's ............................... Baa1/BBB+/BBB+ 161,744 ANCHOR OWNED--NOT PART OF COLLATERAL
Sears .................................. Baa1/BBB/BBB+ 157,647 ANCHOR OWNED--NOT PART OF COLLATERAL
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TOTAL ANCHOR OWNED ................... 319,391
Anchor Tenants - Collateral
JCPenney ............................... Ba3/BB+/BB 125,247 14.5%
Burlington Coat Factory(2) ............. NR/NR/NR 91,390 10.6
Hoyts Cinema ........................... NR/NR/NR 70,477 8.2
Steve & Barry's University
Sportswear(2) ......................... NR/NR/NR 49,132 5.7
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TOTAL ANCHOR TENANTS ................. 336,246 38.9%
TOP 5 MALL TENANTS
H & M .................................. NR/NR/NR 27,389 3.2%
Old Navy ............................... Ba3/BB+/BB+ 15,000 1.7
FYE .................................... NR/NR/NR 12,282 1.4
Hops ................................... NR/NR/NR 6,784 0.8
The Gap ................................ Ba3/BB+/BB+ 6,547 0.8
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TOTAL TOP 5 TENANTS 68,002 7.9%
NON-MAJOR TENANTS ...................... 235,540 27.3
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OCCUPIED MALL COLLATERAL TOTAL ......... 639,788 74.0%
VACANT SPACE ........................... 27,366 3.2
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BRASS MILL CENTER COLLATERAL TOTAL ..... 667,154 77.2%
BRASS MILL CENTER PROPERTY TOTAL ....... 986,545
BRASS MILL COMMONS
Shaw's Supermarket ..................... A3/BBB+/BBB+ 53,317 6.2%
Toys R Us .............................. Ba2/BB/BB 48,000 5.6
OfficeMax .............................. Ba2/BB/NR 29,188 3.4
Barnes & Noble . ....................... NR/BB/NR 22,000 2.5
Non-Major Tenants ...................... 44,528 5.2
Vacant Space ........................... 0 0.0
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BRASS MILL COMMONS TOTAL ............... 197,033 22.8%
COLLATERAL TOTAL ....................... 864,187 100.0%
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PROPERTY TOTAL ......................... 1,183,578
ACTUAL % OF ACTUAL DATE OF LEASE
TENANT RENT PSF ACTUAL RENT RENT EXPIRATION
- ----------------------------------------- ---------- ------------- ------------- ---------------
BRASS MILL CENTER
Anchor Tenants - Anchor Owned
Filene's ............................... ANCHOR OWNED--NOT PART OF COLLATERAL
Sears .................................. ANCHOR OWNED--NOT PART OF COLLATERAL
TOTAL ANCHOR OWNED ...................
Anchor Tenants - Collateral
JCPenney ............................... $ 5.64 $ 706,393 4.6% September 2017
Burlington Coat Factory(2) ............. $ 6.16 562,962 3.6 October 2014
Hoyts Cinema ........................... $ 18.00 1,268,586 8.2 February 2006
Steve & Barry's University
Sportswear(2) ......................... $ 9.00 442,188 2.8 July 2011
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TOTAL ANCHOR TENANTS ................. $ 8.86 $ 2,980,129 19.2%
TOP 5 MALL TENANTS
H & M .................................. $ 27.57 $ 755,040 4.9% January 2016
Old Navy ............................... $ 20.00 300,000 1.9 January 2010
FYE .................................... $ 22.00 270,204 1.7 January 2008
Hops ................................... $ 20.52 139,208 0.9 June 2015
The Gap ................................ $ 23.00 150,581 1.0 January 2010
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TOTAL TOP 5 TENANTS $ 23.75 $ 1,615,033 10.4%
NON-MAJOR TENANTS ...................... $ 33.94 7,993,884 51.5
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OCCUPIED MALL COLLATERAL TOTAL ......... $ 19.68 $12,589,046 81.1%
VACANT SPACE ...........................
BRASS MILL CENTER COLLATERAL TOTAL .....
BRASS MILL CENTER PROPERTY TOTAL .......
BRASS MILL COMMONS
Shaw's Supermarket ..................... $ 14.99 $ 799,222 5.1% February 2024
Toys R Us .............................. $ 12.25 588,000 3.8 January 2018
OfficeMax .............................. $ 13.50 394,038 2.5 January 2018
Barnes & Noble . ....................... $ 15.50 341,000 2.2 December 2012
Non-Major Tenants ...................... $ 18.16 808,673 5.2
Vacant Space ........................... 0 0.0
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BRASS MILL COMMONS TOTAL ............... $ 14.88 $ 2,930,933 18.9%
COLLATERAL TOTAL ....................... $15,519,979 100.0%
PROPERTY TOTAL .........................
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(1) Certain ratings are those of the parent company whether or not the parent
guarantees the lease.
(2) Tenant has executed a lease for the terms as specified, but has not taken
occupancy at the Mortgaged Property.
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LEASE EXPIRATION SCHEDULE
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WA BASE % OF TOTAL CUMULATIVE % OF ACTUAL CUMULATIVE % OF
# OF LEASES RENT/SF TOTAL SF SF % OF SF RENT ACTUAL RENT
YEAR ROLLING ROLLING ROLLING ROLLING(1) ROLLING(1) ROLLING(1) ROLLING(1)
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2004 3 $ 19.47 6,137 0.7% 0.7% 0.8% 0.8%
2005 4 $ 50.34 6,198 0.7% 1.4% 2.0% 2.8%
2006(2) 4 $ 19.35 75,529 8.7% 10.2% 9.4% 12.2%
2007 11 $ 43.18 19,319 2.2% 12.4% 5.4% 17.6%
2008 58 $ 33.65 135,997 15.7% 28.1% 29.5% 47.1%
2009 5 $ 32.62 7,977 0.9% 29.1% 1.7% 48.7%
2010 9 $ 28.11 39,675 4.6% 33.7% 7.2% 55.9%
2011 7 $ 14.25 64,399 7.5% 41.1% 5.9% 61.8%
2012 5 $ 20.11 35,479 4.1% 45.2% 4.6% 66.4%
2013 8 $ 19.45 40,073 4.6% 49.8% 5.0% 71.5%
2014 2 $ 7.22 97,928 11.3% 61.2% 4.6% 76.0%
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(1) Calculated based on approximate square footage occupied by each
tenant.
(2) Assumes the early termination of the Hoyts space.
THE LOAN. The Brass Mill Center & Commons Loan (the "Brass Mill Center &
Commons Loan") represents a senior interest in a $140,000,000 mortgage loan
(the "Brass Mill Center & Commons Whole Loan"), which Brass Mill Center &
Commons Whole Loan is evidenced by two notes, an A note (the "Brass Mill Center
& Commons Note") in the original principal amount of the Brass Mill Center &
Commons Loan and a B note (the "Brass Mill Center & Commons Subordinate Note")
in the original principal amount of $10,000,000, which Brass Mill Center &
Commons Subordinate Note is subordinate in payment priority to the Brass Mill
Center & Commons Loan. The Brass Mill Center & Commons Loan is secured by a
first priority mortgage (the "Brass Mill Center & Commons Mortgage") on the
borrower's fee interest in the real property known as Brass Mill Center &
Commons located in Waterbury, Connecticut. The Brass Mill Center & Commons Loan
represents approximately 12.5% of the Cut-Off Date Pool Balance. The Brass Mill
Center & Commons Whole Loan was originated on March 12, 2004. The Brass Mill
Center & Commons Loan has an outstanding principal balance as of the Cut-Off
Date of $130,000,000 and the Brass Mill Center & Commons Whole Loan has an
outstanding principal balance as of the Cut-Off Date of $140,000,000. The Brass
Mill Center & Commons Note bears interest at 4.550% per annum.
The Brass Mill Center & Commons Loan has a remaining term of 120 months
and matures on April 11, 2014. The Brass Mill Center & Commons Loan may be
prepaid on or after December 11, 2013, and permits defeasance with United
States government obligations beginning the earlier of three years after its
first payment date or two years from the last securitization of any portion of
the Brass Mill Center & Commons Loan and its related companion loan.
THE BORROWER. The borrower is GGP-Brass Mill, Inc., a special purpose
entity. Legal counsel to the borrower delivered a non-consolidation opinion in
connection with the origination of the Brass Mill Center & Commons Loan. The
borrower is 100% owned by GGP/Homart, Inc., and the sponsor of the borrower is
General Growth Properties, Inc. ("GGP"). GGP is the second largest owner and
operator of regional mall and the largest third-party property manager in the
United States.
THE PROPERTY. The Mortgaged Property is approximately 864,187 square feet
of an approximately 1,183,578 square foot regional mall and an adjacent
community center situated on approximately 53.6 acres. The Mortgaged Property
was constructed in 1997. The Mortgaged Property is located in Waterbury,
Connecticut, within the Hartford, Connecticut metropolitan statistical area. As
of February 20, 2004, the occupancy rate (which includes space subject to
pending tenants that have executed a lease) for the Mortgaged Property securing
the Brass Mill Center & Commons Loan was approximately 96.8%.
The anchor tenants at the Mortgaged Property are Filene's, Sears, Roebuck
& Co. ("Sears") and J.C. Penney Company, Inc. ("JCPenney"). Filene's and Sears
own their respective premises and land, which are not part of the collateral.
The largest tenant which is part of the Mortgaged Property is JCPenney,
occupying approximately 125,247 square feet, or approximately 14.5% of the net
rentable area. JCPenney is a major retailer in the United States with interests
in drug, catalog and e-commerce merchandising. As
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of April 5, 2004, JCPenney was rated "Ba3" (Moody's), "BB+" (S&P) and "BB"
(Fitch). The JCPenney lease expires in September 2017. The second largest
tenant is Burlington Coat Factory ("Burlington"), occupying approximately
91,390 square feet, or approximately 10.6% of the net rentable area. Burlington
is a major retailer in the United States that sells brand-name family apparel,
accessories and shoes at discount prices. Burlington has signed a ten-year
lease with a tentative occupancy date on or about November 2004. The Burlington
lease expires in October 2014. The third largest tenant is Hoyts Cinema
("Hoyts"), occupying approximately 70,477 square feet, or approximately 8.2% of
the net rentable area. Hoyts owns and operates approximately 2,000 cinema
screens in Australia, Europe, North America and South America. The Hoyts lease
originally expired in January 2022, however, Hoyts and the borrower have agreed
to a lease amendment whereby Hoyts will remit $2,440,000 to the borrower prior
to July 1, 2004, and the Hoyts lease will terminate on February 28, 2006.
The Construction, Operation and Reciprocal Easement Agreement dated
December 12, 1998 (the "Brass Mill Center & Commons COREA"), encumbering the
Mortgaged Property contains operating covenants requiring Filene's and Sears to
operate their stores at the shopping center for a period of 15 years. However,
these anchors will no longer be subject to these operating covenants if certain
co-tenancy requirements are violated or if certain other department stores are
not operating their stores at the shopping center (the department stores
include Filene's, Sears and JCPenney; however, it does not appear that JCPenney
is subject to an operating covenant under its lease). In addition, the breach
of certain co-tenancy requirements and the failure of certain anchors or other
tenants to operate stores at the shopping center may permit certain other
tenants to cease operating at the Mortgaged Property, abate rent or terminate
their leases.
GUARANTY. GGP/Homart, Inc. has delivered a Guaranty pursuant to which it
guaranteed up to $5,000,000 of the Brass Mill Center & Commons Whole Loan.
Provided no event of default exists, the Guaranty provides that GGP/Homart,
Inc., will be released from its obligations under the Guaranty upon the
delivery to the mortgagee of estoppel certificates or other written evidence
acceptable to the mortgagee evidencing that Burlington Coat Factory and Steve &
Barry's University Sportswear have taken occupancy of the space demised under
their respective leases and have commenced payment of the full minimum base
rent (without offset or abatement) with respect to such demised space.
In addition, GGP/Homart, Inc. has delivered an Indemnity Agreement
pursuant to which it has agreed to guaranty to the mortgagee the payment of any
losses, costs or expenses the mortgagee may incur as a result of the borrower's
failure to pay when due certain tenant allowances owed to Hallmark ($50,000),
AT&T Wireless ($22,810), American Eagle ($150,000), D.E.M.O. ($16,035),
Hollister ($155,278) and Burlington Coat Factory ($1,400,000).
INSURANCE. The borrower, at its sole cost and expense, is required to keep
the Mortgaged Property insured against loss or damage by fire and other risks
under a comprehensive all risk insurance policy (the "Brass Mill Center &
Commons Casualty Insurance Policy"), in each case: (1) in an amount equal to at
least 100% of the then "full replacement cost" of the Mortgaged Property, with
a waiver of depreciation, but the amount shall not be less than the outstanding
principal balance of the Brass Mill Center & Commons Whole Loan; (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
Mortgaged Property will at any time constitute legal nonconforming structures
or uses.
All policies of insurance (the "Brass Mill Center & Commons Insurance
Policies") are required to be issued by one or more financially sound and
responsible insurance companies meeting the Rating Agency and financial
requirements set forth in the loan documents.
CASUALTY AND CONDEMNATION. The Brass Mill Center & Commons Loan documents
provide that if the Mortgaged Property is damaged or destroyed, in whole or in
part, by fire or other casualty, or if any portion of the Mortgaged Property is
taken by any governmental authority through eminent domain or otherwise, the
borrower is required to promptly proceed with the repair or rebuilding of the
improvements as nearly as possible substantially to the condition the Mortgaged
Property was in immediately prior to such fire, other casualty or taking (a
"Brass Mill Center & Commons Restoration"). Subject to the terms of the Brass
Mill Center & Commons COREA, the insurance proceeds or condemnation award
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shall be disbursed to the borrower to be used for the Brass Mill Center &
Commons Restoration provided certain conditions are satisfied, including, (i)
if the net insurance proceeds exceed $7,000,000, less than 25% of the total
floor area of the improvements have been damaged or rendered unusable; (ii) if
the net condemnation award exceeds $7,000,000, the land which is taken is
located along the perimeter or periphery of the Mortgaged Property and no
material portion of the improvements are located on such land; (iii) if the net
insurance proceeds or net condemnation award, as applicable, exceeds
$7,000,000, leases demising in the aggregate at least 75% of the total rentable
space in the Mortgaged Property as of the date of such casualty or condemnation
shall remain in full force and effect during and after the Brass Mill Center &
Commons Restoration; and (iv) the borrower shall commence the Brass Mill Center
& Commons Restoration no later than 60 days after the insurance proceeds or
condemnation award is received by mortgagee but in no event later than 120 days
after the casualty or taking. If any of the conditions under the Brass Mill
Center & Commons Loan documents are not satisfied, insurance proceeds and any
condemnation award may be applied by the mortgagee to the repayment of the
Brass Mill Center & Commons Whole Loan. To the extent not required to be
disbursed by the mortgagee for the restoration of the Mortgaged Property, any
award or payment may be applied to the repayment of the Brass Mill Center &
Commons Whole Loan whether or not then due and payable.
The ability of the mortgagee to apply any condemnation award or insurance
proceeds to restoration of the Mortgaged Property or to a prepayment of the
Brass Mill Center & Commons Loan is subject to the provisions of the Brass Mill
Center & Commons COREA, which (i) require condemnation awards to be applied to
restoration of the Mortgaged Property, unless so much has been taken that it
would be impracticable to operate the improvements thereon, and (ii) during the
period that any operating covenants remain in effect under the Brass Mill
Center & Commons COREA, require insurance proceeds to be applied to restoration
of the Mortgaged Property. In addition, the application of condemnation awards
and insurance proceeds may also be subject to the provisions of any leases that
are not subordinate to the mortgage securing the Brass Mill Center & Commons
Loan, which may also require any condemnation awards and insurance proceeds be
applied to restoration rather than to the prepayment of the Brass Mill Center &
Commons Loan.
TRANSFER OF THE PROPERTY AND INTERESTS IN THE BORROWER. The Brass Mill
Center & Commons Loan documents provide that the borrower will not permit any
sale, assignment, conveyance, transfer or other disposition of, or any
mortgage, lien or other encumbrance on, all or any part of the Mortgaged
Property or any interest in such property or any interest in the borrower,
without the consent of the mortgagee. The borrower, however, shall be permitted
to sell the Mortgaged Property provided the borrower satisfies certain
conditions, including: (i) the transferee is a special purpose, bankruptcy
remote entity that satisfies the requirement of the Brass Mill Center & Commons
Loan documents, and the organizational documents of such transferee are
reasonably satisfactory to the Rating Agencies (provided that such transferee
shall not be required to satisfy any greater obligations in meeting the
requirements of a special purpose, bankruptcy remote entity than those set
forth in the Brass Mill Center & Commons Loan documents); (ii) not less than
50% of the direct equity interests in the transferee are owned directly or
indirectly by a Brass Mill Center & Commons Permitted Owner and the transferee
is controlled by a Brass Mill Center & Commons Permitted Owner; (iii) the
property manager following such sale or conveyance is required to be a Brass
Mill Center & Commons Qualifying Manager; and (iv) the mortgagee has received a
nonconsolidation opinion with respect to the sale or conveyance.
In addition, a transfer or sale (but not a pledge, hypothecation, security
interest or other encumbrance) of any direct or indirect interest in the
borrower is permitted provided certain conditions are satisfied, including: (i)
after such transfer or sale no less than 50% of the equity interests in the
borrower is owned, directly or indirectly, by a Brass Mill Center & Commons
Permitted Owner and a Brass Mill Center & Commons Permitted Owner controls the
borrower; and (ii) if more than 49% of the direct or indirect interests in the
borrower shall have been transferred to a person or entity not owning at least
49% of the direct or indirect interests in the borrower on the date of closing
of the Brass Mill Center & Commons Loan, the borrower shall deliver to the
mortgagee a nonconsolidation opinion with respect to the proposed transfer or
sale.
"Brass Mill Center & Commons Permitted Owner" shall mean (i) a Brass Mill
Center & Commons Qualified Transferee or an affiliate of a Brass Mill Center &
Commons Qualified Transferee; (ii) a Brass
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Mill Center & Commons Sponsor or an affiliate of a Brass Mill Center & Commons
Sponsor; or (iii) any other person or entity for which the mortgagee shall have
received written confirmation by the Rating Agencies that the transfer to such
person or entity will not cause a downgrade, withdrawal or qualification of the
then current ratings of the Certificates. "Brass Mill Center & Commons
Qualified Transferee" shall mean any one of the following (i) a pension fund,
pension trust or pension account that (a) has total real estate assets of at
least $1,000,000,000 and (b) is managed by a person or entity who controls at
least $1,000,000,000 of real estate equity assets; (ii) a pension fund advisor
who (a) immediately prior to such transfer, controls at least $1,000,000,000 of
real estate equity assets and (b) is acting on behalf of one or more pension
funds that, in the aggregate, satisfy the requirements of clause (i) of this
definition; (iii) an insurance company which is subject to supervision by the
insurance commissioner, or a similar official or agency, of a state or
territory of the United States (including the District of Columbia) (a) with a
net worth, as of a date no more than 6 months prior to the date of the transfer
of at least $500,000,000 and (b) who, immediately prior to such transfer,
controls real estate equity assets of at least $1,000,000,000; (iv) a
corporation organized under the banking laws of the United States or any state
or territory of the United States (including the District of Columbia) (a) with
a combined capital and surplus of at least $500,000,000 and (b) who,
immediately prior to such transfer, controls real estate equity assets of at
least $1,000,000,000; or (v) any person or entity (a) with a long-term
unsecured debt rating from the Rating Agencies of at least investment grade or
(b) who (1) owns or operates at least 12 regional shopping centers totaling at
least 6 million square feet of gross leasable area, (2) has a net worth, as of
a date no more than 6 months prior to the date of such transfer, of at least
$500,000,000 and (3) immediately prior to such transfer, controls real estate
equity assets of at least $1,000,000,000.
In addition, the Brass Mill Center & Commons Loan documents do not
restrict the right of (i) any shareholder in General Growth Properties, Inc.,
any limited partner in GGP Limited Partnership, the holder of any equity
interest in NYSCRF or in any other shareholder of GGP/Homart, Inc. (other than
General Growth Properties, Inc. and GGP Limited Partnership), the holder of any
equity interest in any member of GGP/Homart II L.L.C. (other than General
Growth Properties, Inc. and GGP Limited Partnership), or the holder of any
equity interest in Teachers Retirement System of Illinois ("TRS") to transfer
its interest in such entity or to cause or permit its interest in such entity
to be redeemed; or (ii) any shareholder in GGP/Homart, Inc. or any member in
GGP/Homart II L.L.C. to transfer its shares or membership interests, as
applicable, in such entity, or to cause its interest in such entity to be
redeemed, provided that, subsequent to any such transfer or redemption
described in this clause (ii), GGP/Homart, Inc. and/or GGP/Homart L.L.C., as
applicable, is controlled, directly or indirectly, by General Growth
Properties, Inc., GGP Limited Partnership and/or NYSCRF; or (iii) any member of
GGPLP L.L.C. to transfer its interest in GGPLP L.L.C. or to cause its interest
in GGPLP L.L.C. to be redeemed, provided that, subsequent to any such transfer
or redemption described in this clause (iii), GGPLP L.L.C. is controlled,
directly or indirectly, by General Growth Properties, Inc., and/or GGP Limited
Partnership; or (iv) any member of GGP-TRS L.L.C. to transfer its interest in
GGP-TRS L.L.C. or to cause its interest in GGP-TRS L.L.C. to be redeemed,
provided that, subsequent to any such transfer or redemption described in this
clause (iv), GGP-TRS L.L.C. is controlled, directly or indirectly, by General
Growth Properties, Inc., TRS and/or GGP Limited Partnership; or (v) any partner
in Price Development Company, Limited Partnership ("Price") to transfer its
interest in Price or to cause or permit such interest to be redeemed, provided
that, subsequent to any such transfer or redemption described in this clause
(v), Price is controlled directly by General Growth Properties, Inc. or GGP
Limited Partnership.
In addition, each of General Growth, GGPLP, GGPLP L.L.C., GGP-TRS L.L.C.,
NYSCRF, GGP/Homart II L.L.C., GGP Ivanhoe III, Inc., Price and/or GGP/Homart,
Inc. (the "Brass Mill Center & Commons Sponsors") may pledge its respective
indirect interest in the borrower, if any, to each other. Each Brass Mill
Center & Commons Sponsor may also pledge its respective indirect interests in
Borrower to a Brass Mill Center & Commons Qualified Pledgee to secure direct
obligations or debt of such entity provided certain conditions are satisfied,
including (i) after giving effect to the exercise of any remedies available to
the Brass Mill Center & Commons Qualified Pledgee under such pledge, one or
more Brass Mill Center & Commons Sponsors shall own, directly or indirectly,
unencumbered, in the aggregate not less than 51% of the equity interests in the
borrower and shall control the borrower; and (ii) upon the request of the
Rating Agencies, following the exercise of any remedies available to the Brass
Mill Center
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& Commons Qualified Pledgee pursuant to the pledge, the borrower shall deliver
to the mortgagee a nonconsolidation opinion. "Brass Mill Center & Commons
Qualified Pledgee" means one or more of the following: a real estate investment
trust, bank, saving and loan association, investment bank, insurance company,
trust company, commercial credit corporation, pension plan, pension fund or
pension advisory firm, mutual fund, government entity or plan provided such
entity (a) has total assets (in name or under management) in excess of
$650,000,000, and (except with respect to a pension advisory firm or similar
fiduciary) capital/statutory surplus or shareholder's equity of $250,000,000;
and (B) is regularly engaged in the business of making or owning commercial
real estate loans or commercial loans secured by a pledge of interests in a
mortgage borrower or owning and operating commercial mortgaged properties.
RELEASE OF PARCEL. The borrower may obtain the release of one or more
vacant, unimproved, non-income producing parcels or outlots in connection with
the expansion or other development of the Mortgaged Property upon the
satisfaction of certain conditions, including: (i) the borrower provides
evidence that the released property is not necessary for the borrower's
operation or its then current use of the Mortgaged Property and may be
separated from the remaining Mortgaged Property without a material diminution
in the value of the Mortgaged Property; (ii) no event of default has occurred
and is continuing; and (iii) the borrower delivers a rating agency confirmation
that the release will not result in a downgrade, withdrawal or qualification of
the then current rating assigned to the Certificates.
LOCK BOX ACCOUNT. All tenant payments due under the applicable tenant
leases are required to be deposited into a lock box account (the "Brass Mill
Center & Commons Lockbox") maintained with LaSalle Bank National Association
(the "Brass Mill Center & Commons Lockbox Bank") in the name of the borrower
for the benefit of the mortgagee. Other than during a Brass Mill Center &
Commons Lockbox Period, all funds on deposit in the Brass Mill Center & Commons
Lockbox will be transferred on every business day at the borrower's direction.
At any time during the term of the Brass Mill Center & Commons Loan, (i) if the
debt service coverage ratio, as computed by the mortgagee, for any preceding
12-month period is less than 1.20x, or (ii) upon the occurrence of an event of
default under the loan documents (a "Brass Mill Center & Commons Lockbox
Period"), the Brass Mill Center & Commons Lockbox Bank shall transfer funds on
every business day to a cash collateral account (the "Brass Mill Center &
Commons Cash Collateral Account") maintained by the Brass Mill Center & Commons
Lockbox Bank in the name of the mortgagee for the benefit of the mortgagee. The
Brass Mill Center & Commons Lockbox Bank shall apply such funds from the Brass
Mill Center & Commons Cash Collateral Account as set forth in the loan
documents to pay, in order, the following: a reserve for taxes and insurance,
monthly debt service payment, a reserve for replacement costs, tenant
improvements and leasing commissions, to the borrower for operating expenses
and capital expenditures and to the mortgagee for other amounts due and payable
under the loan documents, and any excess is retained for future application
until an event of default no longer exists, at which time the excess funds
shall be disbursed to the borrower.
ESCROWS. The loan documents provide that during any Brass Mill Center &
Commons Lockbox Period the borrower is required to make monthly deposits of
real estate taxes and insurance premiums to a taxes and insurance reserve;
however, the requirement to make deposits for insurance premiums is waived as
long as the borrower pays the premiums for such insurance under blanket
insurance policies. In addition, during any Brass Mill Center & Commons Lockbox
Period the borrower is required to make monthly deposits in the amount of
1/12th of $1 per square foot of the net rentable area into a reserve for
replacement costs, tenant improvements and leasing commissions until such time
as the balance of such reserve equals $848,157. In the event that the balance
in the reserve for replacement costs, tenant improvements and leasing
commissions drops below the target amount set forth above, the borrower will be
required to resume making monthly deposits until the applicable target level is
achieved.
MEZZANINE DEBT. Although no mezzanine debt is currently outstanding, the
Brass Mill Center & Commons Loan permits the incurrence of debt secured by
pledges of the indirect equity interests in the borrower.
ADDITIONAL DEBT. The loan documents prohibit the borrower from incurring
any additional debt, secured or unsecured, except for (1) trade and operational
debt not exceeding $7,000,000 incurred in the ordinary course of business, and
(2) capital expenditures, so long as the sum of all outstanding trade and
operational debt and outstanding capital expenditures does not exceed
$10,500,000.
S-157
ENVIRONMENTAL. A release of PCBs impacted the soil at the Mortgaged
Property. A removal action has been proposed at an estimated cost of $200,000.
In addition, there is documented impact to groundwater which was the subject of
investigation and delineation. A protocol of long-term monitoring is estimated
to cost about $150,000. This total estimated cost of $350,000 will be borne by
the borrower. GGP/Homart, Inc., the parent of the borrower, has provided an
environmental indemnity with respect to such remediation activities.
MANAGEMENT. GGP-Brass Mill, Inc. is the property manager for the Mortgaged
Property securing the Brass Mill Center & Commons Whole Loan. The loan
documents permit the Mortgaged Property to be managed by (a) GGP-Brass Mill,
Inc. or General Growth Management, Inc., (b) General Growth Properties, Inc.,
GGP Limited Partnership, GGPLP L.L.C., GGP/Homart Inc., GGP Homart II L.L.C.,
GGP-TRS L.L.C., GGP Ivanhoe III Inc. or Price Development Company, or any of
their affiliates, or (c) a reputable and experienced management company
approved by the Rating Agencies.
INTERCREDITOR AGREEMENT. The holders of (a) the Brass Mill Center &
Commons Note and (b) the Brass Mill Center & Commons Subordinate Note are
parties to an intercreditor and servicing agreement dated as of March 12, 2004
which sets forth the priority of payments and rights of such holders. See
"DESCRIPTION OF THE MORTGAGE POOL--Co-Lender Loans".
S-158
Four Seasons Town Centre
- --------------------------------------------------------------------------------
LOAN INFORMATION
- --------------------------------------------------------------------------------
MORTGAGE LOAN SELLER Wachovia
CUT-OFF DATE BALANCE $97,864,906
PERCENTAGE OF CUT-OFF DATE POOL BALANCE 9.4%
NUMBER OF MORTGAGE LOANS 1
LOAN PURPOSE Acquisition
SPONSOR General Growth Properties, Inc.
TYPE OF SECURITY Fee
MORTGAGE RATE 5.600%
MATURITY DATE December 11, 2013
AMORTIZATION TYPE Balloon
INTEREST ONLY PERIOD None
ORIGINAL TERM / AMORTIZATION 117 / 300
REMAINING TERM / AMORTIZATION 116 / 299
LOCKBOX Hard-Upfront
SHADOW RATING (S&P/MOODY'S)(1) BBB-/Baa3
UP-FRONT RESERVES
TAX Yes
ONGOING MONTHLY RESERVES
TAX Yes
ADDITIONAL FINANCING(2) Subordinate Debt $ 13,980,700
WHOLE
TRUST ASSET MORTGAGE LOAN
--------------- -------------
CUT-OFF DATE BALANCE $97,864,906 $111,845,606
CUT-OFF DATE BALANCE/SF $105 $120
CUT-OFF DATE LTV 60.8% 69.5%
MATURITY DATE LTV 47.0% 53.7%
UW DSCR ON NCF 1.54x 1.35x
- --------------------------------------------------------------------------------
(1) S&P and Moody's have confirmed that the Four Seasons Town Centre Loan
has, in the context of its inclusion in the trust, the credit
characterisitics consistent with that of an investment-grade rated
obligation.
(2) As of the Cut-Off Date.
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
NUMBER OF MORTGAGED PROPERTIES 1
LOCATION Greensboro, NC
PROPERTY TYPE Retail -- Anchored
SIZE (SF) 928,410
OCCUPANCY AS OF MARCH 1, 2004 95.7%
YEAR BUILT / YEAR RENOVATED 1973 / 1999
APPRAISED VALUE $161,000,000
PROPERTY MANAGEMENT GGP-Four Seasons L.L.C.
UW ECONOMIC OCCUPANCY 93.5%
UW REVENUES $17,393,366
UW TOTAL EXPENSES $5,372,525
UW NET OPERATING INCOME (NOI) $12,020,841
UW NET CASH FLOW (NCF) $11,220,008
- --------------------------------------------------------------------------------
S-159
- ----------------------------------------------------------------------------------
TENANT SUMMARY
- ----------------------------------------------------------------------------------
% OF NET
RATINGS* NET RENTABLE RENTABLE
TENANT MOODY'S/S&P/FITCH AREA (SF) AREA
- ----------------------------------------------------------------------------------
FOUR SEASONS TOWN CENTRE
Anchor Tenants -- Anchor
Owned ............................
Dillard's ......................... B2/BB/NR 212,047 ANCHOR OWNED -- NOT PART OF COLLATERAL
-------
TOTAL ANCHOR OWNED ............... 212,047
Anchor Tenants -- Collateral ......
JCPenney .......................... Ba3/BB+/BB 217,975 23.5%
Belk Stores . ..................... NR/NR/NR 211,994 22.8
------- --------
TOTAL ANCHOR TENANTS ............. 429,969 46.3%
TOP 5 TENANTS
CompUSA ........................... NR/NR/NR 27,720 3.0%
The Limited/Limited Too
Childrens ........................ Baa1/BBB+/NR 16,722 1.8
Abercrombie & Fitch ............... NR/NR/NR 14,424 1.6
Express/Bath & Body Works ......... Baa1/BBB+/NR 13,049 1.4
Eckerd ............................ Ba3/BB+/BB 12,466 1.3
------- --------
TOTAL TOP 5 TENANTS .............. 84,381 9.1%
NON-MAJOR TENANTS ................. 374,318 40.3
------- --------
OCCUPIED COLLATERAL TOTAL ......... 888,668 95.7%
VACANT SPACE ...................... 39,742 4.3
------- --------
COLLATERAL TOTAL .................. 928,410 100.0%
-------
PROPERTY TOTAL .................... 1,140,457
% OF
ACTUAL ACTUAL DATE OF LEASE
TENANT RENT PSF ACTUAL RENT RENT EXPIRATION
- -----------------------------------------------------------------------------------------
FOUR SEASONS TOWN CENTRE
Anchor Tenants -- Anchor
Owned ............................
Dillard's ......................... ANCHOR OWNED -- NOT PART OF COLLATERAL
TOTAL ANCHOR OWNED ...............
Anchor Tenants -- Collateral ......
JCPenney .......................... $ 2.00 $ 435,950 3.8% August 2009
Belk Stores . ..................... $ 2.75 582,984 5.1 January 2014
------------ -----
TOTAL ANCHOR TENANTS ............. $ 2.37 $ 1,018,934 8.9%
TOP 5 TENANTS
CompUSA ........................... $ 8.00 $ 221,760 1.9% June 2008
The Limited/Limited Too
Childrens ........................ $ 20.00 334,440 2.9 January 2007
Abercrombie & Fitch ............... $ 22.27 321,292 2.8 January 2010
Express/Bath & Body Works ......... $ 20.50 267,504 2.3 January 2007
Eckerd ............................ $ 3.04 37,885 0.3 October 2004
------------ -----
TOTAL TOP 5 TENANTS .............. $ 14.02 $ 1,182,881 10.3%
NON-MAJOR TENANTS ................. $ 24.78 9,274,303 80.8
------------ -----
OCCUPIED COLLATERAL TOTAL ......... $ 12.91 $ 11,476,118 100.0%
VACANT SPACE ......................
COLLATERAL TOTAL ..................
PROPERTY TOTAL ....................
- -----------------------------------------------------------------------------------------
* Certain ratings are those of the parent company whether or not the parent
guarantees the lease.
- ------------------------------------------------------------------------------------------------------
LEASE EXPIRATION SCHEDULE
- ------------------------------------------------------------------------------------------------------
WA BASE % OF TOTAL CUMULATIVE % OF ACTUAL CUMULATIVE % OF
# OF LEASES RENT/SF TOTAL SF SF % OF SF RENT ACTUAL RENT
YEAR ROLLING ROLLING ROLLING ROLLING* ROLLING* ROLLING* ROLLING*
- ------------------------------------------------------------------------------------------------------
2004 38 $ 21.29 62,510 6.7% 6.7% 11.6% 11.6%
2005 22 $ 28.93 46,533 5.0% 11.7% 11.7% 23.3%
2006 16 $ 30.53 28,357 3.1% 14.8% 7.5% 30.9%
2007 13 $ 26.46 49,445 5.3% 20.1% 11.4% 42.3%
2008 20 $ 18.36 85,394 9.2% 29.3% 13.7% 55.9%
2009 14 $ 4.81 252,914 27.2% 56.6% 10.6% 66.5%
2010 18 $ 24.94 61,834 6.7% 63.2% 13.4% 80.0%
2011 6 $ 19.95 27,150 2.9% 66.1% 4.7% 84.7%
2012 8 $ 14.35 33,164 3.6% 69.7% 4.1% 88.8%
2013 9 $ 29.66 16,530 1.8% 71.5% 4.3% 93.1%
2014 2 $ 2.84 213,184 23.0% 94.5% 5.3% 98.4%
- ------------------------------------------------------------------------------------------------------
* Calculated based on approximate square footage occupied by each
tenant.
S-160
THE LOAN. The Mortgage Loan (the "Four Seasons Town Centre Loan") is
secured by a first mortgage encumbering a regional mall located in Greensboro,
North Carolina. The Four Seasons Town Centre Loan represents approximately 9.4%
of the Cut-Off Date Pool Balance. The Four Seasons Town Centre Loan was
originated on March 5, 2004, and has a principal balance as of the Cut-Off Date
of $97,864,906. The Four Seasons Town Centre Loan, which is evidenced by a
senior note dated March 5, 2004, is the senior portion of a whole loan with an
original principal balance of $112,000,000. The companion loan related to the
Four Seasons Town Centre Loan is evidenced by a separate note dated March 5,
2004, with an original principal balance of $12,000,000 (the "Four Seasons Town
Centre Subordinate Loan"). The Four Seasons Town Centre Subordinate Loan will
not be an asset of the trust. The Four Seasons Town Centre Loan and the Four
Seasons Town Centre Subordinate Loan will be governed by an intercreditor and
servicing agreement, as described in this prospectus supplement under
"DESCRIPTION OF THE MORTGAGE POOL--Co-Lender Loans" and will be serviced
pursuant to the terms of the Pooling and Servicing Agreement.
The Four Seasons Town Centre Loan has a remaining term of 116 months and
matures on December 11, 2013. The Four Seasons Town Centre Loan may be prepaid
on or after September 11, 2013, and permits defeasance with United States
government obligations beginning two years after the Closing Date.
THE BORROWER. The borrower is GGP-Four Seasons L.L.C., a special purpose
entity. Legal counsel to the borrower delivered a non-consolidation opinion in
connection with the origination of the Four Seasons Town Centre Loan. The
sponsor of the borrower is General Growth Properties, Inc. ("GGP"). GGP owns,
leases, manages, acquires and develops regional shopping malls and single
tenant retail properties in the United States.
THE PROPERTY. The Mortgaged Property is approximately 928,410 square feet
of an approximately 1,140,457 square foot regional mall situated on
approximately 63.4 acres. The Mortgaged Property was constructed in 1973,
expanded in 1988 and renovated in 1999. The Mortgaged Property is located in
Greensboro, North Carolina, within the Greensboro-High Point, North Carolina
metropolitan statistical area. As of March 1, 2004, the occupancy rate for the
Mortgaged Property securing the Four Seasons Town Centre Loan was approximately
95.7%.
The anchor tenants at the Mortgaged Property are J.C. Penney Company, Inc.
("JCPenney"), Dillard's, Inc. and Belk Stores ("Belk"). Dillard's, Inc. owns
its premises and land, which are not part of the collateral. The largest tenant
which is part of the Mortgaged Property is JCPenney, occupying approximately
217,975 square feet, or approximately 23.5% of the net rentable area. JCPenney
is a major retailer in the United States with interests in drug, catalog and
e-commerce merchandising. As of April 5, 2004, JCPenney was rated "Ba3"
(Moody's), "BB+" (S&P) and "BB" (Fitch). The JCPenney lease expires in August
2009. The second largest tenant which is part of the Mortgaged Property is
Belk, occupying approximately 211,994 square feet, or approximately 22.8% of
the net rentable area. Belk sells mid-priced brand-name and private-label
apparel, shoes, cosmetics, gifts, and home furnishings. The Belk family owns
the company, which is the largest privately owned department store chain in the
United States. The Belk lease expires in January 2014. The third largest tenant
which is part of the Mortgaged Property is Comp USA, Inc. ("CompUSA"),
occupying approximately 27,720 square feet, or approximately 3.0% of the net
rentable area. CompUSA is a leading reseller of over 35,000 technology and
consumer electronics products. The CompUSA lease expires in June 2008.
LOCK BOX ACCOUNT. All tenant payments due under the applicable tenant
leases are deposited into a lock box account, which provides an allocation of
funds for certain reserve requirements with the remaining amounts remitted back
to the borrower. At any time during the term of the Four Seasons Town Centre
Loan, (i) if the debt service coverage ratio, as computed by the mortgagee, is
less than 1.10x for a 12 consecutive month period or (ii) upon the occurrence
of an event of default under the loan documents, funds in the lockbox account
are transferred to a cash collateral account in the name of the mortgagee.
Funds in the cash collateral account are swept daily into the cash management
system in accordance with the loan documents.
MANAGEMENT. The Mortgaged Property is self-managed by the borrower.
S-161
RELEASE OF PARCELS. The borrower may obtain the release of certain
non-improved, non-income producing property upon the satisfaction of certain
conditions, including, without limitation: (i) the borrower provides evidence
that the released property is not necessary for the borrower's operation or its
then current use of the Mortgaged Property and may be separated from the
remaining Mortgaged Property without a material diminution in the value of the
Mortgaged Property and (ii) no event of default has occurred and is continuing.
S-162
11 Madison Avenue
- --------------------------------------------------------------------------------
LOAN INFORMATION
- --------------------------------------------------------------------------------
MORTGAGE LOAN SELLER Wachovia
CUT-OFF DATE BALANCE(1) $95,555,556
PERCENTAGE OF CUT-OFF DATE POOL BALANCE 9.2%
NUMBER OF MORTGAGE LOANS 1
LOAN PURPOSE Acquisition
SPONSOR Tamir Sapir
TYPE OF SECURITY(2) Fee
MORTGAGE RATE 5.304%
MATURITY DATE January 11, 2014
AMORTIZATION TYPE ARD
INTEREST ONLY PERIOD 60
ORIGINAL TERM / AMORTIZATION 120 / 360
REMAINING TERM / AMORTIZATION 117 / 360
LOCKBOX Hard-Upfront
SHADOW RATING (S&P/MOODY'S)(3) BBB/Baa2
UP-FRONT RESERVES
TAX/INSURANCE Yes
ONGOING MONTHLY RESERVES
TAX/INSURANCE Yes
TI/LC(4) Yes
REPLACEMENT $18,805
ADDITIONAL FINANCING(5) Pari Passu $334,444,444
Subordinate Debt $85,000,000
PARI PASSU WHOLE
NOTES MORTGAGE LOAN
------------ ---------------
CUT-OFF DATE BALANCE $430,000,000 $515,000,000
CUT-OFF DATE BALANCE/SF $191 $228
CUT-OFF DATE LTV 63.7% 76.3%
MATURITY DATE LTV 59.0% 71.2%
UW DSCR ON NCF 1.55x 1.20x
- --------------------------------------------------------------------------------
(1) Represents the A-2 note in a total senior note of $430,000,000 and
aggregate mortgage debt of $515,000,000. The A-1 note of $143,333,333 and
the A-3 and A-4 notes each of $95,555,556 are not included in the trust,
but are pari passu with the A-2 note that is in the trust. In addition to
the pari passu notes there are three subordinate notes, aggregating to
$85,000,000 which are also not included in the trust. All Balance/SF, LTV
and DSC ratios are based upon the aggregate indebtedness of the senior
notes.
(2) 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. 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.
(3) 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 investment-grade rated obligation.
(4) $47,011.50 ($564,138/yr., $0.25/sf) will be escrowed for the first 36
months of the loan term. $141,034.50 ($1,692,414 yr., $0.75/sf) will be
escrowed during months 37 to 72, and after that time $94,023 ($1,128,276
yr., $0.50/sf) will be escrowed monthly for the remainder of the term.
(5) As of the Cut-Off Date.
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
NUMBER OF MORTGAGED PROPERTIES 1
LOCATION 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
APPRAISED VALUE $675,000,000
PROPERTY MANAGEMENT Cushman & Wakefield, Inc.
UW ECONOMIC OCCUPANCY 98.0%
UW REVENUES $63,438,713
UW TOTAL EXPENSES $18,543,090
UW NET OPERATING INCOME (NOI) $44,895,623
UW NET CASH FLOW (NCF) $44,558,893
- --------------------------------------------------------------------------------
S-163
- --------------------------------------------------------------------------------------------------------------------------------
TENANT SUMMARY
- --------------------------------------------------------------------------------------------------------------------------------
NET % OF NET % OF
RATINGS* MOODY'S/ RENTABLE RENTABLE ACTUAL ACTUAL DATE OF LEASE
TENANT S&P/FITCH AREA (SF) AREA RENT PSF ACTUAL RENT RENT EXPIRATION
- --------------------------------------------------------------------------------------------------------------------------------
Credit Suisse First
Boston ..................... Aa3/A+/AA- 1,921,459 85.2% $ 20.90 $ 40,154,365 83.1% Multiple Spaces
Aon (sublet to IBM) ......... Baa2/A-/A- 138,072 6.1 $ 28.75 3,969,570 8.2 April 2013
Omnicom ..................... Baa1/A-/A- 95,557 4.2 $ 28.25 2,699,485 5.6 September 2008
Gould Paper Corp. ........... NR/NR/NR 46,318 2.1 $ 21.50 995,837 2.1 October 2013
Eleven Madison Park ......... NR/NR/NR 11,500 0.5 $ 18.39 211,485 0.4 December 2017
NON-MAJOR TENANTS ........... 12,018 0.5 $ 22.01 264,567 0.5
VACANT SPACE ................ 31,628 1.4 0 0.0
--------- ----- ------------ -----
TOTAL ....................... 2,256,552 100.0% $ 48,295,309 100.0%
--------- ----- ------------ -----
- --------------------------------------------------------------------------------------------------------------------------------
* Certain ratings are those of the parent company whether or not the parent
guarantees the lease.
- -----------------------------------------------------------------------------------------------------
LEASE EXPIRATION SCHEDULE
- -----------------------------------------------------------------------------------------------------
CUMULATIVE %
WA BASE CUMULATIVE % OF ACTUAL 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 0 $ 0.00 0 0.0% 0.0% 0.0% 0.0%
2006 0 $ 0.00 0 0.0% 0.0% 0.0% 0.0%
2007 3 $ 25.88 390,386 17.3% 17.3% 20.9% 20.9%
2008 1 $ 28.25 95,557 4.2% 21.5% 5.6% 26.5%
2009 0 $ 0.00 0 0.0% 21.5% 0.0% 26.5%
2010 1 $ 176.87 420 0.0% 21.6% 0.2% 26.7%
2011 0 $ 0.00 0 0.0% 21.6% 0.0% 26.7%
2012 0 $ 0.00 0 0.0% 21.6% 0.0% 26.7%
2013 4 $ 26.50 288,404 12.8% 34.3% 15.8% 42.5%
2014 0 $ 0.00 0 0.0% 34.3% 0.0% 42.5%
- -----------------------------------------------------------------------------------------------------
* Calculated based on approximate square footage occupied by each tenant.
S-164
THE LOAN. The Mortgage Loan (the "11 Madison Avenue Loan") is secured by a
first mortgage encumbering an office building located in New York, New York.
The 11 Madison Avenue Loan represents approximately 9.2% of the Cut-Off Date
Pool Balance. The 11 Madison Avenue Loan was originated on December 23, 2003,
and has a principal balance as of the Cut-Off Date of $95,555,556. The 11
Madison Avenue Loan, which is evidenced by a pari passu note dated December 23,
2003, is a portion of a whole loan with an original principal balance of
$515,000,000. The other loans related to the 11 Madison Avenue Loan are
evidenced by six separate notes, each dated December 23, 2003, the "11 Madison
Avenue Pari Passu I Loan" with an original principal balance of $143,333,333,
the "11 Madison Avenue Pari Passu III Loan", with an original principal balance
of $95,555,556, the "11 Madison Avenue Pari Passu IV Loan", with an original
principal balance of $95,555,556, and 3 subordinate notes (the "11 Madison
Avenue Subordinate Loans") with an aggregate original principal balance of
$85,000,000. The 11 Madison Avenue Pari Passu I Loan, the 11 Madison Avenue
Pari Passu III Loan, the 11 Madison Avenue Pari Passu IV Loan and the 11
Madison Avenue Subordinate Loans will not be assets of the trust. The 11
Madison Avenue Loan, the 11 Madison Avenue Pari Passu I Loan, the 11 Madison
Avenue Pari Passu III Loan, the 11 Madison Avenue Pari Passu IV Loan and the 11
Madison Avenue Subordinate Loans will be governed by an intercreditor agreement
and will be serviced pursuant to the terms of the pooling and servicing
agreement entered into in connection with the issuance of the Wachovia Bank
Commercial Mortgage Trust, Commercial Mortgage Pass-Through Certificates,
Series 2004-C10, as described in this prospectus supplement under "DESCRIPTION
OF THE MORTGAGE POOL--Co-Lender Loans". The 11 Madison Avenue Loan provides for
interest-only payments for the first 60 months of its term, and thereafter,
fixed monthly payments of principal and interest.
The 11 Madison Avenue Loan has a remaining term of 117 months to its
anticipated repayment date of January 11, 2014. The 11 Madison Avenue Loan may
be prepaid on or after November 11, 2013, and permits defeasance with United
States government obligations beginning the earlier of four years after
origination or two years from the date of the last securitization of any
portion of the 11 Madison Avenue Loan and its related companion loans.
THE BORROWER. The borrower is 11 Madison Avenue LLC, a special purpose
entity. Legal counsel to the borrower delivered a non-consolidation opinion in
connection with the origination of the 11 Madison Avenue Loan. The sponsor is
Tamir Sapir. Through his various entities, Mr. Sapir owns and operates an
extensive citywide office property portfolio totaling approximately 7.25
million square feet.
THE PROPERTY. The Mortgaged Property is an approximately 2,256,552 square
foot office building situated on approximately 1.9 acres. The Mortgaged
Property was constructed in 1932 and renovated in 1997. The Mortgaged Property
is located in New York, New York, within the New York City metropolitan
statistical area. As of December 22, 2003, the occupancy rate for the Mortgaged
Property securing the 11 Madison Avenue Loan was approximately 98.6%.
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
Mortgaged Property serves as the world headquarters of CSFB, a leading global
investment banking firm. As of April 1, 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 CSFB 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 Mortgaged Property total space) after April 30,
2007 in its sole discretion. However, CSFB must give at least 24 months notice
of such termination (such notice is irrevocable) and must pay a variable
termination fee which is adjusted depending upon the space as to which such
termination applies. 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 tenant improvement
and leasing commission 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 termination option, the mortgagee
will trap 100% of cash flow generated by the Mortgaged Property until such
space is relet. The second largest tenant is Aon Corporation ("Aon"), occupying
138,072 square feet, or approximately 6.1% of the net rentable area. Aon is the
second largest insurance brokerage and consulting company in the world
operating in commercial brokerage, consulting services and consumer
S-165
insurance underwriting. As of April 1, 2004, Aon was rated "Baa2" (Moody's),
"A-" (S&P) and "A-" (Fitch). Aon subleases this entire space to International
Business Machines Corporation ("IBM"). IBM is one of the world's top
manufacturers of computer hardware, including desktop and notebook PCs,
mainframes, servers, storage systems and peripherals. As of April 1, 2004, IBM
was rated "A1" (Moody's), "A+" (S&P) and "AA-" (Fitch). The Aon lease expires
in April 2013. The third largest tenant is Omnicom Group, Inc., ("Omnicom"),
occupying approximately 95,557 square feet, or approximately 4.2% of the net
rentable area. Omnicom is one of the world's largest advertising, marketing and
corporate communication companies. As of April 6, 2004, Omnicom was rated
"Baa1" (Moody's), "A-" (S&P) and "A-" (Fitch). The Omnicom lease expires in
September 2008.
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
January 11, 2014, if the 11 Madison Avenue Loan is not repaid in full, the 11
Madison Avenue Loan enters a hyper-amortization period through January 11,
2039. The interest rate applicable to the 11 Madison Avenue 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. Cushman & Wakefield, Inc. is the property manager for the
Mortgaged Property securing the 11 Madison Avenue Loan.
S-166
Bank of America Tower
- --------------------------------------------------------------------------------
LOAN INFORMATION
- --------------------------------------------------------------------------------
MORTGAGE LOAN SELLER Wachovia
CUT-OFF DATE BALANCE $75,000,000
PERCENTAGE OF CUT-OFF DATE POOL BALANCE 7.2%
NUMBER OF MORTGAGE LOANS 1
LOAN PURPOSE Refinance
SPONSOR Darryl Parmenter
TYPE OF SECURITY Fee
MORTGAGE RATE 6.160%
MATURITY DATE April 11, 2014
AMORTIZATION TYPE ARD
INTEREST ONLY PERIOD 24
ORIGINAL TERM / AMORTIZATION 120 / 360
REMAINING TERM / AMORTIZATION 120 / 360
LOCKBOX Hard-Upfront
UP-FRONT RESERVES
TAX/INSURANCE Yes
REPLACEMENT $8,262
ROLLOVER(1) $1,500,000
ONGOING MONTHLY RESERVES
TAX/INSURANCE Yes
REPLACEMENT $8,262
TI/LC(2) $41,667
ROLLOVER(1) $44,333
ADDITIONAL FINANCING(3) None
CUT-OFF DATE BALANCE $75,000,000
CUT-OFF DATE BALANCE/SF $108
CUT-OFF DATE LTV 69.2%
MATURITY DATE LTV 61.5%
UW DSCR ON NCF 1.51x
- --------------------------------------------------------------------------------
(1) Upfront escrow related to risk associated with the Bank of America lease
expiration in 2009. In addition, monthly amounts of $44,333 are required
beginning on the first payment date through and including the payment
date in April 2009.
(2) Payable on the payment date starting in July 2009 through and including
the Maturity Date, to fund a general TI/LC escrow account.
(3) As of the Cut-Off Date.
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
NUMBER OF MORTGAGED PROPERTIES 1
LOCATION Jacksonville, FL
PROPERTY TYPE Office - CBD
SIZE (SF) 697,341
OCCUPANCY AS OF FEBRUARY 10, 2004 79.5%
YEAR BUILT / YEAR RENOVATED 1990 / NA
APPRAISED VALUE $108,400,000
PROPERTY MANAGEMENT Parmenter Realty and
Investment Company
UW ECONOMIC OCCUPANCY 79.5%
UW REVENUES $14,586,593
UW TOTAL EXPENSES $5,382,443
UW NET OPERATING INCOME (NOI) $9,204,150
UW NET CASH FLOW (NCF) $8,294,363
- --------------------------------------------------------------------------------
S-167
- -----------------------------------------------------------------------------------------------------------------------------
TENANT SUMMARY
- -----------------------------------------------------------------------------------------------------------------------------
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
- ----------------------------- ------------------- ----------- ---------- ---------- ------------- ---------- ---------------
Bank of America ............ Aa2/A+/AA- 188,032 27.0% $ 25.39 $ 4,774,866 36.5% July 2009
Holland & Knight . ......... NR/NR/NR 50,209 7.2 $ 25.75 1,292,882 9.9 September 2013
McGuireWoods .. ............ NR/NR/NR 37,517 5.4 $ 21.68 813,369 6.2 December 2012
Akerman Senterfitt ......... NR/NR/NR 33,178 4.8 $ 24.69 819,165 6.3 June 2011
Rayonier Inc. .............. Baa3/BBB-/NR 32,609 4.7 $ 23.64 770,877 5.9 April 2007
NON-MAJOR TENANTS .......... 213,174 30.6 $ 21.59 4,601,855 35.2
VACANT SPACE ............... 142,622 20.5 0 0.0
------- ----- ----------- -----
TOTAL . .................... 697,341 100.0% $13,073,013 100.0%
======= ===== =========== =====
- -----------------------------------------------------------------------------------------------------------------------------
* Certain ratings are those of the parent whether or not the parent
guarantees the lease.
- -----------------------------------------------------------------------------------------------------------------------
LEASE EXPIRATION SCHEDULE
- -----------------------------------------------------------------------------------------------------------------------
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 4 $ 15.93 26,162 3.8% 3.8% 3.2% 3.2%
2005 6 $ 24.28 14,056 2.0% 5.8% 2.6% 5.8%
2006 2 $ 23.64 16,281 2.3% 8.1% 2.9% 8.7%
2007 6 $ 23.11 92,726 13.3% 21.4% 16.4% 25.1%
2008 2 $ 22.67 46,695 6.7% 28.1% 8.1% 33.2%
2009 2 $ 25.36 190,158 27.3% 55.4% 36.9% 70.1%
2010 2 $ 22.30 28,035 4.0% 59.4% 4.8% 74.9%
2011 2 $ 24.47 37,964 5.4% 64.8% 7.1% 82.0%
2012 1 $ 21.68 37,517 5.4% 70.2% 6.2% 88.2%
2013 1 $ 25.75 50,209 7.2% 77.4% 9.9% 98.1%
2014 1 $ 21.50 11,459 1.6% 79.1% 1.9% 100.0%
- -----------------------------------------------------------------------------------------------------------------------
* Calculated based on approximate square footage occupied by each
tenant.
S-168
THE LOAN. The Mortgage Loan (the "Bank of America Tower Loan") is secured
by a first deed of trust encumbering an office building located in
Jacksonville, Florida. The Bank of America Tower Loan represents approximately
7.2% of the Cut-Off Date Pool Balance. The Bank of America Tower Loan was
originated on March 29, 2004, and has a principal balance as of the Cut-Off
Date of $75,000,000. The Bank of America Tower Loan provides for interest-only
payments for the first 24 months of its term, and thereafter, fixed monthly
payments of principal and interest.
The Bank of America Tower Loan has a remaining term of 120 months to its
anticipated repayment date of April 11, 2014. The Bank of America Tower Loan
may be prepaid with the payment of a yield maintenance charge on or after April
11, 2007, and may be prepaid without penalty or premium on or after December
11, 2013.
THE BORROWER. The borrower is Jacksonville Tower Associates, LLC, a
special purpose entity. Legal counsel to the borrower delivered a
non-consolidation opinion in connection with the origination of the Bank of
America Tower Loan. The sponsor is Darryl Parmenter, founding principal of
Parmenter Realty Partners. Parmenter Realty Partners, a privately held real
estate development company headquartered in Miami, Florida, is actively
involved in acquiring and managing real estate assets in major markets
throughout the southeastern United States. Since its inception, Parmenter
Realty Partners has acquired or developed approximately 10.0 million square
feet of real estate representing over $1.5 billion in value. Currently,
Parmenter Realty Partners owns and manages nearly 2.0 million square feet of
commercial office space.
THE PROPERTY. The Mortgaged Property is an approximately 697,341 square
foot office building situated on approximately 1.5 acres. The Mortgaged
Property was constructed in 1990. The Mortgaged Property is located in
Jacksonville, Florida, within the Jacksonville, Florida metropolitan
statistical area. As of February 10, 2004, the occupancy rate for the Mortgaged
Property securing the Bank of America Tower Loan was approximately 79.5%.
The largest tenant is Bank of America Corporation ("Bank of America"),
occupying approximately 188,032 square feet, or approximately 27.0% of the net
rentable area. Bank of America is the third largest bank in the United States
by assets and provides a diversified range of banking and non-banking financial
services and products. As of April 1, 2004, Bank of America was rated "Aa2"
(Moody's), "A+" (S&P) and "AA-" (Fitch). The Bank of America lease expires in
July 2009. The second largest tenant is Holland & Knight LLP ("Holland &
Knight"), occupying approximately 50,209 square feet, or approximately 7.2% of
the net rentable area. Holland & Knight is an international law firm that
represents a variety of clients in many industries, including banking and
finance, utilities, insurance, shipping lines and cruise operators, airlines
and aircraft manufacturing, transportation and real estate development. The
Holland & Knight lease expires in September 2013. The third largest tenant is
McGuireWoods LLP ("McGuireWoods"), occupying approximately 37,517 square feet,
or approximately 5.4% of the net rentable area. McGuireWoods is an
international law firm that represents a variety of clients in many industries,
including automotive, energy resources, health care, technology and
transportation. The McGuireWoods lease expires in December 2012.
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 April
11, 2014, if the Bank of America Tower Loan is not paid in full, the Bank of
America Tower Loan enters into a hyper-amortization period through April 11,
2036. The interest rate applicable to the Bank of America Tower 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.
MANAGEMENT. Parmenter Realty and Investment Company, an affiliate of the
sponsor, is the property manager for the Mortgaged Property securing the Bank
of America Tower Loan.
S-169
Starrett-Lehigh Building
- --------------------------------------------------------------------------------
LOAN INFORMATION
- --------------------------------------------------------------------------------
MORTGAGE LOAN SELLER Wachovia
CUT-OFF DATE BALANCE(1) $60,000,000
PERCENTAGE OF CUT-OFF DATE POOL BALANCE 5.8%
NUMBER OF MORTGAGE LOANS 1
LOAN PURPOSE Refinance
SPONSOR Mark Karasik
TYPE OF SECURITY Fee
MORTGAGE RATE 5.760%
MATURITY DATE February 11, 2014
AMORTIZATION TYPE ARD
INTEREST ONLY PERIOD 24
ORIGINAL TERM / AMORTIZATION 121 / 312
REMAINING TERM / AMORTIZATION 118 / 312
LOCKBOX Hard-Upfront
SHADOW RATING (S&P/MOODY'S)(2) AAA / A1
UP-FRONT RESERVES
TAX/INSURANCE Yes
TI/LC $7,000,000
ENGINEERING $161,975
ENVIRONMENTAL $500,000
ONGOING MONTHLY RESERVES
TAX/INSURANCE Yes
TI/LC $96,651
REPLACEMENT $28,995
ENVIRONMENTAL(3) $50,000
ADDITIONAL FINANCING(4) Pari Passu $100,000,000
Subordinate Debt $24,000,000
Mezzanine Debt $40,000,000
WHOLE
PARI PASSU MORTGAGE
NOTES LOAN TOTAL DEBT(5)
------------ ------------ -------------
CUT-OFF DATE BALANCE $160,000,000 $184,000,000 $224,000,000
CUT-OFF DATE BALANCE/SF $69 $79 $97
CUT-OFF DATE LTV 45.7% 52.6% 64.0%
MATURITY DATE LTV 38.3% 44.0% 54.7%
UW DSCR ON NCF 2.08x 1.81x 1.34x
- --------------------------------------------------------------------------------
(1) Represents the A-2 note in a total senior note of $160,000,000 and
aggregate mortgage debt of $184,000,000. The A-1 note of $100,000,000 is
not included in the trust and is pari passu with the A-2 note and the B
note of $24,000,000 is subordinate to the pari passu A notes. All Balance
/SF, LTV and DSC ratios were based upon the aggregate indebtedness of the
senior notes.
(2) S&P and Moody's have confirmed that the Starrett-Lehigh Building Loan, in
the context of its inclusion in the trust, has credit characterisitics
consistent with that of an investment-grade rated obligation.
(3) Payable through and including the payment date in June 2004.
(4) As of the Cut-Off Date.
(5) Total Debt includes the mezzanine loan.
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
NUMBER OF MORTGAGED PROPERTIES 1
LOCATION New York, NY
PROPERTY TYPE Office - CBD
SIZE (SF) 2,319,634
OCCUPANCY AS OF SEPTEMBER 30, 2003 74.3%
YEAR BUILT / YEAR RENOVATED 1931 / 2003
APPRAISED VALUE $350,000,000
PROPERTY MANAGEMENT 601 West Management Corp.
UW ECONOMIC OCCUPANCY 76.3%
UW REVENUES $43,623,415
UW TOTAL EXPENSES $17,819,694
UW NET OPERATING INCOME (NOI) $25,803,721
UW NET CASH FLOW (NCF) $24,677,230
- --------------------------------------------------------------------------------
S-170
- ---------------------------------------------------------------------------------------------------------------------------
TENANT SUMMARY
- ---------------------------------------------------------------------------------------------------------------------------
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
- ---------------------------------------------------------------------------------------------------------------------------
U.S 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
NON-MAJOR TENANTS .......... 985,604 42.5 $ 18.50 18,237,876 48.6
VACANT SPACE ............... 595,595 25.7 0 0.0
------- ----- ----------- -----
TOTAL ...................... 2,319,634 100.0% $37,514,249 100.0%
========= ===== =========== =====
- ---------------------------------------------------------------------------------------------------------------------------
* Certain ratings are those of the parent whether or not the parent
guarantees the lease.
- -------------------------------------------------------------------------------------------------------
LEASE EXPIRATION SCHEDULE
- -------------------------------------------------------------------------------------------------------
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.
S-171
THE LOAN. The Mortgage Loan (the "Starrett-Lehigh Building Loan") is
secured by a first mortgage encumbering an office building located in New York,
New York. The Starrett-Lehigh Building Loan represents approximately 5.8% 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
$60,000,000. 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 $100,000,000 and the "Starrett-Lehigh Building Subordinate
Loan", with an original principal balance of $24,000,000. The Starrett-Lehigh
Building Pari Passu Loan and the Starrett-Lehigh Building Subordinate Loan will
not be assets of the trust. The Starrett-Lehigh Building Loan, the
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 entered into in connection with the issuance of the Wachovia Bank
Commercial Mortgage Trust, Commercial Mortgage Pass-Through Certificates,
Series 2004-C10, as described in this prospectus supplement under "DESCRIPTION
OF THE MORTGAGED 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 118 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
its securitization.
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 is an experienced real estate investor and
manager, having 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. 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 (the "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 & export restrictions and prohibitions.
The US Customs Service lease expires in October 2013. As of April 5, 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. See "RISK FACTORS--Single Tenants and
Concentration of Tenants Subject the Trust Fund to Increased Risk" in this
prospectus supplement. 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
U.S. 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 April 5,
2004, the FBI was rated "Aaa" (Moody's), "AAA" (S&P) and "AAA" (Fitch). The FBI
lease expires in October 2008.
LOCK BOX ACCOUNT. All tenant payments due under the applicable tenant
leases are deposited into a mortgagee designated lock box account.
S-172
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 not an asset of 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-173
Westland Mall
- --------------------------------------------------------------------------------
LOAN INFORMATION
- --------------------------------------------------------------------------------
MORTGAGE LOAN SELLER Eurohypo
CUT-OFF DATE BALANCE $58,800,000
PERCENTAGE OF CUT-OFF DATE POOL BALANCE 5.6%
NUMBER OF MORTGAGE LOANS 1
LOAN PURPOSE Acquisition
SPONSOR The Mills Limited Partnership
TYPE OF SECURITY Fee
MORTGAGE RATE 4.952%
MATURITY DATE February 1, 2011
AMORTIZATION TYPE Balloon
INTEREST ONLY PERIOD 36
ORIGINAL TERM / AMORTIZATION 84 / 360
REMAINING TERM / AMORTIZATION 82 / 360
LOCKBOX Hard Lockbox / Springing Cash
Management
SHADOW RATING (S&P/MOODY'S)(1) BBB+/NR
UP-FRONT RESERVES
TAX Yes
ONGOING MONTHLY RESERVES
TAX/INSURANCE(2) Springing
TI/LC(2) $23,000 - Springing
REPLACEMENT(2) $4,817 - Springing
ADDITIONAL FINANCING(3) None
CUT-OFF DATE BALANCE $58,800,000
CUT-OFF DATE
BALANCE/SF $254
CUT-OFF DATE LTV 72.6%
MATURITY DATE LTV 68.2%
UW DSCR ON NCF 1.89x
- --------------------------------------------------------------------------------
(1) S&P has confirmed that the Westland Mall Loan has, in the context of its
inclusion in the trust, the credit characteristics consistent with that
of an investment-grade rated obligation.
(2) Upon the occurrence and continuance of an event of default or if the debt
service coverage ratio for the immediately preceding 3 month period is
less than 1.30x.
(3) As of the Cut-Off Date.
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
NUMBER OF MORTGAGED PROPERTIES 1
LOCATION Hialeah, FL
PROPERTY TYPE Retail - Anchored
SIZE (SF) 231,239
OCCUPANCY AS OF MARCH 1, 2004 87.5%
YEAR BUILT / YEAR RENOVATED 1971 / 1989
APPRAISED VALUE $81,000,000
PROPERTY MANAGEMENT Management Associates
Limited Partnership,
UW ECONOMIC OCCUPANCY 93.2%
UW REVENUES $11,919,428
UW TOTAL EXPENSES $4,496,184
UW NET OPERATING INCOME (NOI) $7,423,244
UW NET CASH FLOW (NCF) $7,119,646
- --------------------------------------------------------------------------------
S-174
- ----------------------------------------------------------------------------------
TENANT SUMMARY
- ----------------------------------------------------------------------------------
NET
RATINGS(1) RENTABLE % OF NET
TENANT MOODY'S/S&P/FITCH AREA (SF) RENTABLE AREA
- ----------------------------------------------------------------------------------
Anchor Tenants -- Anchor
Owned ..........................
Burdines ........................ Baa1/BBB+/BBB+ 221,000 ANCHOR OWNED--NOT PART OF COLLATERAL
Sears ........................... Baa1/BBB/BBB+ 199,032 ANCHOR OWNED--NOT PART OF COLLATERAL
JCPenney ........................ Ba3/BB+/BB 183,786 ANCHOR OWNED--NOT PART OF COLLATERAL
-------
TOTAL ANCHOR OWNED ............. 603,818
TOP 5 TENANTS
Picadilly Cafeteria(2) .......... NR/NR/NR 10,014 4.3%
Guess ........................... NR/BB-/NR 7,725 3.3
Chili's ......................... NR/NR/NR 6,250 2.7
Charlotte Russe . ............... NR/NR/NR 6,177 2.7
Mellon United National Bank ..... NR/A+/AA- 6,000 2.6
------- ----------
TOTAL TOP 5 TENANTS ............ 36,166 15.6%
NON-MAJOR TENANTS ............... 166,190 71.9
------- ----------
OCCUPIED MALL TOTAL ............. 202,356 87.5%
VACANT SPACE .................... 28,883 12.5
------- ----------
COLLATERAL TOTAL ................ 231,239 100.0%
PROPERTY TOTAL .................. 835,057
ACTUAL % OF ACTUAL DATE OF LEASE
TENANT RENT PSF ACTUAL RENT RENT EXPIRATION
- ----------------------------------------------------------------------------------
Anchor Tenants -- Anchor
Owned ..........................
Burdines ........................
Sears ...........................
JCPenney ........................
TOTAL ANCHOR OWNED .............
TOP 5 TENANTS
Picadilly Cafeteria(2) .......... $ 0.00 $ 0 0.0% June 2004
Guess ........................... $ 20.00 154,500 2.4 September 2010
Chili's ......................... $ 17.28 108,000 1.7 April 2014
Charlotte Russe . ............... $ 25.04 154,672 2.4 April 2013
Mellon United National Bank ..... $ 8.33 50,000 0.8 February 2009
----------- -----
TOTAL TOP 5 TENANTS ............ $ 12.92 $ 467,172 7.4%
NON-MAJOR TENANTS ............... $ 35.33 5,870,789 92.6
----------- -----
OCCUPIED MALL TOTAL ............. $ 31.32 $ 6,337,961 100.0%
VACANT SPACE ....................
COLLATERAL TOTAL ................
PROPERTY TOTAL ..................
- ----------------------------------------------------------------------------------
(1) Certain ratings are those of the parent whether or not the parent
guarantees the lease.
(2) Picadilly no longer occupies its space, but continues to pay rent;
however, no income was attributed to the space for purposes of the
underwriting of the Westland Mall Loan.
- -----------------------------------------------------------------------------------------------------------------------------
LEASE EXPIRATION SCHEDULE
WA BASE CUMULATIVE % OF
# OF LEASES RENT/SF TOTAL SF % OF TOTAL CUMULATIVE % OF % OF ACTUAL ACTUAL RENT
YEAR ROLLING ROLLING ROLLING SF ROLLING* SF ROLLING* RENT ROLLING* ROLLING*
- -----------------------------------------------------------------------------------------------------------------------------
2004 12 $ 29.27 21,407 9.3% 9.3% 9.9% 9.9%
2005 5 $ 34.22 11,225 4.9% 14.1% 6.1% 15.9%
2006 12 $ 45.74 16,095 7.0% 21.1% 11.6% 27.6%
2007 13 $ 39.31 22,867 9.9% 31.0% 14.2% 41.7%
2008 7 $ 34.16 15,455 6.7% 37.6% 8.3% 50.1%
2009 7 $ 23.16 23,648 10.2% 47.9% 8.6% 58.7%
2010 11 $ 27.65 27,834 12.0% 59.9% 12.1% 70.9%
2011 7 $ 26.38 20,644 8.9% 68.8% 8.6% 79.5%
2012 6 $ 31.57 12,844 5.6% 74.4% 6.4% 85.8%
2013 8 $ 33.42 19,197 8.3% 82.7% 10.1% 96.0%
2014 3 $ 22.94 11,140 4.8% 87.5% 4.0% 100.0%
- -----------------------------------------------------------------------------------------------------------------------------
* Calculated based on approximate square footage occupied by each tenant.
S-175
THE LOAN. The Mortgage Loan (the "Westland Mall Loan") is secured by a
first mortgage encumbering the in-line portion of a regional mall located in
Hialeah, Florida. The Westland Mall Loan represents approximately 5.6% of the
Cut-Off Date Pool Balance. The Westland Mall Loan was originated on January 15,
2004, and has a principal balance as of the Cut-Off Date of $58,800,000.
The Westland Mall Loan has a remaining term of 82 months and matures on
February 1, 2011. The Westland Mall Loan may be prepaid on or after November 1,
2010, and permits defeasance with United States government obligations
beginning two years after the Closing Date.
THE BORROWER. The borrower is Westland Mills, L.L.C., a special purpose
entity. Legal counsel to the borrower delivered a non-consolidation opinion in
connection with the origination of the Westland Mall Loan. The sponsor of the
borrower is The Mills Limited Partnership, a Delaware limited partnership. The
Mills Limited Partnership is a subsidiary of The Mills Corporation. The Mills
Corporation owns, leases, manages, acquires and develops regional shopping
malls and single tenant retail properties in the United States.
THE PROPERTY. The Mortgaged Property is approximately 231,239 square feet
of an approximately 835,057 net rentable square foot regional mall situated on
approximately 16.9 acres. The Mortgaged Property was constructed in 1971 and
was renovated in 1989. The Mortgaged Property is located in Hialeah, Florida,
within the Miami metropolitan statistical area. As of March 1, 2004, the
occupancy rate for the Mortgaged Property securing the Westland Mall Loan was
approximately 87.5%.
The anchor tenants at the Mortgaged Property are Burdines, Sears Roebuck &
Co. and J.C. Penney Company, Inc., none of which are part of the collateral.
The largest tenant in occupancy which is part of the Mortgaged Property is
Guess, occupying approximately 7,725 square feet, or approximately 3.3% of the
net rentable area. The Guess lease expires in September 2010. The second
largest tenant in occupancy which is part of the Mortgaged Property is Chili's,
occupying approximately 6,250 square feet, or approximately 2.7% of the net
rentable area. The Chili's lease expires in April 2014. The third largest
tenant in occupancy which is part of the Mortgaged Property is Charlotte Russe,
occupying approximately 6,177 square feet, or approximately 2.7% of the net
rentable area. The Charlotte Russe lease expires in April 2013.
LOCK BOX ACCOUNT. All tenant payments due under the applicable tenant
leases are deposited into a mortgagee designated lock box account. Funds in the
lock box account are disbursed to the borrower on a daily basis unless (i) an
event of default occurs and is continuing or (ii) the mortgagee determines the
debt service coverage ratio for the immediately preceding fiscal quarter is
less than 1.30x, during which time funds in the lock box account will not be
available to the borrower and will be distributed pursuant to the loan
documents.
MANAGEMENT. Management Associates Limited Partnership, an affiliate of the
borrower, is the property manager for the Mortgaged Property securing the
Westland Mall Loan.
RELEASE OF PARCELS. The borrower may obtain the release of certain
non-improved, non-income producing property upon the satisfaction of certain
conditions, including, without limitation: (i) the borrower provides evidence
that (a) the released property is not necessary for the borrower's operation or
its then current use of the Mortgaged Property and may be separated from the
remaining Mortgaged Property without a material diminution in the value of the
Mortgaged Property and (b) the released property will be vacant, non-income
producing and unimproved (or improved only by surface parking areas); (ii) no
event of default has occurred and is continuing and (iii) the borrower delivers
a rating agency confirmation that the release will not result in a downgrade,
withdrawal or qualification of the then current rating assigned to the
Certificates.
SUBSTITUTION OF PARKING. The borrower may obtain a release of a portion of
the land containing approximately 140 parking spaces (the "Westland Release
Parcel") by substituting in its place, a parcel of land containing
approximately 140 parking spaces (the "Westland Substitute Parcel"), upon the
satisfaction of certain conditions, including, without limitation: (i) the
borrower provides evidence that (a) the Westland Release Parcel and the
Westland Substitute Parcel contain approximately the same number of parking
spaces, (b) the Westland Release Parcel and the Westland Substitute Parcel are
legally subdivided, (c) all approvals required under the existing leases and
reciprocal easement agreements have been obtained and (d) the Westland Release
Parcel and the Westland Substitute Parcel comply in all respects with all
applicable building and zoning laws, rules, ordinances and regulations; (ii) no
event of default has occurred and is continuing; (iii) the borrower delivers a
REMIC opinion and (iv) the lien of the mortgage is extended to cover the
Westland Substitute Parcel.
S-176
ARC Pool 10-1
- --------------------------------------------------------------------------------
LOAN INFORMATION
- --------------------------------------------------------------------------------
MORTGAGE LOAN SELLER Citigroup
CUT-OFF DATE BALANCE $36,033,285
PERCENTAGE OF CUT-OFF DATE POOL BALANCE 3.5%
NUMBER OF MORTGAGE LOANS 1
LOAN PURPOSE Refinance
Affordable Residential
Communities Inc., a
Maryland corporation and
Affordable Residential
Communities LP, a
Delaware limited
SPONSOR partnership
TYPE OF SECURITY Fee
MORTGAGE RATE 5.530%
MATURITY DATE March 1, 2014
AMORTIZATION TYPE Balloon
ORIGINAL TERM / AMORTIZATION 120 / 360
REMAINING TERM / AMORTIZATION 119 / 359
LOCKBOX Hard-Springing
UP-FRONT RESERVES
TAX/INSURANCE Yes
REPLACEMENT $6,158
ENGINEERING $516,425
ENVIRONMENTAL $62,500
ONGOING MONTHLY RESERVES
TAX/INSURANCE Yes
REPLACEMENT $6,158
ADDITIONAL FINANCING(1) None
CUT-OFF DATE BALANCE $36,033,285
CUT-OFF DATE BALANCE/PAD $24,380
CUT-OFF DATE LTV 76.3%
MATURITY DATE LTV 63.8%
UW DSCR ON NCF 1.37x
- --------------------------------------------------------------------------------
(1) As of the Cut-Off Date.
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
NUMBER OF MORTGAGED PROPERTIES 8
LOCATION Various
PROPERTY TYPE Mobile Home Park
SIZE (PADS) 1,478
OCCUPANCY AS OF SEPTEMBER 30, 2003 96.1%
YEAR BUILT / YEAR RENOVATED Various / NA
APPRAISED VALUE $47,240,000
PROPERTY MANAGEMENT ARC Management Services, Inc.
UW ECONOMIC OCCUPANCY 91.8%
UW REVENUES $6,248,580
UW TOTAL EXPENSES $2,791,458
UW NET OPERATING INCOME (NOI) $3,457,122
UW NET CASH FLOW (NCF) $3,383,222
- --------------------------------------------------------------------------------
S-177
- --------------------------------------------------------------------------------
ARC POOL 10-1
- --------------------------------------------------------------------------------
CUT-OFF
DATE ALLO-
CATED LOAN YEAR
PROPERTY NAME PROPERTY LOCATION BALANCE BUILT
- --------------------------------------------------------------------------------
Siesta Lago ............... Kissimmee, FL $10,434,702 1972
Lakeview Estates .......... Layton, UT 5,186,840 1971
Spring Valley Village ..... Nanuet, NY 4,881,732 1964
Washington Mobile
Estates .................. Ogden, UT 4,347,793 1987
Breazeale ................. Laramie, WY 3,127,360 1960
Havenwood ................. Pompano Beach, FL 3,051,083 1971
Connelly Village .......... Connelly, NY 2,562,909 1976
Lido Estates .............. Lancaster, CA 2,440,866 1987
-----------
$36,033,285
===========
CUT OFF OCCUPANCY UNDER-
DATE BAL- (AS OF WRITTEN
NUMBER ANCE PER SEPTEMBER 30, NET CASH AVERAGE
PROPERTY NAME OF PADS PAD 2003) FLOW RENT
- -------------------------------------------------------------------------------------------
Siesta Lago ............... 490 $ 21,295 93.3% $ 979,280 $324
Lakeview Estates .......... 209 $ 24,817 96.2% 502,762 $286
Spring Valley Village ..... 135 $ 36,161 100.0% 382,792 $611
Washington Mobile
Estates .................. 186 $ 23,375 95.7% 472,081 $281
Breazeale ................. 117 $ 26,730 98.3% 300,840 $259
Havenwood ................. 120 $ 25,426 98.3% 298,124 $442
Connelly Village .......... 100 $ 25,629 100.0% 205,458 $359
Lido Estates .............. 121 $ 20,172 96.7% 241,885 $313
--- ----------
1,478 $ 24,380 96.1% $3,383,222 $358
===== ==========
- -------------------------------------------------------------------------------------------
S-178
THE LOAN. The Mortgage Loan (the "ARC Pool 10-1 Loan") is secured by first
mortgages encumbering 8 mobile home park properties located in Florida (2
properties), Utah (2 properties), New York (2 properties), Wyoming (1 property)
and California (1 property). The ARC Portfolio 10-1 Loan represents
approximately 3.5% of the Cut-off Date Pool Balance. The ARC Pool 10-1 Loan was
originated on February 18, 2004, and has an aggregate principal balance as of
the Cut-off Date of $36,033,285.
The ARC Portfolio 10-1 Loan has a remaining term of 119 months and matures
on March 1, 2014. The ARC Pool 10-1 Loan may be prepaid on or after January 1,
2014, and permits defeasance with United States government obligations
beginning two years after the Closing Date.
THE BORROWER. The borrower is ARC4BFND, L.L.C., a special purpose entity.
Legal counsel to the borrower delivered a non-consolidation opinion in
connection with the origination of the ARC Pool 10-1 Loan. The sponsors of the
borrower are Affordable Residential Communities, Inc., a Maryland corporation,
("ARC") and Affordable Residential Communities LP, a Delaware limited
partnership. ARC is a publicly held, self-administered and self-managed equity
REIT that acquires, redevelops, repositions and operates manufactured housing
communities. In February 2004, in conjunction with its initial public offering,
ARC acquired 90 manufactured housing communities from Hometown America, making
ARC the largest manufactured home community operator in the United States.
THE PROPERTY. The Mortgaged Properties consist of 8 mobile home parks
containing in the aggregate 1,478 pads. Each Mortgaged Property has individual
asphalt paved driveways and separate electric meters for each pad. Amenities at
each Mortgaged Property typically include a swimming pool, heated spa,
volleyball court, clubhouse with meeting room and laundry room, basketball
court, boat/RV storage lot, children's playground, and picnic area. As of the
closing of the ARC Pool 10-1 Loan, 104 pads are currently leased to ARC
Housing, LLC or its affiliates (which own and lease to third party tenants
certain mobile homes located on the respective pads and which are subsidiaries
of ARC), under one or more leases. These leases provide for rent to be payable
for each leased pad in the event the pad is subleased to a third party in
connection with the lease of the mobile home located on the pad, or the related
manufactured housing community is more than 97% leased. Any such rents are to
be no less than the greater of the subrental rate for the pad or market rates.
As of September 30, 2003, the weighted average occupancy rate for the Mortgaged
Properties securing the ARC Pool 10-1 Loan was approximately 96.1%.
LOCK BOX ACCOUNT. At any time during the term of the ARC 10-1 Pool Loan,
upon the occurrence of an event of default under the applicable loan documents,
the borrower must, upon the request of the lender, 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.
MANAGEMENT. ARC Management Services, Inc., an affiliate of the borrower,
is the property manager for the Mortgaged Properties securing the ARC 10-1 Pool
Loan.
S-179
Amargosa Commons Shopping Center
- --------------------------------------------------------------------------------
LOAN INFORMATION
- --------------------------------------------------------------------------------
MORTGAGE LOAN SELLER Wachovia
CUT-OFF DATE BALANCE $29,760,000
PERCENTAGE OF CUT-OFF DATE POOL BALANCE 2.9%
NUMBER OF MORTGAGE LOANS 1
LOAN PURPOSE Acquisition
SPONSOR Sara Dumont and Milton Bilak
TYPE OF SECURITY Fee
MORTGAGE RATE 5.570%
MATURITY DATE April 11, 2014
AMORTIZATION TYPE ARD
INTEREST ONLY PERIOD 24
ORIGINAL TERM / AMORTIZATION 120 / 360
REMAINING TERM / AMORTIZATION 120 / 360
LOCKBOX Hard-Springing
UP-FRONT RESERVES
TAX/INSURANCE Yes
REPLACEMENT $2,888
OCCUPANCY(1) $2,000,000
ONGOING MONTHLY RESERVES
TAX/INSURANCE Yes
REPLACEMENT $722
ADDITIONAL FINANCING(2) None
CUT-OFF DATE BALANCE $29,760,000
CUT-OFF DATE BALANCE/SF $172
CUT-OFF DATE LTV 80.0%
MATURITY DATE LTV 70.2%
UW DSCR ON NCF 1.21x
- --------------------------------------------------------------------------------
(1) Reserve to be held subject to the achievement of certain occupancy
conditions.
(2) As of the Cut-Off Date.
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
NUMBER OF MORTGAGED PROPERTIES 1
LOCATION Palmdale, CA
PROPERTY TYPE Retail - Anchored
SIZE (SF) 173,302
OCCUPANCY AS OF APRIL 1, 2004* 96.1%
YEAR BUILT / YEAR RENOVATED 2003 / NA
APPRAISED VALUE $37,200,000
PROPERTY MANAGEMENT Dolmar, Inc.
UW ECONOMIC OCCUPANCY 93.5%
UW REVENUES $3,605,718
UW TOTAL EXPENSES $1,043,553
UW NET OPERATING INCOME (NOI) $2,562,165
UW NET CASH FLOW (NCF) $2,465,135
- --------------------------------------------------------------------------------
* Includes tenants who have executed leases but not yet taken occupancy.
NOTES:
S-180
- ------------------------------------------------------------------------------------------------------------------------
TENANT SUMMARY
- ------------------------------------------------------------------------------------------------------------------------
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
- ------------------------------------------------------------------------------------------------------------------------
Circuit City ............ NR/NR/NR 32,905 19.0% $ 16.65 $ 547,868 20.4% January 2019
T J Maxx ................ A3/A/NR 28,400 16.4 $ 10.85 308,140 11.5 October 2013
Bed, Bath & Beyond ...... NR/BBB/NR 27,000 15.6 $ 11.50 310,500 11.5 December 2013
PetsMart ................ NR/BB-/NR 19,387 11.2 $ 12.00 232,644 8.6 February 2019
Trader Joe's ............ NR/NR/NR 12,000 6.9 $ 12.00 144,000 5.4 January 2014
NON-MAJOR TENANTS ....... 46,927 27.1 $ 24.44 1,147,029 42.6
VACANT SPACE ............ 6,683 3.9 0 0.0
------ ----- ---------- -----
TOTAL ................... 173,302 100.0% $2,690,181 100.0%
======= ===== ========== =====
- ---------------------------------------------------------------------------------------------------------------------
* Certain ratings are those of the parent whether or not the parent
guarantees the lease.
- ---------------------------------------------------------------------------------------------------------------------
LEASE EXPIRATION SCHEDULE
- ---------------------------------------------------------------------------------------------------------------------
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 0 $ 0.00 0 0.0% 0.0% 0.0% 0.0%
2006 0 $ 0.00 0 0.0% 0.0% 0.0% 0.0%
2007 1 $ 36.00 1,700 1.0% 1.0% 2.3% 2.3%
2008 2 $ 15.77 20,050 11.6% 12.6% 11.8% 14.0%
2009 5 $ 33.48 9,053 5.2% 17.8% 11.3% 25.3%
2010 0 $ 0.00 0 0.0% 17.8% 0.0% 25.3%
2011 0 $ 0.00 0 0.0% 17.8% 0.0% 25.3%
2012 0 $ 0.00 0 0.0% 17.8% 0.0% 25.3%
2013 3 $ 12.40 59,900 34.6% 52.3% 27.6% 52.9%
2014 4 $ 20.04 20,024 11.6% 63.9% 14.9% 67.8%
- ---------------------------------------------------------------------------------------------------------------------
* Calculated based on approximate square footage occupied by each
tenant.
S-181
THE LOAN. The Mortgage Loan (the "Amargosa Commons Shopping Center Loan")
is secured by a first mortgage encumbering an anchored retail center located in
Palmdale, California. The Amargosa Commons Shopping Center Loan represents
approximately 2.9% of the Cut-Off Date Pool Balance. The Amargosa Commons
Shopping Center Loan was originated on April 1, 2004, and has a principal
balance as of the Cut-Off Date of $29,760,000. The Amargosa Commons Shopping
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 Amargosa Commons Shopping Center Loan has a remaining term of 120
months to its anticipated repayment date of April 11, 2014. The Amargosa Commons
Shopping Center Loan may be prepaid on or after February 11, 2014, and permits
defeasance with United States government obligations beginning two years after
the Closing Date.
THE BORROWER. The borrower is Amargosa Palmdale Investments, LLC, a special
purpose entity. Legal counsel to the borrower delivered a non-consolidation
opinion in connection with the origination of the Amargosa Commons Shopping
Center Loan. The sponsors of the borrower are Sara Dumont and Milton Bilak. Ms.
Dumont is an experienced real estate investor with numerous investments in
retail and residential properties. Mr. Bilak specializes in the retail property
sector and currently has interests in 9 properties located in Southern
California and Las Vegas, Nevada totaling approximately 1.4 million square feet.
THE PROPERTY. The Mortgaged Property is an approximately 173,302 square
foot anchored retail center situated on approximately 17.0 acres. The Mortgaged
Property was constructed in 2003. The Mortgaged Property is located in Palmdale,
California, within the Los Angeles-Riverside-Orange County metropolitan
statistical area. As of April 1, 2004, the occupancy rate for the Mortgaged
Property securing the Amargosa Commons Shopping Center Loan was approximately
96.1%.
The largest tenant is Circuit City Stores, Inc. ("Circuit City"), occupying
approximately 32,905 square feet, or approximately 19.0% of the net rentable
area. Circuit City is a national retailer that sells audio and video equipment,
personal computers and consumer electronics. The Circuit City lease expires in
January 2019. The second largest tenant is T.J. Maxx, occupying approximately
28,400 square feet, or approximately 16.4% of the net rentable area. T.J. Maxx,
a subsidiary of TJX Companies, Inc. ("TJX"), sells brand-name apparel, shoes,
domestics, giftware and jewelry at discount prices. As of April 1, 2004, TJX is
rated "A3" (Moody's) and "A" (S&P). The T.J. Maxx lease expires in October 2013.
The third largest tenant is Bed, Bath and Beyond, Inc. ("Bed, Bath & Beyond"),
occupying approximately 27,000 square feet, or approximately 15.6% of the net
rentable area. Bed, Bath & Beyond sells domestic merchandise and home
furnishings typically found in department stores. As of April 1, 2004, Bed, Bath
& Beyond was rated "BBB" (S&P). The Bed, Bath & Beyond lease expires in December
2013.
LOCK BOX ACCOUNT. If the Amargosa Commons Shopping Center Loan is not
repaid in full on or prior to the anticipated repayment date of April 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 April
11, 2014, if the Amargosa Commons Shopping Center Loan is not paid in full, the
Amargosa Commons Shopping Center Loan enters into a hyper-amortization period
through April 11, 2036. The interest rate applicable to the Amargosa Commons
Shopping Center 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.
MANAGEMENT. Dolmar, Inc., an affiliate of one of the sponsors, Mr. Bilak,
is the property manager for the Mortgaged Property securing the Amargosa Commons
Shopping Center Loan.
S-182
Bay City Mall
- --------------------------------------------------------------------------------
LOAN INFORMATION
- --------------------------------------------------------------------------------
MORTGAGE LOAN SELLER Eurohypo
CUT-OFF DATE BALANCE $26,082,959
PERCENTAGE OF CUT-OFF DATE POOL BALANCE 2.5%
NUMBER OF MORTGAGE LOANS 1
LOAN PURPOSE Refinance
SPONSOR General Growth Properties, Inc.
TYPE OF SECURITY Fee
MORTGAGE RATE 5.302%
MATURITY DATE December 1, 2013
AMORTIZATION TYPE Balloon
ORIGINAL TERM / AMORTIZATION 120 / 360
REMAINING TERM / AMORTIZATION 116 / 356
LOCKBOX Hard Lockbox / Springing Cash Management
SHADOW RATING (S&P/MOODY'S)(1) BBB-/Baa3
UP-FRONT RESERVES
TAX/INSURANCE No
ONGOING MONTHLY RESERVES
TAX/INSURANCE(2) Springing
REPLACEMENT(3) $7,525 - Springing
TI/LC(4) $30,100 - Springing
ADDITIONAL FINANCING(5) None
CUT-OFF DATE BALANCE $26,082,959
CUT-OFF DATE BALANCE/SF $72
CUT-OFF DATE LTV 64.7%
MATURITY DATE LTV 54.0%
UW DSCR ON NCF 2.02x
- --------------------------------------------------------------------------------
(1) S&P and Moody's have confirmed that the Bay City Mall Loan, in the context
of its inclusion in the trust, has credit characteristics consistent with
an investment-grade rated obligation.
(2) Upon the occurrence and continuance of an event of default or if the debt
service coverage ratio for the trailing 12-months is less than 1.25x.
(3) Upon the occurrence and continuance of an event of default or if the debt
coverage ratio for the trailing 12-months is less than 1.25x, subject to a
cap of $90,300.
(4) Upon the occurrence and continuance of an event of default or if the debt
coverage ratio for the trailing 12-months is less than 1.25x, subject to a
cap of $361,200.
(5) As of the Cut-Off Date.
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
NUMBER OF MORTGAGED PROPERTIES 1
LOCATION Bay City, MI
PROPERTY TYPE Retail - Anchored
SIZE (SF) 361,194
OCCUPANCY AS OF FEBRUARY 27, 2004 92.3%
YEAR BUILT / YEAR RENOVATED 1991 / 1993
APPRAISED VALUE $40,300,000
PROPERTY MANAGEMENT General Growth Management, Inc.
UW ECONOMIC OCCUPANCY 90.1%
UW REVENUES $ 6,469,657
UW TOTAL EXPENSES $ 2,668,738
UW NET OPERATING INCOME (NOI) $ 3,800,920
UW NET CASH FLOW (NCF) $ 3,525,776
- --------------------------------------------------------------------------------
S-183
- ----------------------------------------------------------------------------------------------------------------------------
TENANT SUMMARY
- ----------------------------------------------------------------------------------------------------------------------------
RATINGS* NET % OF NET ACTUAL % OF DATE OF
MOODY'S/ RENTABLE RENTABLE RENT ACTUAL ACTUAL LEASE
TENANT S&P/FITCH AREA (SF) AREA PSF RENT RENT EXPIRATION
- ----------------------------------------------------------------------------------------------------------------------------
Anchor Tenants - Anchor
Owned .........................
Target ......................... A2/A+/A 101,909 ANCHOR OWNED - NOT PART OF COLLATERAL
J.C. Penney Company, Inc. ...... Ba3/BB+/BB 61,870 ANCHOR OWNED - NOT PART OF COLLATERAL
-------
TOTAL ANCHOR OWNED ............ 163,779
Anchor Tenants - Collateral
Sears . ........................ Baa1/BBB/BBB+ 81,336 22.5% $ 3.50 $ 284,676 8.2% October 2010
Younkers . ..................... Ba3/BB/BB- 70,536 19.5 $ 3.00 211,608 6.1 February 2006
------- ----- ----------- -----
TOTAL ANCHOR TENANTS .......... 151,872 42.0% $ 3.27 $ 496,284 14.3%
TOP 5 TENANTS
Goodrich Bay City 8 ............ NR/NR/NR 22,679 6.3% $ 11.07 $ 251,052 7.3% April 2017
Dunham's Athleisure Corp. ...... NR/NR/NR 14,194 3.9 $ 5.75 81,612 2.4 January 2008
Lerner New York ................ Baa1/BBB+/NR 11,000 3.0 $ 16.00 176,004 5.1 January 2004
Fashion Bug .................... B2/BB-/NR 8,640 2.4 $ 11.57 99,996 2.9 January 2004
DEB ............................ NR/NR/NR 8,030 2.2 $ 8.12 65,208 1.9 January 2007
------- ----- ----------- -----
TOTAL TOP 5 TENANTS ........... 64,543 17.9% $ 10.44 $ 673,872 19.5%
NON-MAJOR TENANTS .............. 117,028 32.4 $ 19.57 2,290,106 66.2
------- ----- ----------- -----
OCCUPIED MALL TOTAL ............ 333,443 92.3% $ 10.38 $ 3,460,262 100.0%
VACANT SPACE ................... 27,751 7.7
------- -----
MALL COLLATERAL TOTAL .......... 361,194 100.0%
PROPERTY TOTAL ................. 524,973
- ----------------------------------------------------------------------------------------------------------------------------
* Certain ratings are those of the parent whether or not the parent
guarantees the lease.
- ----------------------------------------------------------------------------------------------------------------------------
LEASE EXPIRATION SCHEDULE
- ----------------------------------------------------------------------------------------------------------------------------
WA BASE CUMULATIVE % OF
# OF LEASES RENT/SF TOTAL SF % OF TOTAL CUMULATIVE % OF % OF ACTUAL ACTUAL RENT
YEAR ROLLING ROLLING ROLLING SF ROLLING* SF ROLLING* RENT ROLLING* ROLLING*
- ----------------------------------------------------------------------------------------------------------------------------
2004 15 $ 16.05 53,216 14.7% 14.7% 24.7% 24.7%
2005 1 $ 23.53 1,700 0.5% 15.2% 1.2% 25.8%
2006 6 $ 7.22 84,427 23.4% 38.6% 17.6% 43.4%
2007 9 $ 17.81 21,430 5.9% 44.5% 11.0% 54.5%
2008 4 $ 9.27 21,816 6.0% 50.6% 5.8% 60.3%
2009 2 $ 13.31 3,607 1.0% 51.6% 1.4% 61.7%
2010 4 $ 4.30 86,982 24.1% 75.6% 10.8% 72.5%
2011 0 $ 0.00 0 0.0% 75.6% 0.0% 72.5%
2012 6 $ 26.80 13,203 3.7% 79.3% 10.2% 82.7%
2013 4 $ 13.41 8,720 2.4% 81.7% 3.4% 86.1%
2014 5 $ 14.63 15,663 4.3% 86.0% 6.6% 92.7%
- ----------------------------------------------------------------------------------------------------------------------------
* Calculated based on approximate square footage occupied by each tenant.
S-184
THE LOAN. The Mortgage Loan (the "Bay City Mall Loan") is secured by a
first mortgage encumbering an anchored retail center located in Bay City,
Michigan. The Bay City Mall Loan represents approximately 2.5% of the Cut-Off
Date Pool Balance. The Bay City Mall Loan was originated on November 14, 2003,
and has a principal balance as of the Cut-Off Date of $26,082,959.
The Bay City Mall Loan has a remaining term of 116 months and matures on
December 1, 2013. The Bay City Mall Loan may be prepaid on or after September 1,
2013, and permits defeasance with United States government obligations beginning
two years after the Closing Date.
THE BORROWER. The borrower is Bay City Mall Associates L.L.C., a special
purpose entity. Legal counsel to the borrower delivered a non-consolidation
opinion in connection with the origination of the Bay City Mall Loan. The
sponsor of the borrower is GGP/Homart, Inc. GGP/Homart, Inc. is a 50/50 joint
venture between GGP Limited Partnership, a subsidiary of General Growth
Properties, Inc. ("GGP"), and New York State Common Retirement Fund. GGP owns,
leases, manages, acquires and develops regional shopping malls and single tenant
retail properties in the United States.
THE PROPERTY. The Mortgaged Property is an approximately 361,194 square
foot anchored retail center situated on approximately 46.2 acres. The Mortgaged
Property was constructed in 1991 and renovated in 1993. The Mortgaged Property
is located in Bay City, Michigan, within the Saginaw-Bay City metropolitan
statistical area. As of February 27, 2004, the occupancy rate for the Mortgaged
Property securing the Bay City Mall Loan was approximately 92.3%.
The anchor tenants at the Mortgaged Property are Target, J.C. Penney
Company, Inc., Sears Roebuck & Co. ("Sears") and Younkers. Target and J.C. Penny
Company, Inc. are not part of the collateral. The largest tenant which is part
of the Mortgaged Property is Sears, occupying approximately 81,336 square feet,
or approximately 22.5% of the net rentable area. Sears is a national department
store retailer specializing in general merchandise, apparel, hardware and
automotive services. As of April 5, 2004, Sears was rated "Baa1" (Moody's),
"BBB" (S&P) and "BBB+" (Fitch). The Sears lease expires in October 2010. The
second largest tenant which is part of the Mortgaged Property is Younkers,
occupying approximately 70,536 square feet, or approximately 19.5% of the net
rentable area. Younkers is a national department store retailer that specializes
in men's and women's clothing and home fashion goods. As of April 5, 2004,
Younkers' parent company, Saks Incorporated, was rated "Ba3" (Moody's), "BB"
(S&P) and "BB-" (Fitch). The Younkers lease expires in February 2006. The third
largest tenant which is part of the Mortgaged Property is Goodrich Bay City 8
("Goodrich"), occupying approximately 22,679 square feet, or approximately 6.3%
of the net rentable area. Goodrich operates an eight screen movie theater at the
Mortgaged Property. The Goodrich lease expires in April 2017.
LOCK BOX ACCOUNT. All tenant payments due under the applicable tenant
leases are deposited into a mortgagee-designated lock box account. Borrower has
the right to give instructions and directions to the lock box agent and to
withdraw funds in the lock box account unless (i) an event of default has
occurred and is continuing or (ii) the mortgagee determines that the debt
service coverage ratio for the trailing 12-month period is less than 1.25x,
during which time funds in the lock box account will not be available to the
borrower and will be available solely to the mortgagee.
MANAGEMENT. General Growth Management, Inc., an affiliate of the borrower,
is the property manager for the Mortgaged Property securing the Bay City Mall
Loan.
RELEASE OF PARCELS. The borrower may obtain the release of certain
non-improved, non-income producing property upon the satisfaction of certain
conditions, including, without limitation: (i) the borrower provides evidence
that (a) the released property is not necessary for the borrower's operation or
its then current use of the Mortgaged Property and may be separated from the
remaining Mortgaged Property without a material diminution in the value of the
Mortgaged Property and (b) the released property will be vacant, non-income
producing and unimproved (or improved only by surface parking areas); (ii) no
event of default has occurred and is continuing; (iii) the borrower delivers a
rating agency confirmation that the release will not result in a downgrade,
withdrawal or qualification of the then current rating assigned to the
Certificates; and (iv) the borrower delivers a REMIC opinion to the mortgagee.
S-185
The Shoppes at Gilbert Commons
- --------------------------------------------------------------------------------
LOAN INFORMATION
- --------------------------------------------------------------------------------
MORTGAGE LOAN SELLER Wachovia
CUT-OFF DATE BALANCE $25,100,000
PERCENTAGE OF CUT-OFF DATE POOL BALANCE 2.4%
NUMBER OF MORTGAGE LOANS 1
LOAN PURPOSE Refinance
SPONSOR Ron B. Ault and David L. Newquist
TYPE OF SECURITY Fee
MORTGAGE RATE 5.430%
MATURITY DATE April 11, 2014
AMORTIZATION TYPE ARD
INTEREST ONLY PERIOD None
ORIGINAL TERM / AMORTIZATION 120 / 360
REMAINING TERM / AMORTIZATION 120 / 360
LOCKBOX Hard-Springing
UP-FRONT RESERVES
TAX/INSURANCE Yes
REPLACEMENT $976
OCCUPANCY(1) $1,370,000
ONGOING MONTHLY RESERVES
TAX/INSURANCE Yes
REPLACEMENT $976
TI/LC(2) $4,167
ADDITIONAL FINANCING(3) None
CUT-OFF DATE BALANCE $25,100,000
CUT-OFF DATE BALANCE/SF $151
CUT-OFF DATE LTV 79.6%
MATURITY DATE LTV 66.3%
UW DSCR ON NCF 1.25x
- --------------------------------------------------------------------------------
(1) At closing borrower was required to deposit into an occupancy reserve
account: (i) $70,000 to be held until such time as Boston Market or
Chipotle Mexican Grill is in occupancy, (ii) $900,000 to be held until such
time Pizza Picazzo takes occupancy and begins paying rent and (iii)
$400,000 to be held until such time the Mortgaged Property reaches certain
other occupancy and rental income thresholds.
(2) An ongoing TI/LC escrow will be collected monthly up to a maximum amount of
$250,000.
(3) As of the Cut-Off Date.
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
NUMBER OF MORTGAGED PROPERTIES 1
LOCATION Gilbert, AZ
PROPERTY TYPE Retail - Anchored
SIZE (SF) 166,097
OCCUPANCY AS OF FEBRUARY 2, 2004* 96.4%
YEAR BUILT / YEAR RENOVATED 2003 / NA
APPRAISED VALUE $31,545,000
PROPERTY MANAGEMENT ZELL Commercial Real Estate Services, Inc.
UW ECONOMIC OCCUPANCY 94.0%
UW REVENUES $ 2,594,911
UW TOTAL EXPENSES $ 407,441
UW NET OPERATING INCOME (NOI) $ 2,187,470
UW NET CASH FLOW (NCF) $ 2,117,330
- --------------------------------------------------------------------------------
* Includes tenants who have executed leases but not yet taken occupancy.
S-186
- -----------------------------------------------------------------------------------------------------------------------
TENANT SUMMARY
- -----------------------------------------------------------------------------------------------------------------------
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
- -----------------------------------------------------------------------------------------------------------------------
Kohl's ................ A3/A-/A 86,584 52.1% $ 9.26 $ 801,768 36.9% September 2023
Sports Authority ...... NR/NR/NR 35,002 21.1 $ 11.50 402,523 18.5 August 2013
Dress Barn ............ NR/NR/NR 8,000 4.8 $ 22.00 176,000 8.1 January 2009
Beauty Brands ......... NR/NR/NR 5,756 3.5 $ 25.50 146,778 6.8 September 2013
Mattress Firm ......... NR/NR/NR 5,529 3.3 $ 30.00 165,870 7.6 August 2013
NON-MAJOR TENANTS ..... 18,045 10.9 $ 26.51 478,381 22.0
VACANT SPACE .......... 7,181 4.3 0 0.0
------ ----- ---------- -----
TOTAL ................. 166,097 100.0% $2,171,320 100.0%
------- ----- ---------- -----
- -----------------------------------------------------------------------------------------------------------------------
* Certain ratings are those of the parent company whether or not the parent
guarantees the lease.
- --------------------------------------------------------------------------------------------------------------------
LEASE EXPIRATION SCHEDULE
- --------------------------------------------------------------------------------------------------------------------
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 0 $ 0.00 0 0.0% 0.0% 0.0% 0.0%
2006 0 $ 0.00 0 0.0% 0.0% 0.0% 0.0%
2007 0 $ 0.00 0 0.0% 0.0% 0.0% 0.0%
2008 6 $ 26.73 9,839 5.9% 5.9% 12.1% 12.1%
2009 1 $ 22.00 8,000 4.8% 10.7% 8.1% 20.2%
2010 0 $ 0.00 0 0.0% 10.7% 0.0% 20.2%
2011 0 $ 0.00 0 0.0% 10.7% 0.0% 20.2%
2012 0 $ 0.00 0 0.0% 10.7% 0.0% 20.2%
2013 4 $ 16.98 50,693 30.5% 41.3% 39.6% 59.9%
2014 0 $ 0.00 0 0.0% 41.3% 0.0% 59.9%
- --------------------------------------------------------------------------------------------------------------------
* Calculated based on the approximate square footage occupied by each
tenant.
S-187
THE LOAN. The Mortgage Loan (the "Shoppes at Gilbert Commons Loan") is
secured by a first mortgage encumbering an anchored retail center located in
Gilbert, Arizona. The Shoppes at Gilbert Commons Loan represents approximately
2.4% of the Cut-Off Date Pool Balance. The Shoppes at Gilbert Commons Loan was
originated on April 8, 2004, and has a principal balance as of the Cut-Off Date
of $25,100,000.
The Shoppes at Gilbert Commons Loan has a remaining term of 120 months to
its anticipated repayment date of April 11, 2014. The Shoppes at Gilbert Commons
Loan may be prepaid on or after February 11, 2014, and permits defeasance with
United States government obligations beginning four years after its first
payment date.
THE BORROWER. The borrower is Gilbert Commons Financial Group, L.L.C., a
special purpose entity. Legal counsel to the borrower delivered a
non-consolidation opinion in connection with the origination of the Shoppes at
Gilbert Commons Loan. The sponsors of the borrower are Ron B. Ault and David L.
Newquist. David Newquist and Ron Ault have a combined total of 40 years of real
estate experience and are the principals of Gilbert Commons Financial Group,
L.L.C. in Phoenix, Arizona. The holder of 100% of the membership interests in
the borrower is permitted to transfer its membership interests in the borrower
to Donahue Schreiber Realty Group, which would cause a change in control of the
borrower and the related Mortgaged Property. The sponsor has informed the
related Mortgage Loan Seller that it is in discussions to transfer its
membership interests in the borrower in accordance with the foregoing provision.
THE PROPERTY. The Mortgaged Property is an approximately 166,097 square
foot anchored retail center situated on approximately 18.3 acres. The Mortgaged
Property was constructed in 2003. The Mortgaged Property is located in Gilbert,
Arizona, within the Phoenix, Arizona metropolitan statistical area. As of
February 2, 2004, the occupancy rate for the Mortgaged Property securing the
Shoppes at Gilbert Commons Loan was approximately 96.4%.
The largest tenant is Kohl's Department Stores, Inc. ("Kohl's"), occupying
approximately 86,584 square feet, or approximately 52.1% of the net rentable
area. Kohl's operates family oriented, specialty department stores that feature
national brand merchandise targeted to middle income families. As of April 1,
2004, Kohl's Department Store, Inc. was rated "A3" (Moody's), "A--" (S&P) and
"A" (Fitch). The Kohl's lease expires in September 2023. The second largest
tenant is Gart Brothers Sporting Goods Company, operating a Sports Authority
store ("Sports Authority"), occupying approximately 35,002 square feet, or
approximately 21.1% of the net rentable area. In August of 2003, The Sports
Authority, Inc. and Gart Sports Company, the largest and second largest U.S.
sporting goods retailers, respectively, completed a merger that created one of
largest sporting goods retailers in the United States. The Sports Authority's
lease expires in August 2013. The third largest tenant is The Dress Barn, Inc.
(the "Dress Barn"), occupying approximately 8,000 square feet, or approximately
4.8% of the net rentable area. Dress Barn sells women's apparel and accessories
at discount prices. The Dress Barn lease expires in January 2009.
LOCK BOX ACCOUNT. If the Shoppes at Gilbert Commons Loan is not repaid in
full on or prior to the anticipated repayment date of April 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 April
11, 2014, if the Shoppes at Gilbert Commons Loan is not paid in full, the
Shoppes at Gilbert Commons Loan enters into a hyper-amortization period through
April 11, 2034. The interest rate applicable to the Shoppes at Gilbert Commons
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.
MANAGEMENT. ZELL Commercial Real Estate Services, Inc. is the property
manager for the Mortgaged Property securing the Shoppes at Gilbert Commons Loan.
S-188
ARC Pool 5-4
- --------------------------------------------------------------------------------
LOAN INFORMATION
- --------------------------------------------------------------------------------
MORTGAGE LOAN SELLER Citigroup
CUT-OFF DATE BALANCE $24,924,796
PERCENTAGE OF CUT-OFF DATE POOL BALANCE 2.4%
NUMBER OF MORTGAGE LOANS 1
LOAN PURPOSE Refinance
SPONSOR Affordable Residential Communities Inc., a
Maryland corporation and Affordable
Residential Communities LP, a
Delaware limited partnership
TYPE OF SECURITY Fee
MORTGAGE RATE 5.050%
MATURITY DATE March 1, 2009
AMORTIZATION TYPE Balloon
ORIGINAL TERM / AMORTIZATION 60 / 360
REMAINING TERM / AMORTIZATION 59 / 359
LOCKBOX Hard-Springing
UP-FRONT RESERVES
TAX/INSURANCE Yes
REPLACEMENT $7,558
ENGINEERING $194,545
ONGOING MONTHLY RESERVES
TAX/INSURANCE Yes
REPLACEMENT $7,558
ADDITIONAL FINANCING(1) None
CUT-OFF DATE BALANCE $24,924,796
CUT-OFF DATE BALANCE/PAD $13,740
CUT-OFF DATE LTV 71.9%
MATURITY DATE LTV 66.4%
UW DSCR ON NCF 1.46x
- --------------------------------------------------------------------------------
(1) As of the Cut-Off Date.
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
NUMBER OF MORTGAGED PROPERTIES 8
LOCATION Various
PROPERTY TYPE Mobile Home Park
SIZE (PADS) 1,814
OCCUPANCY AS OF SEPTEMBER 30, 2003 83.6%
YEAR BUILT / YEAR RENOVATED Various / NA
APPRAISED VALUE $34,670,000
PROPERTY MANAGEMENT ARC Management Services, Inc.
UW ECONOMIC OCCUPANCY 83.3%
UW REVENUES $5,315,103
UW TOTAL EXPENSES $2,867,522
UW NET OPERATING INCOME (NOI) $2,447,581
UW NET CASH FLOW (NCF) $2,356,881
- --------------------------------------------------------------------------------
S-189
AFRT Portfolio
- --------------------------------------------------------------------------------
LOAN INFORMATION
- --------------------------------------------------------------------------------
MORTGAGE LOAN SELLER Wachovia
CUT-OFF DATE BALANCE $24,777,228
PERCENTAGE OF CUT-OFF DATE POOL BALANCE 2.4%
NUMBER OF MORTGAGE LOANS 2
LOAN PURPOSE Refinance
SPONSOR American Financial Realty Company
TYPE OF SECURITY Fee
MORTGAGE RATE(1) 5.830%
MATURITY DATE Various
AMORTIZATION TYPE ARD
INTEREST ONLY PERIOD None
ORIGINAL TERM / AMORTIZATION 108 / 240
REMAINING TERM / AMORTIZATION(2) Various
LOCKBOX Hard-Springing
UP-FRONT RESERVES
TAX/INSURANCE No
ENGINEERING $241,691
ENVIRONMENTAL $1,500
ONGOING MONTHLY RESERVES
TAX/INSURANCE No
TI/LC(3) $4,167
ADDITIONAL FINANCING(4) None
CUT-OFF DATE BALANCE $24,777,228
CUT-OFF DATE BALANCE/SF $127
CUT-OFF DATE LTV 72.9%
MATURITY DATE LTV 51.0%
UW DSCR ON NCF 1.32x
- --------------------------------------------------------------------------------
(1) Represents the weighted average of the AFRT 8 Pool Mortgage Rate and the
AFRT 9 Pool Mortgage Rate.
(2) The AFRT 8 Pool has a remaining term/amortization of 105/237 and the AFRT
9 Pool has 106/238.
(3) Payable monthly, up to an aggregate of $300,000.
(4) As of the Cut-Off Date.
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
NUMBER OF MORTGAGED PROPERTIES 17
LOCATION Various
PROPERTY TYPE Various
SIZE (SF) 195,775
OCCUPANCY AS OF VARIOUS 100.0%
YEAR BUILT / YEAR RENOVATED Various / Various
APPRAISED VALUE $34,170,000
PROPERTY MANAGEMENT First States Management Corp., LLC
UW ECONOMIC OCCUPANCY 95.0%
UW REVENUES $ 3,736,220
UW TOTAL EXPENSES $ 796,091
UW NET OPERATING INCOME (NOI) $ 2,940,129
UW NET CASH FLOW (NCF) $ 2,801,653
- --------------------------------------------------------------------------------
S-190
Valley Corporate Center
- --------------------------------------------------------------------------------
LOAN INFORMATION
- --------------------------------------------------------------------------------
MORTGAGE LOAN SELLER Wachovia
CUT-OFF DATE BALANCE $22,600,000
PERCENTAGE OF CUT-OFF DATE POOL BALANCE 2.2%
NUMBER OF MORTGAGE LOANS 1
LOAN PURPOSE Acquisition
SPONSOR Stephen G. Hearn
TYPE OF SECURITY Fee
MORTGAGE RATE 5.160%
MATURITY DATE March 11, 2009
AMORTIZATION TYPE Interest Only
INTEREST ONLY PERIOD 60
ORIGINAL TERM / AMORTIZATION 60 / NA
REMAINING TERM / AMORTIZATION 59 / NA
LOCKBOX Soft-Upfront
UP-FRONT RESERVES
TAX/INSURANCE Yes
ENGINEERING $501,500
ONGOING MONTHLY RESERVES
TAX/INSURANCE Yes
REPLACEMENT $2,571
TI/LC(1) $14,283
ADDITIONAL FINANCING(2) Mezzanine Debt $5,641,000
TRUST ASSET TOTAL DEBT
----------------- ---------------------
CUT-OFF DATE BALANCE $22,600,000 $28,241,000
CUT-OFF DATE BALANCE/SF $132 $165
CUT-OFF DATE LTV 71.6% 89.5%
MATURITY DATE LTV 71.6% 89.5%
UW DSCR ON NCF 1.65x 1.15x
- --------------------------------------------------------------------------------
(1) An ongoing annual TI/LC escrow of $1.00/SF per year will be collected
monthly, up to a maximum amount of $500,000.
(2) As of the Cut-Off Date.
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
NUMBER OF MORTGAGED PROPERTIES 1
LOCATION San Diego, CA
PROPERTY TYPE Office - Suburban
SIZE (SF) 171,588
OCCUPANCY AS OF MARCH 31, 2004 83.9%
YEAR BUILT / YEAR RENOVATED 1972 / 1997
APPRAISED VALUE $31,550,000
PROPERTY MANAGEMENT The Hearn Company
UW ECONOMIC OCCUPANCY 83.9%
UW REVENUES $ 3,787,718
UW TOTAL EXPENSES $ 1,573,685
UW NET OPERATING INCOME (NOI) $ 2,214,033
UW NET CASH FLOW (NCF) $ 1,920,870
- --------------------------------------------------------------------------------
S-191
Home Depot -- Colma, CA
- --------------------------------------------------------------------------------
LOAN INFORMATION
- --------------------------------------------------------------------------------
MORTGAGE LOAN SELLER Wachovia
CUT-OFF DATE BALANCE $21,613,000
PERCENTAGE OF CUT-OFF DATE POOL BALANCE 2.1%
NUMBER OF MORTGAGE LOANS 1
LOAN PURPOSE Refinance
SPONSOR Cole Credit Property Fund Limited
Partnership and Cole Credit Property
Fund II Limited Partnership
TYPE OF SECURITY Fee
MORTGAGE RATE 4.800%
MATURITY DATE April 11, 2009
AMORTIZATION TYPE Interest Only
INTEREST ONLY PERIOD 60
ORIGINAL TERM / AMORTIZATION 60 / NA
REMAINING TERM / AMORTIZATION 60 / NA
LOCKBOX Hard-Springing
SHADOW RATING (S&P/MOODY'S)(1) BBB- / A3
UP-FRONT RESERVES No reserves required
ONGOING MONTHLY RESERVES No reserves required
ADDITIONAL FINANCING(2) None
CUT-OFF DATE BALANCE $21,613,000
CUT-OFF DATE BALANCE/SF $216
CUT-OFF DATE LTV 65.2%
MATURITY DATE LTV 65.2%
UW DSCR ON NCF 2.23x
- --------------------------------------------------------------------------------
(1) S&P and Moody's have confirmed that the Home Depot - Colma, CA Loan, in
the context of its inclusion in the trust, has credit characterisitics
consistent with an investment-grade rated obligation.
(2) As of the Cut-Off Date.
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
NUMBER OF MORTGAGED PROPERTIES 1
LOCATION Colma, CA
PROPERTY TYPE Retail - Anchored
SIZE (SF) 99,970
OCCUPANCY AS OF MARCH 1, 2004 100.0%
YEAR BUILT / YEAR RENOVATED 1995 / NA
APPRAISED VALUE $33,150,000
PROPERTY MANAGEMENT Fund Realty Advisors, Inc.
UW ECONOMIC OCCUPANCY 100.0%
UW REVENUES $2,409,277
UW TOTAL EXPENSES $86,316
UW NET OPERATING INCOME (NOI) $2,322,961
UW NET CASH FLOW (NCF) $2,312,964
- --------------------------------------------------------------------------------
S-192
Essex Place Apartments
- --------------------------------------------------------------------------------
LOAN INFORMATION
- --------------------------------------------------------------------------------
MORTGAGE LOAN SELLER Artesia
CUT-OFF DATE BALANCE $20,400,000
PERCENTAGE OF CUT-OFF DATE POOL BALANCE 2.0%
NUMBER OF MORTGAGE LOANS 1
LOAN PURPOSE Purchase
SPONSOR Luke V. McCarthy and Michael W. Palmer
TYPE OF SECURITY Fee
MORTGAGE RATE 5.320%
MATURITY DATE February 11, 2011
AMORTIZATION TYPE Balloon
INTEREST ONLY PERIOD 24
ORIGINAL TERM / AMORTIZATION 84 / 360
REMAINING TERM / AMORTIZATION 82 / 360
LOCKBOX None
UP-FRONT RESERVES
TAX/INSURANCE Yes
REPLACEMENT $246,400
ONGOING MONTHLY RESERVES
TAX/INSURANCE Yes
REPLACEMENT(1) $10,267
ADDITIONAL FINANCING(2) None
CUT-OFF DATE BALANCE $20,400,000
CUT-OFF DATE BALANCE/UNIT $57,955
CUT-OFF DATE LTV 73.5%
MATURITY DATE LTV 68.1%
UW DSCR ON NCF 1.29x
- --------------------------------------------------------------------------------
(1) The borrower is required to deposit a replacement reserve on a monthly
basis beginning on the earlier of 3/11/2006 or the payment date following
the first disbursement from the replacement reserve account.
(2) As of the Cut-Off Date.
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
NUMBER OF MORTGAGED PROPERTIES 1
LOCATION Overland Park, KS
PROPERTY TYPE Multifamily - Conventional
SIZE (UNITS) 352
OCCUPANCY AS OF JANUARY 8, 2004 88.9%
YEAR BUILT / YEAR RENOVATED 1970 / 2002
APPRAISED VALUE $27,750,000
PROPERTY MANAGEMENT Real Property Systems, Inc.
UW ECONOMIC OCCUPANCY 90.5%
UW REVENUES $3,309,060
UW TOTAL EXPENSES $1,461,689
UW NET OPERATING INCOME (NOI) $1,847,371
UW NET CASH FLOW (NCF) $1,759,371
- --------------------------------------------------------------------------------
S-193
University Mall
- --------------------------------------------------------------------------------
LOAN INFORMATION
- --------------------------------------------------------------------------------
MORTGAGE LOAN SELLER Wachovia
CUT-OFF DATE BALANCE $19,734,143
PERCENTAGE OF CUT-OFF DATE POOL 1.9%
BALANCE
NUMBER OF MORTGAGE LOANS 1
LOAN PURPOSE Refinance
SPONSOR Jake & Owen Aronov
TYPE OF SECURITY Leasehold
MORTGAGE RATE 6.120%
MATURITY DATE March 11, 2019
AMORTIZATION TYPE ARD
INTEREST ONLY PERIOD None
ORIGINAL TERM / AMORTIZATION 180 / 360
REMAINING TERM / AMORTIZATION 179 / 359
LOCKBOX Hard-Springing
SHADOW RATING (S&P/MOODY'S)(1) AAA / Aa3
UP-FRONT RESERVES
TAX/INSURANCE Yes
REPLACEMENT $18,702
ENGINEERING $489,079
ONGOING MONTHLY RESERVES
TAX/INSURANCE Yes
REPLACEMENT $9,351
ADDITIONAL FINANCING(2) Future mezzanine debt
and future secured debt are permitted
CUT-OFF DATE BALANCE $19,734,143
CUT-OFF DATE BALANCE/SF $30
CUT-OFF DATE LTV 51.5%
MATURITY DATE LTV 37.8%
UW DSCR ON NCF 2.66x
- --------------------------------------------------------------------------------
(1) S&P and Moody's have confirmed that the University Mall Loan, in the
context of its inclusion in the trust, has credit characterisitics
consistent with an investment-grade rated obligation.
(2) As of the Cut-off Date.
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
NUMBER OF MORTGAGED PROPERTIES 1
LOCATION Tuscaloosa, AL
PROPERTY TYPE Retail - Anchored
SIZE (SF) 653,558
OCCUPANCY AS OF FEBRUARY 11, 2004 97.6%
YEAR BUILT / YEAR RENOVATED 1980 / 1998
APPRAISED VALUE $38,350,000
PROPERTY MANAGEMENT Aronov Realty Management, Inc.
UW ECONOMIC OCCUPANCY 94.1%
UW REVENUES $8,595,469
UW TOTAL EXPENSES $4,324,531
UW NET OPERATING INCOME (NOI) $4,270,938
UW NET CASH FLOW (NCF) $3,829,555
- --------------------------------------------------------------------------------
S-194
Stonegate Apartments/Cedar Ridge Apartments
- --------------------------------------------------------------------------------
LOAN INFORMATION
- --------------------------------------------------------------------------------
MORTGAGE LOAN SELLER Artesia
CUT-OFF DATE BALANCE $19,285,000
PERCENTAGE OF CUT-OFF DATE POOL BALANCE 1.9%
NUMBER OF MORTGAGE LOANS 2
LOAN PURPOSE Refinance
SPONSOR Daisy Afrooz and Peter E. Taylor
TYPE OF SECURITY Fee
MORTGAGE RATE 5.310%
MATURITY DATE April 11, 2014
AMORTIZATION TYPE Balloon
ORIGINAL TERM / AMORTIZATION 120 / 360
REMAINING TERM / AMORTIZATION 120 / 360
LOCKBOX Soft-Upfront
UP-FRONT RESERVES
TAX/INSURANCE Yes
REPLACEMENT $375,376
ONGOING MONTHLY RESERVES
TAX/INSURANCE Yes
REPLACEMENT $15,641
ADDITIONAL FINANCING(1) None
CUT-OFF DATE BALANCE $19,285,000
CUT-OFF DATE BALANCE/UNIT $34,315
CUT-OFF DATE LTV 63.3%
MATURITY DATE LTV 52.6%
UW DSCR ON NCF 1.54x
- --------------------------------------------------------------------------------
(1) As of the Cut-Off Date.
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
NUMBER OF MORTGAGED PROPERTIES 2
LOCATION Sacramento, CA
PROPERTY TYPE Multifamily - Conventional
SIZE (UNITS) 562
OCCUPANCY AS OF VARIOUS 93.4%
YEAR BUILT / YEAR RENOVATED 1978 & 1985 / NA
APPRAISED VALUE $30,460,000
PROPERTY MANAGEMENT PPC Property Management, Inc.
UW ECONOMIC OCCUPANCY 93.0%
UW REVENUES $4,040,829
UW TOTAL EXPENSES $1,867,066
UW NET OPERATING INCOME (NOI) $2,173,763
UW NET CASH FLOW (NCF) $1,986,075
- --------------------------------------------------------------------------------
S-195
Deep Deuce at Bricktown
- --------------------------------------------------------------------------------
LOAN INFORMATION
- --------------------------------------------------------------------------------
MORTGAGE LOAN SELLER Wachovia
CUT-OFF DATE BALANCE $18,240,000
PERCENTAGE OF CUT-OFF DATE POOL BALANCE 1.8%
NUMBER OF MORTGAGE LOANS 1
LOAN PURPOSE Acquisition
SPONSOR Philip M. Welch, Marshall G.
Allan and Michael Tabor
TYPE OF SECURITY Fee
MORTGAGE RATE 4.750%
MATURITY DATE April 11, 2011
AMORTIZATION TYPE Balloon
INTEREST ONLY PERIOD 12
ORIGINAL TERM / AMORTIZATION 84 / 348
REMAINING TERM / AMORTIZATION 84 / 348
LOCKBOX None
UP-FRONT RESERVES
TAX/INSURANCE Yes
REPLACEMENT $6,125
ENGINEERING $5,000
ONGOING MONTHLY RESERVES
TAX/INSURANCE Yes
REPLACEMENT $6,125
ADDITIONAL FINANCING(1) Subordinate Debt $760,000
TRUST ASSET TOTAL DEBT
----------- ----------
CUT-OFF DATE BALANCE $18,240,00 $19,000,000
CUT-OFF DATE BALANCE/UNIT $64,626 $62,041
CUT-OFF DATE LTV 80.0% 83.3%
MATURITY DATE LTV 71.5% 74.7%
UW DSCR ON NCF 1.46x 1.34x
- --------------------------------------------------------------------------------
(1) As of the Cut-Off Date.
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
NUMBER OF MORTGAGED PROPERTIES 1
LOCATION Oklahoma City, OK
PROPERTY TYPE Multifamily - Conventional
SIZE (UNITS) 294
OCCUPANCY AS OF MARCH 16, 2004 87.8%
YEAR BUILT / YEAR RENOVATED 2001 / NA
APPRAISED VALUE $22,800,000
PROPERTY MANAGEMENT LEDIC Realty Services, Ltd.
UW ECONOMIC OCCUPANCY 86.1%
UW REVENUES $ 2,691,310
UW TOTAL EXPENSES $ 926,132
UW NET OPERATING INCOME (NOI) $ 1,765,177
UW NET CASH FLOW (NCF) $ 1,691,677
- --------------------------------------------------------------------------------
S-196
Poway Shopping Center
- --------------------------------------------------------------------------------
LOAN INFORMATION
- --------------------------------------------------------------------------------
MORTGAGE LOAN SELLER Wachovia
CUT-OFF DATE BALANCE $17,660,000
PERCENTAGE OF CUT-OFF DATE POOL BALANCE 1.7%
NUMBER OF MORTGAGE LOANS 1
LOAN PURPOSE Refinance
SPONSOR Laurence S. Langohr(1)
TYPE OF SECURITY Fee
MORTGAGE RATE 5.690%
MATURITY DATE April 11, 2014
AMORTIZATION TYPE Balloon
INTEREST ONLY PERIOD 12
ORIGINAL TERM / AMORTIZATION 120 / 360
REMAINING TERM / AMORTIZATION 120 / 360
LOCKBOX(2) Hard-Upfront
UP-FRONT RESERVES
TAX/INSURANCE No
ONGOING MONTHLY RESERVES
TAX/INSURANCE No
ADDITIONAL FINANCING(3) Mezzanine Debt $ 1,900,000
TRUST ASSET TOTAL DEBT
--------------------- ------------------
CUT-OFF DATE BALANCE $17,660,000 $19,560,000
CUT-OFF DATE BALANCE/SF $165 $182
CUT-OFF DATE LTV 78.1% 86.6 %
MATURITY DATE LTV 67.3% 75.7 %
UW DSCR ON NCF 1.32x 1.16x
- --------------------------------------------------------------------------------
(1) The Mortgaged Property is currently subject to a purchase and sale
agreement pending the closing of a reverse like-kind exchange which would
result in a change in control. The loan documents permit this one-time
transfer without the consent of the mortgagee.
(2) Reverts to springing lockbox once mezzanine loan is paid in full.
(3) As of the Cut-Off Date.
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PROPERTY INFORMATION
- --------------------------------------------------------------------------------
NUMBER OF MORTGAGED PROPERTIES 1
LOCATION Poway, CA
PROPERTY TYPE Retail - Anchored
SIZE (SF) 107,328
OCCUPANCY AS OF MARCH 29, 2004 100.0%
YEAR BUILT / YEAR RENOVATED 2003 / NA
APPRAISED VALUE $22,600,000
PROPERTY MANAGEMENT AIG Properties, Ltd.
UW ECONOMIC OCCUPANCY 97.5%
UW REVENUES $ 1,686,200
UW TOTAL EXPENSES $ 42,155
UW NET OPERATING INCOME (NOI) $ 1,644,045
UW NET CASH FLOW (NCF) $ 1,627,945
- --------------------------------------------------------------------------------
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Sports Authority Corporate Headquarters
- --------------------------------------------------------------------------------
LOAN INFORMATION
- --------------------------------------------------------------------------------
MORTGAGE LOAN SELLER Citigroup
CUT-OFF DATE BALANCE $15,937,612
PERCENTAGE OF CUT-OFF DATE POOL BALANCE 1.5%
NUMBER OF MORTGAGE LOANS 1
LOAN PURPOSE Refinance
SPONSOR Douglas Etkin and
Bruce Etkin
TYPE OF SECURITY Fee
MORTGAGE RATE 6.420%
MATURITY DATE January 1, 2019
AMORTIZATION TYPE Balloon
ORIGINAL TERM / AMORTIZATION 180 / 300
REMAINING TERM / AMORTIZATION 177 / 297
LOCKBOX None
UP-FRONT RESERVES
TAX/INSURANCE No
REPLACEMENT No
ONGOING MONTHLY RESERVES
TAX/INSURANCE No
REPLACEMENT $2,627
ADDITIONAL FINANCING(1) None
CUT-OFF DATE BALANCE $15,937,612
CUT-OFF DATE BALANCE/SF $ 76
CUT-OFF DATE LTV 73.5 %
MATURITY DATE LTV 45.2 %
UW DSCR ON NCF 1.24 x
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(1) As of the Cut-Off Date.
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
NUMBER OF MORTGAGED PROPERTIES 1
LOCATION Englewood, CO
PROPERTY TYPE Office - Suburban
SIZE (SF) 210,207
OCCUPANCY AS OF DECEMBER 31, 2003 100.0%
YEAR BUILT / YEAR RENOVATED 1987 / 2003
APPRAISED VALUE $21,700,000
PROPERTY MANAGEMENT Etkin Johnson Group LLC
UW ECONOMIC OCCUPANCY 90.6%
UW REVENUES $ 1,850,201
UW TOTAL EXPENSES $ 78,536
UW NET OPERATING INCOME (NOI) $ 1,771,665
UW NET CASH FLOW (NCF) $ 1,597,397
- --------------------------------------------------------------------------------
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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
or acquired the Mortgage Loans as described above under "--Mortgage Loan
History".
Thirty-five (35) of the Mortgage Loans (the "Wachovia Mortgage Loans"),
representing 75.8% of the Cut-Off Date Pool Balance (29 Mortgage Loans in Loan
Group 1 or 82.8% of the Cut-Off Date Group 1 Balance and 6 Mortgage Loans in
Loan Group 2 or 37.5% of the Cut-Off Date Group 2 Balance), were originated or
acquired 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, which, as of December 31, 2003, had total assets of $401
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.
Fourteen (14) of the Mortgage Loans (the "Artesia Mortgage Loans"),
representing 8.6% of the Cut-Off Date Pool Balance (8 Mortgage Loans in Loan
Group 1 or 2.9% of the Cut-Off Date Group 1 Balance and 6 Mortgage Loans in Loan
Group 2 or 40.2% of the Cut-Off Date Group 2 Balance), were originated by
Artesia Mortgage Capital Corporation ("Artesia"). Artesia is a Delaware
corporation engaged in the business of originating and securitizing US
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.
Two (2) of the Mortgage Loans (the "Eurohypo Mortgage Loans"), representing
8.2% of the Cut-Off Date Pool Balance (2 Mortgage Loans in Loan Group 1 or 9.6%
of the Cut-Off Date Group 1 Balance), were originated by Eurohypo AG, New York
Branch. Eurohypo AG, New York Branch is the New York branch of a German banking
corporation that focuses on real estate and public finance banking. Eurohypo AG,
New York Branch has total commitments of approximately 2.73 billion EUR ($3.27
billion) of which approximately 1.5 billion EUR ($1.8 billion) are first lien
real estate loans. Eurohypo AG, New York Branch has three offices in the United
States located in New York, Chicago and Los Angeles with over 70 professionals
concentrating on real estate investment banking. Eurohypo AG originates its
loans in the United States through its New York branch.
Three (3) of the Mortgage Loans (the "Citigroup Mortgage Loans"),
representing 7.4% of the Cut-Off Date Pool Balance (2 Mortgage Loans in Loan
Group 1 or 4.6% of the Cut-Off Date Group 1 Balance and 1 Mortgage Loan in Loan
Group 2 or 22.4% of the Cut-Off Date Group 2 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, the Eurohypo Mortgage Loans or the
Citigroup Mortgage Loans; Artesia Mortgage Capital Corporation has no obligation
to repurchase the Wachovia Mortgage Loans, the Eurohypo Mortgage Loans or the
Citigroup Mortgage Loans; Eurohypo AG, New York Branch has no obligation to
repurchase the Wachovia Mortgage Loans, the Artesia 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, the
Artesia Mortgage Loans or the Eurohypo 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.
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All information concerning the Artesia Mortgage Loans contained herein or used
in the preparation of this prospectus supplement is as underwritten by Artesia
Mortgage Capital Corporation. All information concerning the Eurohypo Mortgage
Loans contained herein or used in the preparation of this prospectus supplement
is as underwritten by Eurohypo AG, New York Branch. All information concerning
the Citigroup Mortgage Loans contained herein or used in the preparation of
this prospectus supplement is as underwritten by Citigroup Global Markets
Realty Corp.
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.
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. One (1) Mortgage Loan (representing
1.3% of the Cut-Off Date Pool Balance) sold to the Depositor by Wachovia, was
originated by CDP Capital Real Estate Advisory Inc. or its affiliate. See "RISK
FACTORS--Potential Conflicts of Interest" in this prospectus supplement. The
related Mortgage Loan Seller re-underwrote such Mortgage Loan to the related
Mortgage Loan Seller's underwriting guidelines. 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:
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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 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,
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 originated or acquired 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
S-201
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) the original or copy of any ground lease, ground lessor
estoppel, environmental insurance policy or guaranty relating to such Mortgage
Loan; (xii) any intercreditor agreement relating to permitted debt (including
mezzanine debt) of the mortgagor; (xiii) copies of any loan agreement, escrow
agreement, or security agreement relating to such Mortgage Loan; and (xiv) a
copy of any letter of credit and related transfer documents related to such
Mortgage Loan. Notwithstanding the foregoing, with respect to the 11 Madison
Avenue Loan and the Starrett-Lehigh Building Loan, the 2004-C10 Trustee will
hold the original documents related to the 11 Madison Avenue Loan and the
Starrett-Lehigh Building Loan for the benefit of the trust fund formed by the
2004-C10 Pooling and Servicing Agreement and the Trust Fund formed by the
Pooling and Servicing Agreement, other than the related Mortgage Notes that are
not assets of the trust fund formed by the 2004-C10 Pooling and Servicing
Agreement, which will be held (i) in the case of the Mortgage Notes related to
the two 11 Madison Avenue Pari Passu Loans not included in either the trust
fund formed by the 2004-C10 Pooling and Servicing Agreement or the Trust Fund,
by the holders of those 11 Madison Avenue Senior Loans and (ii) in the case of
the Mortgage Notes related to the 11 Madison Avenue Loan and the
Starrett-Lehigh Building Loan, by the Trustee under the Pooling and Servicing
Agreement.
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, the interest of the trust or the interests of any
Certificateholder, 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 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, (ii) the unpaid accrued interest on such Mortgage
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) 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, no
such document omission or defect (other than with respect to the Mortgage Note,
the Mortgage, the title insurance policy, the ground lease, any letter of
credit, any franchise agreement, comfort letter, and comfort letter transfer
document (the "Core Material Documents")) 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. With respect to material document defects other than those involving
the Core Material Documents, any applicable cure period may be extended if the
document involved is not needed imminently. Such extension will end upon 30 days
notice of such need as reasonably determined by the Master Servicer or Special
Servicer (with a possible 30 day extension if the Master Servicer or Special
Servicer agrees that the applicable Mortgage Loan Seller is diligently
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pursuing a cure). All material document defects regardless of the document
involved will be cured no later than 2 years after the Closing Date; provided,
however, that the initial 90 day cure period described herein will not be
reduced.
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; (xv) not be
substituted for a deleted Mortgage Loan if it would result in the termination
of the REMIC status of either of the REMICs or the imposition of tax on either
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
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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, security interests or any other ownership 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 and the applicable Mortgage Loan Seller has no
knowledge of any such rights, defenses or counterclaims having been
asserted;
(vii) each related assignment of 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 and
adversely interferes with the current use of the Mortgaged Property or the
security intended to be provided by such Mortgage or with the
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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) each Mortgaged Property was covered by (1) a fire and extended
perils included within the classification "All Risk of Physical Loss"
insurance policy in an amount (subject to a customary deductible) at least
equal to the lesser of the replacement cost of improvements located on such
Mortgaged Property, with no deduction for depreciation, or the outstanding
principal balance of the Mortgage Loan and in any event, the amount
necessary to avoid the operation of any co-insurance provisions; (2)
business interruption or rental loss insurance in an amount at least equal
to 12 months of operations of the related Mortgaged Property; and (3)
comprehensive general liability insurance against claims for personal and
bodily injury, death or property damage occurring on, in or about the
related Mortgaged Property in an amount customarily required by prudent
commercial mortgage lenders, but not less than $1 million; such insurance
is required by the Mortgage or related Mortgage Loan documents and was in
full force and effect with respect to each related Mortgaged Property at
origination and to the knowledge of the Mortgage Loan Seller, all insurance
coverage required under each Mortgage is in full force and effect with
respect to each Mortgaged Property; and no notice of termination or
cancellation with respect to any such insurance policy has been received by
the Mortgage Loan Seller; except for certain amounts not greater than
amounts which would be considered prudent by a commercial mortgage lender
with respect to a similar Mortgage Loan and which are set forth in the
related Mortgage, any insurance proceeds in respect of a casualty loss,
will be applied either to the repair or restoration of the related
Mortgaged Property with mortgagee or a third-party custodian acceptable to
mortgagee having the right to hold and disburse the proceeds as the repair
or restoration progresses, other than with respect to amounts that are
customarily acceptable to commercial and multifamily mortgage lending
institutions, or the reduction of the outstanding principal balance of the
Mortgage Loan and accrued interest thereon; to the Mortgage Loan Seller's
knowledge, the insurer with respect to each policy is qualified to do
business in the relevant jurisdiction to the extent required; the insurance
policies contain a standard mortgagee clause or names the mortgagee, its
successors and assigns as loss payees in the case of property insurance
policies and additional insureds in the case of liability insurance
policies and provide that they are not terminable and may not be reduced
without 30 days prior written notice to the mortgagee (or, with respect to
non-payment of premiums, 10 days prior written notice to the mortgagee) or
such lesser period as prescribed by applicable law; and each Mortgage
requires that the mortgagor maintain insurance as described above or
permits the mortgagee to require insurance as described above;
(xi) as of the Closing Date, each 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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(xii) one or more environmental site assessments or updates 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, the interests of the trust therein or the interests
of any Certificateholder, 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 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.
With respect to any Mortgage Loan which has become a Defaulted Mortgage
Loan under the Pooling and Servicing Agreement or with respect to which the
related Mortgaged Property has been foreclosed and which is the subject of a
repurchase claim under the related Mortgage Loan Purchase Agreement, the
Special Servicer with the consent of the Controlling Class Representative will
be required to notify the related Mortgage Loan Seller in writing of its
intention to sell such Defaulted Mortgage Loan or such foreclosed Mortgaged
Property at least 45 days prior to commencing any such action. Such Mortgage
Loan Seller shall have 10 business days to determine whether or not to consent
to such sale. If such Mortgage Loan Seller does not consent to such sale, the
Special Servicer shall contract with a third party set forth in the Pooling and
Servicing Agreement (a "Determination Party") as to the merits of such sale. If
the related Determination Party determines that the proposed sale is
reasonable, given the circumstances, and subsequent to such sale, a court of
competent jurisdiction determines that such Mortgage Loan Seller was liable
under the related Mortgage Loan Agreement and required to repurchase such
Defaulted Mortgage Loan or REO Property in accordance with the terms thereof,
then such Mortgage Loan Seller will be required to pay an amount equal to the
difference (if any) between the proceeds of the related action and the price at
which such Mortgage Loan Seller would have been obligated to pay had such
Mortgage Loan Seller repurchased such Defaulted Mortgage Loan or REO Property
in accordance with the terms thereof which shall generally include the costs
related to contracting with the Determination Party. In the event that (a) the
Special Servicer ignores the determination of the Determination Party and
liquidates the related Defaulted Mortgage Loan or REO Property and/or (b) a
court of competent jurisdiction determines that such Mortgage Loan Seller was
not obligated to repurchase the related Defaulted Mortgage or REO Property, the
costs of contracting with the Determination Party will constitute Additional
Trust Fund Expenses and the Mortgage Loan Seller is not liable for any such
difference.
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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
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 or some other accommodation can be reached. "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
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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 (other
than the 11 Madison Avenue Loan and the Starrett-Lehigh Building Loan) for the
benefit of the Certificateholders, and the Companion Loans (other than the 11
Madison Avenue Companion Loans and the Starrett-Lehigh Building 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, (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 (other than the 11 Madison Avenue Loan and the
Starrett-Lehigh Building Loan) and its related Companion Loan (a "Loan Pair")
are involved, with a view towards the maximization of recovery on such Loan
Pair to the Certificateholders, the holder of the related Companion Loan and
the Trust Fund (as a collective whole, taking into account that the Deep Deuce
at Bricktown Subordinate Loan is subordinate to the Deep Deuce at Bricktown
Loan, that the Brass Mill Center & Commons Subordinate Loan is subordinate to
the Brass Mill Center & Commons Loan and that the Four Seasons Town Centre
Subordinate Loan is subordinate to the Four Seasons Town Centre 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"). See "--Servicing of the 11
Madison Avenue Loan and the Starrett-Lehigh Building Loan" below for a
description of the servicing of the 11 Madison Avenue Loan and the
Starrett-Lehigh Building Loan.
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 (other than the 11 Madison
Avenue Loan and the Starrett-Lehigh Building Loan). SL Green Funding LLC will
be appointed as a sub-servicer for the 2004-C10 special servicer with respect
to the 11 Madison Avenue Loan. The Trust Fund will not
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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 the 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 (but excluding the 11 Madison Avenue Loan and the
Starrett-Lehigh Building Loan and their respective 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 the
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.
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, REO Properties, the 11 Madison Avenue Loan
and the Starrett-Lehigh Building Loan). Although the Master Servicer will be
authorized to employ agents, including sub-servicers, to directly 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, is our affiliate, one of the Mortgage Loan Sellers and an
affiliate of one of the Underwriters. Wachovia Bank, National Association is
also acting as the initial special servicer for the 11 Madison Avenue Loan
under the 2004-C10 Pooling and Servicing Agreement. In addition, it is
anticipated that Wachovia Bank, National Association (or an affiliated entity)
will be the holder of certain 11 Madison Avenue Pari Passu Loans and one of the
11 Madison Avenue Subordinate Loans. 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
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and except for the information in the first three 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.
Lennar Partners, Inc., a Florida corporation (the "Special Servicer"), is
a subsidiary of LNR Property Corporation ("LNR") and will be responsible for
special servicing any Specially Serviced Mortgage Loans and REO Properties. The
principal executive offices of the Special Servicer 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. LNR and its affiliates have
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.
The Special Servicer and its affiliates own and are in the business of
acquiring assets similar in type to the assets of the Trust Fund. 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.
The information set forth herein regarding the Special Servicer 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. 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 greater than 25% of its
original Certificate Balance; 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 Z Certificates, the
REMIC Residual Certificates or the Class X Certificates) bearing the latest
alphabetical Class designation. The Class A-1, Class A-2, Class A-3, Class A-4
and Class A-5 Certificates will be treated as one Class for determining the
Controlling Class.
The Brass Mill Center & Commons Intercreditor Agreement and the Four
Seasons Town Centre Intercreditor Agreement each permit, so long as the
principal amount of the Brass Mill Center & Commons Subordinate Loan or the
Four Seasons Town Centre Subordinate Loan, less any existing related Appraisal
Reduction Amount, is at least equal to 25% of the original principal amount of
such Brass Mill Center & Commons Subordinate Loan or Four Seasons Town Centre
Subordinate Loan, the holder of the Brass Mill Center & Commons Subordinate
Loan or the Four Seasons Town Centre Subordinate Loan, as the case may be, to
replace the Special Servicer with respect to the Brass Mill Center & Commons
Loan or the Four Seasons Town Centre Loan, respectively. See "DESCRIPTION OF
THE CERTIFICATES--Voting Rights" in this prospectus supplement and the
accompanying prospectus.
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The 2004-C10 Pooling and Servicing Agreement permits, so long as no 11
Madison Avenue Control Appraisal Period exists, the holder of the most
subordinate 11 Madison Avenue Subordinate Loan for which no control appraisal
period exists, to replace the 2004-C10 Special Servicer with respect to the 11
Madison Avenue Whole Loan. Such holder will be required to pay all
out-of-pocket costs related to the transfer of servicing if the 2004-C10
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. Following the occurrence and during the
continuance of an 11 Madison Avenue Control Appraisal Period, the 2004-C10
Controlling Class Representative shall have the power to replace the 2004-C10
Special Servicer with respect to the 11 Madison Avenue Loan. The 2004-C10
Pooling and Servicing Agreement permits, so long as a Starrett-Lehigh Building
Control Appraisal Period has not occurred and is continuing, the holder (or
holders) of the majority of the Voting Rights allocated to the Class SL
Certificates issued under the 2004-C10 Pooling and Servicing Agreement to
replace the 2004-C10 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 2004-C10 Special Servicer and
whose approval is required for certain actions by the 2004-C10 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 2004-C10 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. Following the occurrence and during the continuance of a
Starrett-Lehigh Building Control Appraisal Period, the 2004-C10 Controlling
Class Representative shall have the power to replace the 2004-C10 Special
Servicer with respect to the Starrett-Lehigh Building Loan. Any replacement of
the 2004-C10 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 2004-C10 special servicer to be bound by the terms and conditions
of the 2004-C10 Pooling and Servicing Agreement. See "DESCRIPTION OF THE
CERTIFICATES--Voting Rights" in this prospectus supplement and the accompanying
prospectus.
The Special Servicer is responsible for servicing and administering any
Mortgage Loan (other than the 11 Madison Avenue Loan and the Starrett-Lehigh
Building Loan) or Companion Loan (other than the 11 Madison Avenue Companion
Loans and the Starrett-Lehigh Building Companion Loans) as to which (a) the
related mortgagor has (i) failed to make within 60 days of the date due any
Balloon Payment unless the Master Servicer has, on or prior to such 60th day,
received written evidence from an institutional lender of such lender's binding
commitment to refinance such Mortgage Loan or Companion Loan within 120 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 (in the case of the Special Servicer, with the consent of
the Controlling Class Representative) shall have determined, in its good faith
and reasonable judgment and
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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; (g) the Master Servicer shall
have force placed insurance against damages or losses arising from acts of
terrorism due to the failure of the related borrower to maintain or cause such
insurance to be maintained and (1) subsequent to such force placement such
borrower fails to maintain or cause to be maintained insurance coverage against
damages or losses arising from acts of terrorism for a period of 60 days (or
such shorter time period as the Controlling Class Representative may consent
to) or (2) the Master Servicer fails to have been reimbursed for any Servicing
Advances made in connection with the force placement of such insurance coverage
(unless the circumstances giving rise to such forced placement of such
insurance coverage have otherwise been cured and the Master Servicer has been
reimbursed for any Servicing Advances made in connection with the forced
placement of such insurance coverage); or (h) 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 (h) above, a "Servicing Transfer Event").
In general, as long as the related Co-Lender Loan (other than the 11
Madison Avenue Loan and the Starrett-Lehigh Building 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 (other
than the 11 Madison Avenue Companion Loans or the Starrett-Lehigh Building
Companion Loans) becomes specially serviced, then the Co-Lender Loan will
become a Specially Serviced Mortgage Loan. If a Co-Lender Loan (other than the
11 Madison Avenue Loan or the Starrett-Lehigh Building Loan) becomes a
Specially Serviced Mortgage Loan, then the related Companion Loan will become a
Specially Serviced Mortgage Loan. If the 11 Madison Avenue Pari Passu Loan, the
Starrett-Lehigh Building Pari Passu Loan or the Starrett-Lehigh Building
Subordinate Loan becomes a specially serviced mortgage loan under the 2004-C10
Pooling and Servicing Agreement, the 11 Madison Avenue Loan or the
Starrett-Lehigh Building Loan, as the case may be, will become a specially
serviced mortgage loan under the 2004-C10 Pooling and Servicing Agreement.
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
(other than the 11 Madison Avenue Loan or the Starrett-Lehigh Building Loan) or
a related Companion Loan, the Master Servicer is in general required to
transfer its servicing responsibilities with respect to such Mortgage 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. If title to the
related 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.
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Mortgage Loans 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 (other than the 11 Madison Avenue Loan or the
Starrett-Lehigh Building Loan) or Companion Loan (other than the 11 Madison
Avenue Companion Loans or the Starrett-Lehigh Building Companion Loans) 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 (h) 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 OF THE 11 MADISON AVENUE LOAN AND THE STARRETT-LEHIGH BUILDING LOAN
The 11 Madison Avenue Loan and the Starrett-Lehigh Building Loan, and any
related REO Property, are being serviced under the 2004-C10 Pooling and
Servicing Agreement and therefore the 2004-C10 Master Servicer and/or the
2004-C10 Trustee will generally make advances and remit collections on the 11
Madison Avenue Loan and the Starrett-Lehigh Building Loan to or on behalf of
the Trust Fund. The servicing arrangements under the 2004-C10 Pooling and
Servicing Agreement are generally similar to the servicing arrangements under
the Pooling and Servicing Agreement.
In that regard:
o Wachovia Bank, National Association is the 2004-C10 Master Servicer
and, with respect to the 11 Madison Avenue mortgage loan, the 2004-C10
Special Servicer and the 2004-C10 Special Servicer is Lennar Partners,
Inc., with respect to each mortgage loan, including the Starrett-Lehigh
Building mortgage loan, other than the 11 Madison Avenue mortgage loan.
o The 2004-C10 Trustee is Wells Fargo Bank, N.A., who will be the
mortgagee of record for the 11 Madison Avenue Loan and the
Starrett-Lehigh Building Loan.
o The Master Servicer, the Special Servicer or the Trustee under the
Pooling and Servicing Agreement will have no obligation or authority to
(a) supervise the 2004-C10 Master Servicer, the 2004-C10 Special
Servicer or 2004-C10 Trustee or (b) make servicing advances with
respect to the 11 Madison Avenue Loan or the Starrett-Lehigh Building
Loan. The obligation of the Master Servicer to provide information and
collections to the Trustee and the Certificateholders with respect to
the 11 Madison Avenue Loan and the Starrett-Lehigh Building Loan is
dependent on its receipt of the corresponding information and
collection from the 2004-C10 Master Servicer or the 2004-C10 Special
Servicer.
o In accordance with the terms of the related Intercreditor Agreement and
the 2004-C10 Pooling and Servicing Agreement, after an 11 Madison
Avenue Control Appraisal Period or a
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Starrett-Lehigh Building Control Appraisal Period has occurred and is
continuing, subject to the exceptions described herein under "SERVICING
OF THE MORTGAGE LOANS--The Controlling Class Representative", the
Controlling Class Representative will generally share with the 2004-C10
Controlling Class Representative the rights given to the 2004-C10
Controlling Class Representative under the 2004-C10 Pooling and
Servicing Agreement to direct the servicing of the 11 Madison Avenue
Loan or the Starrett-Lehigh Building Loan, as applicable. Prior to the
occurrence of an 11 Madison Avenue Control Appraisal Period or a
Starrett-Lehigh Building Control Appraisal Period, the 2004-C10
Controlling Class Representative will not be entitled to exercise any
of the rights and powers described in the 2004-C10 Pooling and
Servicing Agreement with respect to the 11 Madison Avenue Loan or the
Starrett-Lehigh Building Loan, as applicable, and, instead, the holders
of the 11 Madison Avenue Subordinate Companion Loans or the
Starrett-Lehigh Building Subordinate Companion Loans, as the case may
be, or their designees will have the right to direct the servicing of
the 11 Madison Avenue Loan or the Starrett-Lehigh Building Loan, as the
case may be. See "--The Controlling Class Representative" below.
o Pursuant to the 2004-C10 Pooling and Servicing Agreement, the workout
fee and liquidation fee with respect to the 11 Madison Avenue Loan or
the Starrett-Lehigh Building Loan will be generally the same as under
the Pooling and Servicing Agreement.
o The Master Servicer will be required to make P&I Advances with respect
to the 11 Madison Avenue Loan and the Starrett-Lehigh Building Loan
that the 2004-C10 Master Servicer is required but fails to make, unless
the 2004-C10 Master Servicer or the Master Servicer, after receiving
the necessary information from the 2004-C10 Master Servicer, has
determined that such advance would not be recoverable from collections
on the 11 Madison Avenue Loan or the Starrett-Lehigh Building Loan.
o If the 2004-C10 Master Servicer determines that a servicing advance it
made with respect to the 11 Madison Avenue Loan or the Starrett-Lehigh
Building Loan or the related Mortgaged Property is nonrecoverable, it
will be entitled to be reimbursed from general collections on all
Mortgage Loans.
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 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 0.0800%. As of the Cut-Off Date the weighted
average Master Servicing Fee Rate will be approximately 0.0413% 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.
The 11 Madison Avenue Loan and the Starrett-Lehigh Building Loan will be
serviced by the 2004-C10 Master Servicer. Notwithstanding the foregoing, the
Master Servicer shall receive a Master Servicing Fee with respect to the 11
Madison Avenue Loan and the Starrett-Lehigh Building Loan at a Master Servicing
Fee Rate of 0.02%.
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
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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 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 0.0200% 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; provided, however, to the extent any such
Prepayment Interest Shortfall is the result of the Master Servicer's failure to
enforce the applicable Mortgage Loan documents, the amount in clause (a) shall
include the entire Master Servicing Fee on the applicable Mortgage Loan for
such Collection Period; provided, further, however, with respect to one (1)
Mortgage Loan (loan number 4), representing 7.2% of the Cut-Off Date Pool
Balance (8.5% of the Cut-Off Date Group 1 Balance), in the event of a
Prepayment Interest Shortfall, the Master Servicer will deposit in the
Certificate Account, without any right to reimbursement therefor, the amount of
the 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.
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 0.2500% 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, 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) 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 1.0000% 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, the Majority
Subordinate Certificateholder or the purchasing 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. The Special Servicer also is entitled to a "Workout Fee" with
respect to each Corrected Mortgage Loan, which is generally equal to 1.0000% 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
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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 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 (other than Special Servicing Fees, Workout Fees and/or
Liquidation Fees) 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 (other than Special Servicing Fees, Workout Fees and/or
Liquidation Fees) related to such Mortgage Loan has been paid 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, 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 and not previously reimbursed, such late payment charges or
default interest will be used to reimburse the Trust Fund for such payment of
interest.
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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 holder of any
related Companion Loan) to modify, waive or amend any term of any Mortgage Loan
(other than the 11 Madison Avenue Loan and the Starrett-Lehigh Building 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 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 1.20x, 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 (other than the 11 Madison Avenue Loan and the
Starrett-Lehigh Building Loan), 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 the Master Servicer may extend the
maturity of Mortgage Loans with an original maturity of five years or less with
Controlling Class approval for up to two six month extensions), 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
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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.
The Special Servicer is required to notify the Trustee, the Master
Servicer, the Controlling Class Representative and the Rating Agencies and,
with respect to the Co-Lender Loans (other than the 11 Madison Avenue Loan and
the Starrett-Lehigh Building Loan), subject to certain rights of 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
other than the 11 Madison Avenue Loan and the Starrett-Lehigh Building 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.
THE CONTROLLING CLASS REPRESENTATIVE
Subject to the succeeding paragraphs, and other than with respect to the
11 Madison Avenue Loan and the Starrett-Lehigh Building Loan, 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 actual or proposed 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) or a material
non-monetary term;
(iii) any actual or 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 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;
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(v) any acceptance of substitute or additional collateral or release of
material 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 release of any performance or "earn-out" reserves, escrows or
letters of credit;
(viii) any acceptance of an assumption agreement releasing a borrower
from liability under a Mortgage Loan (other than in connection with a
defeasance permitted under the terms of the applicable mortgage loan
documents);
(ix) any termination of the related property manager for Mortgage Loans
having an outstanding principal balance of greater than $5,000,000;
(x) any determination to allow a borrower not to maintain terrorism
insurance; and
(xi) any determination to decrease the time period referenced in clause
(g) of the definition of Servicing Transfer Event.
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.
CDP Capital Real Estate Advisory Inc., or an affiliate, 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 2004-C10 Master Servicer and the 2004-C10 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 (an
"11 Madison Avenue Control Appraisal Period"). Such rights include (i) the
2004-C10 Special Servicer and/or the 2004-C10 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 notice provisions related to
prepayment; (ii) the 2004-C10 Special Servicer and/or the 2004-C10 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
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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 2004-C10 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 11 Madison Avenue 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, 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 (including the 2004-C10
Controlling Class Representative) give conflicting consents or directions to
the 2004-C10 Master Servicer or the 2004-C10 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 2004-C10 Controlling Class Representative satisfy the
Servicing Standard, the 2004-C10 Master
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Servicer or the 2004-C10 Special Servicer, as applicable, will be required to
follow the directions of the 2004-C10 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 Starrett-Lehigh Building
Subordinate Loan (or any representative designated thereby) 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 2004-C10 Controlling Class Representative and the
Controlling Class Representative give conflicting consents or directions to the
2004-C10 Master Servicer or the 2004-C10 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 2004-C10 Controlling Class Representative satisfy the
Servicing Standard, the 2004-C10 Master Servicer or the 2004-C10 Special
Servicer, as applicable, will be required to follow the directions of the
2004-C10 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, if the unpaid principal amount of the Brass
Mill Center & Commons Subordinate Loan or the Four Seasons Town Centre
Subordinate Loan, net of any existing related Appraisal Reduction Amount with
respect to the related Co-Lender Loan and its Subordinate Companion Loan
(calculated as if such Mortgage Loan and its related Subordinate Companion Loan
were a single mortgage loan), is equal to or greater than 25% of the original
unpaid principal amount of such Subordinate Companion Loan, then (i) the
Controlling Class Representative will not be entitled to exercise any of the
rights and powers described above with respect to the related Co-Lender Loan
and its Subordinate Companion Loan and, instead, the holder of the Subordinate
Companion Loan, or its designee will be entitled to exercise the same or
similar rights and powers with respect to the related Co-Lender Loan and its
Subordinate Companion Loan and (ii) subject to the requirements of the two
immediately preceding paragraphs, the holder of such Subordinate Companion Loan
or its designee will be entitled to direct the Special Servicer with respect to
the acceptance of a discounted payoff with respect to such Subordinate
Companion Loan, the modification, extension, amendment or waiver of any
material non-monetary term of the related Co-Lender Loan and its Subordinate
Companion Loan if a Servicing Transfer Event occurs, and any release of
collateral for the related Co-Lender Loan and its Subordinate Companion Loan
(other than in accordance with the related Mortgage Loan documents). See
"DESCRIPTION OF THE MORTGAGE POOL--Co-Lender Loans--Brass Mill Center & Commons
Loan and Four Seasons Town Centre Loan--Servicing Provisions of the Brass Mill
Center & Commons Intercreditor Agreement and the Four Seasons Town Centre
Intercreditor Agreement" in this prospectus supplement.
Notwithstanding the foregoing, the holder of the Deep Deuce at Bricktown
Subordinate Loan may exercise certain approval rights relating to a
modification of such Deep Deuce at Bricktown Subordinate Loan that materially
and adversely affects the holder of such Deep Deuce at Bricktown Subordinate
Loan prior to the expiration of the related repurchase period. Furthermore, the
holder of the Deep Deuce at Bricktown Subordinate Loan may exercise certain
approval rights relating to a modification of the Deep Deuce at Bricktown Loan
or the Deep Deuce at Bricktown Subordinate Loan that materially and adversely
affects the holder of such Companion Loan and certain other matters related to
Defaulted Lease Claims. See "DESCRIPTION OF THE MORTGAGE POOL--Co-Lender
Loans--Deep Deuce at Bricktown Loan--Servicing Provisions of the Deep Deuce at
Bricktown 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, or for errors in judgment; provided, however, that the Controlling
Class
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Representative will not be protected against any liability to a Controlling
Class Certificateholder 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 each Certificateholder agrees to take no action against the
Controlling Class Representative or any of its respective officers, directors,
employees, principals or agents as a result of such a special relationship or
conflict. The Starrett-Lehigh Building Representative under the 2004-C10
Pooling and Servicing Agreement 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 (other than the 11 Madison Avenue Loan and the
Starrett-Lehigh Building Loan) becomes a Defaulted Mortgage Loan, the Special
Servicer to determine the fair value of the 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, the
Majority Subordinate Certificateholder will have an assignable option to
purchase (subject to, in certain instances, the rights of subordinated secured
creditors or mezzanine lenders to purchase the related Mortgage Loan and in the
case of the Starrett-Lehigh Building Loan, subject to the rights of (i) the
mezzanine lender and (ii) the controlling holder of the Class SL certificates
issued pursuant to the 2004-C10 Pooling and Servicing Agreement, to purchase
the Starrett-Lehigh Building Loan) (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, but
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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.
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,
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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. 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 or the Master Servicer is required to perform or
cause to be performed a physical inspection of a Mortgaged Property (other than
the Mortgaged Property related to the 11 Madison Avenue Loan or the
Starrett-Lehigh Building Loan) 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 or the Master Servicer, as the case may be, 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 (other than
the Mortgaged Property related to the 11 Madison Avenue Loan or the
Starrett-Lehigh Building 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 (other
than the Mortgaged Property related to the 11 Madison Avenue Loan or the
Starrett-Lehigh Building Loan) 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-C11 (the "Certificates") will be issued
pursuant to a Pooling and Servicing Agreement, dated as of April 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 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 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, Class A-5
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"); and (v) the Class Z Certificates.
Only the Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, 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 and
Class X-P Certificates (collectively, the "Non-Offered Certificates"), the
Class Z 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 A-5, 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's names on the books of their respective
depositaries (collectively, the "Depositaries") which in turn will hold such
positions in customers' securities accounts in the Depositaries' names on the
books of DTC. DTC is a limited-purpose trust company organized under the New
York Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code and a "clearing
agency" registered pursuant to Section 17A of the Securities Exchange Act of
1934, as amended. DTC was created to hold securities for its Participants and
to facilitate
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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, 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.
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.
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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 ............................................. $ 56,200,000 5.396%
Class A-2 Certificates ............................................. $ 70,000,000 6.721%
Class A-3 Certificates ............................................. $ 87,715,000 8.422%
Class A-4 Certificates ............................................. $ 52,829,000 5.072%
Class A-5 Certificates ............................................. $454,900,000 43.678%
Class B Certificates ............................................... $ 28,641,000 2.750%
Class C Certificates ............................................... $ 13,018,000 1.250%
Class D Certificates ............................................... $ 23,434,000 2.250%
Class E Certificates ............................................... $ 11,717,000 1.125%
Non-Offered Certificates (other than Class X Certificates) ......... $243,034,309 23.335%
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 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,
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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
$1,041,488,309 (subject to a permitted variance of plus or minus 5.0%).
The Notional Amount of the Class X-P Certificates will generally equal:
(i) until the Distribution Date in October 2004, the sum of (a) the
lesser of $52,751,000 and the Certificate Balance of the Class
A-1 Certificates, (b) the lesser of $160,674,000 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 A-5, Class B, Class C, Class D, Class E, Class F,
Class G, Class H and Class J Certificates;
(ii) after the Distribution Date in October 2004, through and
including the Distribution Date in April 2005, the sum of (a) the
lesser of $48,322,000 and the Certificate Balance of the Class
A-1 Certificates, (b) the lesser of $160,227,000 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 A-5, Class B, Class C, Class D, Class E, Class F,
Class G, Class H and Class J Certificates;
(iii) after the Distribution Date in April 2005, through and including
the Distribution Date in October 2005, the sum of (a) the lesser
of $29,639,000 and the Certificate Balance of the Class A-1
Certificates, (b) the lesser of $157,050,000 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 A-5, Class B, Class C, Class D, Class E, Class F, Class G,
Class H and Class J Certificates;
(iv) after the Distribution Date in October 2005, through and
including the Distribution Date in April 2006, the sum of (a) the
lesser of $8,278,000 and the Certificate Balance of the Class A-1
Certificates, (b) the lesser of $153,363,000 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 A-5, Class B, Class C, Class D, Class E, Class F, Class G,
Class H and Class J Certificates;
(v) after the Distribution Date in April 2006, through and including
the Distribution Date in October 2006, the sum of (a) the lesser
of $57,010,000 and the Certificate Balance of the Class A-2
Certificates, (b) the lesser of $149,455,000 and the Certificate
Balance of the Class A-1A Certificates, (c) the aggregate
Certificate Balances of the Class A-3, Class A-4, Class A-5,
Class B, Class C, Class D, Class E, Class F, Class G and Class H
Certificates and (d) the lesser of $13,852,000 and the
Certificate Balance of the Class J Certificates;
(vi) after the Distribution Date in October 2006, through and
including the Distribution Date in April 2007, the sum of (a) the
lesser of $35,940,000 and the Certificate Balance of the Class
A-2 Certificates, (b) the lesser of $145,595,000 and the
Certificate Balance of the Class A-1A Certificates, (c) the
aggregate Certificate Balances of the Class A-3, Class A-4, Class
A-5, Class B, Class C, Class D, Class E, Class F, Class G and
Class H Certificates and (d) the lesser of $3,833,000 and the
Certificate Balance of the Class J Certificates;
(vii) after the Distribution Date in April 2007, through and including
the Distribution Date in October 2007, the sum of (a) the lesser
of $15,470,000 and the Certificate Balance of the Class A-2
Certificates, (b) the lesser of $141,906,000 and the Certificate
Balance of the Class A-1A Certificates, (c) the aggregate
Certificate Balances of the Class A-3, Class A-4, Class A-5,
Class B, Class C, Class D, Class E, Class F and Class G
Certificates and (d) the lesser of $4,593,000 and the Certificate
Balance of the Class H Certificates;
(viii) after the Distribution Date in October 2007, through and
including the Distribution Date in April 2008, the sum of (a) the
lesser of $83,127,000 and the Certificate Balance of the Class
A-3
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Certificates, (b) the lesser of $138,287,000 and the Certificate
Balance of the Class A-1A Certificates, (c) the aggregate
Certificate Balances of the Class A-4, Class A-5, Class B, Class
C, Class D, Class E and Class F Certificates and (d) the lesser
of $8,315,000 and the Certificate Balance of the Class G
Certificates;
(ix) after the Distribution Date in April 2008, through and including
the Distribution Date in October 2008, the sum of (a) the lesser
of $63,256,000 and the Certificate Balance of the Class A-3
Certificates, (b) the lesser of $134,808,000 and the Certificate
Balance of the Class A-1A Certificates, (c) the aggregate
Certificate Balances of the Class A-4, Class A-5, Class B, Class
C, Class D and Class E Certificates and (d) the lesser of
$13,689,000 and the Certificate Balance of the Class F
Certificates;
(x) after the Distribution Date in October 2008, through and
including the Distribution Date in April 2009, the sum of (a) the
lesser of $44,234,000 and the Certificate Balance of the Class
A-4 Certificates, (b) the lesser of $125,015,000 and the
Certificate Balance of the Class A-1A Certificates, (c) the
aggregate Certificate Balances of the Class A-5, Class B, Class
C, Class D and Class E Certificates and (d) the lesser of
$5,087,000 and the Certificate Balance of the Class F
Certificates;
(xi) after the Distribution Date in April 2009, through and including
the Distribution Date in October 2009, the sum of (a) the lesser
of $26,720,000 and the Certificate Balance of the Class A-4
Certificates, (b) the lesser of $121,838,000 and the Certificate
Balance of the Class A-1A Certificates, (c) the aggregate
Certificate Balances of the Class A-5, Class B, Class C and Class
D Certificates and (d) the lesser of $9,125,000 and the
Certificate Balance of the Class E Certificates;
(xii) after the Distribution Date in October 2009, through and
including the Distribution Date in April 2010, the sum of (a) the
lesser of $9,510,000 and the Certificate Balance of the Class A-4
Certificates, (b) the lesser of $118,726,000 and the Certificate
Balance of the Class A-1A Certificates, (c) the aggregate
Certificate Balances of the Class A-5, Class B, Class C and Class
D Certificates and (d) the lesser of $1,785,000 and the
Certificate Balance of the Class E Certificates;
(xiii) after the Distribution Date in April 2010, through and including
the Distribution Date in October 2010, the sum of (a) the lesser
of $447,928,000 and the Certificate Balance of the Class A-5
Certificates, (b) the lesser of $115,748,000 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 $18,172,000 and the Certificate Balance of the
Class D Certificates;
(xiv) after the Distribution Date in October 2010, through and
including the Distribution Date in April 2011, the sum of (a) the
lesser of $393,398,000 and the Certificate Balance of the Class
A-5 Certificates, (b) the lesser of $73,724,000 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 $11,504,000 and the
Certificate Balance of the Class D Certificates;
(xv) after the Distribution Date in April 2011, $0.
The initial Notional Amount of the Class X-P Certificates will be
$1,010,357,000.
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,
Class
S-229
A-5 and Class A-1A Certificates, which amounts shall be applied pro rata (based
on remaining Class Certificate Balances) to such Classes). 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-1, Class
A-2, Class A-3, Class A-4, Class A-5, Class A-1A, Class B, Class C, Class D,
Class E, Class F, Class G, Class H and Class J 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 (as defined below) for such
date that remains after the required distributions have been made on all the
REMIC Regular Certificates. 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 A-5, Class B, Class C, Class D and Class E Certificates for
each Distribution Date will equal the respective 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 0.0347% 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 April 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
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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 April 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 0.3338% 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 April 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 April 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, 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 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 on such Distribution Date).
S-231
Interest on each Class of REMIC Regular 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 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 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 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 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 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 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 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 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 May 2004.
S-232
DISTRIBUTIONS
General. 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 May 2004.
The Available Distribution Amount. The aggregate amount available for
distributions of interest and principal to Certificateholders on each
Distribution Date (the "Available Distribution Amount") will, in general, equal
the sum of the following amounts:
(a) the total amount of all cash received on 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 Certificates); and
(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.
(b) all P&I Advances made by the Master Servicer or the Trustee with
respect to such Distribution Date;
(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; 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.
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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.
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 (the "Interest Reserve Loans") which accrues interest on an
Actual/360 basis an amount equal to one 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.
Distribution Account. The Trustee will establish and will maintain a
"Distribution Account" in the name 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, will be used to make distributions on the Certificates.
Gain on Sale Reserve Account. The Trustee will establish and will maintain
a "Gain on Sale Reserve Account" in the name 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 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, to the extent of
the Available Distribution Amount, in the following order of priority:
(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, Class A-4 Certificates and Class A-5 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 on such Distribution Date and, to the
extent not previously paid, for all prior Distribution Dates, and
(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 the 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
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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 be 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) after the Class A-1 Certificates, Class A-2 Certificates, Class
A-3 Certificates and Class A-4 Certificates have been retired, to
distributions of principal to the holders of the Class A-5
Certificates in an amount (not to exceed the then outstanding
Certificate Balance of the Class A-5 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, Class A-3 Certificates or Class A-4 Certificates on
such Distribution Date;
(7) 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-5 Certificates have been retired, the Loan
Group 1 Principal Distribution Amount remaining after payments to
the Class A-5 Certificates have been made on such Distribution
Date;
(8) to distributions to the holders of the Class A-1 Certificates,
Class A-2 Certificates, Class A-3 Certificates, Class A-4
Certificates, Class A-5 Certificates and Class A-1A Certificates,
pro rata,
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in accordance with the respective amounts of Realized Losses and
Additional Trust Fund Expenses, if any, previously 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;
(9) 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;
(10) after the Class A-1 Certificates, Class A-2 Certificates, Class
A-3 Certificates, Class A-4 Certificates, Class A-5 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,
Class A-5 Certificates and/or Class A-1A Certificates on such
Distribution Date;
(11) 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;
(12) 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;
(13) 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;
(14) 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;
(15) 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;
(16) 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;
(17) 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;
(18) 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;
(19) 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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(20) 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;
(21) 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;
(22) 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;
(23) 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;
(24) 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;
(25) 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;
(26) 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;
(27) 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;
(28) 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;
(29) 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;
(30) 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;
(31) 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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(32) 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;
(33) 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;
(34) 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;
(35) 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;
(36) 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;
(37) 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;
(38) 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;
(39) 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;
(40) 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;
(41) 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;
(42) 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;
(43) 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;
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(44) 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;
(45) 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;
(46) 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;
(47) 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;
(48) 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;
(49) 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;
(50) 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
(51) 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 (50) 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 "--Termination" below), 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, the Class A-2 Certificates,
the Class A-3 Certificates, the Class A-4 Certificates, the Class A-5
Certificates and the 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.
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 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 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.
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The "Accrued Certificate Interest" in respect of each Class of Sequential
Pay 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 the Starrett-Lehigh Building Loan, prepayment interest
shortfalls will be allocated first to the promissory note related to the
Starrett-Lehigh Building Subordinate Loan and second, pro rata, between the
promissory notes related to the Starrett-Lehigh Building Loan and the
Starrett-Lehigh Building Pari Passu Loan. The portion of such shortfall
allocated to the Starrett-Lehigh Building Loan, net of amounts payable by the
Master Servicer, will be included in the Net Aggregate Prepayment Interest
Shortfall. With respect to the 11 Madison Avenue Loan, prepayment interest
shortfalls will be allocated first to the promissory note related to the most
subordinate of the 11 Madison Avenue Subordinate Loans, second to the
promissory note related to the second most subordinate of the 11 Madison Avenue
Subordinate Loans, third to the promissory note related to the senior most of
the 11 Madison Avenue Subordinate Loans and fourth, pro rata, between the
promissory notes related to the 11 Madison Avenue Loan and the 11 Madison
Avenue Pari Passu Loans. The portion of such shortfall allocated to the 11
Madison Avenue Loan, net of amounts payable by the Master Servicer, will be
included in the Net Aggregate Prepayment Interest Shortfall. With respect to
the Brass Mill Center & Commons Loan, prepayment interest shortfalls will be
allocated first to the promissory note related to the Brass Mill Center &
Commons Subordinate Loan and second to the promissory note related to the Brass
Mill Center & Commons Loan. The portion of such shortfall allocated to the
Brass Mill Center & Commons Loan, net of amounts payable by the Master
Servicer, will be included in the Net Aggregate Prepayment Interest Shortfall.
With respect to the Four Seasons Town Centre Loan, prepayment interest
shortfalls will be allocated first, to the promissory note related to the Four
Seasons Town Centre Subordinate Loan and second, to the promissory note related
to the Four Seasons Town Centre Loan. The portion of such shortfall allocated
to the Four Seasons Town Centre Loan, net of amounts payable by the Master
Servicer, will be included in the Net Aggregate Prepayment Interest Shortfall.
With respect to the Deep Deuce at Bricktown Loan, prepayment interest
shortfalls will be allocated first to the promissory note related to the Deep
Deuce at Bricktown Subordinate Loan and second to the promissory note related
to the Deep Deuce at Bricktown Loan. The portion of such shortfall allocated to
the Deep Deuce at Bricktown Loan, net of amounts payable by the Master
Servicer, will be included in the Net Aggregate Prepayment Interest Shortfall.
Principal Distribution Amount. So long as both the Class A-5 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-5 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
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borrower during the related Collection Period or advanced by the Master
Servicer, the Trustee, the 2004-C10 Master Servicer or the 2004-C10 Trustee, as
applicable:
(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.
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.
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
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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 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 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
(other than the 11 Madison Avenue Loan or the Starrett-Lehigh Building Loan)
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
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(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 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 April 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 REO Mortgage Loan. In the
event that there are two or more such US 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 the holders of the Class Z 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. This subordination provided by the Subordinate
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 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), (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), (c) to the
holders of the Class C Certificates by means of the subordination of the Class
D, the Class E
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and the Non-Offered Certificates (other than the Class A-1A, Class X-C and
Class X-P 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 (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, 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-5 Certificates will receive principal payments only after the
Certificate Balance of the Class A-4 Certificates has been reduced to zero, the
Class A-4 Certificates will receive principal payments only after the
Certificate Balance of the Class A-3 Certificates has been reduced to zero, the
Class A-3 Certificates will receive principal payments only after the
Certificate Balance of the Class A-2 Certificates has 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, Class A-4, Class A-5 and Class A-1A 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-5, 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-5
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-5 Certificates until the Certificate Balance thereof has been reduced
to zero) and to the Class A-1A Certificates, 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, Class A-5 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, Class A-5 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, Class A-5 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, Class A-5 and Class A-1A
Certificates by the Subordinate Certificates.
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 (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
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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,
the Class A-5 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.
Any losses and expenses that are associated with each of the 11 Madison
Avenue Loan and the 11 Madison Avenue Companion Loans will be allocated in
accordance with the terms of the 11 Madison Avenue Intercreditor Agreement
first, to the most subordinate 11 Madison Avenue Subordinate Loan, second, to
the second most subordinate 11 Madison Avenue Subordinate Loan, third, to the
third most subordinate 11 Madison Avenue Subordinate Loan and fourth pro rata,
between the 11 Madison Avenue Loan and the 11 Madison Avenue Pari Passu Loans.
The portion of those losses and expenses allocated to the 11 Madison Avenue
Loan will be allocated among the Certificates in the manner described above.
Any losses and expenses that are associated with each of the
Starrett-Lehigh Building Loan and the Starrett-Lehigh Building Companion Loans
will be allocated in accordance with the terms of the Starrett-Lehigh Building
Intercreditor Agreement first, to the Starrett-Lehigh Building Subordinate Loan
and second, pro rata, between the Starrett-Lehigh Building Loan and the
Starrett-Lehigh Building Pari Passu Loan. The portion of those losses and
expenses allocated to the Starrett-Lehigh Building Loan will be allocated among
the Certificates in the manner described above.
Any losses and expenses that are associated with each of the Brass Mill
Center & Commons Loan, the Brass Mill Center & Commons Subordinate Loan, the
Four Seasons Town Centre Loan, the Four Seasons Town Centre Subordinate Loan,
the Deep Deuce at Bricktown Loan and the Deep Deuce at Bricktown Subordinate
Loan will be allocated in accordance with the terms of the related
Intercreditor Agreement first, to the related Subordinate Companion Loan and
second, to the related Mortgage Loan. The portion of those losses and expenses
allocated to each of the related Mortgage Loans will be allocated among the
Certificates in the manner described above.
"Realized Losses" are losses arising from the inability to collect all
amounts due and owing under any defaulted Mortgage 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 (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 for which a Final Recovery
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Determination has been made includes nonrecoverable Advances (including
interest on such nonrecoverable Advances) to the extent amounts have been paid
from the Principal Distribution Amount pursuant to the Pooling and Servicing
Agreement.
"Additional Trust Fund Expenses" include, among other things, (i) any
Special Servicing Fees, Liquidation Fees, Determination Party fees (in certain
circumstances) 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)
and any Assumed Scheduled Payments, net of related Master Servicing Fees, in
respect of the Mortgage Loans (other than the 11 Madison Avenue Loan and the
Starrett-Lehigh Building Loan, as provided below) 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 the 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, 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 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 otherwise be required without regard to
this sentence, minus the product of (a) such Appraisal Reduction Amount and (b)
the per annum
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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 any
P&I Advances with respect to any Subordinate Companion Loan, 11 Madison Avenue
Companion Loan or any Starrett-Lehigh Building Companion Loan. In general,
neither the Master Servicer nor the Trustee will be required to make any P&I
Advances with respect to the 11 Madison Avenue Loan or the Starrett-Lehigh
Building Loan under the Pooling and Servicing Agreement. Those advances will be
made by the 2004-C10 Master Servicer in accordance with the 2004-C10 Pooling
and Servicing Agreement on generally the same terms and conditions as are
applicable under the Pooling and Servicing Agreement. Furthermore, the amount
of principal and interest advances to be made with respect to the 11 Madison
Avenue Loan and the Starrett-Lehigh Building Loan may be reduced by an
appraisal reduction amount as calculated under the 2004-C10 Pooling and
Servicing Agreement, which amount will be calculated in a manner generally the
same as an Appraisal Reduction Amount. If the 2004-C10 Master Servicer or the
2004-C10 Trustee fails to make a required principal and interest advance on the
11 Madison Avenue Loan or the Starrett-Lehigh Building Loan pursuant to the
2004-C10 Pooling and Servicing Agreement (other than based on a determination
that such advance will not be recoverable out of collections on the 11 Madison
Avenue Loan or the Starrett-Lehigh Building Loan, as the case may be), the
Master Servicer will be required to make the P&I Advances on the 11 Madison
Avenue Loan or the Starrett-Lehigh Building Loan, as the case may be, so long
as it has received all information necessary to make a recoverability
determination. If the Master Servicer fails to make the required P&I Advance,
the Trustee is required to make such P&I Advance, subject to the same
limitations, and with the same rights, as described above for the Master
Servicer. The Master Servicer and the Trustee may conclusively rely on the
non-recoverability determination of the 2004-C10 Master Servicer. If any
principal and interest advances are made with respect to the 11 Madison Avenue
Loan or the Starrett-Lehigh Building Loan under the 2004-C10 Pooling and
Servicing Agreement, or under the Pooling and Servicing Agreement, the party
making that advance will be entitled to be reimbursed with interest thereon as
set forth in the 2004-C10 Pooling and Servicing Agreement, or the Pooling and
Servicing Agreement, as applicable, including in the event that the 2004-C10
Master Servicer has made a principal and interest advance on the 11 Madison
Avenue Loan or the Starrett-Lehigh Building Loan that it or the Special
Servicer subsequently determines is not recoverable from expected collections
on the 11 Madison Avenue Loan or the Starrett-Lehigh Building Loan, as
applicable, from general collections on all Mortgage Loans in this trust.
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 (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 or the Special
Servicer 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.
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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 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 in 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; provided, however,
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 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, the Special 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. In the event that the Master Servicer or
Trustee, as applicable, elects not to recover such non-recoverable Advances
over time, the Master Servicer or Trustee, as applicable, will be required to
give S&P and Moody's at least 15 days notice prior to any such reimbursement,
unless the Master Servicer or Trustee, as applicable, makes a determination not
to give such notice in accordance with the terms of 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 or the
Special Servicer 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 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.
APPRAISAL REDUCTIONS
Other than with respect to the 11 Madison Avenue Loan and the
Starrett-Lehigh Building Loan, upon the earliest of the date (each such date, a
"Required Appraisal Date") that (1) any Mortgage Loan
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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, (3)
any Mortgage 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, (5) a borrower with respect to any Mortgage Loan
becomes subject to any bankruptcy proceeding or (6) a Balloon Payment with
respect to any Mortgage Loan has not been paid on its scheduled maturity date,
unless the Master Servicer has, on or prior to 60 days following the scheduled
maturity 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 Required
Appraisal Loan) or (7) any Mortgage Loan is outstanding 60 days after the third
anniversary of an extension of its scheduled maturity date (each such Mortgage
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
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 less any downward adjustments made by the Special
Servicer (without implying any obligation to do so) based upon its review of
the Appraisal and such other information as the Special Servicer deems
appropriate. 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
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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. With respect to the 11 Madison Avenue Loan and the
Starrett-Lehigh Building Loan, the appraisal reduction amount will be
calculated under the 2004-C10 Pooling and Servicing Agreement in a manner
generally the same as an Appraisal Reduction Amount as described above. See
"SERVICING OF THE MORTGAGE LOANS--Servicing of the 11 Madison Avenue Loan and
the Starrett-Lehigh Building Loan" in this prospectus supplement. 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.
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:
(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 in reduction of the Certificate Balance
thereof;
(ii) the amount of the distribution to the holders of each Class
of REMIC Regular Certificates allocable to Distributable Certificate
Interest;
(iii) the amount of the distribution to the holders of each Class
of REMIC Regular 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 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 (including any such
advances made on the 11 Madison Avenue Loan or Starrett-Lehigh Building
Loan under the 2004-C10 Pooling and Servicing Agreement) 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;
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(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 for such Distribution Date;
(xv) any unpaid Distributable Certificate Interest in respect of
each Class of REMIC Regular Certificates after giving effect to the
distributions made on such Distribution Date;
(xvi) the Pass-Through Rate for each Class of REMIC Regular
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 (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
(including any such advances made on the 11 Madison Avenue Loan or
Starrett-Lehigh Building Loan under the 2004-C10 Pooling and Servicing
Agreement) paid to the Master Servicer or the Trustee (or the 2004-C10
Master Servicer or 2004-C10 Trustee, as applicable) 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;
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(xxvii) the original and then current ratings for each Class of
REMIC Regular 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 R-I Certificates, Class R-II Certificates and Class Z
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.
(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 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.
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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 the 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, 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.
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.
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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 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 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 ............................................. March 15, 2009
Class A-2 ............................................. April 15, 2009
Class A-3 ............................................. April 15, 2011
Class A-4 ............................................. June 15, 2013
Class A-5 ............................................. April 15, 2014
Class B ............................................... April 15, 2014
Class C ............................................... April 15, 2014
Class D ............................................... April 15, 2014
Class E ............................................... April 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
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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.
The "Rated Final Distribution Date" with respect to each Class of Offered
Certificates is the Distribution Date in January 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, 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, 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 and
Class Z 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, Class A-5 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 subject
thereto, and (ii) the purchase of all of the Mortgage Loans and all of the REO
Properties, if any, remaining in the Trust Fund by the Master Servicer, the
Special Servicer 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
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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 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 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.
An exchange by any Certificateholder of all of the then outstanding
Certificates for all of the Mortgage Loans and each REO Property remaining in
the Trust Fund may be made: (i) if the then outstanding Certificates are held
by a single Certificateholder, (ii) after the Class A-1, Class A-2, Class A-3,
Class A-4, Class A-5, Class A-1A, Class B, Class C, Class D and Class E
Certificates have been paid in full, and (iii) by giving written notice to each
of the parties to the Pooling and Servicing Agreement no later than 30 days
prior to the anticipated date of exchange. In the event that such
Certificateholder elects to exchange its Certificates for all of the Mortgage
Loans and each REO Property remaining in the Trust Fund, such Certificateholder
must deposit in the Certificate Account in immediately available funds in an
amount equal to all amounts then due and owing to the Master Servicer, the
Special Servicer, the Trustee, the Certificate Registrar, the REMIC
Administrator and their respective agents under the Pooling and Servicing
Agreement.
For purposes of the foregoing provisions relating to termination of the
trust, with respect to the 11 Madison Avenue Loan and the Starrett-Lehigh
Building Loan, the term REO Property refers to the trust's beneficial interest
in the related REO Property under the 2004-C10 Pooling and Servicing Agreement.
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
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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 will not be entitled to any
fee with respect to 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.
The Trustee is also authorized to invest or direct the investment of funds
held in the Distribution Account, the Additional Interest Account and the Gain
on Sale Reserve 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.
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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 to the Class A-1 Certificates until the Certificate Balance thereof is
reduced to zero, then, to the Class A-2 Certificates until the Certificate
Balance thereof is 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-5 Certificates until the Certificate Balance thereof
has been reduced to zero. The Loan Group 2 Principal Distribution Amount (and,
after the Class A-5 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, the Class E
Certificates and then the Non-Offered Certificates (other than the Class A-1A,
Class X-C and Class X-P 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, Class
A-5 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, Class A-4 and Class A-5 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 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.
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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 or the Special Servicer 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, 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, Class A-5 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 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 is distributed to 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 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. 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,
Class A-5 and Class A-1A Certificates (in reduction of the Certificate Balance
of each such Class), 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 Certificates, Class A-2 Certificates, Class A-3 Certificates, Class
A-4 Certificates, Class A-5 Certificates and Class A-1A Certificates (and the
Class X Certificates with respect to shortfalls of interest). As more
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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.
Pass-Through Rate. The yield on the Class A-5, Class A-1A, 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 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 limited
by, based upon, or equal to, the Weighted Average Net Mortgage Rate of the
Mortgage Loans.
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, 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 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.
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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 A-5, 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 is reduced to
zero, then, to the Class A-2 Certificates until the Certificate Balance thereof
is 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-5 Certificates until the Certificate Balance thereof has been
reduced to zero. The Loan Group 2 Principal Distribution Amount (and, after the
Class A-5 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
A-5, 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 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.
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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, (xii) the borrowers under any Mortgage Loans which permit the
borrower to choose between defeasance or a yield maintenance charge choose to
be subject to a yield maintenance charge, (xiii) distributions on the
Certificates are made on the 15th day (each assumed to be a business day) of
each month, commencing in May 2004, and (xiv) the Closing Date for the sale of
the Offered Certificates is April 30, 2004.
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
4/15/05 .................................. 85 85 85 85 85
4/15/06 .................................. 68 68 68 68 68
4/15/07 .................................. 46 46 46 46 46
4/15/08 .................................. 22 22 22 22 22
4/15/09 .................................. 0 0 0 0 0
Weighted average life (in years) ......... 2.70 2.70 2.70 2.70 2.69
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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
4/15/05 .................................. 100 100 100 100 100
4/15/06 .................................. 100 100 100 100 100
4/15/07 .................................. 100 100 100 100 100
4/15/08 .................................. 100 100 100 100 100
4/15/09 .................................. 0 0 0 0 0
Weighted average life (in years) ......... 4.90 4.90 4.88 4.87 4.69
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
4/15/05 .................................. 100 100 100 100 100
4/15/06 .................................. 100 100 100 100 100
4/15/07 .................................. 100 100 100 100 100
4/15/08 .................................. 100 100 100 100 100
4/15/09 .................................. 100 100 100 100 100
4/15/10 .................................. 82 82 82 82 82
4/15/11 .................................. 0 0 0 0 0
Weighted average life (in years) ......... 6.50 6.50 6.49 6.47 6.35
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
4/15/05 .................................. 100 100 100 100 100
4/15/06 .................................. 100 100 100 100 100
4/15/07 .................................. 100 100 100 100 100
4/15/08 .................................. 100 100 100 100 100
4/15/09 .................................. 100 100 100 100 100
4/15/10 .................................. 100 100 100 100 100
4/15/11 .................................. 100 100 100 100 100
4/15/12 .................................. 69 69 69 69 69
4/15/13 .................................. 3 3 3 3 3
4/15/14 .................................. 0 0 0 0 0
Weighted average life (in years) ......... 8.29 8.29 8.29 8.28 8.24
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PERCENTAGES OF THE CLOSING DATE CERTIFICATE
BALANCE OF THE CLASS A-5 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
4/15/05 .................................. 100 100 100 100 100
4/15/06 .................................. 100 100 100 100 100
4/15/07 .................................. 100 100 100 100 100
4/15/08 .................................. 100 100 100 100 100
4/15/09 .................................. 100 100 100 100 100
4/15/10 .................................. 100 100 100 100 100
4/15/11 .................................. 100 100 100 100 100
4/15/12 .................................. 100 100 100 100 100
4/15/13 .................................. 100 100 100 100 100
4/15/14 .................................. 0 0 0 0 0
Weighted average life (in years) ......... 9.77 9.76 9.74 9.71 9.53
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
4/15/05 .................................. 100 100 100 100 100
4/15/06 .................................. 100 100 100 100 100
4/15/07 .................................. 100 100 100 100 100
4/15/08 .................................. 100 100 100 100 100
4/15/09 .................................. 100 100 100 100 100
4/15/10 .................................. 100 100 100 100 100
4/15/11 .................................. 100 100 100 100 100
4/15/12 .................................. 100 100 100 100 100
4/15/13 .................................. 100 100 100 100 100
4/15/14 .................................. 0 0 0 0 0
Weighted average life (in years) ......... 9.96 9.96 9.96 9.96 9.71
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
4/15/05 .................................. 100 100 100 100 100
4/15/06 .................................. 100 100 100 100 100
4/15/07 .................................. 100 100 100 100 100
4/15/08 .................................. 100 100 100 100 100
4/15/09 .................................. 100 100 100 100 100
4/15/10 .................................. 100 100 100 100 100
4/15/11 .................................. 100 100 100 100 100
4/15/12 .................................. 100 100 100 100 100
4/15/13 .................................. 100 100 100 100 100
4/15/14 .................................. 0 0 0 0 0
Weighted average life (in years) ......... 9.96 9.96 9.96 9.96 9.79
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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
4/15/05 .................................. 100 100 100 100 100
4/15/06 .................................. 100 100 100 100 100
4/15/07 .................................. 100 100 100 100 100
4/15/08 .................................. 100 100 100 100 100
4/15/09 .................................. 100 100 100 100 100
4/15/10 .................................. 100 100 100 100 100
4/15/11 .................................. 100 100 100 100 100
4/15/12 .................................. 100 100 100 100 100
4/15/13 .................................. 100 100 100 100 100
4/15/14 .................................. 0 0 0 0 0
Weighted average life (in years) ......... 9.96 9.96 9.96 9.96 9.79
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
4/15/05 .................................. 100 100 100 100 100
4/15/06 .................................. 100 100 100 100 100
4/15/07 .................................. 100 100 100 100 100
4/15/08 .................................. 100 100 100 100 100
4/15/09 .................................. 100 100 100 100 100
4/15/10 .................................. 100 100 100 100 100
4/15/11 .................................. 100 100 100 100 100
4/15/12 .................................. 100 100 100 100 100
4/15/13 .................................. 100 100 100 100 100
4/15/14 .................................. 0 0 0 0 0
Weighted average life (in years) ......... 9.96 9.96 9.96 9.96 9.79
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.
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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 (1) the making of appropriate elections,
(2) compliance with all provisions of the Pooling and Servicing Agreement, (3)
compliance with the 2004-C10 Pooling and Servicing Agreement and other related
documents and any amendments thereto and the continued qualification of the
REMICs formed thereunder and (4) compliance with applicable changes in the
Code, 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
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 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.
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 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 prepayment assumption that will be used in determining the rate of
accrual of original issue discount, if any, or amortization of amortizable bond
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 if such Offered Certificate were treated as
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.
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 19.7%
by initial Cut-Off Date Pool Balance) and, accordingly, investment in the
Offered Certificates may not be
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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 US 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.
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 US 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 2002-19
(March 28, 2002) to J.P. Morgan Securities Inc. ("JPMorgan Securities"),and PTE
89-88 (October 17, 1989) to Goldman, Sachs & Co. (each, 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) JPMorgan 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, JPMorgan
Securities or Goldman, Sachs
S-267
& Co. and (f) any member of the underwriting syndicate or selling group of
which Wachovia Securities, Citigroup Securities, JPMorgan 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,
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
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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 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.
Persons who have an ongoing relationship with the Teachers' Retirement
System of Illinois or the New York State Common Retirement Fund, each of which
is a governmental plan, should note that these plans own equity interests in
certain borrowers. Such persons should consult with counsel regarding whether
this relationship would affect their ability to purchase and hold Certificates.
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
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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.
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, JPMorgan Securities and Goldman, Sachs & Co.
(collectively, the "Underwriters"), the Depositor has agreed to sell to each of
Wachovia Securities, Citigroup Securities, JPMorgan Securities and Goldman,
Sachs & Co., and each of Wachovia Securities, Citigroup Securities, JPMorgan
Securities and 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%:
CLASS WACHOVIA SECURITIES CITIGROUP SECURITIES JPMORGAN SECURITIES GOLDMAN, SACHS & CO.
- -------------------- --------------------- ---------------------- --------------------- ---------------------
Class A-1 .......... $ 52,050,613 $ 4,149,387
Class A-2 .......... $ 64,831,724 $ 5,168,276
Class A-3 .......... $ 81,238,782 $ 6,476,218
Class A-4 .......... $ 48,928,502 $ 3,900,498
Class A-5 .......... $ 375,005,218 $ 29,894,782 $25,000,000 $25,000,000
Class B ............ $ 26,526,363 $ 2,114,637
Class C ............ $ 12,056,848 $ 961,152
Class D ............ $ 21,703,809 $ 1,730,191
Class E ............ $ 10,851,905 $ 865,095
Wachovia Securities and Citigroup Securities are acting as co-lead
managers for this offering and JPMorgan Securities and Goldman, Sachs & Co. are
acting as co-managers for this offering. Citigroup Securities is acting as sole
bookrunner with respect to 16.90% of the Class A-5 Certificates. Wachovia
Securities is acting as sole bookrunner with respect to the remainder of the
Class A-5 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
$805,429,505, 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
S-270
Underwriter. In connection with the purchase and sale of the Offered
Certificates, Wachovia Securities, Citigroup Securities, JPMorgan 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.
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.
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 Dechert LLP, Charlotte, North Carolina.
S-271
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 A-5 ................................................. 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.
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-272
INDEX OF DEFINED TERMS
PAGE
11 Madison Avenue Companion Loans .........................................S-101
11 Madison Avenue Control Appraisal Period ................................S-219
11 Madison Avenue Intercreditor Agreement .................................S-101
11 Madison Avenue Loan .............................................S-100, S-165
11 Madison Avenue Pari Passu I Loan .......................................S-165
11 Madison Avenue Pari Passu III Loan .....................................S-165
11 Madison Avenue Pari Passu IV Loan ......................................S-165
11 Madison Avenue Pari Passu Loans ........................................S-100
11 Madison Avenue Senior Loans ............................................S-101
11 Madison Avenue Subordinate Loans ................................S-101, S-165
11 Madison Avenue Whole Loan ..............................................S-101
1% ( ) ....................................................................S-114
2004-C10 Controlling Class Representative .................................S-104
2004-C10 Master Servicer ..................................................S-104
2004-C10 Pooling and Servicing Agreement ..................................S-104
2004-C10 Special Servicer .................................................S-104
2004-C10 Trustee ..........................................................S-104
2% ( ) ....................................................................S-114
3% ( ) ....................................................................S-114
Accrued Certificate Interest ..............................................S-240
Actual/360 basis ...........................................................S-95
Additional Interest ........................................................S-95
Additional Interest Account ...............................................S-234
Additional Trust Fund Expenses ............................................S-246
Administrative Cost Rate ..................................................S-113
Advance ...................................................................S-248
Amargosa Commons Shopping Center Loan .....................................S-182
Anticipated Repayment Date .................................................S-95
Aon .......................................................................S-165
Appraisal Reduction Amount ................................................S-249
ARC .......................................................................S-179
ARC Pool 10-1 Loan ........................................................S-179
ARD Loans ..................................................................S-95
Artesia .............................................................S-94, S-199
Artesia Mortgage Loans ....................................................S-199
Assumed Final Distribution Date ...........................................S-254
Assumed Scheduled Payment .................................................S-242
Available Distribution Amount .............................................S-233
Balloon Loans ..............................................................S-95
Balloon Payment ............................................................S-95
Bank of America ...........................................................S-169
Bank of America Tower Loan ................................................S-169
Bay City Mall Loan ........................................................S-185
Bed, Bath & Beyond ........................................................S-182
Belk ......................................................................S-161
Brass Mill Center & Commons Cash Collateral Account .......................S-157
Brass Mill Center & Commons Casualty Insurance Policy .....................S-154
Brass Mill Center & Commons COREA .........................................S-154
Brass Mill Center & Commons Insurance Policies ............................S-154
Brass Mill Center & Commons Intercreditor Agreement .......................S-102
Brass Mill Center & Commons Loan ...................................S-100, S-153
Brass Mill Center & Commons Lockbox .......................................S-157
Brass Mill Center & Commons Lockbox Bank ..................................S-157
Brass Mill Center & Commons Lockbox Period ................................S-157
Brass Mill Center & Commons Mortgage ......................................S-153
Brass Mill Center & Commons Note ..........................................S-153
Brass Mill Center & Commons Permitted Owner ...............................S-155
Brass Mill Center & Commons Qualified Pledgee .............................S-157
Brass Mill Center & Commons Qualified Transferee ..........................S-156
Brass Mill Center & Commons Restoration ...................................S-154
Brass Mill Center & Commons Sponsors ......................................S-156
Brass Mill Center & Commons Subordinate Loan ..............................S-100
Brass Mill Center & Commons Subordinate Note ..............................S-153
Brass Mill Center & Commons Whole Loan..............................S-100, S-153
Breach ....................................................................S-207
Burlington ................................................................S-154
Capital Imp. Reserve ......................................................S-114
Certificate Balance .......................................................S-227
Certificate Deferred Interest .............................................S-229
Certificateholders ........................................................S-233
Certificates ..............................................................S-225
Circuit City ..............................................................S-182
Citigroup ..................................................................S-94
Citigroup Mortgage Loans ..................................................S-199
Citigroup Securities ......................................................S-267
Class .....................................................................S-225
Class A Certificates ......................................................S-225
Class X Certificates ......................................................S-225
Class X-C Components ......................................................S-230
Class X-C Strip Rate ......................................................S-230
Class X-P Components ......................................................S-231
Class X-P Strip Rate ......................................................S-231
Clearstream ...............................................................S-225
Clearstream Participants ..................................................S-227
CMSA ......................................................................S-252
CMSA Bond File ............................................................S-252
CMSA Collateral Summary File ..............................................S-252
CMSA Loan Periodic Update File ............................................S-252
CMSA Property File ........................................................S-252
Co-Lender Loans ...........................................................S-101
Collection Period .........................................................S-232
Companion Loans ...........................................................S-101
Compensating Interest Payment .............................................S-215
CompUSA ...................................................................S-161
Condemnation Rights .......................................................S-100
Constant Prepayment Rate ..................................................S-261
S-273
PAGE
Controlling Class .........................................................S-210
Controlling Class Representative ..........................................S-210
Core Material Documents ...................................................S-202
Corrected Mortgage Loan ...................................................S-213
CPR .......................................................................S-261
Crossed Group .............................................................S-207
Crossed Loan ..............................................................S-207
CSFB ......................................................................S-165
Custodian .................................................................S-201
Cut-Off Date ...............................................................S-93
Cut-Off Date Balance .......................................................S-93
Cut-Off Date Group 1 Balance ...............................................S-93
Cut-Off Date Group 2 Balance ...............................................S-93
Cut-Off Date Group Balances ................................................S-93
Cut-Off Date LTV ..........................................................S-113
Cut-Off Date LTV Ratio ....................................................S-113
Cut-Off Date Pool Balance ..................................................S-93
D ( ) .....................................................................S-114
Deep Deuce at Bricktown Intercreditor Agreement ...........................S-102
Deep Deuce at Bricktown Loan ..............................................S-101
Deep Deuce at Bricktown Subordinate Loan ..................................S-101
Deep Deuce at Bricktown Whole Loan ........................................S-101
Defaulted Mortgage Loan ...................................................S-222
Defeasance ................................................................S-114
Defeasance Collateral ......................................................S-97
Defect ....................................................................S-207
Depositaries ..............................................................S-225
Determination Date ........................................................S-232
Determination Party .......................................................S-206
Discount Rate .............................................................S-243
Distributable Certificate Interest ........................................S-239
Distribution Account ......................................................S-234
Distribution Date .........................................................S-233
Distribution Date Statement ...............................................S-250
Dress Barn ................................................................S-188
DSC Ratio .................................................................S-111
DSCR ......................................................................S-111
DTC .......................................................................S-225
Due Date ...................................................................S-95
Enhancement Insurer .......................................................S-100
ERISA .....................................................................S-267
Euroclear Operator ........................................................S-225
Euroclear Participants ....................................................S-227
Euroclear System ..........................................................S-225
Eurohypo ...................................................................S-94
Eurohypo Mortgage Loans ...................................................S-199
Excess Cash Flow ...........................................................S-95
Excluded Plan .............................................................S-269
Exemption .................................................................S-267
Exemptions ................................................................S-267
FBI .......................................................................S-172
Final Recovery Determination ..............................................S-251
Fitch .....................................................................S-268
Form 8-K ..................................................................S-208
Four Seasons Town Centre Intercreditor Agreement ..........................S-102
Four Seasons Town Centre Loan ......................................S-100, S-161
Four Seasons Town Centre Subordinate Loan ..........................S-100, S-161
Four Seasons Town Centre Whole Loan .......................................S-100
Fully Amortizing Loan ......................................................S-95
Gain on Sale Reserve Account ..............................................S-234
GGP .........................................................S-153, S-161, S-185
Goodrich ..................................................................S-185
Holland & Knight ..........................................................S-169
Hoyts .....................................................................S-154
IBM .......................................................................S-166
Indirect Participants .....................................................S-226
Intercreditor Agreements ..................................................S-102
Interest Accrual Period ...................................................S-232
Interest Reserve Account ..................................................S-234
Interest Reserve Amount ...................................................S-234
Interest Reserve Loans ....................................................S-234
IRS .......................................................................S-266
JCPenney ...........................................................S-153, S-161
JPMorgan Securities .......................................................S-267
Kohl's ....................................................................S-188
L ( ) .....................................................................S-114
Liquidation Fee ...........................................................S-215
LNR .......................................................................S-210
Loan Group 1 ...............................................................S-93
Loan Group 1 Principal Distribution Amount ................................S-240
Loan Group 2 ...............................................................S-93
Loan Group 2 Principal Distribution Amount ................................S-240
Loan Groups ................................................................S-93
Loan Pair .................................................................S-208
Loan per Sq. Ft., Unit, Pad or Room .......................................S-113
Lockout ...................................................................S-114
Lockout Period ............................................................S-114
LTV at ARD or Maturity ....................................................S-113
Majority Subordinate Certificateholder ....................................S-255
Master Servicer ...........................................................S-209
Master Servicing Fee ......................................................S-214
Master Servicing Fee Rate .................................................S-214
Maturity Date LTV Ratio ...................................................S-113
McGuireWoods ..............................................................S-169
Moody's ...................................................................S-268
Mortgage ...................................................................S-93
Mortgage Deferred Interest ................................................S-229
Mortgage File .............................................................S-201
S-274
PAGE
Mortgage Loan ..............................................................S-93
Mortgage Loan Purchase Agreement ..........................................S-199
Mortgage Loan Purchase Agreements .........................................S-199
Mortgage Loans ......................................................S-93, S-214
Mortgage Note ..............................................................S-93
Mortgage Pool ..............................................................S-93
Mortgage Rate ..............................................................S-95
Mortgaged Property .........................................................S-93
NA ........................................................................S-114
NAV .......................................................................S-114
Net Aggregate Prepayment Interest Shortfall ...............................S-239
Net Mortgage Rate .........................................................S-232
Non-Offered Certificates ..................................................S-225
Nonrecoverable P&I Advance ................................................S-247
Notional Amount ...........................................................S-228
NRSRO .....................................................................S-268
O ( ) ....................................................................S-114
Occupancy Percentage ......................................................S-114
Offered Certificates ......................................................S-225
OID Regulations ...........................................................S-266
Omnicom ...................................................................S-166
Omnimedia .................................................................S-172
Open Period ...............................................................S-114
Option Price ..............................................................S-222
Original Term to Maturity .................................................S-114
Participants ..............................................................S-225
Party in Interest .........................................................S-268
Periodic Payments ..........................................................S-95
P&I Advance ...............................................................S-246
Plan ......................................................................S-267
Pooling and Servicing Agreement ...........................................S-225
Prepayment Interest Excess ................................................S-215
Prepayment Interest Shortfall .............................................S-214
Prepayment Premiums .......................................................S-242
Price .....................................................................S-156
Primary Collateral ........................................................S-207
Principal Distribution Amount .............................................S-240
Privileged Person .........................................................S-253
PTE .......................................................................S-267
Purchase Option ...........................................................S-222
Purchase Price ............................................................S-202
Qualified Appraiser .......................................................S-249
Qualified Substitute Mortgage Loan ........................................S-203
Rated Final Distribution Date .............................................S-255
Rating Agencies ...........................................................S-272
Realized Losses ...........................................................S-245
Reimbursement Rate ........................................................S-248
REIT ......................................................................S-266
Related Proceeds ..........................................................S-247
Remaining Amortization Term ...............................................S-114
Remaining Term to Maturity ................................................S-114
REMIC ......................................................................S-30
REMIC Administrator .......................................................S-257
REMIC Regular Certificates ................................................S-225
REMIC Regulations .........................................................S-265
REMIC Residual Certificates ...............................................S-225
Rental Property ...........................................................S-112
REO Extension .............................................................S-223
REO Mortgage Loan .........................................................S-242
REO Property ..............................................................S-212
Replacement Reserve .......................................................S-114
Required Appraisal Date ...................................................S-248
Required Appraisal Loan ...................................................S-249
Restricted Group ..........................................................S-268
Restricted Servicer Reports ...............................................S-252
Rules .....................................................................S-226
Scenario ..................................................................S-261
Scheduled Payment .........................................................S-241
Sears ..............................................................S-153, S-185
Sequential Pay Certificates ...............................................S-225
Servicing Fees ............................................................S-215
Servicing Standard ........................................................S-208
Servicing Transfer Event ..................................................S-212
Shoppes at Gilbert Commons Loan ...........................................S-188
Similar Law ...............................................................S-267
S&P .......................................................................S-268
Special Servicer ..........................................................S-210
Special Servicing Fee .....................................................S-215
Special Servicing Fee Rate ................................................S-215
Specially Serviced Mortgage Loans .........................................S-213
Specially Serviced Trust Fund Assets ......................................S-213
Sports Authority ..........................................................S-188
Starrett-Lehigh Building Companion Loans ..................................S-101
Starrett-Lehigh Building Control Appraisal Period .........................S-107
Starrett-Lehigh Building Intercreditor Agreement ..........................S-101
Starrett-Lehigh Building Loan ......................................S-100, S-172
Starrett-Lehigh Building Loan Option Price ................................S-108
Starrett-Lehigh Building Pari Passu Loan ...........................S-101, S-172
Starrett-Lehigh Building Purchase Option ..................................S-107
Starrett-Lehigh Building Representative ...................................S-211
Starrett-Lehigh Building Senior Loans .....................................S-101
Starrett-Lehigh Building Subordinate Loan ..........................S-101, S-172
Starrett-Lehigh Building Whole Loan .......................................S-101
Stated Principal Balance ..................................................S-232
Subordinate Certificates ..................................................S-225
Subordinate Companion Loans ...............................................S-101
Substitution Shortfall Amount .............................................S-202
Table Assumptions ..................................................S-254, S-262
Terms and Conditions ......................................................S-227
TI/LC Reserve .............................................................S-114
S-275
PAGE
TJX .......................................................................S-182
TRS .......................................................................S-156
Trust Fund ................................................................S-225
Trustee Fee ...............................................................S-257
Underwriter ...............................................................S-267
Underwriters ..............................................................S-270
Underwriting Agreement ....................................................S-270
Underwritten Replacement Reserves .........................................S-113
Unrestricted Servicer Reports .............................................S-252
Updated Collection Report .................................................S-252
US Customs Service ........................................................S-172
Voting Rights .............................................................S-255
Wachovia ...................................................................S-94
Wachovia Mortgage Loans ...................................................S-199
Wachovia Securities .......................................................S-267
Weighted Average Net Mortgage Rate ........................................S-232
weighted averages .........................................................S-113
Wells Fargo ...............................................................S-256
Westland Mall Loan ........................................................S-176
Westland Release Parcel ...................................................S-176
Westland Substitute Parcel ................................................S-176
Workout Fee ...............................................................S-215
Year Built ................................................................S-113
Yield Maintenance Charges .................................................S-242
YM ( ) ....................................................................S-114
S-276
WACHOVIA BANK COMMERCIAL MORTGAGE TRUST SERIES 2004-C11
ANNEX A-1
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS AND MORTGAGED PROPERTIES
MORTGAGE LOAN
LOAN GROUP
NUMBER NUMBER PROPERTY NAME ADDRESS
- ------------------------------------------------------------------------------------------------------------------------------------
1 1 Brass Mill Center & Commons 495 Union Street
2 1 Four Seasons Town Centre 400 Four Seasons Town Centre
3 1 11 Madison Avenue (1) 11 Madison Avenue
4 1 Bank of America Tower 50 North Laura Street
5 1 Starrett-Lehigh Building (1) 601 West 26th Street
6 1 Westland Mall 1675 West 49th Street
7 2 ARC 10-1 Pool Various
7.1 Siesta Lago 4750 Siesta Lago Drive
7.2 Lakeview Estates 2600 North Hill Field Road
7.3 Spring Valley Village 36 Hopf Drive
7.4 Washington Mobile Estates 1450 North Washington Boulevard
7.5 Breazeale 2458 North 9th Street
7.6 Havenwood 106 Havenwood Drive
7.7 Connelly Village 331 James Street
7.8 Lido Estates 2547 East Avenue I
8 1 Amargosa Commons Shopping Center 39331-39523 10th Street West
9 1 Bay City Mall 4101 East Wilder Road
10 1 The Shoppes at Gilbert Commons 1121 East Baseline Road
11 1 ARC 5-4 Pool Various
11.1 Riverdale (Colonial Coach) 8000 Highway 85
11.2 Summit Oaks 6812 Randoll Mill Road
11.3 Marnelle 1512 Highway 54 West
11.4 Siesta Manor 35 San Aymores
11.5 Tanglewood 100 Hickory Hills
11.6 Belaire 1550 Yellowstone Avenue
11.7 Hidden Oaks 5306 Rita Kay Lane
11.8 Park Avenue Estates 1400 East Kay Avenue
12 1 Valley Corporate Center 591 Camino De La Reina
13 1 Home Depot - Colma, CA 2 Colma Boulevard
14 2 Essex Place Apartments 8900 West 102nd Terrace
15 1 University Mall 1701 McFarland Boulevard East
16 1 AFRT 9 Pool Various
16.1 Bank of America Office Building - Fort Meyers, FL 3210 Cleveland Avenue
16.2 Capital City Bank - Macon, GA 455 Walnut
16.3 Bank of America Office Building - Reno, NV 5905 South Virginia Street
16.4 Central Carolina Bank - Morganton, NC 300 North Green Street
16.5 Bank of America and Motor Bank Office Building - Nassau Bay, TX 2200 NASA Road One
16.6 Capital City Bank - Palatka, FL 200 Reid Street
16.7 Regions Bank - Hilton Head, SC 2 Lafayette Place
16.8 Citibank - Pembroke Pines, FL 18395 Pines Boulevard
16.9 AmSouth Bank - Winter Park, FL 2200 Aloma Avenue
17 2 Deep Deuce at Bricktown 314 Northeast 2nd Street
18 1 Poway Shopping Center 12900 Gregg Court
19 1 Sports Authority Corporate Headquarters 1050 and 1090 West Hampden Avenue
20 2 Timberwood Apartments 13711 East Richthofen Circle
21 1 Covina Technology Center 1325 - 1411 North Grand Avenue
22 2 Centennial Park Apartments 12000 Hayes
23 1 Harrison Court 761 Harrison Avenue
24 2 Rancho Montana 2000 East Roger Road
25 2 Town Center Apartments 6233 West 120th Street
26 1 10400 Eaton Place 10400 Eaton Place
27 2 Stonegate Apartments 5417 Mack Road
28 2 Cedar Ridge Apartments 4945 Mack Road
29 1 Sam's Club Plaza 5100 Cleveland Avenue
30 1 Oliver Creek Crossing Shopping Center Atlanta Highway at McLemore Drive
31 1 Colonial Heritage Mobile Home Park 861 East Butler Avenue
32 2 Monaco South Apartments 2280 South Monaco Parkway
33 1 Punta Gorda Crossings 2310 Tamiami Trail
34 1 University District Building 1107 Northeast 45th Street
35 1 Top Food & Drug - Olympia, WA 1313 Cooper Point Road SW
36 1 Plaza 75 Shopping Center 7331-7343 Indian School Road
37 1 AFRT 8 Pool Various
37.1 Sovereign Bank/U.S. Post Office - Avondale, PA 102 Pennsylvania Avenue
37.2 Unity Bank - Edison Township, NJ 1746 Oak Tree Road
37.3 Keystone Savings Bank - Emmaus, PA 235 Main Street
37.4 Unity Bank - Highland Park, NJ 104 Raritan Avenue
37.5 Sovereign Bank - Phoenixville, PA 124 South Main Street
37.6 Valley National Bank - Scotch Plains, NJ 1922 Westfield Avenue
37.7 Unity Bank - South Plainfield, NJ 2426 Plainfield Avenue
37.8 Fleet Bank - Warminster, PA 473 York Road
38 1 The Shoppes at Bell Creek 8319 Bell Creek Road
39 2 North Park Village Condominiums 55 West Center Street
40 1 Bethpage Plaza Shopping Center 548-598 Stewart Avenue
41 1 Carolina Self Storage Pool Various
41.1 Carolina Self Storage - Orangeburg, SC 2950 North Road
41.2 Carolina Self Storage - Florence, SC 2201 Second Loop Road
41.3 Carolina Self Storage - Sumter, SC (North Guignard Drive) 1143 North Guignard Drive
41.4 Carolina Self Storage - Sumter, SC (Broad Street) 3785 Broad Street
42 1 Walgreens - New Haven, CT 88 York Street
43 1 Fresh Market Shopping Center 9375 Poplar Avenue
44 2 Carisbrooke Apartments - Phase II 2403-2404 Heathrow, 2404 Chiswick & 21
Thatcham Drive
45 1 Walgreens - Harrison, OH 1032 Harrison Avenue
46 1 Heritage Square Shopping Center 900-1030 North Norma Street
47 1 Best Buy - Tacoma, WA 2214 South 48th Street
48 1 Walgreens - Cincinnati, OH 4241 Glenway Avenue
49 1 The Hill Building 114 Virginia Street
50 2 Colonial Court Townhome Apartments 58 Colonial Court
51 1 Rite Aid - Asbury Park, NJ 901 Main Street
52 1 The Shops at Summerwood 13055 and 13155 West Lake Houston Parkway
53 1 Thornydale Self-Storage 6955 North Thornydale Road
54 1 Pirate Plaza Shopping Center 1113 East Sinton Street
MORTGAGE
LOAN ZIP CROSS COLLATERALIZED AND
NUMBER CITY STATE CODE CROSS DEFAULTED LOAN FLAG
- ------------------------------------------------------------------------------------------------------------------------
1 Waterbury CT 06706
2 Greensboro NC 27407
3 New York NY 10010
4 Jacksonville FL 32202
5 New York NY 10001
6 Hialeah FL 33012
7 Various Various Various
7.1 Kissimmee FL 34746
7.2 Layton UT 84041
7.3 Nanuet NY 10954
7.4 Ogden UT 84404
7.5 Laramie WY 82072
7.6 Pompano Beach FL 33064
7.7 Connelly NY 12417
7.8 Lancaster CA 93535
8 Palmdale CA 93551
9 Bay City MI 48706
10 Gilbert AZ 85233
11 Various Various Various
11.1 Riverdale GA 30296
11.2 Fort Worth TX 76120
11.3 Fayetteville GA 30214
11.4 Fenton MO 63026
11.5 Huntsville TX 77320
11.6 Pocatello ID 83201
11.7 Fort Worth TX 76119
11.8 Haysville KS 67060
12 San Diego CA 92108
13 Colma CA 94014
14 Overland Park KS 66212
15 Tuscaloosa AL 35404
16 Various Various Various AFRT Portfolio
16.1 Fort Myers FL 33901
16.2 Macon GA 31201
16.3 Reno NV 89502
16.4 Morganton NC 28655
16.5 Nassau Bay TX 77058
16.6 Palatka FL 32177
16.7 Hilton Head SC 29926
16.8 Pembroke Pines FL 33029
16.9 Winter Park FL 32792
17 Oklahoma City OK 73104
18 Poway CA 92064
19 Englewood CO 80110
20 Aurora CO 80011
21 Covina CA 91722
22 Overland Park KS 66213
23 Boston MA 02118
24 Tucson AZ 85719
25 Overland Park KS 66209
26 Fairfax VA 22030
27 Sacramento CA 95823 Stonegate Apartments/Cedar Ridge Apartments Portfolio
28 Sacramento CA 95823 Stonegate Apartments/Cedar Ridge Apartments Portfolio
29 Fort Myers FL 33907
30 Montgomery AL 36107
31 Doylestown PA 18901
32 Denver CO 80222
33 Punta Gorda FL 33950
34 Seattle WA 98105
35 Olympia WA 98502
36 Phoenix AZ 85043
37 Various Various Various AFRT Portfolio
37.1 Avondale PA 19311
37.2 Edison Township NJ 08820
37.3 Emmaus PA 18049
37.4 Highland Park NJ 08904
37.5 Phoenixville PA 19460
37.6 Scotch Plains NJ 07076
37.7 South Plainfield NJ 07080
37.8 Warminster PA 18974
38 Mechanicsville VA 23116
39 North Salt Lake UT 84054
40 Bethpage NY 11714
41 Various SC Various
41.1 Orangeburg SC 29118
41.2 Florence SC 29501
41.3 Sumter SC 29150
41.4 Sumter SC 29154
42 New Haven CT 06511
43 Germantown TN 38138
44 Champaign IL 61820
45 Harrison OH 45030
46 Ridgecrest CA 93555
47 Tacoma WA 98409
48 Cincinnati OH 45236
49 Richmond VA 23219
50 Colonial Heights VA 23834
51 Asbury Park NJ 07712
52 Houston TX 77044
53 Tucson AZ 85741
54 Sinton TX 78387
MORTGAGE GENERAL SPECIFIC
LOAN LOAN PROPERTY PROPERTY ORIGINAL LOAN CUT-OFF DATE
NUMBER ORIGINATOR TYPE TYPE BALANCE ($) LOAN BALANCE ($)
- -----------------------------------------------------------------------------------------------------------------------
1 Wachovia Retail Anchored 130,000,000.00 130,000,000.00
2 Wachovia Retail Anchored 98,000,000.00 97,864,905.53
3 Wachovia Office CBD 95,555,555.66 95,555,555.66
4 Wachovia Office CBD 75,000,000.00 75,000,000.00
5 Wachovia Office CBD 60,000,000.00 60,000,000.00
6 Eurohypo Retail Anchored 58,800,000.00 58,800,000.00
7 Citigroup Mobile Home Park Mobile Home Park 36,067,000.00 36,033,285.21
7.1 Citigroup Mobile Home Park Mobile Home Park
7.2 Citigroup Mobile Home Park Mobile Home Park
7.3 Citigroup Mobile Home Park Mobile Home Park
7.4 Citigroup Mobile Home Park Mobile Home Park
7.5 Citigroup Mobile Home Park Mobile Home Park
7.6 Citigroup Mobile Home Park Mobile Home Park
7.7 Citigroup Mobile Home Park Mobile Home Park
7.8 Citigroup Mobile Home Park Mobile Home Park
8 Wachovia Retail Anchored 29,760,000.00 29,760,000.00
9 Eurohypo Retail Anchored 26,195,000.00 26,082,959.01
10 Wachovia Retail Anchored 25,100,000.00 25,100,000.00
11 Citigroup Mobile Home Park Mobile Home Park 24,951,000.00 24,924,796.35
11.1 Citigroup Mobile Home Park Mobile Home Park
11.2 Citigroup Mobile Home Park Mobile Home Park
11.3 Citigroup Mobile Home Park Mobile Home Park
11.4 Citigroup Mobile Home Park Mobile Home Park
11.5 Citigroup Mobile Home Park Mobile Home Park
11.6 Citigroup Mobile Home Park Mobile Home Park
11.7 Citigroup Mobile Home Park Mobile Home Park
11.8 Citigroup Mobile Home Park Mobile Home Park
12 Wachovia Office Suburban 22,600,000.00 22,600,000.00
13 Wachovia Retail Anchored 21,613,000.00 21,613,000.00
14 Artesia Multifamily Conventional 20,400,000.00 20,400,000.00
15 Wachovia Retail Anchored 19,750,000.00 19,734,143.27
16 Wachovia Various Various 18,800,000.00 18,716,550.33
16.1 Wachovia Office Suburban
16.2 Wachovia Retail Unanchored
16.3 Wachovia Office Suburban
16.4 Wachovia Retail Anchored
16.5 Wachovia Office Suburban
16.6 Wachovia Retail Unanchored
16.7 Wachovia Retail Anchored
16.8 Wachovia Retail Anchored
16.9 Wachovia Retail Anchored
17 Wachovia Multifamily Conventional 18,240,000.00 18,240,000.00
18 Wachovia Retail Anchored 17,660,000.00 17,660,000.00
19 Citigroup Office Suburban 16,000,000.00 15,937,612.39
20 Wachovia Multifamily Conventional 14,100,000.00 14,100,000.00
21 Wachovia Industrial Flex 13,500,000.00 13,413,049.59
22 Artesia Multifamily Conventional 12,500,000.00 12,500,000.00
23 Wachovia Multifamily Student Housing 11,490,000.00 11,456,334.08
24 Wachovia Multifamily Conventional 11,000,000.00 11,000,000.00
25 Artesia Multifamily Conventional 10,500,000.00 10,500,000.00
26 Wachovia Office Suburban 10,125,000.00 10,103,877.44
27 Artesia Multifamily Conventional 9,850,000.00 9,850,000.00
28 Artesia Multifamily Conventional 9,435,000.00 9,435,000.00
29 Wachovia Retail Anchored 8,800,000.00 8,800,000.00
30 Wachovia Retail Shadow Anchored 8,500,000.00 8,490,796.51
31 Wachovia Mobile Home Park Mobile Home Park 8,160,000.00 8,160,000.00
32 Wachovia Multifamily Conventional 8,150,000.00 8,150,000.00
33 Wachovia Retail Anchored 7,617,000.00 7,593,389.85
34 Wachovia Office CBD 7,525,000.00 7,509,002.16
35 Artesia Retail Anchored 7,500,000.00 7,492,795.68
36 Wachovia Retail Anchored 6,400,000.00 6,394,412.25
37 Wachovia Retail Various 6,100,000.00 6,060,677.59
37.1 Wachovia Retail Anchored
37.2 Wachovia Retail Unanchored
37.3 Wachovia Retail Anchored
37.4 Wachovia Retail Unanchored
37.5 Wachovia Retail Anchored
37.6 Wachovia Retail Unanchored
37.7 Wachovia Retail Unanchored
37.8 Wachovia Retail Anchored
38 Wachovia Retail Anchored 6,000,000.00 5,987,729.56
39 Wachovia Multifamily Conventional 5,559,000.00 5,553,880.85
40 Wachovia Retail Anchored 5,300,000.00 5,300,000.00
41 Wachovia Self Storage Self Storage 4,900,000.00 4,893,560.74
41.1 Wachovia Self Storage Self Storage
41.2 Wachovia Self Storage Self Storage
41.3 Wachovia Self Storage Self Storage
41.4 Wachovia Self Storage Self Storage
42 Artesia Retail Anchored 4,300,000.00 4,300,000.00
43 Wachovia Retail Unanchored 4,100,000.00 4,100,000.00
44 Wachovia Multifamily Conventional 3,264,000.00 3,264,000.00
45 Artesia Retail Anchored 3,250,000.00 3,246,816.36
46 Artesia Retail Shadow Anchored 3,050,000.00 3,034,081.65
47 Wachovia Retail Anchored 3,000,000.00 3,000,000.00
48 Artesia Retail Anchored 2,975,000.00 2,972,085.75
49 Wachovia Mixed Use Office/Multifamily 2,625,000.00 2,625,000.00
50 Artesia Multifamily Conventional 2,000,000.00 1,991,422.98
51 Wachovia Retail Unanchored 1,850,000.00 1,847,071.34
52 Artesia Retail Unanchored 1,845,000.00 1,843,405.66
53 Artesia Self Storage Self Storage 1,700,000.00 1,694,781.18
54 Artesia Retail Unanchored 815,000.00 802,330.27
MORTGAGE % OF AGGREGATE % OF LOAN % OF LOAN
LOAN CUT-OFF DATE GROUP GROUP 2 MATURITY DATE
NUMBER BALANCE 1 BALANCE BALANCE ORIGINATION DATE FIRST PAY DATE OR ARD
- ----------------------------------------------------------------------------------------------------------------------------------
1 12.48% 14.76% 12-Mar-2004 11-May-2004 11-Apr-2014
2 9.40% 11.12% 5-Mar-2004 11-Apr-2004 11-Dec-2013
3 9.17% 10.85% 23-Dec-2003 11-Feb-2004 11-Jan-2014
4 7.20% 8.52% 29-Mar-2004 11-May-2004 11-Apr-2014
5 5.76% 6.81% 2-Jan-2004 11-Feb-2004 11-Feb-2014
6 5.65% 6.68% 15-Jan-2004 1-Mar-2004 1-Feb-2011
7 3.46% 22.38% 18-Feb-2004 1-Apr-2004 1-Mar-2014
7.1
7.2
7.3
7.4
7.5
7.6
7.7
7.8
8 2.86% 3.38% 1-Apr-2004 11-May-2004 11-Apr-2014
9 2.50% 2.96% 14-Nov-2003 1-Jan-2004 1-Dec-2013
10 2.41% 2.85% 8-Apr-2004 11-May-2004 11-Apr-2014
11 2.39% 2.83% 18-Feb-2004 1-Apr-2004 1-Mar-2009
11.1
11.2
11.3
11.4
11.5
11.6
11.7
11.8
12 2.17% 2.57% 23-Feb-2004 11-Apr-2004 11-Mar-2009
13 2.08% 2.45% 23-Mar-2004 11-May-2004 11-Apr-2009
14 1.96% 12.67% 15-Jan-2004 11-Mar-2004 11-Feb-2011
15 1.89% 2.24% 13-Feb-2004 11-Apr-2004 11-Mar-2019
16 1.80% 2.13% 10-Feb-2004 11-Mar-2004 11-Feb-2013
16.1
16.2
16.3
16.4
16.5
16.6
16.7
16.8
16.9
17 1.75% 11.33% 12-Apr-2004 11-May-2004 11-Apr-2011
18 1.70% 2.01% 1-Apr-2004 11-May-2004 11-Apr-2014
19 1.53% 1.81% 8-Dec-2003 1-Feb-2004 1-Jan-2019
20 1.35% 8.76% 19-Feb-2004 11-Apr-2004 11-Mar-2014
21 1.29% 1.52% 7-Aug-2003 1-Oct-2003 1-Sep-2013
22 1.20% 7.76% 11-Feb-2004 11-Apr-2004 11-Mar-2011
23 1.10% 1.30% 15-Jan-2004 11-Mar-2004 11-Feb-2014
24 1.06% 6.83% 1-Apr-2004 11-May-2004 11-Apr-2014
25 1.01% 6.52% 11-Feb-2004 11-Apr-2004 11-Mar-2011
26 0.97% 1.15% 3-Feb-2004 11-Mar-2004 11-Feb-2014
27 0.95% 6.12% 22-Mar-2004 11-May-2004 11-Apr-2014
28 0.91% 5.86% 22-Mar-2004 11-May-2004 11-Apr-2014
29 0.84% 1.00% 1-Apr-2004 11-May-2004 11-Apr-2014
30 0.82% 0.96% 10-Mar-2004 11-Apr-2004 11-Mar-2014
31 0.78% 0.93% 18-Mar-2004 11-May-2004 11-Apr-2014
32 0.78% 5.06% 26-Mar-2004 11-May-2004 11-Apr-2009
33 0.73% 0.86% 11-Feb-2004 11-Mar-2004 11-Feb-2014
34 0.72% 0.85% 5-Feb-2004 11-Mar-2004 11-Feb-2014
35 0.72% 0.85% 12-Feb-2004 11-Apr-2004 11-Mar-2014
36 0.61% 0.73% 2-Mar-2004 11-Apr-2004 11-Mar-2014
37 0.58% 0.69% 30-Dec-2003 11-Feb-2004 11-Jan-2013
37.1
37.2
37.3
37.4
37.5
37.6
37.7
37.8
38 0.57% 0.68% 2-Feb-2004 11-Mar-2004 11-Feb-2014
39 0.53% 3.45% 26-Feb-2004 11-Apr-2004 11-Mar-2014
40 0.51% 0.60% 1-Mar-2004 11-Apr-2004 11-Mar-2014
41 0.47% 0.56% 2-Mar-2004 11-Apr-2004 11-Mar-2014
41.1
41.2
41.3
41.4
42 0.41% 0.49% 17-Mar-2004 11-May-2004 11-Apr-2014
43 0.39% 0.47% 16-Mar-2004 11-May-2004 11-Apr-2014
44 0.31% 2.03% 25-Mar-2004 11-May-2004 11-Apr-2014
45 0.31% 0.37% 25-Feb-2004 11-Apr-2004 11-Mar-2014
46 0.29% 0.34% 1-Dec-2003 11-Jan-2004 11-Dec-2013
47 0.29% 0.34% 19-Mar-2004 11-May-2004 11-Apr-2014
48 0.29% 0.34% 25-Feb-2004 11-Apr-2004 11-Mar-2014
49 0.25% 0.30% 25-Mar-2004 11-May-2004 11-Apr-2014
50 0.19% 1.24% 11-Dec-2003 11-Feb-2004 11-Jan-2014
51 0.18% 0.21% 17-Feb-2004 11-Apr-2004 11-Mar-2014
52 0.18% 0.21% 11-Mar-2004 11-Apr-2004 11-Mar-2014
53 0.16% 0.19% 9-Mar-2004 11-Apr-2004 11-Mar-2020
54 0.08% 0.09% 1-Oct-2003 11-Nov-2003 11-Oct-2008
LOAN INTEREST ORIGINAL
MORTGAGE ADMINISTRATIVE INTEREST ACCURAL TERM TO REMAINING TERM
LOAN MORTGAGE COST RATE ACCRUAL METHOD MATURITY OR TO MATURITY OR REMAINING IO
NUMBER RATE (%) (%) METHOD DURING IO ARD (MOS.) ARD (MOS.) PERIOD (MOS.)
- --------------------------------------------------------------------------------------------------------------------------------
1 4.5500% 0.04235% Actual/360 120 120
2 5.6000% 0.04235% Actual/360 117 116
3 5.3043% 0.04235% Actual/360 Actual/360 120 117 57
4 6.1600% 0.04235% Actual/360 Actual/360 120 120 24
5 5.7600% 0.04235% Actual/360 Actual/360 121 118 21
6 4.9519% 0.04235% Actual/360 Actual/360 84 82 34
7 5.5300% 0.04235% Actual/360 120 119
7.1
7.2
7.3
7.4
7.5
7.6
7.7
7.8
8 5.5700% 0.04235% Actual/360 Actual/360 120 120 24
9 5.3020% 0.04235% Actual/360 120 116
10 5.4300% 0.08235% Actual/360 120 120
11 5.0500% 0.04235% Actual/360 60 59
11.1
11.2
11.3
11.4
11.5
11.6
11.7
11.8
12 5.1600% 0.04235% Actual/360 Actual/360 60 59 59
13 4.8000% 0.04235% Actual/360 Actual/360 60 60 60
14 5.3200% 0.04235% Actual/360 Actual/360 84 82 22
15 6.1200% 0.04235% Actual/360 180 179
16 5.8100% 0.04235% Actual/360 108 106
16.1
16.2
16.3
16.4
16.5
16.6
16.7
16.8
16.9
17 4.7500% 0.04235% Actual/360 Actual/360 84 84 12
18 5.6900% 0.04235% Actual/360 Actual/360 120 120 12
19 6.4200% 0.06235% Actual/360 180 177
20 5.3900% 0.04235% Actual/360 Actual/360 120 119 23
21 6.0900% 0.04235% Actual/360 120 113
22 5.0600% 0.04235% Actual/360 Actual/360 84 83 23
23 5.9200% 0.04235% Actual/360 120 118
24 5.1700% 0.04235% Actual/360 Actual/360 120 120 24
25 5.0600% 0.04235% Actual/360 Actual/360 84 83 23
26 5.7700% 0.04235% Actual/360 120 118
27 5.3100% 0.04235% Actual/360 120 120
28 5.3100% 0.04235% Actual/360 120 120
29 5.5500% 0.04235% Actual/360 120 120
30 4.9200% 0.04235% Actual/360 120 119
31 5.1500% 0.04235% Actual/360 120 120
32 4.5900% 0.04235% Actual/360 Actual/360 60 60 60
33 5.5500% 0.04235% Actual/360 120 118
34 5.6700% 0.04235% Actual/360 120 118
35 5.4200% 0.04235% Actual/360 120 119
36 5.8000% 0.04235% Actual/360 120 119
37 5.8900% 0.04235% Actual/360 108 105
37.1
37.2
37.3
37.4
37.5
37.6
37.7
37.8
38 5.8750% 0.04235% Actual/360 120 118
39 5.5900% 0.04235% Actual/360 120 119
40 5.1400% 0.04235% Actual/360 Actual/360 120 119 23
41 5.8500% 0.04235% Actual/360 120 119
41.1
41.2
41.3
41.4
42 5.5500% 0.04235% Actual/360 120 120
43 5.4700% 0.04235% Actual/360 120 120
44 5.4900% 0.04235% Actual/360 120 120
45 5.3400% 0.04235% Actual/360 120 119
46 6.2800% 0.04235% Actual/360 120 116
47 5.6500% 0.04235% Actual/360 120 120
48 5.3400% 0.04235% Actual/360 120 119
49 5.5000% 0.04235% Actual/360 120 120
50 5.8500% 0.04235% Actual/360 120 117
51 5.7700% 0.04235% Actual/360 120 119
52 5.8400% 0.04235% Actual/360 120 119
53 5.7600% 0.04235% Actual/360 192 191
54 5.8000% 0.04235% Actual/360 60 54
MORTGAGE
LOAN ORIGINAL AMORT REMAINING AMORT MONTHLY P&I MATURITY DATE OR ARD ARD
NUMBER TERM (MOS.) TERM (MOS.) PAYMENTS ($) BALLOON BALANCE ($) LOAN PREPAYMENT PROVISIONS
- ------------------------------------------------------------------------------------------------------------------------------------
1 300 300 726,276.59 95,585,452.54 N L(36),D(79),O(5)
2 300 299 607,672.25 75,628,552.24 N L(25),D(88),O(4)
3 360 360 530,879.64 88,518,665.95 Y L(27),D(90),O(3)
4 360 360 457,406.80 66,712,719.07 Y L(35),YM1%(80),O(5)
5 312 312 371,358.51 50,213,553.25 Y L(27),D(91),O(3)
6 360 360 313,924.85 55,204,219.29 N L(26),D(54),O(4)
7 360 359 205,463.84 30,157,646.90 N L(25),D(92),O(3)
7.1
7.2
7.3
7.4
7.5
7.6
7.7
7.8
8 360 360 170,283.35 26,114,723.78 Y L(24),D(93),O(3)
9 360 356 145,494.59 21,749,384.19 N L(28),D(88),O(4)
10 360 360 141,414.63 20,920,406.23 Y L(48),D(69),O(3)
11 360 359 134,705.85 23,029,030.97 N L(25),D(32),O(3)
11.1
11.2
11.3
11.4
11.5
11.6
11.7
11.8
12 IO IO IO 22,600,000.00 Y L(48),D(8),O(4)
13 IO IO IO 21,613,000.00 Y L(48),D(8),O(4)
14 360 360 113,535.65 18,901,587.44 N L(36),D(45),O(3)
15 360 359 119,939.23 14,497,843.49 Y L(25),D(148),O(7)
16 240 238 132,636.48 13,077,798.43 Y L(26),D(79),O(3)
16.1
16.2
16.3
16.4
16.5
16.6
16.7
16.8
16.9
17 348 348 96,639.70 16,291,098.20 N L(48),D(33),O(3)
18 360 360 102,386.83 15,199,406.11 N L(24),D(92),O(4)
19 300 297 107,234.69 9,803,253.84 N LO(27),YM1%(151),O(2)
20 360 360 79,087.85 12,320,301.91 Y L(48),D(69),O(3)
21 360 353 81,722.12 11,480,273.60 N L(31),D(85),O(4)
22 360 360 67,561.82 11,539,114.46 N L(36),D(45),O(3)
23 300 298 73,469.36 8,872,851.73 Y L(48),D(69),O(3)
24 360 360 60,198.50 9,559,150.09 Y L(48),D(69),O(3)
25 360 360 56,751.93 9,692,856.09 N L(36),D(45),O(3)
26 360 358 59,215.46 8,527,577.45 Y L(48),D(69),O(3)
27 360 360 54,758.69 8,178,884.29 N L(36),D(81),O(3)
28 360 360 52,451.60 7,834,291.43 N L(36),D(81),O(3)
29 360 360 50,241.84 7,362,026.92 N L(24),D(93),O(3)
30 360 359 45,215.16 6,970,157.28 Y L(25),D(88),O(7)
31 360 360 44,555.74 6,741,108.43 Y L(48),D(69),O(3)
32 IO IO IO 8,150,000.00 N L(25),YM2%orD(32),O(3)
33 300 298 47,002.76 5,807,617.64 Y L(26),D(91),O(3)
34 360 358 43,532.18 6,318,607.48 Y L(26),D(91),O(3)
35 360 359 42,208.49 6,249,734.10 Y L(36),D(81),O(3)
36 360 359 37,552.19 5,395,684.77 Y L(48),D(69),O(3)
37 240 237 43,316.08 4,255,522.69 Y L(27),D(78),O(3)
37.1
37.2
37.3
37.4
37.5
37.6
37.7
37.8
38 360 358 35,492.27 5,069,308.01 N L(48),D(68),O(4)
39 360 359 31,878.01 4,656,805.42 Y L(48),D(69),O(3)
40 360 360 28,906.74 4,602,604.91 N L(48),D(68),O(4)
41 300 299 31,123.01 3,775,471.08 Y L(48),D(69),O(3)
41.1
41.2
41.3
41.4
42 360 360 24,549.99 3,597,354.15 Y L(36),D(81),O(3)
43 360 360 23,202.24 3,421,541.72 Y L(48),D(69),O(3)
44 360 360 18,512.16 2,725,575.40 Y L(48),D(69),O(3)
45 360 359 18,128.22 2,701,414.66 Y L(36),D(81),O(3)
46 300 296 20,176.51 2,384,461.72 N L(36),D(81),O(3)
47 360 360 17,317.07 2,517,498.95 Y L(24),D(93),O(3)
48 360 359 16,594.29 2,472,834.08 Y L(36),D(81),O(3)
49 360 360 14,904.46 2,192,664.59 Y L(48),D(69),O(3)
50 300 297 12,703.27 1,540,964.60 N L(36),D(81),O(3)
51 276 275 12,120.59 1,346,793.40 N L(48),D(69),O(3)
52 360 359 10,872.64 1,557,343.58 N L(36),D(81),O(3)
53 192 191 13,650.82 0.00 N L(36),D(153),O(3)
54 240 234 5,745.27 690,731.69 N L(36),D(21),O(3)
MORTGAGE
LOAN APPRAISED CUT-OFF DATE LTV RATIO AT YEAR YEAR
NUMBER VALUE ($) APPRAISAL DATE DSCR (X) LTV RATIO MATURITY OR ARD BUILT RENOVATED
- ------------------------------------------------------------------------------------------------------------------------
1 209,500,000 1-Mar-2006 1.77 62.05% 45.63% 1997
2 161,000,000 1-Mar-2004 1.54 60.79% 46.97% 1973 1999
3 675,000,000 2-Dec-2003 1.55 63.70% 59.01% 1932 1997
4 108,400,000 15-Mar-2004 1.51 69.19% 61.54% 1990
5 350,000,000 24-Nov-2003 2.08 45.71% 38.26% 1931 2003
6 81,000,000 17-Nov-2003 1.89 72.59% 68.15% 1971 1989
7 47,240,000 Various 1.37 76.28% 63.84% Various
7.1 13,680,000 1-Jan-2004 1972
7.2 6,800,000 1-Dec-2003 1971
7.3 6,400,000 1-Jan-2004 1964
7.4 5,700,000 10-Nov-2003 1987
7.5 4,100,000 22-Jul-2003 1960
7.6 4,000,000 1-Jan-2004 1971
7.7 3,360,000 1-Jan-2004 1976
7.8 3,200,000 1-Jan-2004 1987
8 37,200,000 1-May-2004 1.21 80.00% 70.20% 2003
9 40,300,000 1-Oct-2003 2.02 64.72% 53.97% 1991 1993
10 31,545,000 2-Feb-2004 1.25 79.57% 66.32% 2003
11 34,670,000 Various 1.46 71.89% 66.42% Various
11.1 10,800,000 1-Aug-2003 1976
11.2 6,360,000 1-Jan-2004 1972
11.3 5,920,000 16-Nov-2003 1970
11.4 3,470,000 1-Jan-2004 1967
11.5 3,400,000 1-Jan-2004 1970
11.6 2,640,000 14-Nov-2003 1973
11.7 1,320,000 1-Jan-2004 1977
11.8 760,000 1-Jan-2004 1999
12 31,550,000 6-Jan-2004 1.65 71.63% 71.63% 1972 1997
13 33,150,000 12-Feb-2004 2.23 65.20% 65.20% 1995
14 27,750,000 22-Sep-2003 1.29 73.51% 68.11% 1970 2002
15 38,350,000 1-May-2003 2.66 51.46% 37.80% 1980 1998
16 24,640,000 Various 1.27 75.96% 53.08% Various Various
16.1 2,850,000 15-Jan-2004 1974 2003
16.2 2,200,000 4-Jan-2004 1950
16.3 2,300,000 11-Jan-2004 1989
16.4 2,700,000 4-Jan-2004 1977
16.5 3,400,000 15-Jan-2004 1981
16.6 4,440,000 24-Dec-2003 1972
16.7 3,000,000 6-Jan-2004 1999 2003
16.8 2,150,000 6-Jan-2004 1996
16.9 1,600,000 24-Dec-2003 1994
17 22,800,000 13-Feb-2004 1.46 80.00% 71.45% 2001
18 22,600,000 8-Dec-2003 1.32 78.14% 67.25% 2003
19 21,700,000 10-Oct-2003 1.24 73.45% 45.18% 1987 2003
20 18,300,000 30-Dec-2003 1.28 77.05% 67.32% 1983
21 18,000,000 1-Jul-2003 1.20 74.52% 63.78% 1979 2000
22 17,300,000 31-Oct-2003 1.31 72.25% 66.70% 1997 2002
23 13,900,000 1-Nov-2003 1.20 82.42% 63.83% 1863 1991
24 14,400,000 5-Jan-2004 1.42 76.39% 66.38% 1971 2003
25 15,000,000 21-Oct-2003 1.29 70.00% 64.62% 1996 2002
26 13,500,000 8-Jan-2004 1.33 74.84% 63.17% 1979 1995
27 15,300,000 21-Jan-2004 1.53 64.38% 53.46% 1978
28 15,160,000 21-Jan-2004 1.55 62.24% 51.68% 1985
29 11,000,000 6-Dec-2003 1.33 80.00% 66.93% 1990
30 13,250,000 1-Oct-2003 1.77 64.08% 52.60% 2002
31 10,200,000 12-Feb-2004 1.36 80.00% 66.09% 1948
32 10,850,000 29-Jan-2004 1.94 75.12% 75.12% 1971
33 9,650,000 15-Aug-2003 1.20 78.69% 60.18% 2002
34 12,000,000 13-Nov-2003 1.94 62.58% 52.66% 1961 1985
35 10,900,000 7-Jan-2004 1.49 68.74% 57.34% 1987 1997
36 8,500,000 29-Nov-2003 1.43 75.23% 63.48% 1973
37 9,530,000 Various 1.49 63.60% 44.65% Various Various
37.1 1,200,000 9-Dec-2003 1915 1980
37.2 1,150,000 9-Dec-2003 1977
37.3 1,300,000 8-Dec-2003 1958
37.4 800,000 9-Dec-2003 1970
37.5 1,700,000 9-Dec-2003 1985
37.6 1,100,000 9-Dec-2003 1960
37.7 980,000 9-Dec-2003 1976
37.8 1,300,000 8-Dec-2003 1983
38 7,600,000 1-Jun-2003 1.45 78.79% 66.70% 2002
39 7,525,000 12-Dec-2003 1.20 73.81% 61.88% 1978
40 7,900,000 30-Jan-2004 1.53 67.09% 58.26% 1961 2004
41 8,090,000 Various 1.53 60.49% 46.67% Various
41.1 1,850,000 13-Nov-2003 2000
41.2 2,850,000 15-Nov-2003 2001
41.3 1,670,000 14-Nov-2003 1999
41.4 1,720,000 14-Nov-2003 1995
42 6,200,000 20-Jan-2004 1.38 69.35% 58.02% 2001
43 5,150,000 10-Feb-2004 1.35 79.61% 66.44% 2001
44 4,080,000 28-Jan-2004 1.23 80.00% 66.80% 2002
45 4,400,000 22-Jan-2004 1.38 73.79% 61.40% 2003
46 4,065,000 29-Aug-2003 1.47 74.64% 58.66% 1983
47 4,200,000 4-Feb-2004 1.59 71.43% 59.94% 2003
48 4,200,000 22-Jan-2004 1.44 70.76% 58.88% 2003
49 3,400,000 9-Jan-2004 1.40 77.21% 64.49% 1878 1987
50 2,800,000 11-Nov-2003 1.57 71.12% 55.03% 1946 2003
51 2,860,000 20-Nov-2003 1.65 64.58% 47.09% 2000
52 2,470,000 24-Jan-2004 1.41 74.63% 63.05% 2003
53 2,440,000 26-Jan-2004 1.20 69.46% 0.00% 1996
54 1,100,000 11-Jul-2003 1.37 72.94% 62.79% 1964 1999
MORTGAGE CUT-OFF DATE
LOAN NUMBER OF UNIT OF LOAN AMOUNT OCCUPANCY OCCUPANCY
NUMBER UNITS MEASURE PER (UNIT) ($) RATE (%) "AS OF" DATE MOST RECENT PERIOD
- ----------------------------------------------------------------------------------------------------------------------------------
1 864,187 Sq. Ft. 150 96.83% 20-Feb-2004 2004 Forecast
2 928,410 Sq. Ft. 105 95.72% 1-Mar-2004 Budget 1/04-12/31/04
3 2,256,552 Sq. Ft. 42 98.60% 22-Dec-2003 TTM 11/03
4 697,341 Sq. Ft. 108 79.55% 10-Feb-2004 YE 2003
5 2,319,634 Sq. Ft. 26 74.32% 30-Sep-2003 T-11 thru 8/03 Annualized
6 231,239 Sq. Ft. 254 87.51% 1-Mar-2004 2003 Actual/Budget
7 1,478 Pads 24,380 96.14% 30-Sep-2003 TTM 9/03
7.1 490 Pads 93.27% 30-Sep-2003 TTM 9/03
7.2 209 Pads 96.17% 30-Sep-2003 TTM 9/03
7.3 135 Pads 100.00% 30-Sep-2003 TTM 9/03
7.4 186 Pads 95.70% 30-Sep-2003 TTM 9/03
7.5 117 Pads 98.29% 30-Sep-2003 TTM 9/03
7.6 120 Pads 98.33% 30-Sep-2003 TTM 9/03
7.7 100 Pads 100.00% 30-Sep-2003 TTM 9/03
7.8 121 Pads 96.69% 30-Sep-2003 TTM 9/03
8 173,302 Sq. Ft. 172 96.14% 1-Apr-2004 Borrower Budget
9 361,194 Sq. Ft. 72 92.32% 27-Feb-2004 TTM 7/03
10 166,097 Sq. Ft. 151 96.40% 2-Feb-2004 Pro Forma
11 1,814 Pads 13,740 83.57% 30-Sep-2003 TTM 9/03
11.1 481 Pads 83.78% 30-Sep-2003 TTM 9/03
11.2 292 Pads 77.74% 30-Sep-2003 TTM 9/03
11.3 205 Pads 92.20% 30-Sep-2003 TTM 9/03
11.4 227 Pads 82.82% 30-Sep-2003 TTM 9/03
11.5 266 Pads 81.95% 30-Sep-2003 TTM 9/03
11.6 171 Pads 86.55% 30-Sep-2003 TTM 9/03
11.7 87 Pads 77.01% 30-Sep-2003 TTM 9/03
11.8 85 Pads 89.41% 30-Sep-2003 TTM 9/03
12 171,588 Sq. Ft. 132 83.91% 31-Mar-2004 YE 2003
13 99,970 Sq. Ft. 216 100.00% 1-Mar-2004
14 352 Units 57,955 88.92% 8-Jan-2004 YE 2003
15 653,558 Sq. Ft. 30 97.59% 11-Feb-2004 TTM 9/03
16 161,678 Sq. Ft. 116 100.00% Various YE 2003
16.1 29,403 Sq. Ft. 100.00% 26-Jan-2004
16.2 18,925 Sq. Ft. 100.00% 18-Feb-2004
16.3 24,206 Sq. Ft. 100.00% 30-Mar-2004
16.4 20,830 Sq. Ft. 100.00% 21-Jan-2004
16.5 31,568 Sq. Ft. 100.00% 30-Mar-2004
16.6 21,092 Sq. Ft. 100.00% 12-Feb-2004
16.7 8,413 Sq. Ft. 100.00% 12-Feb-2004
16.8 3,741 Sq. Ft. 100.00% 29-Jan-2004
16.9 3,500 Sq. Ft. 100.00% 4-Feb-2004
17 294 Units 62,041 87.76% 16-Mar-2004 2004 Budget
18 107,328 Sq. Ft. 165 100.00% 29-Mar-2004
19 210,207 Sq. Ft. 76 100.00% 31-Dec-2003
20 336 Units 41,964 92.26% 5-Jan-2004 YE 2003
21 151,813 Sq. Ft. 88 76.89% 29-Feb-2004 TTM 2/04
22 170 Units 73,529 92.35% 2-Feb-2004 YE 2003
23 60 Units 190,939 100.00% 15-Jan-2004 Operating Budget
24 385 Units 28,571 88.57% 12-Feb-2004 Buyer's Budget
25 156 Units 67,308 94.87% 2-Feb-2004 YE 2003
26 103,173 Sq. Ft. 98 92.44% 15-Jan-2004 Pro-forma
27 288 Units 34,201 94.44% 27-Feb-2004 YE 2003
28 274 Units 34,434 92.34% 29-Feb-2004 YE 2003
29 94,977 Sq. Ft. 93 100.00% 1-Apr-2004 YE 2003
30 94,744 Sq. Ft. 90 98.15% 1-Mar-2004 YE 2003
31 254 Pads 32,126 97.64% 31-Dec-2003 YE 2003
32 216 Units 37,731 90.74% 9-Feb-2004 YE 2003
33 67,371 Sq. Ft. 113 100.00% 9-Jan-2004
34 79,803 Sq. Ft. 94 96.78% 31-Oct-2003 9/03 Annualized
35 74,607 Sq. Ft. 100 100.00% 11-Feb-2004 YE 2003
36 126,474 Sq. Ft. 51 81.40% 19-Jan-2004 YE 2003
37 34,097 Sq. Ft. 178 100.00% Various
37.1 8,065 Sq. Ft. 100.00% 30-Mar-2004
37.2 4,500 Sq. Ft. 100.00% 12-Dec-2003
37.3 3,384 Sq. Ft. 100.00% 18-Dec-2003
37.4 3,200 Sq. Ft. 100.00% 12-Dec-2003
37.5 2,692 Sq. Ft. 100.00% 18-Dec-2003
37.6 4,156 Sq. Ft. 100.00% 16-Dec-2003
37.7 3,400 Sq. Ft. 100.00% 12-Dec-2003
37.8 4,700 Sq. Ft. 100.00% 30-Mar-2004
38 64,561 Sq. Ft. 93 92.57% 20-Jan-2004
39 170 Units 32,670 91.18% 29-Dec-2003 YTD 10/03 Annualized
40 64,063 Sq. Ft. 83 98.54% 5-Mar-2004 YE 2003
41 1,596 Units 3,066 89.28% Various YE 2003
41.1 413 Units 92.49% 28-Feb-2004
41.2 481 Units 84.82% 29-Feb-2004
41.3 360 Units 94.72% 29-Feb-2004
41.4 342 Units 85.96% 29-Feb-2004
42 15,120 Sq. Ft. 284 100.00% 29-Jan-2004 YE 2003
43 25,159 Sq. Ft. 163 100.00% 10-Feb-2004 11/03 - 2/04 Annualized
44 64 Units 51,000 95.31% 24-Mar-2004 T-3 Annualized 2/04
45 14,490 Sq. Ft. 224 100.00% 31-Dec-2003 YE 2003
46 36,719 Sq. Ft. 83 93.39% 1-Feb-2004 TTM 7/03
47 50,000 Sq. Ft. 60 100.00% 4-Mar-2004
48 14,490 Sq. Ft. 205 100.00% 31-Dec-2003 YE 2003
49 35,311 Sq. Ft. 74 100.00% 1-Mar-2004 YE 2003
50 64 Units 31,116 87.50% 31-Dec-2003
51 11,180 Sq. Ft. 165 100.00% 1-Jan-2004
52 14,721 Sq. Ft. 125 100.00% 5-Feb-2004
53 454 Units 3,733 96.92% 26-Jan-2004 YE 2003
54 15,540 Sq. Ft. 52 100.00% 31-Dec-2003 YE 2003
MORTGAGE UW NET UW NET
LOAN MOST RECENT MOST RECENT MOST RECENT MOST RECENT UW UW OPERATING CASH
NUMBER REVENUES ($) EXPENSES ($) NOI ($) NCF ($) REVENUES ($) EXPENSES ($) INCOME ($) FLOW ($)
- ------------------------------------------------------------------------------------------------------------------------------------
1 26,285,380 11,210,798 15,074,582 14,944,954 27,153,895 11,238,617 15,915,278 15,456,332
2 17,435,928 5,570,656 11,865,272 11,763,147 17,393,366 5,372,525 12,020,841 11,220,008
3 62,279,306 17,608,014 44,671,292 44,445,637 63,438,713 18,543,090 44,895,623 44,558,893
4 14,034,693 5,479,645 8,555,048 8,383,741 14,586,593 5,382,443 9,204,150 8,294,363
5 38,011,964 16,183,135 21,828,830 21,480,884 43,623,415 17,819,694 25,803,721 24,677,230
6 11,333,016 4,519,133 6,813,883 6,804,183 11,919,428 4,496,184 7,423,244 7,119,646
7 6,295,815 2,550,364 3,745,451 3,745,451 6,248,580 2,791,458 3,457,122 3,383,222
7.1 1,910,328 876,911 1,033,417 1,033,417 1,902,457 898,677 1,003,780 979,280
7.2 789,681 226,881 562,801 562,801 780,467 267,255 513,212 502,762
7.3 941,155 529,343 411,812 411,812 924,682 535,140 389,542 382,792
7.4 642,086 124,075 518,011 518,011 645,030 163,649 481,381 472,081
7.5 456,526 127,690 328,836 328,836 458,459 151,769 306,690 300,840
7.6 619,704 293,763 325,941 325,941 628,512 324,388 304,124 298,124
7.7 438,485 124,913 313,572 313,572 416,001 205,542 210,458 205,458
7.8 497,850 246,788 251,062 251,062 492,972 245,037 247,935 241,885
8 3,499,729 686,514 2,813,215 2,803,883 3,605,718 1,043,553 2,562,165 2,465,135
9 6,083,073 2,422,718 3,660,355 3,660,355 6,469,657 2,668,738 3,800,920 3,525,776
10 2,649,486 410,514 2,238,972 2,170,242 2,594,911 407,441 2,187,470 2,117,330
11 5,362,815 2,560,880 2,801,935 2,801,935 5,315,103 2,867,522 2,447,581 2,356,881
11.1 1,500,261 646,267 853,994 853,994 1,489,505 730,751 758,754 734,704
11.2 961,111 407,065 554,046 554,046 943,699 459,578 484,121 469,521
11.3 719,396 264,545 454,851 454,851 714,190 312,716 401,474 391,224
11.4 618,900 349,029 269,871 269,871 605,274 398,346 206,928 195,578
11.5 678,162 382,588 295,574 295,574 691,656 418,550 273,106 259,806
11.6 449,251 183,095 266,156 266,156 451,267 233,813 217,454 208,904
11.7 251,792 193,893 57,899 57,899 244,055 180,089 63,966 59,616
11.8 183,942 134,398 49,544 49,544 175,457 133,680 41,777 37,527
12 3,781,831 1,460,745 2,321,086 2,290,200 3,787,718 1,573,685 2,214,033 1,920,870
13 2,409,277 86,316 2,322,961 2,312,964
14 3,247,728 1,393,466 1,854,262 1,454,684 3,309,060 1,461,689 1,847,371 1,759,371
15 8,672,293 4,343,154 4,329,139 4,216,928 8,595,469 4,324,531 4,270,938 3,829,555
16 2,561,596 682,163 1,879,433 1,879,433 2,926,751 784,997 2,141,754 2,027,248
16.1
16.2
16.3
16.4
16.5
16.6
16.7
16.8
16.9
17 2,876,333 959,179 1,917,154 1,843,654 2,691,310 926,132 1,765,177 1,691,677
18 1,686,200 42,155 1,644,045 1,627,945
19 1,850,201 78,536 1,771,665 1,597,397
20 2,347,982 1,068,205 1,279,777 1,195,777 2,305,521 1,010,295 1,295,226 1,211,226
21 1,846,868 455,381 1,391,488 1,376,306 1,722,490 452,672 1,269,818 1,172,980
22 1,893,480 719,930 1,173,550 1,104,815 1,844,203 731,315 1,112,888 1,065,288
23 1,282,800 279,662 1,003,138 985,138 1,376,537 304,561 1,071,977 1,053,977
24 2,382,526 1,080,371 1,302,155 1,205,905 2,223,107 1,098,017 1,125,090 1,028,840
25 1,652,293 657,114 995,179 938,709 1,584,210 662,618 921,591 877,911
26 1,848,305 659,112 1,189,193 1,166,179 1,705,277 633,206 1,072,071 946,790
27 1,980,944 778,536 1,202,408 1,177,661 2,047,381 948,948 1,098,432 1,008,288
28 2,004,054 749,795 1,254,259 1,225,383 1,993,448 918,118 1,075,330 977,786
29 1,302,451 286,125 1,016,326 992,582 1,214,597 314,479 900,118 799,480
30 1,194,703 274,253 920,450 910,975 1,289,130 248,826 1,040,304 959,802
31 1,189,415 486,039 703,376 695,696 1,190,008 455,700 734,307 726,627
32 1,488,870 687,225 801,645 736,617 1,488,870 697,526 791,344 726,316
33 980,445 268,507 711,938 676,868
34 1,802,937 664,302 1,138,635 1,114,694 1,735,572 593,316 1,142,255 1,014,560
35 877,500 2,524 874,976 874,976 833,625 27,509 806,116 756,152
36 868,265 459,694 408,571 378,998 1,178,018 432,894 745,123 642,917
37 809,469 11,095 798,375 774,405
37.1
37.2
37.3
37.4
37.5
37.6
37.7
37.8
38 793,298 120,707 672,591 617,991
39 983,665 425,537 558,128 494,208 1,000,694 477,708 522,986 459,066
40 1,142,259 684,807 457,452 445,032 1,316,026 747,092 568,934 530,302
41 1,235,958 537,386 698,572 674,647 1,126,372 529,944 596,428 572,503
41.1
41.2
41.3
41.4
42 440,004 2,775 437,229 437,229 431,204 17,936 413,268 407,374
43 545,410 126,906 418,504 415,989 518,821 133,705 385,115 377,053
44 435,636 90,614 345,022 330,622 444,232 157,169 287,063 272,663
45 193,911 3,796 190,115 190,115 314,188 9,426 304,762 299,598
46 547,396 142,915 404,481 400,730 597,765 206,518 391,247 356,610
47 339,750 6,795 332,955 331,257
48 161,500 2,755 158,745 158,745 299,880 8,996 290,884 285,791
49 341,485 117,995 223,490 210,719 377,855 114,712 263,143 250,372
50 412,387 156,655 255,732 239,732
51 247,960 6,199 241,761 240,308
52 288,518 93,265 195,254 183,463
53 406,200 187,375 218,825 218,825 371,695 167,999 203,696 195,849
54 145,111 37,440 107,671 107,671 142,432 43,873 98,558 94,731
MORTGAGE LARGEST LARGEST LARGEST
LOAN TENANT TENANT TENANT
NUMBER LARGEST TENANT NAME SQ. FT. % OF NRA EXP. DATE
- ---------------------------------------------------------------------------------------------------------------------------
1 JCPenney 125,247 14.49% 30-Sep-2017
2 JCPenney 217,975 23.48% 31-Aug-2009
3 Credit Suisse First Boston 1,921,459 85.15% Multiple Spaces
4 Bank of America, N.A. 188,032 26.96% 31-Jul-2009
5 US Customs 266,327 11.48% 31-Oct-2013
6 Piccadilly 10,014 4.33% 1-Jun-2004
7
7.1
7.2
7.3
7.4
7.5
7.6
7.7
7.8
8 Circuit City 32,905 18.99% 31-Jan-2019
9 Sears 81,336 22.52% 30-Oct-2010
10 Kohl's 86,584 52.13% 12-Sep-2023
11
11.1
11.2
11.3
11.4
11.5
11.6
11.7
11.8
12 Kyle J. Marx & James C. Carroll 8,783 5.12% 31-May-2007
13 Home Depot 99,970 100.00% 31-Jan-2016
14
15 Sears (ground lease) 105,000 16.07% 19-Aug-2010
16 Various Various Various Various
16.1 Bank of America, N.A. 15,671 53.30% 31-Dec-2012
16.2 Capital City Bank 18,925 100.00% 31-Aug-2010
16.3 Ledcor Industries 10,620 43.87% 28-Feb-2007
16.4 National Bank of Commerce 20,830 100.00% 31-Aug-2010
16.5 Bank of America, N.A. 23,397 74.12% 31-Dec-2012
16.6 Capital City Bank 21,092 100.00% 31-Aug-2010
16.7 Regions Bank 8,413 100.00% 27-Aug-2024
16.8 CitiBank F.S.B. 3,741 100.00% 28-Feb-2013
16.9 AmSouth Bank 3,500 100.00% 28-Feb-2023
17
18 Kohl's 88,248 82.22% 31-Jan-2025
19 The Sports Authority 210,207 100.00% 31-Jul-2018
20
21 Apollo (the Potomac Group) 33,802 22.27% 30-Nov-2005
22
23
24
25
26 BAE Enterprise Systems 25,694 24.90% Multiple Spaces
27
28
29 OfficeMax Inc. 25,000 26.32% 31-Aug-2007
30 A C Moore 21,394 22.58% 31-Mar-2013
31
32
33 Publix 44,271 65.71% 1-Apr-2023
34 University of Washington 50,783 63.64% Multiple Spaces
35 Haggen, Inc. (Top Food & Drug) 74,607 100.00% 31-Dec-2019
36 Big Lots 33,196 26.25% 30-Jun-2013
37 Various Various Various Various
37.1 Sovereign Bank 4,500 55.80% 28-Feb-2019
37.2 Unity Bank 4,500 100.00% 28-Feb-2009
37.3 Sovereign Bank 3,384 100.00% 28-Feb-2019
37.4 Unity Bank 3,200 100.00% 31-May-2009
37.5 Sovereign Bank 2,692 100.00% 28-Feb-2019
37.6 Valley National Bank 4,156 100.00% 28-Feb-2019
37.7 Unity Bank 3,400 100.00% 31-Mar-2009
37.8 Fleet Bank 4,700 100.00% 30-Apr-2009
38 Food Lion 37,961 58.80% 15-Apr-2023
39
40 King Kullen Grocery Co., Inc. 30,000 46.83% 30-Jun-2023
41
41.1
41.2
41.3
41.4
42 Walgreens 15,120 100.00% 30-Sep-2061
43 Fresh Market 18,400 73.13% 31-Oct-2023
44
45 Walgreens 14,490 100.00% 31-May-2078
46 Hollywood Video 6,307 17.18% 3-Dec-2010
47 Best Buy 50,000 100.00% 31-Jan-2023
48 Walgreens 14,490 100.00% 30-Jun-2078
49 Interactive Financial Group, Inc. 17,884 50.65% 30-Jun-2006
50
51 Rite Aid 11,180 100.00% 31-Jul-2020
52 Manuel's Mexican Restaurant 3,000 20.38% 31-Oct-2008
53
54 Dollar General 7,700 49.55% 28-Feb-2009
MORTGAGE 2ND LARGEST 2ND LARGEST 2ND LARGEST
LOAN TENANT TENANT % TENANT
NUMBER 2ND LARGEST TENANT NAME SQ. FT. OF NRA (%) EXP. DATE
- ---------------------------------------------------------------------------------------------------------------
1 Burlington Coat Factory 91,390 10.58% 31-Oct-2014
2 Belk Stores 211,994 22.83% 31-Jan-2014
3 Aon (sublet to IBM) 138,072 6.12% 30-Apr-2013
4 Holland & Knight 50,209 7.20% 30-Sep-2013
5 Martha Stewart 159,500 6.88% 16-Dec-2009
6 Guess 7,725 3.34% 1-Sep-2010
7
7.1
7.2
7.3
7.4
7.5
7.6
7.7
7.8
8 T.J. Maxx 28,400 16.39% 31-Oct-2013
9 Younkers 70,536 19.53% 28-Feb-2006
10 The Sports Authority 35,002 21.07% 1-Aug-2013
11
11.1
11.2
11.3
11.4
11.5
11.6
11.7
11.8
12 Bob Baker Enterprises, Inc. 7,073 4.12% 31-Oct-2005
13
14
15 JCPenney (ground lease) 99,450 15.22% 19-Aug-2010
16 Various Various Various Various
16.1 Florida Rural Legal Services, Inc. 13,732 46.70% 27-Aug-2013
16.2
16.3 Bank of America, N.A. 8,708 35.97% 31-Dec-2012
16.4
16.5 University of Texas Medical 6,484 20.54% Multiple Spaces
16.6
16.7
16.8
16.9
17
18 Staples 19,080 17.78% 12-Feb-2019
19
20
21 Kaiser Federal 28,301 18.64% 30-Apr-2010
22
23
24
25
26 Data Systems 16,785 16.27% 1-Apr-2008
27
28
29 Western Auto - Advance Auto Parts 15,376 16.19% 31-Dec-2004
30 Dollar Tree 12,000 12.67% 30-Sep-2007
31
32
33 Blockbuster Video 3,500 5.20% 1-Jun-2008
34 Ernest E. Barrett, DDS 3,972 4.98% 31-Jul-2010
35
36 Family Dollar Store 14,400 11.39% 22-Mar-2006
37 Various Various Various Various
37.1 U.S. Post Office 3,565 44.20% 31-Dec-2007
37.2
37.3
37.4
37.5
37.6
37.7
37.8
38 Movie Gallery 3,200 4.96% 22-Nov-2008
39
40 Erga Bakery 3,760 5.87% 30-Sep-2009
41
41.1
41.2
41.3
41.4
42
43 Ken Rash's 3,200 12.72% 30-Nov-2005
44
45
46 Casa Corona 4,920 13.40% 1-Dec-2006
47
48
49
50
51
52 Tan & Nails 4 You 2,340 15.90% 31-Jan-2014
53
54 Texas Workforce 3,650 23.49% 31-Dec-2010
MORTGAGE 3RD LARGEST 3RD LARGEST 3RD LARGEST LARGEST AFFILIATED
LOAN TENANT TENANT % TENANT SPONSOR FLAG
NUMBER 3RD LARGEST TENANT NAME SQ. FT OF NRA EXP. DATE LOCKBOX (> THAN 5% OF POOL)
- ------------------------------------------------------------------------------------------------------------------------------------
1 Hoyts Cinema 70,477 8.16% 28-Feb-2006 Day 1 GGP
2 Comp USA, Inc. 27,720 2.99% 30-Jun-2008 Day 1 GGP
3 Omnicom 95,557 4.23% 30-Sep-2008 Day 1 Tamir Sapir
4 McGuire Woods 37,517 5.38% 31-Dec-2012 Day 1 Darrul Parmenter
5 FBI 118,288 5.10% 31-Oct-2008 Day 1 Mark Karasick
6 Chili's 6,250 2.70% 1-Apr-2014 Day 1 The Mills Corporation
7 Springing
7.1
7.2
7.3
7.4
7.5
7.6
7.7
7.8
8 Bed Bath & Beyond 27,000 15.58% 8-Dec-2013 Springing
9 Goodrich Bay City 8 22,679 6.28% 30-Apr-2017 Day 1 GGP
10 Dress Barn 8,000 4.82% 15-Jan-2009 Springing
11 Springing
11.1
11.2
11.3
11.4
11.5
11.6
11.7
11.8
12 Blue Shield of California 5,921 3.45% 31-Jul-2007 Day 1
13 Springing
14
15 McRaes 90,174 13.80% 19-Aug-2005 Springing
16 Various Various Various Various Springing
16.1
16.2
16.3 Nevada Works 4,878 20.15% 14-Jan-2010
16.4
16.5 Quest 1,687 5.34% 30-Sep-2006
16.6
16.7
16.8
16.9
17
18 Day 1
19
20 Springing
21 Kelly Paper 12,776 8.42% 31-Oct-2009 Day 1
22
23 Springing
24 Springing
25
26 American Institute for Full Employment 11,135 10.79% 1-Aug-2006 Springing
27 Day 1
28 Day 1
29 DollarLand USA Inc. 8,942 9.41% 15-Jul-2005
30 Shoe Department 6,110 6.45% 31-Dec-2007 Springing
31 Springing
32 Springing
33 Suncoast Schools Federal Credit Union 3,250 4.82% 1-May-2006 Springing
34 GSA - USA 3,084 3.86% MTM Springing
35 Springing
36 China Buffet 7,280 5.76% 31-Oct-2009 Springing
37 Springing
37.1
37.2
37.3
37.4
37.5
37.6
37.7
37.8
38 ATA Black Belt Acad. 3,200 4.96% 30-Nov-2008
39 Springing
40 North Fork Bank 3,500 5.46% 31-Mar-2008
41 Springing
41.1
41.2
41.3
41.4
42 Day 1
43 Orthodontic Centers of TN 2,326 9.25% 30-Jun-2009 Springing
44 Springing
45 Springing
46 Nickoletti's 4,000 10.89% 10-Feb-2005
47 Springing
48 Springing
49 Springing
50
51 Day 1
52 Grand Stand Hair Salon 1,720 11.68% 30-Nov-2008
53
54 Coinmach 3,000 19.31% 9-Mar-2009
(1) Two Mortgage Loans, representing 14.9% of the Cut-Off Date Pool Balance
(17.7% 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.
See "DESCRIPTION OF THE MORTGAGED POOL - Additional Mortgage Loan Information"
in the prospectus supplement.
WACHOVIA BANK COMMERCIAL MORTGAGE TRUST SERIES 2004-C11
ANNEX A-1A
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
AND MORTGAGED PROPERTIES IN LOAN GROUP 1
MORTGAGE LOAN
LOAN GROUP
NUMBER NUMBER PROPERTY NAME ADDRESS
- ----------------------------------------------------------------------------------------------------------------------------------
1 1 Brass Mill Center & Commons 495 Union Street
2 1 Four Seasons Town Centre 400 Four Seasons Town Centre
3 1 11 Madison Avenue (1) 11 Madison Avenue
4 1 Bank of America Tower 50 North Laura Street
5 1 Starrett-Lehigh Building (1) 601 West 26th Street
6 1 Westland Mall 1675 West 49th Street
8 1 Amargosa Commons Shopping Center 39331-39523 10th Street West
9 1 Bay City Mall 4101 East Wilder Road
10 1 The Shoppes at Gilbert Commons 1121 East Baseline Road
11 1 ARC 5-4 Pool Various
11.1 Riverdale (Colonial Coach) 8000 Highway 85
11.2 Summit Oaks 6812 Randoll Mill Road
11.3 Marnelle 1512 Highway 54 West
11.4 Siesta Manor 35 San Aymores
11.5 Tanglewood 100 Hickory Hills
11.6 Belaire 1550 Yellowstone Avenue
11.7 Hidden Oaks 5306 Rita Kay Lane
11.8 Park Avenue Estates 1400 East Kay Avenue
12 1 Valley Corporate Center 591 Camino De La Reina
13 1 Home Depot - Colma, CA 2 Colma Boulevard
15 1 University Mall 1701 McFarland Boulevard East
16 1 AFRT 9 Pool Various
16.1 Bank of America Office Building - Fort Meyers, FL 3210 Cleveland Avenue
16.2 Capital City Bank - Macon, GA 455 Walnut
16.3 Bank of America Office Building - Reno, NV 5905 South Virginia Street
16.4 Central Carolina Bank - Morganton, NC 300 North Green Street
16.5 Bank of America and Motor Bank Office Building - Nassau Bay, TX 2200 NASA Road One
16.6 Capital City Bank - Palatka, FL 200 Reid Street
16.7 Regions Bank - Hilton Head, SC 2 Lafayette Place
16.8 Citibank - Pembroke Pines, FL 18395 Pines Boulevard
16.9 AmSouth Bank - Winter Park, FL 2200 Aloma Avenue
18 1 Poway Shopping Center 12900 Gregg Court
19 1 Sports Authority Corporate Headquarters 1050 and 1090 West Hampden Avenue
21 1 Covina Technology Center 1325 - 1411 North Grand Avenue
23 1 Harrison Court 761 Harrison Avenue
26 1 10400 Eaton Place 10400 Eaton Place
29 1 Sam's Club Plaza 5100 Cleveland Avenue
30 1 Oliver Creek Crossing Shopping Center Atlanta Highway at McLemore Drive
31 1 Colonial Heritage Mobile Home Park 861 East Butler Avenue
33 1 Punta Gorda Crossings 2310 Tamiami Trail
34 1 University District Building 1107 Northeast 45th Street
35 1 Top Food & Drug - Olympia, WA 1313 Cooper Point Road SW
36 1 Plaza 75 Shopping Center 7331-7343 Indian School Road
37 1 AFRT 8 Pool Various
37.1 Sovereign Bank/U.S. Post Office - Avondale, PA 102 Pennsylvania Avenue
37.2 Unity Bank - Edison Township, NJ 1746 Oak Tree Road
37.3 Keystone Savings Bank - Emmaus, PA 235 Main Street
37.4 Unity Bank - Highland Park, NJ 104 Raritan Avenue
37.5 Sovereign Bank - Phoenixville, PA 124 South Main Street
37.6 Valley National Bank - Scotch Plains, NJ 1922 Westfield Avenue
37.7 Unity Bank - South Plainfield, NJ 2426 Plainfield Avenue
37.8 Fleet Bank - Warminster, PA 473 York Road
38 1 The Shoppes at Bell Creek 8319 Bell Creek Road
40 1 Bethpage Plaza Shopping Center 548-598 Stewart Avenue
41 1 Carolina Self Storage Pool Various
41.1 Carolina Self Storage - Orangeburg, SC 2950 North Road
41.2 Carolina Self Storage - Florence, SC 2201 Second Loop Road
41.3 Carolina Self Storage - Sumter, SC (North Guignard Drive) 1143 North Guignard Drive
41.4 Carolina Self Storage - Sumter, SC (Broad Street) 3785 Broad Street
42 1 Walgreens - New Haven, CT 88 York Street
43 1 Fresh Market Shopping Center 9375 Poplar Avenue
45 1 Walgreens - Harrison, OH 1032 Harrison Avenue
46 1 Heritage Square Shopping Center 900-1030 North Norma Street
47 1 Best Buy - Tacoma, WA 2214 South 48th Street
48 1 Walgreens - Cincinnati, OH 4241 Glenway Avenue
49 1 The Hill Building 114 Virginia Street
51 1 Rite Aid - Asbury Park, NJ 901 Main Street
52 1 The Shops at Summerwood 13055 and 13155 West Lake Houston Parkway
53 1 Thornydale Self-Storage 6955 North Thornydale Road
54 1 Pirate Plaza Shopping Center 1113 East Sinton Street
MORTGAGE
LOAN ZIP CROSS COLLATERALIZED AND LOAN
NUMBER CITY STATE CODE CROSS DEFAULTED LOAN FLAG ORIGINATOR
- -------------------------------------------------------------------------------------------------------------------------
1 Waterbury CT 06706 Wachovia
2 Greensboro NC 27407 Wachovia
3 New York NY 10010 Wachovia
4 Jacksonville FL 32202 Wachovia
5 New York NY 10001 Wachovia
6 Hialeah FL 33012 Eurohypo
8 Palmdale CA 93551 Wachovia
9 Bay City MI 48706 Eurohypo
10 Gilbert AZ 85233 Wachovia
11 Various Various Various Citigroup
11.1 Riverdale GA 30296 Citigroup
11.2 Fort Worth TX 76120 Citigroup
11.3 Fayetteville GA 30214 Citigroup
11.4 Fenton MO 63026 Citigroup
11.5 Huntsville TX 77320 Citigroup
11.6 Pocatello ID 83201 Citigroup
11.7 Fort Worth TX 76119 Citigroup
11.8 Haysville KS 67060 Citigroup
12 San Diego CA 92108 Wachovia
13 Colma CA 94014 Wachovia
15 Tuscaloosa AL 35404 Wachovia
16 Various Various Various AFRT Portfolio Wachovia
16.1 Fort Myers FL 33901 Wachovia
16.2 Macon GA 31201 Wachovia
16.3 Reno NV 89502 Wachovia
16.4 Morganton NC 28655 Wachovia
16.5 Nassau Bay TX 77058 Wachovia
16.6 Palatka FL 32177 Wachovia
16.7 Hilton Head SC 29926 Wachovia
16.8 Pembroke Pines FL 33029 Wachovia
16.9 Winter Park FL 32792 Wachovia
18 Poway CA 92064 Wachovia
19 Englewood CO 80110 Citigroup
21 Covina CA 91722 Wachovia
23 Boston MA 02118 Wachovia
26 Fairfax VA 22030 Wachovia
29 Fort Myers FL 33907 Wachovia
30 Montgomery AL 36107 Wachovia
31 Doylestown PA 18901 Wachovia
33 Punta Gorda FL 33950 Wachovia
34 Seattle WA 98105 Wachovia
35 Olympia WA 98502 Artesia
36 Phoenix AZ 85043 Wachovia
37 Various Various Various AFRT Portfolio Wachovia
37.1 Avondale PA 19311 Wachovia
37.2 Edison Township NJ 08820 Wachovia
37.3 Emmaus PA 18049 Wachovia
37.4 Highland Park NJ 08904 Wachovia
37.5 Phoenixville PA 19460 Wachovia
37.6 Scotch Plains NJ 07076 Wachovia
37.7 South Plainfield NJ 07080 Wachovia
37.8 Warminster PA 18974 Wachovia
38 Mechanicsville VA 23116 Wachovia
40 Bethpage NY 11714 Wachovia
41 Various SC Various Wachovia
41.1 Orangeburg SC 29118 Wachovia
41.2 Florence SC 29501 Wachovia
41.3 Sumter SC 29150 Wachovia
41.4 Sumter SC 29154 Wachovia
42 New Haven CT 06511 Artesia
43 Germantown TN 38138 Wachovia
45 Harrison OH 45030 Artesia
46 Ridgecrest CA 93555 Artesia
47 Tacoma WA 98409 Wachovia
48 Cincinnati OH 45236 Artesia
49 Richmond VA 23219 Wachovia
51 Asbury Park NJ 07712 Wachovia
52 Houston TX 77044 Artesia
53 Tucson AZ 85741 Artesia
54 Sinton TX 78387 Artesia
MORTGAGE GENERAL SPECIFIC ORIGINAL CUT-OFF % OF AGGREGATE % OF LOAN
LOAN PROPERTY PROPERTY LOAN DATE LOAN CUT-OFF GROUP 1
NUMBER TYPE TYPE BALANCE ($) BALANCE ($) DATE BALANCE BALANCE
- ------------------------------------------------------------------------------------------------------------------------------------
1 Retail Anchored 130,000,000.00 130,000,000.00 12.48% 14.76%
2 Retail Anchored 98,000,000.00 97,864,905.53 9.40% 11.12%
3 Office CBD 95,555,555.66 95,555,555.66 9.17% 10.85%
4 Office CBD 75,000,000.00 75,000,000.00 7.20% 8.52%
5 Office CBD 60,000,000.00 60,000,000.00 5.76% 6.81%
6 Retail Anchored 58,800,000.00 58,800,000.00 5.65% 6.68%
8 Retail Anchored 29,760,000.00 29,760,000.00 2.86% 3.38%
9 Retail Anchored 26,195,000.00 26,082,959.01 2.50% 2.96%
10 Retail Anchored 25,100,000.00 25,100,000.00 2.41% 2.85%
11 Mobile Home Park Mobile Home Park 24,951,000.00 24,924,796.35 2.39% 2.83%
11.1 Mobile Home Park Mobile Home Park
11.2 Mobile Home Park Mobile Home Park
11.3 Mobile Home Park Mobile Home Park
11.4 Mobile Home Park Mobile Home Park
11.5 Mobile Home Park Mobile Home Park
11.6 Mobile Home Park Mobile Home Park
11.7 Mobile Home Park Mobile Home Park
11.8 Mobile Home Park Mobile Home Park
12 Office Suburban 22,600,000.00 22,600,000.00 2.17% 2.57%
13 Retail Anchored 21,613,000.00 21,613,000.00 2.08% 2.45%
15 Retail Anchored 19,750,000.00 19,734,143.27 1.89% 2.24%
16 Various Various 18,800,000.00 18,716,550.33 1.80% 2.13%
16.1 Office Suburban
16.2 Retail Unanchored
16.3 Office Suburban
16.4 Retail Anchored
16.5 Office Suburban
16.6 Retail Unanchored
16.7 Retail Anchored
16.8 Retail Anchored
16.9 Retail Anchored
18 Retail Anchored 17,660,000.00 17,660,000.00 1.70% 2.01%
19 Office Suburban 16,000,000.00 15,937,612.39 1.53% 1.81%
21 Industrial Flex 13,500,000.00 13,413,049.59 1.29% 1.52%
23 Multifamily Student Housing 11,490,000.00 11,456,334.08 1.10% 1.30%
26 Office Suburban 10,125,000.00 10,103,877.44 0.97% 1.15%
29 Retail Anchored 8,800,000.00 8,800,000.00 0.84% 1.00%
30 Retail Shadow Anchored 8,500,000.00 8,490,796.51 0.82% 0.96%
31 Mobile Home Park Mobile Home Park 8,160,000.00 8,160,000.00 0.78% 0.93%
33 Retail Anchored 7,617,000.00 7,593,389.85 0.73% 0.86%
34 Office CBD 7,525,000.00 7,509,002.16 0.72% 0.85%
35 Retail Anchored 7,500,000.00 7,492,795.68 0.72% 0.85%
36 Retail Anchored 6,400,000.00 6,394,412.25 0.61% 0.73%
37 Retail Various 6,100,000.00 6,060,677.59 0.58% 0.69%
37.1 Retail Anchored
37.2 Retail Unanchored
37.3 Retail Anchored
37.4 Retail Unanchored
37.5 Retail Anchored
37.6 Retail Unanchored
37.7 Retail Unanchored
37.8 Retail Anchored
38 Retail Anchored 6,000,000.00 5,987,729.56 0.57% 0.68%
40 Retail Anchored 5,300,000.00 5,300,000.00 0.51% 0.60%
41 Self Storage Self Storage 4,900,000.00 4,893,560.74 0.47% 0.56%
41.1 Self Storage Self Storage
41.2 Self Storage Self Storage
41.3 Self Storage Self Storage
41.4 Self Storage Self Storage
42 Retail Anchored 4,300,000.00 4,300,000.00 0.41% 0.49%
43 Retail Unanchored 4,100,000.00 4,100,000.00 0.39% 0.47%
45 Retail Anchored 3,250,000.00 3,246,816.36 0.31% 0.37%
46 Retail Shadow Anchored 3,050,000.00 3,034,081.65 0.29% 0.34%
47 Retail Anchored 3,000,000.00 3,000,000.00 0.29% 0.34%
48 Retail Anchored 2,975,000.00 2,972,085.75 0.29% 0.34%
49 Mixed Use Office/Multifamily 2,625,000.00 2,625,000.00 0.25% 0.30%
51 Retail Unanchored 1,850,000.00 1,847,071.34 0.18% 0.21%
52 Retail Unanchored 1,845,000.00 1,843,405.66 0.18% 0.21%
53 Self Storage Self Storage 1,700,000.00 1,694,781.18 0.16% 0.19%
54 Retail Unanchored 815,000.00 802,330.27 0.08% 0.09%
INTEREST
MORTGAGE LOAN INTEREST ACCURAL
LOAN ORIGINATION FIRST PAY MATURITY DATE MORTGAGE ADMINISTRATIVE ACCRUAL METHOD
NUMBER DATE DATE OR ARD RATE (%) COST RATE(%) METHOD DURING IO
- -------------------------------------------------------------------------------------------------------------------------------
1 12-Mar-2004 11-May-2004 11-Apr-2014 4.5500% 0.04235% Actual/360
2 5-Mar-2004 11-Apr-2004 11-Dec-2013 5.6000% 0.04235% Actual/360
3 23-Dec-2003 11-Feb-2004 11-Jan-2014 5.3043% 0.04235% Actual/360 Actual/360
4 29-Mar-2004 11-May-2004 11-Apr-2014 6.1600% 0.04235% Actual/360 Actual/360
5 2-Jan-2004 11-Feb-2004 11-Feb-2014 5.7600% 0.04235% Actual/360 Actual/360
6 15-Jan-2004 1-Mar-2004 1-Feb-2011 4.9519% 0.04235% Actual/360 Actual/360
8 1-Apr-2004 11-May-2004 11-Apr-2014 5.5700% 0.04235% Actual/360 Actual/360
9 14-Nov-2003 1-Jan-2004 1-Dec-2013 5.3020% 0.04235% Actual/360
10 8-Apr-2004 11-May-2004 11-Apr-2014 5.4300% 0.08235% Actual/360
11 18-Feb-2004 1-Apr-2004 1-Mar-2009 5.0500% 0.04235% Actual/360
11.1
11.2
11.3
11.4
11.5
11.6
11.7
11.8
12 23-Feb-2004 11-Apr-2004 11-Mar-2009 5.1600% 0.04235% Actual/360 Actual/360
13 23-Mar-2004 11-May-2004 11-Apr-2009 4.8000% 0.04235% Actual/360 Actual/360
15 13-Feb-2004 11-Apr-2004 11-Mar-2019 6.1200% 0.04235% Actual/360
16 10-Feb-2004 11-Mar-2004 11-Feb-2013 5.8100% 0.04235% Actual/360
16.1
16.2
16.3
16.4
16.5
16.6
16.7
16.8
16.9
18 1-Apr-2004 11-May-2004 11-Apr-2014 5.6900% 0.04235% Actual/360 Actual/360
19 8-Dec-2003 1-Feb-2004 1-Jan-2019 6.4200% 0.06235% Actual/360
21 7-Aug-2003 1-Oct-2003 1-Sep-2013 6.0900% 0.04235% Actual/360
23 15-Jan-2004 11-Mar-2004 11-Feb-2014 5.9200% 0.04235% Actual/360
26 3-Feb-2004 11-Mar-2004 11-Feb-2014 5.7700% 0.04235% Actual/360
29 1-Apr-2004 11-May-2004 11-Apr-2014 5.5500% 0.04235% Actual/360
30 10-Mar-2004 11-Apr-2004 11-Mar-2014 4.9200% 0.04235% Actual/360
31 18-Mar-2004 11-May-2004 11-Apr-2014 5.1500% 0.04235% Actual/360
33 11-Feb-2004 11-Mar-2004 11-Feb-2014 5.5500% 0.04235% Actual/360
34 5-Feb-2004 11-Mar-2004 11-Feb-2014 5.6700% 0.04235% Actual/360
35 12-Feb-2004 11-Apr-2004 11-Mar-2014 5.4200% 0.04235% Actual/360
36 2-Mar-2004 11-Apr-2004 11-Mar-2014 5.8000% 0.04235% Actual/360
37 30-Dec-2003 11-Feb-2004 11-Jan-2013 5.8900% 0.04235% Actual/360
37.1
37.2
37.3
37.4
37.5
37.6
37.7
37.8
38 2-Feb-2004 11-Mar-2004 11-Feb-2014 5.8750% 0.04235% Actual/360
40 1-Mar-2004 11-Apr-2004 11-Mar-2014 5.1400% 0.04235% Actual/360 Actual/360
41 2-Mar-2004 11-Apr-2004 11-Mar-2014 5.8500% 0.04235% Actual/360
41.1
41.2
41.3
41.4
42 17-Mar-2004 11-May-2004 11-Apr-2014 5.5500% 0.04235% Actual/360
43 16-Mar-2004 11-May-2004 11-Apr-2014 5.4700% 0.04235% Actual/360
45 25-Feb-2004 11-Apr-2004 11-Mar-2014 5.3400% 0.04235% Actual/360
46 1-Dec-2003 11-Jan-2004 11-Dec-2013 6.2800% 0.04235% Actual/360
47 19-Mar-2004 11-May-2004 11-Apr-2014 5.6500% 0.04235% Actual/360
48 25-Feb-2004 11-Apr-2004 11-Mar-2014 5.3400% 0.04235% Actual/360
49 25-Mar-2004 11-May-2004 11-Apr-2014 5.5000% 0.04235% Actual/360
51 17-Feb-2004 11-Apr-2004 11-Mar-2014 5.7700% 0.04235% Actual/360
52 11-Mar-2004 11-Apr-2004 11-Mar-2014 5.8400% 0.04235% Actual/360
53 9-Mar-2004 11-Apr-2004 11-Mar-2020 5.7600% 0.04235% Actual/360
54 1-Oct-2003 11-Nov-2003 11-Oct-2008 5.8000% 0.04235% Actual/360
MORTGAGE ORIGINAL TERM REMAINING TERM REMAINING IO MATURITY DATE
LOAN TO MATURITY TO MATURITY PERIOD ORIGINAL AMORT REMAINING AMORT MONTHLY P&I OR ARD
NUMBER OR ARD (MOS.) OR ARD (MOS.) (MOS.) TERM (MOS.) TERM (MOS.) PAYMENTS ($) BALLOON BALANCE ($)
- ------------------------------------------------------------------------------------------------------------------------------------
1 120 120 300 300 726,276.59 95,585,452.54
2 117 116 300 299 607,672.25 75,628,552.24
3 120 117 57 360 360 530,879.64 88,518,665.95
4 120 120 24 360 360 457,406.80 66,712,719.07
5 121 118 21 312 312 371,358.51 50,213,553.25
6 84 82 34 360 360 313,924.85 55,204,219.29
8 120 120 24 360 360 170,283.35 26,114,723.78
9 120 116 360 356 145,494.59 21,749,384.19
10 120 120 360 360 141,414.63 20,920,406.23
11 60 59 360 359 134,705.85 23,029,030.97
11.1
11.2
11.3
11.4
11.5
11.6
11.7
11.8
12 60 59 59 IO IO IO 22,600,000.00
13 60 60 60 IO IO IO 21,613,000.00
15 180 179 360 359 119,939.23 14,497,843.49
16 108 106 240 238 132,636.48 13,077,798.43
16.1
16.2
16.3
16.4
16.5
16.6
16.7
16.8
16.9
18 120 120 12 360 360 102,386.83 15,199,406.11
19 180 177 300 297 107,234.69 9,803,253.84
21 120 113 360 353 81,722.12 11,480,273.60
23 120 118 300 298 73,469.36 8,872,851.73
26 120 118 360 358 59,215.46 8,527,577.45
29 120 120 360 360 50,241.84 7,362,026.92
30 120 119 360 359 45,215.16 6,970,157.28
31 120 120 360 360 44,555.74 6,741,108.43
33 120 118 300 298 47,002.76 5,807,617.64
34 120 118 360 358 43,532.18 6,318,607.48
35 120 119 360 359 42,208.49 6,249,734.10
36 120 119 360 359 37,552.19 5,395,684.77
37 108 105 240 237 43,316.08 4,255,522.69
37.1
37.2
37.3
37.4
37.5
37.6
37.7
37.8
38 120 118 360 358 35,492.27 5,069,308.01
40 120 119 23 360 360 28,906.74 4,602,604.91
41 120 119 300 299 31,123.01 3,775,471.08
41.1
41.2
41.3
41.4
42 120 120 360 360 24,549.99 3,597,354.15
43 120 120 360 360 23,202.24 3,421,541.72
45 120 119 360 359 18,128.22 2,701,414.66
46 120 116 300 296 20,176.51 2,384,461.72
47 120 120 360 360 17,317.07 2,517,498.95
48 120 119 360 359 16,594.29 2,472,834.08
49 120 120 360 360 14,904.46 2,192,664.59
51 120 119 276 275 12,120.59 1,346,793.40
52 120 119 360 359 10,872.64 1,557,343.58
53 192 191 192 191 13,650.82 0.00
54 60 54 240 234 5,745.27 690,731.69
MORTGAGE LTV RATIO AT
LOAN ARD APPRAISED APPRAISAL CUT-OFF DATE MATURITY OR YEAR
NUMBER LOAN PREPAYMENT PROVISIONS VALUE ($) DATE DSCR (X) LTV RATIO ARD BUILT
- ------------------------------------------------------------------------------------------------------------------------------------
1 N L(36),D(79),O(5) 209,500,000 1-Mar-2006 1.77 62.05% 45.63% 1997
2 N L(25),D(88),O(4) 161,000,000 1-Mar-2004 1.54 60.79% 46.97% 1973
3 Y L(27),D(90),O(3) 675,000,000 2-Dec-2003 1.55 63.70% 59.01% 1932
4 Y L(35),YM1%(80),O(5) 108,400,000 15-Mar-2004 1.51 69.19% 61.54% 1990
5 Y L(27),D(91),O(3) 350,000,000 24-Nov-2003 2.08 45.71% 38.26% 1931
6 N L(26),D(54),O(4) 81,000,000 17-Nov-2003 1.89 72.59% 68.15% 1971
8 Y L(24),D(93),O(3) 37,200,000 1-May-2004 1.21 80.00% 70.20% 2003
9 N L(28),D(88),O(4) 40,300,000 1-Oct-2003 2.02 64.72% 53.97% 1991
10 Y L(48),D(69),O(3) 31,545,000 2-Feb-2004 1.25 79.57% 66.32% 2003
11 N L(25),D(32),O(3) 34,670,000 Various 1.46 71.89% 66.42% Various
11.1 10,800,000 1-Aug-2003 1976
11.2 6,360,000 1-Jan-2004 1972
11.3 5,920,000 16-Nov-2003 1970
11.4 3,470,000 1-Jan-2004 1967
11.5 3,400,000 1-Jan-2004 1970
11.6 2,640,000 14-Nov-2003 1973
11.7 1,320,000 1-Jan-2004 1977
11.8 760,000 1-Jan-2004 1999
12 Y L(48),D(8),O(4) 31,550,000 6-Jan-2004 1.65 71.63% 71.63% 1972
13 Y L(48),D(8),O(4) 33,150,000 12-Feb-2004 2.23 65.20% 65.20% 1995
15 Y L(25),D(148),O(7) 38,350,000 1-May-2003 2.66 51.46% 37.80% 1980
16 Y L(26),D(79),O(3) 24,640,000 Various 1.27 75.96% 53.08% Various
16.1 2,850,000 15-Jan-2004 1974
16.2 2,200,000 4-Jan-2004 1950
16.3 2,300,000 11-Jan-2004 1989
16.4 2,700,000 4-Jan-2004 1977
16.5 3,400,000 15-Jan-2004 1981
16.6 4,440,000 24-Dec-2003 1972
16.7 3,000,000 6-Jan-2004 1999
16.8 2,150,000 6-Jan-2004 1996
16.9 1,600,000 24-Dec-2003 1994
18 N L(24),D(92),O(4) 22,600,000 8-Dec-2003 1.32 78.14% 67.25% 2003
19 N LO(27),YM1%(151),O(2) 21,700,000 10-Oct-2003 1.24 73.45% 45.18% 1987
21 N L(31),D(85),O(4) 18,000,000 1-Jul-2003 1.20 74.52% 63.78% 1979
23 Y L(48),D(69),O(3) 13,900,000 1-Nov-2003 1.20 82.42% 63.83% 1863
26 Y L(48),D(69),O(3) 13,500,000 8-Jan-2004 1.33 74.84% 63.17% 1979
29 N L(24),D(93),O(3) 11,000,000 6-Dec-2003 1.33 80.00% 66.93% 1990
30 Y L(25),D(88),O(7) 13,250,000 1-Oct-2003 1.77 64.08% 52.60% 2002
31 Y L(48),D(69),O(3) 10,200,000 12-Feb-2004 1.36 80.00% 66.09% 1948
33 Y L(26),D(91),O(3) 9,650,000 15-Aug-2003 1.20 78.69% 60.18% 2002
34 Y L(26),D(91),O(3) 12,000,000 13-Nov-2003 1.94 62.58% 52.66% 1961
35 Y L(36),D(81),O(3) 10,900,000 7-Jan-2004 1.49 68.74% 57.34% 1987
36 Y L(48),D(69),O(3) 8,500,000 29-Nov-2003 1.43 75.23% 63.48% 1973
37 Y L(27),D(78),O(3) 9,530,000 Various 1.49 63.60% 44.65% Various
37.1 1,200,000 9-Dec-2003 1915
37.2 1,150,000 9-Dec-2003 1977
37.3 1,300,000 8-Dec-2003 1958
37.4 800,000 9-Dec-2003 1970
37.5 1,700,000 9-Dec-2003 1985
37.6 1,100,000 9-Dec-2003 1960
37.7 980,000 9-Dec-2003 1976
37.8 1,300,000 8-Dec-2003 1983
38 N L(48),D(68),O(4) 7,600,000 1-Jun-2003 1.45 78.79% 66.70% 2002
40 N L(48),D(68),O(4) 7,900,000 30-Jan-2004 1.53 67.09% 58.26% 1961
41 Y L(48),D(69),O(3) 8,090,000 Various 1.53 60.49% 46.67% Various
41.1 1,850,000 13-Nov-2003 2000
41.2 2,850,000 15-Nov-2003 2001
41.3 1,670,000 14-Nov-2003 1999
41.4 1,720,000 14-Nov-2003 1995
42 Y L(36),D(81),O(3) 6,200,000 20-Jan-2004 1.38 69.35% 58.02% 2001
43 Y L(48),D(69),O(3) 5,150,000 10-Feb-2004 1.35 79.61% 66.44% 2001
45 Y L(36),D(81),O(3) 4,400,000 22-Jan-2004 1.38 73.79% 61.40% 2003
46 N L(36),D(81),O(3) 4,065,000 29-Aug-2003 1.47 74.64% 58.66% 1983
47 Y L(24),D(93),O(3) 4,200,000 4-Feb-2004 1.59 71.43% 59.94% 2003
48 Y L(36),D(81),O(3) 4,200,000 22-Jan-2004 1.44 70.76% 58.88% 2003
49 Y L(48),D(69),O(3) 3,400,000 9-Jan-2004 1.40 77.21% 64.49% 1878
51 N L(48),D(69),O(3) 2,860,000 20-Nov-2003 1.65 64.58% 47.09% 2000
52 N L(36),D(81),O(3) 2,470,000 24-Jan-2004 1.41 74.63% 63.05% 2003
53 N L(36),D(153),O(3) 2,440,000 26-Jan-2004 1.20 69.46% 0.00% 1996
54 N L(36),D(21),O(3) 1,100,000 11-Jul-2003 1.37 72.94% 62.79% 1964
MORTGAGE CUT-OFF DATE
LOAN YEAR NUMBER UNIT OF LOAN AMOUNT OCCUPANCY OCCUPANCY
NUMBER RENOVATED OF UNITS MEASURE PER (UNIT) ($) RATE (%) "AS OF" DATE MOST RECENT PERIOD
- ------------------------------------------------------------------------------------------------------------------------------------
1 864,187 Sq. Ft. 150 96.83% 20-Feb-2004 2004 Forecast
2 1999 928,410 Sq. Ft. 105 95.72% 1-Mar-2004 Budget 1/04-12/31/04
3 1997 2,256,552 Sq. Ft. 42 98.60% 22-Dec-2003 TTM 11/03
4 697,341 Sq. Ft. 108 79.55% 10-Feb-2004 YE 2003
5 2003 2,319,634 Sq. Ft. 26 74.32% 30-Sep-2003 T-11 thru 8/03 Annualized
6 1989 231,239 Sq. Ft. 254 87.51% 1-Mar-2004 2003 Actual/Budget
8 173,302 Sq. Ft. 172 96.14% 1-Apr-2004 Borrower Budget
9 1993 361,194 Sq. Ft. 72 92.32% 27-Feb-2004 TTM 7/03
10 166,097 Sq. Ft. 151 96.40% 2-Feb-2004 Pro Forma
11 1,814 Pads 13,740 83.57% 30-Sep-2003 TTM 9/03
11.1 481 Pads 83.78% 30-Sep-2003 TTM 9/03
11.2 292 Pads 77.74% 30-Sep-2003 TTM 9/03
11.3 205 Pads 92.20% 30-Sep-2003 TTM 9/03
11.4 227 Pads 82.82% 30-Sep-2003 TTM 9/03
11.5 266 Pads 81.95% 30-Sep-2003 TTM 9/03
11.6 171 Pads 86.55% 30-Sep-2003 TTM 9/03
11.7 87 Pads 77.01% 30-Sep-2003 TTM 9/03
11.8 85 Pads 89.41% 30-Sep-2003 TTM 9/03
12 1997 171,588 Sq. Ft. 132 83.91% 31-Mar-2004 YE 2003
13 99,970 Sq. Ft. 216 100.00% 1-Mar-2004
15 1998 653,558 Sq. Ft. 30 97.59% 11-Feb-2004 TTM 9/03
16 Various 161,678 Sq. Ft. 116 100.00% Various YE 2003
16.1 2003 29,403 Sq. Ft. 100.00% 26-Jan-2004
16.2 18,925 Sq. Ft. 100.00% 18-Feb-2004
16.3 24,206 Sq. Ft. 100.00% 30-Mar-2004
16.4 20,830 Sq. Ft. 100.00% 21-Jan-2004
16.5 31,568 Sq. Ft. 100.00% 30-Mar-2004
16.6 21,092 Sq. Ft. 100.00% 12-Feb-2004
16.7 2003 8,413 Sq. Ft. 100.00% 12-Feb-2004
16.8 3,741 Sq. Ft. 100.00% 29-Jan-2004
16.9 3,500 Sq. Ft. 100.00% 4-Feb-2004
18 107,328 Sq. Ft. 165 100.00% 29-Mar-2004
19 2003 210,207 Sq. Ft. 76 100.00% 31-Dec-2003
21 2000 151,813 Sq. Ft. 88 76.89% 29-Feb-2004 TTM 2/04
23 1991 60 Units 190,939 100.00% 15-Jan-2004 Operating Budget
26 1995 103,173 Sq. Ft. 98 92.44% 15-Jan-2004 Pro-forma
29 94,977 Sq. Ft. 93 100.00% 1-Apr-2004 YE 2003
30 94,744 Sq. Ft. 90 98.15% 1-Mar-2004 YE 2003
31 254 Pads 32,126 97.64% 31-Dec-2003 YE 2003
33 67,371 Sq. Ft. 113 100.00% 9-Jan-2004
34 1985 79,803 Sq. Ft. 94 96.78% 31-Oct-2003 9/03 Annualized
35 1997 74,607 Sq. Ft. 100 100.00% 11-Feb-2004 YE 2003
36 126,474 Sq. Ft. 51 81.40% 19-Jan-2004 YE 2003
37 Various 34,097 Sq. Ft. 178 100.00% Various
37.1 1980 8,065 Sq. Ft. 100.00% 30-Mar-2004
37.2 4,500 Sq. Ft. 100.00% 12-Dec-2003
37.3 3,384 Sq. Ft. 100.00% 18-Dec-2003
37.4 3,200 Sq. Ft. 100.00% 12-Dec-2003
37.5 2,692 Sq. Ft. 100.00% 18-Dec-2003
37.6 4,156 Sq. Ft. 100.00% 16-Dec-2003
37.7 3,400 Sq. Ft. 100.00% 12-Dec-2003
37.8 4,700 Sq. Ft. 100.00% 30-Mar-2004
38 64,561 Sq. Ft. 93 92.57% 20-Jan-2004
40 2004 64,063 Sq. Ft. 83 98.54% 5-Mar-2004 YE 2003
41 1,596 Units 3,066 89.28% Various YE 2003
41.1 413 Units 92.49% 28-Feb-2004
41.2 481 Units 84.82% 29-Feb-2004
41.3 360 Units 94.72% 29-Feb-2004
41.4 342 Units 85.96% 29-Feb-2004
42 15,120 Sq. Ft. 284 100.00% 29-Jan-2004 YE 2003
43 25,159 Sq. Ft. 163 100.00% 10-Feb-2004 11/03 - 2/04 Annualized
45 14,490 Sq. Ft. 224 100.00% 31-Dec-2003 YE 2003
46 36,719 Sq. Ft. 83 93.39% 1-Feb-2004 TTM 7/03
47 50,000 Sq. Ft. 60 100.00% 4-Mar-2004
48 14,490 Sq. Ft. 205 100.00% 31-Dec-2003 YE 2003
49 1987 35,311 Sq. Ft. 74 100.00% 1-Mar-2004 YE 2003
51 11,180 Sq. Ft. 165 100.00% 1-Jan-2004
52 14,721 Sq. Ft. 125 100.00% 5-Feb-2004
53 454 Units 3,733 96.92% 26-Jan-2004 YE 2003
54 1999 15,540 Sq. Ft. 52 100.00% 31-Dec-2003 YE 2003
MORTGAGE MOST UW NET
LOAN MOST RECENT MOST RECENT MOST RECENT RECENT UW UW OPERATING UW NET
NUMBER REVENUES ($) EXPENSES ($) NOI ($) NCF ($) REVENUES ($) EXPENSES ($) INCOME ($) CASH FLOW ($)
- ---------------------------------------------------------------------------------------------------------------------------------
1 26,285,380 11,210,798 15,074,582 14,944,954 27,153,895 11,238,617 15,915,278 15,456,332
2 17,435,928 5,570,656 11,865,272 11,763,147 17,393,366 5,372,525 12,020,841 11,220,008
3 62,279,306 17,608,014 44,671,292 44,445,637 63,438,713 18,543,090 44,895,623 44,558,893
4 14,034,693 5,479,645 8,555,048 8,383,741 14,586,593 5,382,443 9,204,150 8,294,363
5 38,011,964 16,183,135 21,828,830 21,480,884 43,623,415 17,819,694 25,803,721 24,677,230
6 11,333,016 4,519,133 6,813,883 6,804,183 11,919,428 4,496,184 7,423,244 7,119,646
8 3,499,729 686,514 2,813,215 2,803,883 3,605,718 1,043,553 2,562,165 2,465,135
9 6,083,073 2,422,718 3,660,355 3,660,355 6,469,657 2,668,738 3,800,920 3,525,776
10 2,649,486 410,514 2,238,972 2,170,242 2,594,911 407,441 2,187,470 2,117,330
11 5,362,815 2,560,880 2,801,935 2,801,935 5,315,103 2,867,522 2,447,581 2,356,881
11.1 1,500,261 646,267 853,994 853,994 1,489,505 730,751 758,754 734,704
11.2 961,111 407,065 554,046 554,046 943,699 459,578 484,121 469,521
11.3 719,396 264,545 454,851 454,851 714,190 312,716 401,474 391,224
11.4 618,900 349,029 269,871 269,871 605,274 398,346 206,928 195,578
11.5 678,162 382,588 295,574 295,574 691,656 418,550 273,106 259,806
11.6 449,251 183,095 266,156 266,156 451,267 233,813 217,454 208,904
11.7 251,792 193,893 57,899 57,899 244,055 180,089 63,966 59,616
11.8 183,942 134,398 49,544 49,544 175,457 133,680 41,777 37,527
12 3,781,831 1,460,745 2,321,086 2,290,200 3,787,718 1,573,685 2,214,033 1,920,870
13 2,409,277 86,316 2,322,961 2,312,964
15 8,672,293 4,343,154 4,329,139 4,216,928 8,595,469 4,324,531 4,270,938 3,829,555
16 2,561,596 682,163 1,879,433 1,879,433 2,926,751 784,997 2,141,754 2,027,248
16.1
16.2
16.3
16.4
16.5
16.6
16.7
16.8
16.9
18 1,686,200 42,155 1,644,045 1,627,945
19 1,850,201 78,536 1,771,665 1,597,397
21 1,846,868 455,381 1,391,488 1,376,306 1,722,490 452,672 1,269,818 1,172,980
23 1,282,800 279,662 1,003,138 985,138 1,376,537 304,561 1,071,977 1,053,977
26 1,848,305 659,112 1,189,193 1,166,179 1,705,277 633,206 1,072,071 946,790
29 1,302,451 286,125 1,016,326 992,582 1,214,597 314,479 900,118 799,480
30 1,194,703 274,253 920,450 910,975 1,289,130 248,826 1,040,304 959,802
31 1,189,415 486,039 703,376 695,696 1,190,008 455,700 734,307 726,627
33 980,445 268,507 711,938 676,868
34 1,802,937 664,302 1,138,635 1,114,694 1,735,572 593,316 1,142,255 1,014,560
35 877,500 2,524 874,976 874,976 833,625 27,509 806,116 756,152
36 868,265 459,694 408,571 378,998 1,178,018 432,894 745,123 642,917
37 809,469 11,095 798,375 774,405
37.1
37.2
37.3
37.4
37.5
37.6
37.7
37.8
38 793,298 120,707 672,591 617,991
40 1,142,259 684,807 457,452 445,032 1,316,026 747,092 568,934 530,302
41 1,235,958 537,386 698,572 674,647 1,126,372 529,944 596,428 572,503
41.1
41.2
41.3
41.4
42 440,004 2,775 437,229 437,229 431,204 17,936 413,268 407,374
43 545,410 126,906 418,504 415,989 518,821 133,705 385,115 377,053
45 193,911 3,796 190,115 190,115 314,188 9,426 304,762 299,598
46 547,396 142,915 404,481 400,730 597,765 206,518 391,247 356,610
47 339,750 6,795 332,955 331,257
48 161,500 2,755 158,745 158,745 299,880 8,996 290,884 285,791
49 341,485 117,995 223,490 210,719 377,855 114,712 263,143 250,372
51 247,960 6,199 241,761 240,308
52 288,518 93,265 195,254 183,463
53 406,200 187,375 218,825 218,825 371,695 167,999 203,696 195,849
54 145,111 37,440 107,671 107,671 142,432 43,873 98,558 94,731
MORTGAGE LARGEST LARGEST LARGEST
LOAN TENANT TENANT TENANT
NUMBER LARGEST TENANT NAME SQ. FT. % OF NRA EXP. DATE
- -----------------------------------------------------------------------------------------------------------------------------------
1 JCPenney 125,247 14.49% 30-Sep-2017
2 JCPenney 217,975 23.48% 31-Aug-2009
3 Credit Suisse First Boston 1,921,459 85.15% Multiple Spaces
4 Bank of America, N.A. 188,032 26.96% 31-Jul-2009
5 US Customs 266,327 11.48% 31-Oct-2013
6 Piccadilly 10,014 4.33% 1-Jun-2004
8 Circuit City 32,905 18.99% 31-Jan-2019
9 Sears 81,336 22.52% 30-Oct-2010
10 Kohl's 86,584 52.13% 12-Sep-2023
11
11.1
11.2
11.3
11.4
11.5
11.6
11.7
11.8
12 Kyle J. Marx & James C. Carroll 8,783 5.12% 31-May-2007
13 Home Depot 99,970 100.00% 31-Jan-2016
15 Sears (ground lease) 105,000 16.07% 19-Aug-2010
16 Various Various Various Various
16.1 Bank of America, N.A. 15,671 53.30% 31-Dec-2012
16.2 Capital City Bank 18,925 100.00% 31-Aug-2010
16.3 Ledcor Industries 10,620 43.87% 28-Feb-2007
16.4 National Bank of Commerce 20,830 100.00% 31-Aug-2010
16.5 Bank of America, N.A. 23,397 74.12% 31-Dec-2012
16.6 Capital City Bank 21,092 100.00% 31-Aug-2010
16.7 Regions Bank 8,413 100.00% 27-Aug-2024
16.8 CitiBank F.S.B. 3,741 100.00% 28-Feb-2013
16.9 AmSouth Bank 3,500 100.00% 28-Feb-2023
18 Kohl's 88,248 82.22% 31-Jan-2025
19 The Sports Authority 210,207 100.00% 31-Jul-2018
21 Apollo (the Potomac Group) 33,802 22.27% 30-Nov-2005
23
26 BAE Enterprise Systems 25,694 24.90% Multiple Spaces
29 OfficeMax Inc. 25,000 26.32% 31-Aug-2007
30 A C Moore 21,394 22.58% 31-Mar-2013
31
33 Publix 44,271 65.71% 1-Apr-2023
34 University of Washington 50,783 63.64% Multiple Spaces
35 Haggen, Inc. (Top Food & Drug) 74,607 100.00% 31-Dec-2019
36 Big Lots 33,196 26.25% 30-Jun-2013
37 Various Various Various Various
37.1 Sovereign Bank 4,500 55.80% 28-Feb-2019
37.2 Unity Bank 4,500 100.00% 28-Feb-2009
37.3 Sovereign Bank 3,384 100.00% 28-Feb-2019
37.4 Unity Bank 3,200 100.00% 31-May-2009
37.5 Sovereign Bank 2,692 100.00% 28-Feb-2019
37.6 Valley National Bank 4,156 100.00% 28-Feb-2019
37.7 Unity Bank 3,400 100.00% 31-Mar-2009
37.8 Fleet Bank 4,700 100.00% 30-Apr-2009
38 Food Lion 37,961 58.80% 15-Apr-2023
40 King Kullen Grocery Co., Inc. 30,000 46.83% 30-Jun-2023
41
41.1
41.2
41.3
41.4
42 Walgreens 15,120 100.00% 30-Sep-2061
43 Fresh Market 18,400 73.13% 31-Oct-2023
45 Walgreens 14,490 100.00% 31-May-2078
46 Hollywood Video 6,307 17.18% 3-Dec-2010
47 Best Buy 50,000 100.00% 31-Jan-2023
48 Walgreens 14,490 100.00% 30-Jun-2078
49 Interactive Financial Group, Inc. 17,884 50.65% 30-Jun-2006
51 Rite Aid 11,180 100.00% 31-Jul-2020
52 Manuel's Mexican Restaurant 3,000 20.38% 31-Oct-2008
53
54 Dollar General 7,700 49.55% 28-Feb-2009
MORTGAGE 2ND LARGEST 2ND LARGEST 2ND LARGEST
LOAN TENANT TENANT % TENANT
NUMBER 2ND LARGEST TENANT NAME SQ. FT. OF NRA (%) EXP. DATE
- -----------------------------------------------------------------------------------------------------------------------------------
1 Burlington Coat Factory 91,390 10.58% 31-Oct-2014
2 Belk Stores 211,994 22.83% 31-Jan-2014
3 Aon (sublet to IBM) 138,072 6.12% 30-Apr-2013
4 Holland & Knight 50,209 7.20% 30-Sep-2013
5 Martha Stewart 159,500 6.88% 16-Dec-2009
6 Guess 7,725 3.34% 1-Sep-2010
8 T.J. Maxx 28,400 16.39% 31-Oct-2013
9 Younkers 70,536 19.53% 28-Feb-2006
10 The Sports Authority 35,002 21.07% 1-Aug-2013
11
11.1
11.2
11.3
11.4
11.5
11.6
11.7
11.8
12 Bob Baker Enterprises, Inc. 7,073 4.12% 31-Oct-2005
13
15 JCPenney (ground lease) 99,450 15.22% 19-Aug-2010
16 Various Various Various Various
16.1 Florida Rural Legal Services, Inc. 13,732 46.70% 27-Aug-2013
16.2
16.3 Bank of America, N.A. 8,708 35.97% 31-Dec-2012
16.4
16.5 University of Texas Medical 6,484 20.54% Multiple Spaces
16.6
16.7
16.8
16.9
18 Staples 19,080 17.78% 12-Feb-2019
19
21 Kaiser Federal 28,301 18.64% 30-Apr-2010
23
26 Data Systems 16,785 16.27% 1-Apr-2008
29 Western Auto - Advance Auto Parts 15,376 16.19% 31-Dec-2004
30 Dollar Tree 12,000 12.67% 30-Sep-2007
31
33 Blockbuster Video 3,500 5.20% 1-Jun-2008
34 Ernest E. Barrett, DDS 3,972 4.98% 31-Jul-2010
35
36 Family Dollar Store 14,400 11.39% 22-Mar-2006
37 Various Various Various Various
37.1 U.S. Post Office 3,565 44.20% 31-Dec-2007
37.2
37.3
37.4
37.5
37.6
37.7
37.8
38 Movie Gallery 3,200 4.96% 22-Nov-2008
40 Erga Bakery 3,760 5.87% 30-Sep-2009
41
41.1
41.2
41.3
41.4
42
43 Ken Rash's 3,200 12.72% 30-Nov-2005
45
46 Casa Corona 4,920 13.40% 1-Dec-2006
47
48
49
51
52 Tan & Nails 4 You 2,340 15.90% 31-Jan-2014
53
54 Texas Workforce 3,650 23.49% 31-Dec-2010
MORTGAGE 3RD LARGEST 3RD LARGEST 3RD LARGEST
LOAN TENANT TENANT TENANT LARGEST AFFILIATED SPONSOR
NUMBER 3RD LARGEST TENANT NAME SQ. FT % OF NRA EXP. DATE LOCKBOX FLAG (> THAN 5% OF POOL)
- ------------------------------------------------------------------------------------------------------------------------------------
1 Hoyts Cinema 70,477 8.16% 28-Feb-2006 Day 1 GGP
2 Comp USA, Inc. 27,720 2.99% 30-Jun-2008 Day 1 GGP
3 Omnicom 95,557 4.23% 30-Sep-2008 Day 1 Tamir Sapir
4 McGuire Woods 37,517 5.38% 31-Dec-2012 Day 1 Darrul Parmenter
5 FBI 118,288 5.10% 31-Oct-2008 Day 1 Mark Karasick
6 Chili's 6,250 2.70% 1-Apr-2014 Day 1 The Mills Corporation
8 Bed Bath & Beyond 27,000 15.58% 8-Dec-2013 Springing
9 Goodrich Bay City 8 22,679 6.28% 30-Apr-2017 Day 1 GGP
10 Dress Barn 8,000 4.82% 15-Jan-2009 Springing
11 Springing
11.1
11.2
11.3
11.4
11.5
11.6
11.7
11.8
12 Blue Shield of California 5,921 3.45% 31-Jul-2007 Day 1
13 Springing
15 McRaes 90,174 13.80% 19-Aug-2005 Springing
16 Various Various Various Various Springing
16.1
16.2
16.3 Nevada Works 4,878 20.15% 14-Jan-2010
16.4
16.5 Quest 1,687 5.34% 30-Sep-2006
16.6
16.7
16.8
16.9
18 Day 1
19
21 Kelly Paper 12,776 8.42% 31-Oct-2009 Day 1
23 Springing
26 American Institute for Full Employment 11,135 10.79% 1-Aug-2006 Springing
29 DollarLand USA Inc. 8,942 9.41% 15-Jul-2005
30 Shoe Department 6,110 6.45% 31-Dec-2007 Springing
31 Springing
33 Suncoast Schools Federal Credit Union 3,250 4.82% 1-May-2006 Springing
34 GSA - USA 3,084 3.86% MTM Springing
35 Springing
36 China Buffet 7,280 5.76% 31-Oct-2009 Springing
37 Springing
37.1
37.2
37.3
37.4
37.5
37.6
37.7
37.8
38 ATA Black Belt Acad. 3,200 4.96% 30-Nov-2008
40 North Fork Bank 3,500 5.46% 31-Mar-2008
41 Springing
41.1
41.2
41.3
41.4
42 Day 1
43 Orthodontic Centers of TN 2,326 9.25% 30-Jun-2009 Springing
45 Springing
46 Nickoletti's 4,000 10.89% 10-Feb-2005
47 Springing
48 Springing
49 Springing
51 Day 1
52 Grand Stand Hair Salon 1,720 11.68% 30-Nov-2008
53
54 Coinmach 3,000 19.31% 9-Mar-2009
(1) Two Mortgage Loans, representing 14.9% of the Cut-Off Date Pool Balance
(17.7% 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.
See "DESCRIPTION OF THE MORTGAGED POOL - Additional Mortgage Loan Information"
in the prospectus supplement.
WACHOVIA BANK COMMERCIAL MORTGAGE TRUST SERIES 2004-C11
ANNEX A-1B
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
AND MORTGAGED PROPERTIES IN LOAN GROUP 2
MORTGAGE LOAN
LOAN GROUP
NUMBER NUMBER PROPERTY NAME ADDRESS
- ------------------------------------------------------------------------------------------------------------------------------------
7 2 ARC 10-1 Pool Various
7.1 Siesta Lago 750 Siesta Lago Drive
7.2 Lakeview Estates 600 North Hill Field Road
7.3 Spring Valley Village 6 Hopf Drive
7.4 Washington Mobile Estates 450 North Washington Boulevard
7.5 Breazeale 458 North 9th Street
7.6 Havenwood 06 Havenwood Drive
7.7 Connelly Village 31 James Street
7.8 Lido Estates 547 East Avenue I
14 2 Essex Place Apartments 900 West 102nd Terrace
17 2 Deep Deuce at Bricktown 14 Northeast 2nd Street
20 2 Timberwood Apartments 3711 East Richthofen Circle
22 2 Centennial Park Apartments 2000 Hayes
24 2 Rancho Montana 000 East Roger Road
25 2 Town Center Apartments 233 West 120th Street
27 2 Stonegate Apartments 417 Mack Road
28 2 Cedar Ridge Apartments 945 Mack Road
32 2 Monaco South Apartments 280 South Monaco Parkway
39 2 North Park Village Condominiums 5 West Center Street
44 2 Carisbrooke Apartments - Phase II 403-2404 Heathrow, 2404 Chiswick & 21 Thatcham Drive
50 2 Colonial Court Townhome Apartments 8 Colonial Court
MORTGAGE
LOAN ZIP CROSS COLLATERALIZED AND
NUMBER CITY STATE CODE CROSS DEFAULTED LOAN FLAG
- ------------------------------------------------------------------------------------------------------------------------------------
7 Various Various Various
7.1 Kissimmee FL 34746
7.2 Layton UT 84041
7.3 Nanuet NY 10954
7.4 Ogden UT 84404
7.5 Laramie WY 82072
7.6 Pompano Beach FL 33064
7.7 Connelly NY 12417
7.8 Lancaster CA 93535
14 Overland Park KS 66212
17 Oklahoma City OK 73104
20 Aurora CO 80011
22 Overland Park KS 66213
24 Tucson AZ 85719
25 Overland Park KS 66209
27 Sacramento CA 95823 Stonegate Apartments/Cedar Ridge Apartments Portfolio
28 Sacramento CA 95823 Stonegate Apartments/Cedar Ridge Apartments Portfolio
32 Denver CO 80222
39 North Salt Lake UT 84054
44 Champaign IL 61820
50 Colonial Heights VA 23834
MORTGAGE GENERAL SPECIFIC ORIGINAL % OF AGGREGATE % OF LOAN
LOAN LOAN PROPERTY PROPERTY LOAN CUT-OFF DATE CUT-OFF DATE GROUP 2
NUMBER ORIGINATOR TYPE TYPE BALANCE ($) LOAN BALANCE ($) BALANCE BALANCE
- -----------------------------------------------------------------------------------------------------------------------------------
7 Citigroup Mobile Home Park Mobile Home Park 36,067,000.00 36,033,285.21 3.46% 22.38%
7.1 Citigroup Mobile Home Park Mobile Home Park
7.2 Citigroup Mobile Home Park Mobile Home Park
7.3 Citigroup Mobile Home Park Mobile Home Park
7.4 Citigroup Mobile Home Park Mobile Home Park
7.5 Citigroup Mobile Home Park Mobile Home Park
7.6 Citigroup Mobile Home Park Mobile Home Park
7.7 Citigroup Mobile Home Park Mobile Home Park
7.8 Citigroup Mobile Home Park Mobile Home Park
14 Artesia Multifamily Conventional 20,400,000.00 20,400,000.00 1.96% 12.67%
17 Wachovia Multifamily Conventional 18,240,000.00 18,240,000.00 1.75% 11.33%
20 Wachovia Multifamily Conventional 14,100,000.00 14,100,000.00 1.35% 8.76%
22 Artesia Multifamily Conventional 12,500,000.00 12,500,000.00 1.20% 7.76%
24 Wachovia Multifamily Conventional 11,000,000.00 11,000,000.00 1.06% 6.83%
25 Artesia Multifamily Conventional 10,500,000.00 10,500,000.00 1.01% 6.52%
27 Artesia Multifamily Conventional 9,850,000.00 9,850,000.00 0.95% 6.12%
28 Artesia Multifamily Conventional 9,435,000.00 9,435,000.00 0.91% 5.86%
32 Wachovia Multifamily Conventional 8,150,000.00 8,150,000.00 0.78% 5.06%
39 Wachovia Multifamily Conventional 5,559,000.00 5,553,880.85 0.53% 3.45%
44 Wachovia Multifamily Conventional 3,264,000.00 3,264,000.00 0.31% 2.03%
50 Artesia Multifamily Conventional 2,000,000.00 1,991,422.98 0.19% 1.24%
MORTGAGE FIRST MATURITY LOAN INTEREST
LOAN ORIGINATION PAY DATE MORTGAGE ADMINISTRATIVE ACCRUAL INTEREST ACCURAL
NUMBER DATE DATE OR ARD RATE (%) COST RATE(%) METHOD METHOD DURING IO
- ----------------------------------------------------------------------------------------------------------------------------------
7 18-Feb-2004 1-Apr-2004 1-Mar-2014 5.5300% 0.04235% Actual/360
7.1
7.2
7.3
7.4
7.5
7.6
7.7
7.8
14 15-Jan-2004 11-Mar-2004 11-Feb-2011 5.3200% 0.04235% Actual/360 Actual/360
17 12-Apr-2004 11-May-2004 11-Apr-2011 4.7500% 0.04235% Actual/360 Actual/360
20 19-Feb-2004 11-Apr-2004 11-Mar-2014 5.3900% 0.04235% Actual/360 Actual/360
22 11-Feb-2004 11-Apr-2004 11-Mar-2011 5.0600% 0.04235% Actual/360 Actual/360
24 1-Apr-2004 11-May-2004 11-Apr-2014 5.1700% 0.04235% Actual/360 Actual/360
25 11-Feb-2004 11-Apr-2004 11-Mar-2011 5.0600% 0.04235% Actual/360 Actual/360
27 22-Mar-2004 11-May-2004 11-Apr-2014 5.3100% 0.04235% Actual/360
28 22-Mar-2004 11-May-2004 11-Apr-2014 5.3100% 0.04235% Actual/360
32 26-Mar-2004 11-May-2004 11-Apr-2009 4.5900% 0.04235% Actual/360 Actual/360
39 26-Feb-2004 11-Apr-2004 11-Mar-2014 5.5900% 0.04235% Actual/360
44 25-Mar-2004 11-May-2004 11-Apr-2014 5.4900% 0.04235% Actual/360
50 11-Dec-2003 11-Feb-2004 11-Jan-2014 5.8500% 0.04235% Actual/360
MORTGAGE ORIGINAL TERM REMAINING TERM MATURITY DATE OR
LOAN TO MATURITY TO MATURITY REMAINING IO ORIGINAL AMORT REMAINING AMORT MONTHLY P&I ARD BALLOON
NUMBER OR ARD (MOS.) OR ARD (MOS.) PERIOD (MOS.) TERM (MOS.) TERM (MOS.) PAYMENTS ($) BALANCE ($)
- ------------------------------------------------------------------------------------------------------------------------------------
7 120 119 360 359 205,463.84 30,157,646.90
7.1
7.2
7.3
7.4
7.5
7.6
7.7
7.8
14 84 82 22 360 360 113,535.65 18,901,587.44
17 84 84 12 348 348 96,639.70 16,291,098.20
20 120 119 23 360 360 79,087.85 12,320,301.91
22 84 83 23 360 360 67,561.82 11,539,114.46
24 120 120 24 360 360 60,198.50 9,559,150.09
25 84 83 23 360 360 56,751.93 9,692,856.09
27 120 120 360 360 54,758.69 8,178,884.29
28 120 120 360 360 52,451.60 7,834,291.43
32 60 60 60 IO IO IO 8,150,000.00
39 120 119 360 359 31,878.01 4,656,805.42
44 120 120 360 360 18,512.16 2,725,575.40
50 120 117 300 297 12,703.27 1,540,964.60
MORTGAGE CUT-OFF LTV RATIO AT
LOAN ARD APPRAISED APPRAISAL DATE LTV MATURITY OR YEAR
NUMBER LOAN PREPAYMENT PROVISIONS VALUE ($) DATE DSCR (X) RATIO ARD BUILT
- ------------------------------------------------------------------------------------------------------------------------------
7 N L(25),D(92),O(3) 47,240,000 Various 1.37 76.28% 63.84% Various
7.1 13,680,000 1-Jan-2004 1972
7.2 6,800,000 1-Dec-2003 1971
7.3 6,400,000 1-Jan-2004 1964
7.4 5,700,000 10-Nov-2003 1987
7.5 4,100,000 22-Jul-2003 1960
7.6 4,000,000 1-Jan-2004 1971
7.7 3,360,000 1-Jan-2004 1976
7.8 3,200,000 1-Jan-2004 1987
14 N L(36),D(45),O(3) 27,750,000 22-Sep-2003 1.29 73.51% 68.11% 1970
17 N L(48),D(33),O(3) 22,800,000 13-Feb-2004 1.46 80.00% 71.45% 2001
20 Y L(48),D(69),O(3) 18,300,000 30-Dec-2003 1.28 77.05% 67.32% 1983
22 N L(36),D(45),O(3) 17,300,000 31-Oct-2003 1.31 72.25% 66.70% 1997
24 Y L(48),D(69),O(3) 14,400,000 5-Jan-2004 1.42 76.39% 66.38% 1971
25 N L(36),D(45),O(3) 15,000,000 21-Oct-2003 1.29 70.00% 64.62% 1996
27 N L(36),D(81),O(3) 15,300,000 21-Jan-2004 1.53 64.38% 53.46% 1978
28 N L(36),D(81),O(3) 15,160,000 21-Jan-2004 1.55 62.24% 51.68% 1985
32 N L(25),YM2%orD(32),O(3) 10,850,000 29-Jan-2004 1.94 75.12% 75.12% 1971
39 Y L(48),D(69),O(3) 7,525,000 12-Dec-2003 1.20 73.81% 61.88% 1978
44 Y L(48),D(69),O(3) 4,080,000 28-Jan-2004 1.23 80.00% 66.80% 2002
50 N L(36),D(81),O(3) 2,800,000 11-Nov-2003 1.57 71.12% 55.03% 1946
MORTGAGE CUT-OFF DATE
LOAN YEAR NUMBER UNIT OF LOAN AMOUNT OCCUPANCY OCCUPANCY
NUMBER RENOVATED OF UNITS MEASURE PER (UNIT) ($) RATE (%) "AS OF" DATE MOST RECENT PERIOD
- -------------------------------------------------------------------------------------------------------------------------------
7 1,478 Pads 24,380 96.14% 30-Sep-2003 TTM 9/03
7.1 490 Pads 93.27% 30-Sep-2003 TTM 9/03
7.2 209 Pads 96.17% 30-Sep-2003 TTM 9/03
7.3 135 Pads 100.00% 30-Sep-2003 TTM 9/03
7.4 186 Pads 95.70% 30-Sep-2003 TTM 9/03
7.5 117 Pads 98.29% 30-Sep-2003 TTM 9/03
7.6 120 Pads 98.33% 30-Sep-2003 TTM 9/03
7.7 100 Pads 100.00% 30-Sep-2003 TTM 9/03
7.8 121 Pads 96.69% 30-Sep-2003 TTM 9/03
14 2002 352 Units 57,955 88.92% 8-Jan-2004 YE 2003
17 294 Units 62,041 87.76% 16-Mar-2004 2004 Budget
20 336 Units 41,964 92.26% 5-Jan-2004 YE 2003
22 2002 170 Units 73,529 92.35% 2-Feb-2004 YE 2003
24 2003 385 Units 28,571 88.57% 12-Feb-2004 Buyer's Budget
25 2002 156 Units 67,308 94.87% 2-Feb-2004 YE 2003
27 288 Units 34,201 94.44% 27-Feb-2004 YE 2003
28 274 Units 34,434 92.34% 29-Feb-2004 YE 2003
32 216 Units 37,731 90.74% 9-Feb-2004 YE 2003
39 170 Units 32,670 91.18% 29-Dec-2003 YTD 10/03 Annualized
44 64 Units 51,000 95.31% 24-Mar-2004 T-3 Annualized 2/04
50 2003 64 Units 31,116 87.50% 31-Dec-2003
MORTGAGE UW NET
LOAN MOST RECENT MOST RECENT MOST RECENT MOST RECENT UW UW OPERATING UW NET
NUMBER REVENUES ($) EXPENSES ($) NOI ($) NCF ($) REVENUES ($) EXPENSES ($) INCOME ($) CASH FLOW ($)
- ----------------------------------------------------------------------------------------------------------------------------------
7 6,295,815 2,550,364 3,745,451 3,745,451 6,248,580 2,791,458 3,457,122 3,383,222
7.1 1,910,328 876,911 1,033,417 1,033,417 1,902,457 898,677 1,003,780 979,280
7.2 789,681 226,881 562,801 562,801 780,467 267,255 513,212 502,762
7.3 941,155 529,343 411,812 411,812 924,682 535,140 389,542 382,792
7.4 642,086 124,075 518,011 518,011 645,030 163,649 481,381 472,081
7.5 456,526 127,690 328,836 328,836 458,459 151,769 306,690 300,840
7.6 619,704 293,763 325,941 325,941 628,512 324,388 304,124 298,124
7.7 438,485 124,913 313,572 313,572 416,001 205,542 210,458 205,458
7.8 497,850 246,788 251,062 251,062 492,972 245,037 247,935 241,885
14 3,247,728 1,393,466 1,854,262 1,454,684 3,309,060 1,461,689 1,847,371 1,759,371
17 2,876,333 959,179 1,917,154 1,843,654 2,691,310 926,132 1,765,177 1,691,677
20 2,347,982 1,068,205 1,279,777 1,195,777 2,305,521 1,010,295 1,295,226 1,211,226
22 1,893,480 719,930 1,173,550 1,104,815 1,844,203 731,315 1,112,888 1,065,288
24 2,382,526 1,080,371 1,302,155 1,205,905 2,223,107 1,098,017 1,125,090 1,028,840
25 1,652,293 657,114 995,179 938,709 1,584,210 662,618 921,591 877,911
27 1,980,944 778,536 1,202,408 1,177,661 2,047,381 948,948 1,098,432 1,008,288
28 2,004,054 749,795 1,254,259 1,225,383 1,993,448 918,118 1,075,330 977,786
32 1,488,870 687,225 801,645 736,617 1,488,870 697,526 791,344 726,316
39 983,665 425,537 558,128 494,208 1,000,694 477,708 522,986 459,066
44 435,636 90,614 345,022 330,622 444,232 157,169 287,063 272,663
50 412,387 156,655 255,732 239,732
MORTGAGE LARGEST TENANT NAME LARGEST LARGEST LARGEST 2ND LARGEST TENANT NAME 2ND LARGEST 2ND LARGEST 2ND LARGEST
LOAN TENANT TENANT TENANT EXP. TENANT TENANT % TENANT
NUMBER SQ. FT. % OF NRA DATE SQ. FT. OF NRA (%) EXP. DATE
- ------------------------------------------------------------------------------------------------------------------------------------
7
7.1
7.2
7.3
7.4
7.5
7.6
7.7
7.8
14
17
20
22
24
25
27
28
32
39
44
50
MORTGAGE 3RD LARGEST TENANT NAME 3RD LARGEST 3RD LARGEST 3RD LARGEST LOCKBOX LARGEST AFFILIATED SPONSOR FLAG
LOAN TENANT TENANT % TENANT (> THAN 5% OF POOL)
NUMBER SQ. FT OF NRA EXP. DATE
- ------------------------------------------------------------------------------------------------------------------------------------
7 Springing
7.1
7.2
7.3
7.4
7.5
7.6
7.7
7.8
14
17
20 Springing
22
24 Springing
25
27 Day 1
28 Day 1
32 Springing
39 Springing
44 Springing
50
WACHOVIA BANK COMMERCIAL MORTGAGE TRUST SERIES 2004-C11
ANNEX A-2
CERTAIN INFORMATION REGARDING MULTIFAMILY MORTGAGED PROPERTIES
MORTGAGE LOAN
LOAN GROUP
NUMBER NUMBER PROPERTY NAME PROPERTY ADDRESS PROPERTY CITY
- ------------------------------------------------------------------------------------------------------------------------------------
14 2 Essex Place Apartments 8900 West 102nd Terrace Overland Park
17 2 Deep Deuce at Bricktown 314 Northeast 2nd Street Oklahoma City
20 2 Timberwood Apartments 13711 East Richthofen Circle Aurora
22 2 Centennial Park Apartments 12000 Hayes Overland Park
23 1 Harrison Court (1) 761 Harrison Avenue Boston
24 2 Rancho Montana 2000 East Roger Road Tucson
25 2 Town Center Apartments 6233 West 120th Street Overland Park
27 2 Stonegate Apartments 5417 Mack Road Sacramento
28 2 Cedar Ridge Apartments 4945 Mack Road Sacramento
32 2 Monaco South Apartments 2280 South Monaco Parkway Denver
39 2 North Park Village Condominiums 55 West Center Street North Salt Lake
44 2 Carisbrooke Apartments - Phase II 2403-2404 Heathrow, 2404 Chiswick & 21 Thatcham Drive Champaign
50 2 Colonial Court Townhome Apartments 58 Colonial Court Colonial Heights
MORTGAGE GENERAL UTILITIES NUMBER OF
LOAN PROPERTY PROPERTY PROPERTY SPECIFIC ELEVATOR TENANT STUDIO
NUMBER STATE ZIP CODE COUNTY TYPE PROPERTY TYPE BUILDINGS PAYS UNITS
- --------------------------------------------------------------------------------------------------------------------------------
14 KS 66212 Johnson Multifamily Conventional N E 2
17 OK 73104 Oklahoma Multifamily Conventional N E,W
20 CO 80011 Arapahoe Multifamily Conventional N E,W,G,S
22 KS 66213 Johnson Multifamily Conventional N W,E,T
23 MA 02118 Suffolk Multifamily Student Housing Y E 12
24 AZ 85719 Pima Multifamily Conventional N E, G, P, C
25 KS 66209 Johnson Multifamily Conventional N E
27 CA 95823 Sacramento Multifamily Conventional N E,G 24
28 CA 95823 Sacramento Multifamily Conventional N E,G
32 CO 80222 Denver Multifamily Conventional Y W,E,G,T,S
39 UT 84054 Davis Multifamily Conventional N E,G,P,C
44 IL 61820 Champaign Multifamily Conventional N E,W
50 VA 23834 Chesterfield Multifamily Conventional N E,G
MORTGAGE NUMBER NUMBER NUMBER NUMBER AVERAGE RENT; AVERAGE RENT;
LOAN OF 1 BR OF 2 BR OF 3 BR OF 4+ RENT RANGES - RENT RANGES - 1
NUMBER UNITS UNITS UNITS BR UNITS STUDIO UNITS BR UNITS
- ---------------------------------------------------------------------------------------------------------------------------------
14 144 186 20 552;525-579 626;499-840
17 132 118 44 716;600-680
20 104 232 631;623-633
22 48 85 37 710;604-850
23 34 14
24 136 208 40 1 474;465-495
25 58 80 18 742;620-835
27 123 138 3 525;525-525 574;325-695
28 92 182 575;575-575
32 148 67 1 566;535-580
39 170
44 32 32 530;515-545
50 64
MORTGAGE AVERAGE RENT; AVERAGE RENT; AVERAGE RENT; MORTGAGE
LOAN RENT RANGES - 2 RENT RANGES - 3 RENT RANGES - 4+ LOAN
NUMBER BR UNITS BR UNITS BR UNITS NUMBER
- --------------------------------------------------------------------------------------------------------------------
14 924;619-1235 1109;889-1305 14
17 892;824-970 1015;915-1155 17
20 784;751-796 20
22 962;779-1289 1156;925-1390 22
23 23
24 594;585-600 795;795-795 950;950-950 24
25 929;849-1140 1104;1034-1269 25
27 686;347-695 795;795-795 27
28 708;695-745 28
32 713;710-730 955;955-955 32
39 535;532-563 39
44 685;675-695 44
50 592;485-624 50
(1) The rental rates for each unit are determined by the existing master lease.
[THIS PAGE INTENTIONALLY LEFT BLANK.]
WACHOVIA BANK COMMERCIAL MORTGAGE TRUST SERIES 2004-C11
ANNEX A-3
RESERVE ACCOUNT INFORMATION
MORTGAGE LOAN GENERAL SPECIFIC
LOAN GROUP PROPERTY PROPERTY
NUMBER NUMBER PROPERTY NAME TYPE TYPE
- ------------------------------------------------------------------------------------------------------------------------------------
1 1 Brass Mill Center & Commons (1) Retail Anchored
2 1 Four Seasons Town Centre Retail Anchored
3 1 11 Madison Avenue Office CBD
4 1 Bank of America Tower Office CBD
5 1 Starrett-Lehigh Building Office CBD
6 1 Westland Mall (1) Retail Anchored
7 2 ARC 10-1 Pool Mobile Home Park Mobile Home Park
7.1 Siesta Lago Mobile Home Park Mobile Home Park
7.2 Lakeview Estates Mobile Home Park Mobile Home Park
7.3 Spring Valley Village Mobile Home Park Mobile Home Park
7.4 Washington Mobile Estates Mobile Home Park Mobile Home Park
7.5 Breazeale Mobile Home Park Mobile Home Park
7.6 Havenwood Mobile Home Park Mobile Home Park
7.7 Connelly Village Mobile Home Park Mobile Home Park
7.8 Lido Estates Mobile Home Park Mobile Home Park
8 1 Amargosa Commons Shopping Center Retail Anchored
9 1 Bay City Mall (1) Retail Anchored
10 1 The Shoppes at Gilbert Commons Retail Anchored
11 1 ARC 5-4 Pool Mobile Home Park Mobile Home Park
11.1 Riverdale (Colonial Coach) Mobile Home Park Mobile Home Park
11.2 Summit Oaks Mobile Home Park Mobile Home Park
11.3 Marnelle Mobile Home Park Mobile Home Park
11.4 Siesta Manor Mobile Home Park Mobile Home Park
11.5 Tanglewood Mobile Home Park Mobile Home Park
11.6 Belaire Mobile Home Park Mobile Home Park
11.7 Hidden Oaks Mobile Home Park Mobile Home Park
11.8 Park Avenue Estates Mobile Home Park Mobile Home Park
12 1 Valley Corporate Center Office Suburban
13 1 Home Depot - Colma, CA Retail Anchored
14 2 Essex Place Apartments (3) Multifamily Conventional
15 1 University Mall Retail Anchored
16 1 AFRT 9 Pool Various Various
16.1 Bank of America Office Building - Fort Meyers, FL Office Suburban
16.2 Capital City Bank - Macon, GA Retail Unanchored
16.3 Bank of America Office Building - Reno, NV Office Suburban
16.4 Central Carolina Bank - Morganton, NC Retail Anchored
16.5 Bank of America and Motor Bank Office Building - Nassau Bay, TX Office Suburban
16.6 Capital City Bank - Palatka, FL Retail Unanchored
16.7 Regions Bank - Hilton Head, SC Retail Anchored
16.8 Citibank - Pembroke Pines, FL Retail Anchored
16.9 AmSouth Bank - Winter Park, FL Retail Anchored
17 2 Deep Deuce at Bricktown Multifamily Conventional
18 1 Poway Shopping Center Retail Anchored
19 1 Sports Authority Corporate Headquarters Office Suburban
20 2 Timberwood Apartments Multifamily Conventional
21 1 Covina Technology Center Industrial Flex
22 2 Centennial Park Apartments (4) Multifamily Conventional
23 1 Harrison Court Multifamily Student Housing
24 2 Rancho Montana Multifamily Conventional
25 2 Town Center Apartments (5) Multifamily Conventional
26 1 10400 Eaton Place Office Suburban
27 2 Stonegate Apartments Multifamily Conventional
28 2 Cedar Ridge Apartments Multifamily Conventional
29 1 Sam's Club Plaza Retail Anchored
30 1 Oliver Creek Crossing Shopping Center Retail Shadow Anchored
31 1 Colonial Heritage Mobile Home Park Mobile Home Park Mobile Home Park
32 2 Monaco South Apartments Multifamily Conventional
33 1 Punta Gorda Crossings Retail Anchored
34 1 University District Building Office CBD
35 1 Top Food & Drug - Olympia, WA Retail Anchored
36 1 Plaza 75 Shopping Center Retail Anchored
37 1 AFRT 8 Pool Retail Various
37.1 Sovereign Bank/U.S. Post Office - Avondale, PA Retail Anchored
37.2 Unity Bank - Edison Township, NJ Retail Unanchored
37.3 Keystone Savings Bank - Emmaus, PA Retail Anchored
37.4 Unity Bank - Highland Park, NJ Retail Unanchored
37.5 Sovereign Bank - Phoenixville, PA Retail Anchored
37.6 Valley National Bank - Scotch Plains, NJ Retail Unanchored
37.7 Unity Bank - South Plainfield, NJ Retail Unanchored
37.8 Fleet Bank - Warminster, PA Retail Anchored
38 1 The Shoppes at Bell Creek Retail Anchored
39 2 North Park Village Condominiums Multifamily Conventional
40 1 Bethpage Plaza Shopping Center Retail Anchored
41 1 Carolina Self Storage Pool Self Storage Self Storage
41.1 Carolina Self Storage - Orangeburg, SC Self Storage Self Storage
41.2 Carolina Self Storage - Florence, SC Self Storage Self Storage
41.3 Carolina Self Storage - Sumter, SC (North Guignard Drive) Self Storage Self Storage
41.4 Carolina Self Storage - Sumter, SC (Broad Street) Self Storage Self Storage
42 1 Walgreens - New Haven, CT Retail Anchored
43 1 Fresh Market Shopping Center Retail Unanchored
44 2 Carisbrooke Apartments - Phase II Multifamily Conventional
45 1 Walgreens - Harrison, OH Retail Anchored
46 1 Heritage Square Shopping Center Retail Shadow Anchored
47 1 Best Buy - Tacoma, WA Retail Anchored
48 1 Walgreens - Cincinnati, OH Retail Anchored
49 1 The Hill Building Mixed Use Office/Multifamily
50 2 Colonial Court Townhome Apartments Multifamily Conventional
51 1 Rite Aid - Asbury Park, NJ Retail Unanchored
52 1 The Shops at Summerwood Retail Unanchored
53 1 Thornydale Self-Storage Self Storage Self Storage
54 1 Pirate Plaza Shopping Center Retail Unanchored
ANNUAL INITIAL
MORTGAGE MONTHLY MONTHLY DEPOSIT TO DEPOSIT TO CAPITAL ONGOING
LOAN TAX INSURANCE REPLACEMENT IMPROVEMENTS INITIAL TI/LC TI/LC
NUMBER ESCROW ESCROW RESERVES RESERVE ESCROW FOOTNOTE
- -----------------------------------------------------------------------------------------------------------------------
1
2 111,840
3 222,900 108,333 225,655 (2)
4 113,671 31,091 99,147 (2)
5 610,844 112,906 347,945 161,975 7,000,000 (2)
6
7 70,331 4,557 73,900 516,425
7.1 21,958 1,120 24,500 1,500
7.2 1,739 600 10,450 21,150
7.3 25,731 476 6,750 400,625
7.4 900 553 9,300 49,963
7.5 825 734 5,850 18,875
7.6 6,547 396 6,000
7.7 8,995 211 5,000 5,000
7.8 3,636 467 6,050 19,313
8 34,789 5,458 8,664
9
10 17,083 3,152 11,713 (2)
11 31,387 4,745 90,700 194,545
11.1 8,500 1,325 24,050 94,420
11.2 9,158 821 14,600 23,438
11.3 927 533 10,250
11.4 2,919 435 11,350 43,750
11.5 1,534 776 13,300 4,188
11.6 3,953 334 8,550 18,750
11.7 1,728 303 4,350 10,000
11.8 2,668 218 4,250
12 22,777 4,620 30,850 501,500 (2)
13
14 17,796 7,914
15 28,029 11,949 112,212 489,079
16 241,691 (2)
16.1
16.2
16.3
16.4
16.5
16.6
16.7
16.8
16.9
17 13,578 6,738 73,500 5,000
18
19 31,525 (2)
20 9,010 3,479 81,312
21 22,776 930,000 (2)
22 15,827 4,610
23 3,846 2,500 21,000 11,750
24 12,551 4,221 93,940 500,875
25 13,025 3,555
26 7,332 998 23,015 200,000 (2)
27 5,606 5,673 90,144 45,000
28 6,078 5,905 97,544 313,625
29 13,014 4,077 23,744 6,250
30 4,894 1,128 9,474
31 7,043 557 2,889 1,313
32 4,498 3,009 65,028 220,000
33
34 10,029 23,941 140,748
35 11,191
36 15,755 2,213 29,573 (2)
37
37.1
37.2
37.3
37.4
37.5
37.6
37.7
37.8
38 2,938 1,440 6,219 (2)
39 5,623 1,765 57,970 129,738
40 38,440 12,421 199,018
41 5,250 1,543 23,925
41.1
41.2
41.3
41.4
42 362 2,268 5,000
43 6,837 481 2,516
44 418 1,230 14,400
45
46 2,723 2,371 6,977 62,500 (2)
47
48
49 2,704 527 12,771 41,813
50 2,175 1,199 50,000
51
52 4,839 1,298 2,208 (2)
53 4,469 472 7,488
54 943 579 4,040 50,000 (2)
(1) Upon the satisfaction of certain tests, these Mortgage Loans have escrows
which may spring into effect.
(2) In addition to any such escrows funded at loan closing for potential TI/LC,
these Mortgage Loans require funds to be escrowed during some or all of the loan
term for TI/LC expenses, which may be incurred during the loan term. In certain
instances, escrowed funds may be released to the borrower upon satisfaction of
certain leasing conditions.
(3) $10,267 will be escrowed monthly for Replacement Reserves beginning on the
earlier of 3/11/2006 or payment date following first disbursement.
(4) $3,967 will be escrowed monthly for Replacement Reserves beginning on the
earlier of 4/11/2005 or payment date following first disbursement.
(5) $3,640 will be escrowed monthly for Replacement Reserves beginning on the
earlier of 4/11/2005 or payment date following first disbursement.
[THIS PAGE INTENTIONALLY LEFT BLANK.]
WACHOVIA BANK COMMERCIAL MORTGAGE TRUST SERIES 2004-C11
ANNEX A-4
COMMERCIAL TENANT SCHEDULE
MORTGAGE LOAN GENERAL SPECIFIC
LOAN GROUP PROPERTY PROPERTY
NUMBER NUMBER PROPERTY NAME TYPE TYPE
- -----------------------------------------------------------------------------------------------------------------------------------
1 1 Brass Mill Center & Commons Retail Anchored
2 1 Four Seasons Town Centre Retail Anchored
3 1 11 Madison Avenue Office CBD
4 1 Bank of America Tower Office CBD
5 1 Starrett-Lehigh Building Office CBD
6 1 Westland Mall Retail Anchored
8 1 Amargosa Commons Shopping Center Retail Anchored
9 1 Bay City Mall Retail Anchored
10 1 The Shoppes at Gilbert Commons Retail Anchored
12 1 Valley Corporate Center Office Suburban
13 1 Home Depot - Colma, CA Retail Anchored
15 1 University Mall Retail Anchored
16 1 AFRT 9 Pool Various Various
16.1 Bank of America Office Building - Fort Meyers, FL Office Suburban
16.2 Capital City Bank - Macon, GA Retail Unanchored
16.3 Bank of America Office Building - Reno, NV Office Suburban
16.4 Central Carolina Bank - Morganton, NC Retail Anchored
16.5 Bank of America and Motor Bank Office Building - Nassau Bay, TX Office Suburban
16.6 Capital City Bank - Palatka, FL Retail Unanchored
16.7 Regions Bank - Hilton Head, SC Retail Anchored
16.8 Citibank - Pembroke Pines, FL Retail Anchored
16.9 AmSouth Bank - Winter Park, FL Retail Anchored
18 1 Poway Shopping Center Retail Anchored
19 1 Sports Authority Corporate Headquarters Office Suburban
21 1 Covina Technology Center Industrial Flex
26 1 10400 Eaton Place Office Suburban
29 1 Sam's Club Plaza Retail Anchored
30 1 Oliver Creek Crossing Shopping Center Retail Shadow Anchored
33 1 Punta Gorda Crossings Retail Anchored
34 1 University District Building Office CBD
35 1 Top Food & Drug - Olympia, WA Retail Anchored
36 1 Plaza 75 Shopping Center Retail Anchored
37 1 AFRT 8 Pool Retail Various
37.1 Sovereign Bank/U.S. Post Office - Avondale, PA Retail Anchored
37.2 Unity Bank - Edison Township, NJ Retail Unanchored
37.3 Keystone Savings Bank - Emmaus, PA Retail Anchored
37.4 Unity Bank - Highland Park, NJ Retail Unanchored
37.5 Sovereign Bank - Phoenixville, PA Retail Anchored
37.6 Valley National Bank - Scotch Plains, NJ Retail Unanchored
37.7 Unity Bank - South Plainfield, NJ Retail Unanchored
37.8 Fleet Bank - Warminster, PA Retail Anchored
38 1 The Shoppes at Bell Creek Retail Anchored
40 1 Bethpage Plaza Shopping Center Retail Anchored
42 1 Walgreens - New Haven, CT Retail Anchored
43 1 Fresh Market Shopping Center Retail Unanchored
45 1 Walgreens - Harrison, OH Retail Anchored
46 1 Heritage Square Shopping Center Retail Shadow Anchored
47 1 Best Buy - Tacoma, WA Retail Anchored
48 1 Walgreens - Cincinnati, OH Retail Anchored
49 1 The Hill Building Mixed Use Office/Multifamily
51 1 Rite Aid - Asbury Park, NJ Retail Unanchored
52 1 The Shops at Summerwood Retail Unanchored
54 1 Pirate Plaza Shopping Center Retail Unanchored
MORTGAGE LARGEST LARGEST
LOAN CUT-OFF DATE NUMBER OF UNIT OF TENANT TENANT EXP.
NUMBER LOAN BALANCE ($) UNITS (UNITS) MEASURE LARGEST TENANT % OF NRA DATE
- ------------------------------------------------------------------------------------------------------------------------------------
1 130,000,000.00 864,187 Sq. Ft. JCPenney 14.49% 30-Sep-2017
2 97,864,905.53 928,410 Sq. Ft. JCPenney 23.48% 31-Aug-2009
3 95,555,555.66 2,256,552 Sq. Ft. Credit Suisse First Boston 85.15% Multiple Spaces
4 75,000,000.00 697,341 Sq. Ft. Bank of America, N.A. 26.96% 31-Jul-2009
5 60,000,000.00 2,319,634 Sq. Ft. US Customs 11.48% 31-Oct-2013
6 58,800,000.00 231,239 Sq. Ft. Piccadilly 4.33% 1-Jun-2004
8 29,760,000.00 173,302 Sq. Ft. Circuit City 18.99% 31-Jan-2019
9 26,082,959.01 361,194 Sq. Ft. Sears 22.52% 30-Oct-2010
10 25,100,000.00 166,097 Sq. Ft. Kohl's 52.13% 12-Sep-2023
12 22,600,000.00 171,588 Sq. Ft. Kyle J. Marx & James C. Carroll 5.12% 31-May-2007
13 21,613,000.00 99,970 Sq. Ft. Home Depot 100.00% 31-Jan-2016
15 19,734,143.27 653,558 Sq. Ft. Sears (ground lease) 16.07% 19-Aug-2010
16 18,716,550.33 161,678 Sq. Ft. Various Various Various
16.1 29,403 Sq. Ft. Bank of America, N.A. 53.30% 31-Dec-2012
16.2 18,925 Sq. Ft. Capital City Bank 100.00% 31-Aug-2010
16.3 24,206 Sq. Ft. Ledcor Industries 43.87% 28-Feb-2007
16.4 20,830 Sq. Ft. National Bank of Commerce 100.00% 31-Aug-2010
16.5 31,568 Sq. Ft. Bank of America, N.A. 74.12% 31-Dec-2012
16.6 21,092 Sq. Ft. Capital City Bank 100.00% 31-Aug-2010
16.7 8,413 Sq. Ft. Regions Bank 100.00% 27-Aug-2024
16.8 3,741 Sq. Ft. CitiBank F.S.B. 100.00% 28-Feb-2013
16.9 3,500 Sq. Ft. AmSouth Bank 100.00% 28-Feb-2023
18 17,660,000.00 107,328 Sq. Ft. Kohl's 82.22% 31-Jan-2025
19 15,937,612.39 210,207 Sq. Ft. The Sports Authority 100.00% 31-Jul-2018
21 13,413,049.59 151,813 Sq. Ft. Apollo (the Potomac Group) 22.27% 30-Nov-2005
26 10,103,877.44 103,173 Sq. Ft. BAE Enterprise Systems 24.90% Multiple Spaces
29 8,800,000.00 94,977 Sq. Ft. OfficeMax Inc. 26.32% 31-Aug-2007
30 8,490,796.51 94,744 Sq. Ft. A C Moore 22.58% 31-Mar-2013
33 7,593,389.85 67,371 Sq. Ft. Publix 65.71% 1-Apr-2023
34 7,509,002.16 79,803 Sq. Ft. University of Washington 63.64% Multiple Spaces
35 7,492,795.68 74,607 Sq. Ft. Haggen, Inc. (Top Food & Drug) 100.00% 31-Dec-2019
36 6,394,412.25 126,474 Sq. Ft. Big Lots 26.25% 30-Jun-2013
37 6,060,677.59 34,097 Sq. Ft. Various Various Various
37.1 8,065 Sq. Ft. Sovereign Bank 55.80% 28-Feb-2019
37.2 4,500 Sq. Ft. Unity Bank 100.00% 28-Feb-2009
37.3 3,384 Sq. Ft. Sovereign Bank 100.00% 28-Feb-2019
37.4 3,200 Sq. Ft. Unity Bank 100.00% 31-May-2009
37.5 2,692 Sq. Ft. Sovereign Bank 100.00% 28-Feb-2019
37.6 4,156 Sq. Ft. Valley National Bank 100.00% 28-Feb-2019
37.7 3,400 Sq. Ft. Unity Bank 100.00% 31-Mar-2009
37.8 4,700 Sq. Ft. Fleet Bank 100.00% 30-Apr-2009
38 5,987,729.56 64,561 Sq. Ft. Food Lion 58.80% 15-Apr-2023
40 5,300,000.00 64,063 Sq. Ft. King Kullen Grocery Co., Inc. 46.83% 30-Jun-2023
42 4,300,000.00 15,120 Sq. Ft. Walgreens 100.00% 30-Sep-2061
43 4,100,000.00 25,159 Sq. Ft. Fresh Market 73.13% 31-Oct-2023
45 3,246,816.36 14,490 Sq. Ft. Walgreens 100.00% 31-May-2078
46 3,034,081.65 36,719 Sq. Ft. Hollywood Video 17.18% 3-Dec-2010
47 3,000,000.00 50,000 Sq. Ft. Best Buy 100.00% 31-Jan-2023
48 2,972,085.75 14,490 Sq. Ft. Walgreens 100.00% 30-Jun-2078
49 2,625,000.00 35,311 Sq. Ft. Interactive Financial Group, Inc. 50.65% 30-Jun-2006
51 1,847,071.34 11,180 Sq. Ft. Rite Aid 100.00% 31-Jul-2020
52 1,843,405.66 14,721 Sq. Ft. Manuel's Mexican Restaurant 20.38% 31-Oct-2008
54 802,330.27 15,540 Sq. Ft. Dollar General 49.55% 28-Feb-2009
MORTGAGE 2ND LARGEST 2ND LARGEST
LOAN TENANT % OF TENANT EXP.
NUMBER 2ND LARGEST TENANT NAME NRA (%) DATE 3RD LARGEST TENANT NAME
- ----------------------------------------------------------------------------------------------------------------------------------
1 Burlington Coat Factory 10.58% 31-Oct-2014 Hoyts Cinema
2 Belk Stores 22.83% 31-Jan-2014 Comp USA, Inc.
3 Aon (sublet to IBM) 6.12% 30-Apr-2013 Omnicom
4 Holland & Knight 7.20% 30-Sep-2013 McGuire Woods
5 Martha Stewart 6.88% 16-Dec-2009 FBI
6 Guess 3.34% 1-Sep-2010 Chili's
8 T.J. Maxx 16.39% 31-Oct-2013 Bed Bath & Beyond
9 Younkers 19.53% 28-Feb-2006 Goodrich Bay City 8
10 Sports Authority 21.07% 1-Aug-2013 Dress Barn
12 Bob Baker Enterprises, Inc. 4.12% 31-Oct-2005 Blue Shield of California
13
15 JCPenney (ground lease) 15.22% 19-Aug-2010 McRaes
16 Various Various Various Various
16.1 Florida Rural Legal Services, Inc. 46.70% 27-Aug-2013
16.2
16.3 Bank of America, N.A. 35.97% 31-Dec-2012 Nevada Works
16.4
16.5 University of Texas Medical 20.54% Multiple Spaces Quest
16.6
16.7
16.8
16.9
18 Staples 17.78% 12-Feb-2019
19
21 Kaiser Federal 18.64% 30-Apr-2010 Kelly Paper
26 Data Systems 16.27% 1-Apr-2008 American Institute for Full Employment
29 Western Auto - Advance Auto Parts 16.19% 31-Dec-2004 DollarLand USA Inc.
30 Dollar Tree 12.67% 30-Sep-2007 Shoe Department
33 Blockbuster Video 5.20% 1-Jun-2008 Suncoast Schools Federal Credit Union
34 Ernest E. Barrett, DDS 4.98% 31-Jul-2010 GSA - USA
35
36 Family Dollar Store 11.39% 22-Mar-2006 China Buffet
37 Various Various Various
37.1 U.S. Post Office 44.20% 31-Dec-2007
37.2
37.3
37.4
37.5
37.6
37.7
37.8
38 Movie Gallery 4.96% 22-Nov-2008 ATA Black Belt Acad.
40 Erga Bakery 5.87% 30-Sep-2009 North Fork Bank
42
43 Ken Rash's 12.72% 30-Nov-2005 Orthodontic Centers of TN
45
46 Casa Corona 13.40% 1-Dec-2006 Nickoletti's
47
48
49
51
52 Tan & Nails 4 You 15.90% 31-Jan-2014 Grand Stand Hair Salon
54 Texas Workforce 23.49% 31-Dec-2010 Coinmach
MORTGAGE 3RD LARGEST 3RD LARGEST MORTGAGE
LOAN TENANT % TENANT EXP. LOAN
NUMBER OF NRA DATE NUMBER
- ---------------------------------------------------------------------------------------------------------------------
1 8.16% 28-Feb-2006 1
2 2.99% 30-Jun-2008 2
3 4.23% 30-Sep-2008 3
4 5.38% 31-Dec-2012 4
5 5.10% 31-Oct-2008 5
6 2.70% 1-Apr-2014 6
8 15.58% 8-Dec-2013 8
9 6.28% 30-Apr-2017 9
10 4.82% 15-Jan-2009 10
12 3.45% 31-Jul-2007 12
13 13
15 13.80% 19-Aug-2005 15
16 Various Various 16
16.1 16.1
16.2 16.2
16.3 20.15% 14-Jan-2010 16.3
16.4 16.4
16.5 5.34% 30-Sep-2006 16.5
16.6 16.6
16.7 16.7
16.8 16.8
16.9 16.9
18 18
19 19
21 8.42% 31-Oct-2009 21
26 10.79% 1-Aug-2006 26
29 9.41% 15-Jul-2005 29
30 6.45% 31-Dec-2007 30
33 4.82% 1-May-2006 33
34 3.86% MTM 34
35 35
36 5.76% 31-Oct-2009 36
37 37
37.1 37.1
37.2 37.2
37.3 37.3
37.4 37.4
37.5 37.5
37.6 37.6
37.7 37.7
37.8 37.8
38 4.96% 30-Nov-2008 38
40 5.46% 31-Mar-2008 40
42 42
43 9.25% 30-Jun-2009 43
45 45
46 10.89% 10-Feb-2005 46
47 47
48 48
49 49
51 51
52 11.68% 30-Nov-2008 52
54 19.31% 9-Mar-2009 54
[THIS PAGE INTENTIONALLY LEFT BLANK.]
WACHOVIA BANK COMMERCIAL MORTGAGE TRUST SERIES 2004-C11
ANNEX A-5
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS AND
MORTGAGED PROPERTIES (CROSSED & PORTFOLIOS)
MORTGAGE LOAN
LOAN GROUP
NUMBER NUMBER PROPERTY NAME CITY STATE
- -------------------------------------------------------------------------------------------------------------------------------
7 2 ARC 10-1 Pool Various Various
- -------------------------------------------------------------------------------------------------------------------------------
7.1 Siesta Lago Kissimmee FL
7.2 Lakeview Estates Layton UT
7.3 Spring Valley Village Nanuet NY
7.4 Washington Mobile Estates Ogden UT
7.5 Breazeale Laramie WY
7.6 Havenwood Pompano Beach FL
7.7 Connelly Village Connelly NY
7.8 Lido Estates Lancaster CA
11 1 ARC 5-4 Pool Various Various
- -------------------------------------------------------------------------------------------------------------------------------
11.1 Riverdale (Colonial Coach) Riverdale GA
11.2 Summit Oaks Fort Worth TX
11.3 Marnelle Fayetteville GA
11.4 Siesta Manor Fenton MO
11.5 Tanglewood Huntsville TX
11.6 Belaire Pocatello ID
11.7 Hidden Oaks Fort Worth TX
11.8 Park Avenue Estates Haysville KS
Various 1 AFRT Portfolio Various Various
- -------------------------------------------------------------------------------------------------------------------------------
16 1 AFRT 9 Pool Various Various
- -------------------------------------------------------------------------------------------------------------------------------
16.1 Bank of America Office Building - Fort Meyers, FL Fort Myers FL
16.2 Capital City Bank - Macon, GA Macon GA
16.3 Bank of America Office Building - Reno, NV Reno NV
16.4 Central Carolina Bank - Morganton, NC Morganton NC
16.5 Bank of America and Motor Bank Office Building - Nassau Bay, TX Nassau Bay TX
16.6 Capital City Bank - Palatka, FL Palatka FL
16.7 Regions Bank - Hilton Head, SC Hilton Head SC
16.8 Citibank - Pembroke Pines, FL Pembroke Pines FL
16.9 AmSouth Bank - Winter Park, FL Winter Park FL
37 1 AFRT 8 Pool Various Various
- -------------------------------------------------------------------------------------------------------------------------------
37.1 Sovereign Bank/U.S. Post Office - Avondale, PA Avondale PA
37.2 Unity Bank - Edison Township, NJ Edison Township NJ
37.3 Keystone Savings Bank - Emmaus, PA Emmaus PA
37.4 Unity Bank - Highland Park, NJ Highland Park NJ
37.5 Sovereign Bank - Phoenixville, PA Phoenixville PA
37.6 Valley National Bank - Scotch Plains, NJ Scotch Plains NJ
37.7 Unity Bank - South Plainfield, NJ South Plainfield NJ
37.8 Fleet Bank - Warminster, PA Warminster PA
Various 2 Stonegate Apartments/Cedar Ridge Apartments Portfolio Sacramento CA
- -------------------------------------------------------------------------------------------------------------------------------
27 2 Stonegate Apartments Sacramento CA
28 2 Cedar Ridge Apartments Sacramento CA
41 1 Carolina Self Storage Pool Various SC
- -------------------------------------------------------------------------------------------------------------------------------
41.1 Carolina Self Storage - Orangeburg, SC Orangeburg SC
41.2 Carolina Self Storage - Florence, SC Florence SC
41.3 Carolina Self Storage - Sumter, SC (North Guignard Drive) Sumter SC
41.4 Carolina Self Storage - Sumter, SC (Broad Street) Sumter SC
MORTGAGE % OF AGGREGATE
LOAN CROSS COLLATERALIZED AND ORIGINAL LOAN CUT-OFF DATE CUT-OFF DATE
NUMBER CROSS DEFAULTED LOAN FLAG BALANCE ($) LOAN BALANCE ($) BALANCE
- -----------------------------------------------------------------------------------------------------------------------------------
7 36,067,000.00 36,033,285.21 3.46%
- -----------------------------------------------------------------------------------------------------------------------------------
7.1
7.2
7.3
7.4
7.5
7.6
7.7
7.8
11 24,951,000.00 24,924,796.35 2.39%
- -----------------------------------------------------------------------------------------------------------------------------------
11.1
11.2
11.3
11.4
11.5
11.6
11.7
11.8
Various AFRT Portfolio 24,900,000.00 24,777,227.92 2.38%
- -----------------------------------------------------------------------------------------------------------------------------------
16 AFRT Portfolio 18,800,000.00 18,716,550.33 1.80%
- -----------------------------------------------------------------------------------------------------------------------------------
16.1
16.2
16.3
16.4
16.5
16.6
16.7
16.8
16.9
37 AFRT Portfolio 6,100,000.00 6,060,677.59 0.58%
- -----------------------------------------------------------------------------------------------------------------------------------
37.1
37.2
37.3
37.4
37.5
37.6
37.7
37.8
Various Stonegate Apartments/Cedar Ridge Apartments Portfolio 19,285,000.00 19,285,000.00 1.85%
- -----------------------------------------------------------------------------------------------------------------------------------
27 Stonegate Apartments/Cedar Ridge Apartments Portfolio 9,850,000.00 9,850,000.00 0.95%
28 Stonegate Apartments/Cedar Ridge Apartments Portfolio 9,435,000.00 9,435,000.00 0.91%
41 4,900,000.00 4,893,560.74 0.47%
- -----------------------------------------------------------------------------------------------------------------------------------
41.1
41.2
41.3
41.4
ORIGINAL REMAINING
MORTGAGE ORIGINAL TERM REMAINING TERM AMORT AMORT
LOAN TO MATURITY TO MATURITY REMAINING IO TERM TERM MONTHLY P&I
NUMBER OR ARD (MOS.) OR ARD (MOS.) PERIOD (MOS.) (MOS.) (MOS.) PAYMENTS ($)
- ---------------------------------------------------------------------------------------------------------------------------
7 120 119 360 359 205,463.84
- ---------------------------------------------------------------------------------------------------------------------------
7.1
7.2
7.3
7.4
7.5
7.6
7.7
7.8
11 60 59 360 359 134,705.85
- ---------------------------------------------------------------------------------------------------------------------------
11.1
11.2
11.3
11.4
11.5
11.6
11.7
11.8
Various 108 Various 240 Various 175,952.56
- ---------------------------------------------------------------------------------------------------------------------------
16 108 106 240 238 132,636.48
- ---------------------------------------------------------------------------------------------------------------------------
16.1
16.2
16.3
16.4
16.5
16.6
16.7
16.8
16.9
37 108 105 240 237 43,316.08
- ---------------------------------------------------------------------------------------------------------------------------
37.1
37.2
37.3
37.4
37.5
37.6
37.7
37.8
Various 120 120 360 360 107,210.29
- ---------------------------------------------------------------------------------------------------------------------------
27 120 120 360 360 54,758.69
28 120 120 360 360 52,451.60
41 120 119 300 299 31,123.01
- ---------------------------------------------------------------------------------------------------------------------------
41.1
41.2
41.3
41.4
MORTGAGE MATURITY DATE
LOAN OR ARD BALLOON APPRAISED CUT-OFF DATE LTV RATIO AT NUMBER OF
NUMBER BALANCE ($) VALUE ($) DSCR (X) LTV RATIO MATURITY OR ARD UNITS (UNITS)
- -------------------------------------------------------------------------------------------------------------------------
7 30,157,646.90 47,240,000.00 1.37 76.28% 63.84% 1,478
- -------------------------------------------------------------------------------------------------------------------------
7.1 13,680,000.00 490
7.2 6,800,000.00 209
7.3 6,400,000.00 135
7.4 5,700,000.00 186
7.5 4,100,000.00 117
7.6 4,000,000.00 120
7.7 3,360,000.00 100
7.8 3,200,000.00 121
11 23,029,030.97 34,670,000.00 1.46 71.89% 66.42% 1,814
- -------------------------------------------------------------------------------------------------------------------------
11.1 10,800,000.00 481
11.2 6,360,000.00 292
11.3 5,920,000.00 205
11.4 3,470,000.00 227
11.5 3,400,000.00 266
11.6 2,640,000.00 171
11.7 1,320,000.00 87
11.8 760,000.00 85
Various 17,333,321.12 34,170,000.00 1.32 72.51% 50.73% 195,775
- -------------------------------------------------------------------------------------------------------------------------
16 13,077,798.43 24,640,000.00 1.27 75.96% 53.08% 161,678
- -------------------------------------------------------------------------------------------------------------------------
16.1 2,850,000.00 29,403
16.2 2,200,000.00 18,925
16.3 2,300,000.00 24,206
16.4 2,700,000.00 20,830
16.5 3,400,000.00 31,568
16.6 4,440,000.00 21,092
16.7 3,000,000.00 8,413
16.8 2,150,000.00 3,741
16.9 1,600,000.00 3,500
37 4,255,522.69 9,530,000.00 1.49 63.60% 44.65% 34,097
- -------------------------------------------------------------------------------------------------------------------------
37.1 1,200,000.00 8,065
37.2 1,150,000.00 4,500
37.3 1,300,000.00 3,384
37.4 800,000.00 3,200
37.5 1,700,000.00 2,692
37.6 1,100,000.00 4,156
37.7 980,000.00 3,400
37.8 1,300,000.00 4,700
Various 16,013,175.72 30,460,000.00 1.54 63.31% 52.57% 562
- -------------------------------------------------------------------------------------------------------------------------
27 8,178,884.29 15,300,000.00 1.53 64.38% 53.46% 288
28 7,834,291.43 15,160,000.00 1.55 62.24% 51.68% 274
41 3,775,471.08 8,090,000.00 1.53 60.49% 46.67% 1,596
- -------------------------------------------------------------------------------------------------------------------------
41.1 1,850,000.00 413
41.2 2,850,000.00 481
41.3 1,670,000.00 360
41.4 1,720,000.00 342
MORTGAGE CUT-OFF DATE MORTGAGE
LOAN UNIT OF LOAN AMOUNT UW NET LOAN
NUMBER MEASURE PER (UNIT) ($) CASH FLOW ($) NUMBER
- ---------------------------------------------------------------------------
7 Pads 24,379.76 3,383,222.21 7
- ---------------------------------------------------------------------------
7.1 Pads 979,280.30 7.1
7.2 Pads 502,761.57 7.2
7.3 Pads 382,791.90 7.3
7.4 Pads 472,081.28 7.4
7.5 Pads 300,840.11 7.5
7.6 Pads 298,123.79 7.6
7.7 Pads 205,458.47 7.7
7.8 Pads 241,884.79 7.8
11 Pads 13,740.24 2,356,880.68 11
- ---------------------------------------------------------------------------
11.1 Pads 734,703.62 11.1
11.2 Pads 469,521.47 11.2
11.3 Pads 391,224.46 11.3
11.4 Pads 195,577.66 11.4
11.5 Pads 259,806.30 11.5
11.6 Pads 208,903.57 11.6
11.7 Pads 59,616.11 11.7
11.8 Pads 37,527.48 11.8
Various Sq. Ft. 126.56 2,801,652.62 Various
- ---------------------------------------------------------------------------
16 Sq. Ft. 115.76 2,027,248.02 16
- ---------------------------------------------------------------------------
16.1 Sq. Ft. 16.1
16.2 Sq. Ft. 16.2
16.3 Sq. Ft. 16.3
16.4 Sq. Ft. 16.4
16.5 Sq. Ft. 16.5
16.6 Sq. Ft. 16.6
16.7 Sq. Ft. 16.7
16.8 Sq. Ft. 16.8
16.9 Sq. Ft. 16.9
37 Sq. Ft. 177.75 774,404.60 37
- ---------------------------------------------------------------------------
37.1 Sq. Ft. 37.1
37.2 Sq. Ft. 37.2
37.3 Sq. Ft. 37.3
37.4 Sq. Ft. 37.4
37.5 Sq. Ft. 37.5
37.6 Sq. Ft. 37.6
37.7 Sq. Ft. 37.7
37.8 Sq. Ft. 37.8
Various Units 34,314.95 1,986,074.64 Various
- ---------------------------------------------------------------------------
27 Units 34,201.39 1,008,288.49 27
28 Units 34,434.31 977,786.15 28
41 Units 3,066.14 572,503.03 41
- ---------------------------------------------------------------------------
41.1 Units 41.1
41.2 Units 41.2
41.3 Units 41.3
41.4 Units 41.4
[THIS PAGE INTENTIONALLY LEFT BLANK.]
ANNEX B
[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-C11 @ www.ctslink.com/cmbs
9062 OLD ANNAPOLIS ROAD PAYMENT DATE: 05/17/2004
COLUMBIA, MD 21045 RECORD DATE: 04/30/2004
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, Wells Fargo Bank, N.A. Page 1 of 18
B-1
[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-C11 @ www.ctslink.com/cmbs
9062 OLD ANNAPOLIS ROAD PAYMENT DATE: 05/17/2004
COLUMBIA, MD 21045 RECORD DATE: 04/30/2004
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-1A 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-5 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%
Z 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, Wells Fargo Bank, N.A. Page 2 of 18
B-2
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9062 OLD ANNAPOLIS ROAD PAYMENT DATE: 05/17/2004
COLUMBIA, MD 21045 RECORD DATE: 04/30/2004
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-1A 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-5 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
Z 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, Wells Fargo Bank, N.A. Page 3 of 18
B-3
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9062 OLD ANNAPOLIS ROAD PAYMENT DATE: 05/17/2004
COLUMBIA, MD 21045 RECORD DATE: 04/30/2004
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-1A
A-2
A-3
A-4
A-5
X-P
X-C
B
C
D
E
F
G
H
J
K
L
M
N
O
P
- ------------------------------------------------------------------------------------------------------------------------------------
Total
- ------------------------------------------------------------------------------------------------------------------------------------
Copyright, Wells Fargo Bank, N.A. Page 4 of 18
B-4
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9062 OLD ANNAPOLIS ROAD PAYMENT DATE: 05/17/2004
COLUMBIA, MD 21045 RECORD DATE: 04/30/2004
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, Wells Fargo Bank, N.A. Page 5 of 18
B-5
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9062 OLD ANNAPOLIS ROAD PAYMENT DATE: 05/17/2004
COLUMBIA, MD 21045 RECORD DATE: 04/30/2004
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, Wells Fargo Bank, N.A. Page 6 of 18
B-6
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9062 OLD ANNAPOLIS ROAD PAYMENT DATE: 05/17/2004
COLUMBIA, MD 21045 RECORD DATE: 04/30/2004
RATINGS DETAIL
Original Ratings Current Ratings (1)
-------------------------- --------------------------
Class CUSIP Fitch Moody's S & P Fitch Moody's S & P
-------- ------- ------- -------- ------ ------- --------- --------
A-1
A-1A
A-2
A-3
A-4
A-5
X-P
X-C
B
C
D
E
F
G
H
J
K
L
M
N
O
P
--------------------------------------------------------------------------
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, Wells Fargo Bank, N.A. Page 7 of 18
B-7
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CORPORATE TRUST SERVICES SERIES 2004-C11 @ www.ctslink.com/cmbs
9062 OLD ANNAPOLIS ROAD PAYMENT DATE: 05/17/2004
COLUMBIA, MD 21045 RECORD DATE: 04/30/2004
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, Wells Fargo Bank, N.A. Page 8 of 18
B-8
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9062 OLD ANNAPOLIS ROAD PAYMENT DATE: 05/17/2004
COLUMBIA, MD 21045 RECORD DATE: 04/30/2004
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, Wells Fargo Bank, N.A. Page 9 of 18
B-9
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9062 OLD ANNAPOLIS ROAD PAYMENT DATE: 05/17/2004
COLUMBIA, MD 21045 RECORD DATE: 04/30/2004
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, Wells Fargo Bank, N.A. Page 10 of 18
B-10
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9062 OLD ANNAPOLIS ROAD PAYMENT DATE: 05/17/2004
COLUMBIA, MD 21045 RECORD DATE: 04/30/2004
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, Wells Fargo Bank, N.A. Page 11 of 18
B-11
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9062 OLD ANNAPOLIS ROAD PAYMENT DATE: 05/17/2004
COLUMBIA, MD 21045 RECORD DATE: 04/30/2004
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, Wells Fargo Bank, N.A. Page 12 of 18
B-12
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9062 OLD ANNAPOLIS ROAD PAYMENT DATE: 05/17/2004
COLUMBIA, MD 21045 RECORD DATE: 04/30/2004
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, Wells Fargo Bank, N.A. Page 13 of 18
B-13
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9062 OLD ANNAPOLIS ROAD PAYMENT DATE: 05/17/2004
COLUMBIA, MD 21045 RECORD DATE: 04/30/2004
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, Wells Fargo Bank, N.A. Page 14 of 18
B-14
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9062 OLD ANNAPOLIS ROAD PAYMENT DATE: 05/17/2004
COLUMBIA, MD 21045 RECORD DATE: 04/30/2004
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, Wells Fargo Bank, N.A. Page 15 of 18
B-15
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9062 OLD ANNAPOLIS ROAD PAYMENT DATE: 05/17/2004
COLUMBIA, MD 21045 RECORD DATE: 04/30/2004
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, Wells Fargo Bank, N.A. Page 16 of 18
B-16
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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-C11 @ www.ctslink.com/cmbs
9062 OLD ANNAPOLIS ROAD PAYMENT DATE: 05/17/2004
COLUMBIA, MD 21045 RECORD DATE: 04/30/2004
MODIFIED LOAN DETAIL
Offering
Loan Document Pre-Modification
Number Cross-Reference Balance Modification Date Modification Description
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
Totals
- ------------------------------------------------------------------------------------------------------------
Copyright, 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-C11 @ www.ctslink.com/cmbs
9062 OLD ANNAPOLIS ROAD PAYMENT DATE: 05/17/2004
COLUMBIA, MD 21045 RECORD DATE: 04/30/2004
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, Wells Fargo Bank, N.A. Page 18 of 18
B-18
ANNEX C
CLASS X-P REFERENCE RATE SCHEDULE
INTEREST DISTRIBUTION CLASS X-P INTEREST DISTRIBUTION CLASS X-P
ACCRUAL PERIOD DATE REFERENCE RATE ACCRUAL PERIOD DATE REFERENCE RATE
- ---------------- -------------- ---------------- ---------------- -------------- ---------------
1 05/15/04 5.33672 43 11/15/07 5.51778
2 06/15/04 5.51613 44 12/15/07 5.33841
3 07/15/04 5.33684 45 01/15/08 5.51783
4 08/15/04 5.51625 46 02/15/08 5.33846
5 09/15/04 5.51631 47 03/15/08 5.33872
6 10/15/04 5.33702 48 04/15/08 5.51790
7 11/15/04 5.51643 49 05/15/08 5.33853
8 12/15/04 5.33714 50 06/15/08 5.51795
9 01/15/05 5.33720 51 07/15/08 5.33857
10 02/15/05 5.33726 52 08/15/08 5.51800
11 03/15/05 5.33770 53 09/15/08 5.51772
12 04/15/05 5.51674 54 10/15/08 5.33835
13 05/15/05 5.33744 55 11/15/08 5.51777
14 06/15/05 5.51688 56 12/15/08 5.33840
15 07/15/05 5.33758 57 01/15/09 5.33842
16 08/15/05 5.51702 58 02/15/09 5.33845
17 09/15/05 5.51709 59 03/15/09 5.33925
18 10/15/05 5.33779 60 04/15/09 5.53191
19 11/15/05 5.51724 61 05/15/09 5.37371
20 12/15/05 5.33793 62 06/15/09 5.55437
21 01/15/06 5.33800 63 07/15/09 5.37386
22 02/15/06 5.33807 64 08/15/09 5.55453
23 03/15/06 5.33858 65 09/15/09 5.55461
24 04/15/06 5.51754 66 10/15/09 5.37410
25 05/15/06 5.33820 67 11/15/09 5.55477
26 06/15/06 5.51759 68 12/15/09 5.37426
27 07/15/06 5.33820 69 01/15/10 5.37434
28 08/15/06 5.51759 70 02/15/10 5.37442
29 09/15/06 5.51760 71 03/15/10 5.37540
30 10/15/06 5.33821 72 04/15/10 5.55518
31 11/15/06 5.51759 73 05/15/10 5.37465
32 12/15/06 5.33820 74 06/15/10 5.55534
33 01/15/07 5.33819 75 07/15/10 5.37481
34 02/15/07 5.33820 76 08/15/10 5.55551
35 03/15/07 5.33881 77 09/15/10 5.55560
36 04/15/07 5.51760 78 10/15/10 5.37506
37 05/15/07 5.33823 79 11/15/10 5.55577
38 06/15/07 5.51765 80 12/15/10 5.37522
39 07/15/07 5.33828 81 01/15/11 5.37530
40 08/15/07 5.51770 82 02/15/11 5.37539
41 09/15/07 5.51773 83 03/15/11 5.44303
42 10/15/07 5.33836 84 04/15/11 5.60354
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.
April 9, 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;
o all mortgage loans will have been
originated by persons
8
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.
11
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
16
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 notifies DTC of its intent to terminate the
book-entry system through DTC with respect to such certificates and, upon
receipt of notice of such intent from DTC, the participants holding beneficial
interests in the certificates agree to initiate such termination. 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
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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.
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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.
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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
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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
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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
89
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--
90
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
91
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
94
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
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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
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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
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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,"
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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, Farmer 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
110
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. 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
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The file "WBCMT 2004-C11 Prospectus Annexes A1-5.xls", which is a Microsoft
Excel*, Version 5.0 spreadsheet, provides in electronic format certain
information shown in Annexes A-1, 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 Trustee will make
available through its internet website an electronic file in CMSA format
updating and supplementing the information contained in the "WBCMT 2004-C11
Prospectus Annexes A1-5.xls" file.
To open the file, insert the diskette into your floppy drive. Copy the file
"WBCMT 2004-C11 Prospectus Annexes A1-5.xls" to your hard drive or network
drive. Copy the file "WBCMT 2004-C11 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 Crossed Collateralized Pool", respectively.
*Microsoft Excel is a registered trademark of Microsoft Corporation.
================================================================================
UNTIL JULY 22, 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 AND 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
PAGE
------
PROSPECTUS SUPPLEMENT
SUMMARY OF PROSPECTUS SUPPLEMENT ...................................... S-5
OVERVIEW OF THE CERTIFICATES .......................................... S-6
RISK FACTORS .......................................................... S-45
DESCRIPTION OF THE MORTGAGE POOL ...................................... S-93
SERVICING OF THE MORTGAGE LOANS ....................................... S-208
DESCRIPTION OF THE CERTIFICATES ....................................... S-225
YIELD AND MATURITY CONSIDERATIONS ..................................... S-258
USE OF PROCEEDS ....................................................... S-265
MATERIAL FEDERAL INCOME TAX
CONSEQUENCES ........................................................ S-265
ERISA CONSIDERATIONS .................................................. S-267
LEGAL INVESTMENT ...................................................... S-270
METHOD OF DISTRIBUTION ................................................ S-270
LEGAL MATTERS ......................................................... S-271
RATINGS ............................................................... S-272
INDEX OF DEFINED TERMS ................................................ S-273
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
$798,454,000
(APPROXIMATE)
WACHOVIA COMMERCIAL
MORTGAGE SECURITIES, INC.
(DEPOSITOR)
WACHOVIA BANK COMMERCIAL
MORTGAGE TRUST
COMMERCIAL MORTGAGE PASS-THROUGH
CERTIFICATES SERIES 2004-C11
------------------------------------------------
PROSPECTUS SUPPLEMENT
------------------------------------------------
WACHOVIA SECURITIES
CITIGROUP
JPMORGAN
GOLDMAN, SACHS & CO.
APRIL 21, 2004
================================================================================
$798,454,000 (APPROXIMATE)
WACHOVIA BANK COMMERCIAL MORTGAGE TRUST
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES SERIES 2004-C11