Filed Pursuant to Rule 424(b)(5)
Registration File No.: 333-108125
The information in this prospectus supplement is not complete and may be
changed. We may not sell these securities, nor will we accept offers to buy
these securities, prior to the time a final prospectus supplement is delivered.
This prospectus supplement is not an offer to sell these securities, and it is
not soliciting an offer to buy these securities, in any state where the offer or
sale is not permitted.
SUBJECT TO COMPLETION, DATED MAY 24, 2004
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED MAY 24, 2004)
CITIGROUP COMMERCIAL MORTGAGE TRUST 2004-C1
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2004-C1
CLASS A-1, CLASS A-2, CLASS A-3, CLASS A-4, CLASS B,
CLASS C, CLASS D AND CLASS E
APPROXIMATE TOTAL OFFERED CERTIFICATE PRINCIPAL BALANCE
AT INITIAL ISSUANCE: $1,086,347,000
We, Citigroup Commercial Mortgage Securities Inc., have prepared this
prospectus supplement in order to offer the classes of commercial mortgage
pass-through certificates identified above. These certificates are the only
securities offered by this prospectus supplement. This prospectus supplement
specifically relates to, and is accompanied by, our prospectus dated May 24,
2004. We will not list the offered certificates on any national securities
exchange or any automated quotation system of any registered securities
associations, such as NASDAQ.
The offered certificates will represent interests only in the trust
identified in the title above. The offered certificates will not represent
interests in or obligations of any other party. The assets of the trust will
include a pool of multifamily and commercial mortgage loans with characteristics
described in this prospectus supplement. No governmental agency or
instrumentality or private insurer has insured or guaranteed the offered
certificates or any of the mortgage loans that back them.
Each class of offered certificates will receive monthly distributions of
interest, principal or both, commencing in July 2004. The table on page S-5 of
this prospectus supplement contains a list of the classes of offered
certificates and sets forth the principal balance, pass-through rate, and other
select characteristics of each of those classes. Credit enhancement is being
provided through the subordination of various other classes, including multiple
non-offered classes, of series 2004-C1 certificates. That same table on page S-5
of this prospectus supplement also contains a list of the non-offered classes of
the series 2004-C1 certificates.
---------------
YOU SHOULD FULLY CONSIDER THE RISK FACTORS BEGINNING ON PAGE S-39 IN THIS
PROSPECTUS SUPPLEMENT AND ON PAGE 14 IN THE ACCOMPANYING PROSPECTUS PRIOR TO
INVESTING IN THE OFFERED CERTIFICATES.
---------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------
Citigroup Global Markets Inc., Wachovia Capital Markets, LLC, CDC
Securities and Deutsche Bank Securities Inc. are the underwriters for this
offering. They will purchase the offered certificates from us. Our proceeds from
the sale of the offered certificates will equal approximately % of the total
initial principal balance of the offered certificates, plus accrued interest,
before deducting expenses payable by us. Each underwriter currently intends to
sell its allocation of offered certificates from time to time in negotiated
transactions or otherwise at varying prices to be determined at the time of
sale. See "Method of Distribution" in this prospectus supplement.
With respect to this offering, Citigroup Global Markets Inc. and Wachovia
Capital Markets, LLC are acting as joint bookrunning managers in the following
manner: Wachovia Capital Markets, LLC is acting as sole bookrunning manager with
respect to 60.89% of the class A-4 certificates, and Citigroup Global Markets
Inc. is acting as sole bookrunning manager with respect to the remainder of the
class A-4 certificates and all other classes of offered certificates. CDC
Securities and Deutsche Bank Securities Inc. are co-managers.
CITIGROUP WACHOVIA SECURITIES
CDC SECURITIES DEUTSCHE BANK SECURITIES
----------------
The date of this prospectus supplement is , 2004.
CITIGROUP COMMERCIAL MORTGAGE TRUST 2004-C1
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2004-C1
[MAP OMITTED]
UTAH WYOMING KANSAS MISSOURI ILLINOIS MICHIGAN OHIO
3 properties 2 properties 8 properties 5 properties 10 properties 1 property 9 properties
$21,219,406 $5,688,937 $21,682,868 $18,404,386 $198,591,011 $7,740,000 $56,017,503
1.8% of total 0.5% of total 1.8% of total 1.6% of total 16.8% of total 0.7% of total 4.7% of total
PENNSYLVANIA NEW YORK NEW HAMPSHIRE MAINE WASHINGTON MASSACHUSETTS OREGON
1 property 6 properties 1 property 1 property 5 properties 2 properties 4 properties
$6,700,000 $59,038,245 $35,500,000 $7,000,000 $33,198,274 $24,111,938 $19,114,917
0.6% of total 5.0% of total 3.0% of total 0.6% of total 2.8% of total 2.0% of total 1.6% of total
CONNECTICUT NEVADA NEW JERSEY NORTHERN CALIFORNIA MARYLAND SOUTHERN CALIFORNIA DISTRICT OF COLUMBIA
5 properties 2 properties 4 properties 4 properties 1 property 10 properties 2 properties
$27,830,108 $9,043,973 $48,535,989 $46,319,066 $5,291,803 $63,202,834 $18,800,000
2.4% of total 0.8% of total 4.1% of total 3.9% of total 0.4% of total 5.3% of total 1.6% of total
ARIZONA NORTH CAROLINA COLORADO GEORGIA OKLAHOMA TEXAS LOUISIANA
1 property 4 properties 3 properties 1 property 6 properties 9 properties 2 properties
$4,644,000 $19,213,257 $20,970,702 $15,000,000 $11,257,837 $97,428,390 $65,064,076
0.4% of total 1.6% of total 1.8% of total 1.3% of total 1.0% of total 8.2% of total 5.5% of total
MISSISSIPPI ALABAMA FLORIDA GUAM
1 property 1 property 16 properties 1 property
$2,594,976 $2,397,073 $177,099,898 $26,864,655
0.2% of total 0.2% of total 15.0% of total 2.3% of total
> $100 MM of Initial Mortgage Pool Balance
$75 - $100 MM of Initial Mortgage Pool Balance
$50 - $75 MM of Initial Mortgage Pool Balance
$25 - $50 MM of Initial Mortgage Pool Balance
$0 - $25 MM of Initial Mortgage Pool Balance
% OF INITIAL MORTGAGE POOL BALANCE
[GRAPHIC OMITTED]
Unanchored Retail 2.6%
Hospitality 4.5%
Multifamily 6.6%
Self Storage 9.4%
Mobile Home Park 9.7%
Office 21.1%
Anchored Retail 37.1%
Industrial 1.0%
Land 2.3%
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
PAGE
----
Important Notice About the Information Contained in this Prospectus Supplement
and the Accompanying Prospectus..........................................................................S-4
Summary of Prospectus Supplement...........................................................................S-5
Risk Factors..............................................................................................S-39
Capitalized Terms Used in this Prospectus Supplement......................................................S-58
Forward-Looking Statements................................................................................S-58
Description of the Mortgage Pool..........................................................................S-59
Servicing of the Underlying Mortgage Loans................................................................S-98
Description of the Offered Certificates..................................................................S-133
Yield and Maturity Considerations........................................................................S-164
Federal Income Tax Consequences..........................................................................S-170
ERISA Considerations.....................................................................................S-174
Legal Investment.........................................................................................S-178
Method of Distribution...................................................................................S-178
Legal Matters............................................................................................S-180
Ratings..................................................................................................S-180
Glossary.................................................................................................S-182
ANNEX A-1--Characteristics of the Underlying Mortgage Loans and the Mortgaged Real Properties.............A-1-1
ANNEX A-2--Summary Characteristics of the Underlying Mortgage Loans and the Mortgaged Real Properties.....A-2-1
ANNEX A-3--Characteristics of the Multifamily Mortgaged Real Properties...................................A-3-1
ANNEX B--Description of Twenty Largest Mortgage Loans, Groups of Cross-Collateralized Mortgage
Loans and/or Groups of Borrower Affiliated Mortgage Loans........................................B-1
ANNEX C--Decrement Tables...................................................................................C-1
ANNEX D--Form of Payment Date Statement.....................................................................D-1
ANNEX E--Class X-2 Reference Rate Schedule..................................................................E-1
ANNEX F--Global Clearance, Settlement And Tax Documentation Procedures......................................F-1
S-3
---------------
IMPORTANT NOTICE ABOUT THE INFORMATION CONTAINED IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
Information about the offered certificates is contained in two separate
documents:
o this prospectus supplement, which describes the specific terms of the
offered certificates; and
o the accompanying prospectus, which provides general information, some
of which may not apply to the offered certificates.
If the description of the terms of the offered certificates contained in
this prospectus supplement varies from the information contained in the
accompanying prospectus, you should rely on the information contained in this
prospectus supplement.
You should rely only on the information contained in this prospectus
supplement and the accompanying prospectus. We have not authorized any person to
give any other information or to make any representation that is different from
the information contained in this prospectus supplement and the accompanying
prospectus.
S-4
SUMMARY OF PROSPECTUS SUPPLEMENT
This summary contains selected information regarding the offering being
made by this prospectus supplement. It does not contain all of the information
you need to consider in making your investment decision. TO UNDERSTAND ALL OF
THE TERMS OF THE OFFERING OF THE OFFERED CERTIFICATES, YOU SHOULD READ CAREFULLY
THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS IN FULL.
INTRODUCTION TO THE TRANSACTION
The offered certificates will be part of a series of commercial mortgage
pass-through certificates designated as the Series 2004-C1 Commercial Mortgage
Pass-Through Certificates, which series consists of multiple classes. The table
below identifies the respective classes of that series, specifies various
characteristics of each of those classes and indicates which of those classes
are offered by this prospectus supplement and which are not.
- ------------------------------------------------------------------------------------------------------------------------------
SERIES 2004-C1 COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES(1)
- ------------------------------------------------------------------------------------------------------------------------------
APPROX. %
TOTAL
APPROX. % CREDIT
APPROX. OF INITIAL SUPPORT WEIGHTED
TOTAL PRINCIPAL MORTGAGE AT PASS-THROUGH INITIAL AVERAGE
BALANCE AT POOL INITIAL RATE PASS-THROUGH LIFE PRINCIPAL S&P/MOODY'S
CLASS INITIAL ISSUANCE BALANCE(6) ISSUANCE(6) DESCRIPTION RATE (YEARS) WINDOW RATINGS
- ------------------------------------------------------------------------------------------------------------------------------
Offered Certificates
- ------------------------------------------------------------------------------------------------------------------------------
A-1 $ 68,457,000 5.8% 15.250% % 2.47 07/04-12/08 AAA/Aaa
- ------------------------------------------------------------------------------------------------------------------------------
A-2 $ 162,500,000 13.7% 15.250% % 4.76 12/08-05/09 AAA/Aaa
- ------------------------------------------------------------------------------------------------------------------------------
A-3 $ 224,418,000 19.0% 15.250% % 7.02 05/09-09/13 AAA/Aaa
- ------------------------------------------------------------------------------------------------------------------------------
A-4 $ 546,724,000 46.2% 15.250% % 9.69 09/13-05/14 AAA/Aaa
- ------------------------------------------------------------------------------------------------------------------------------
B $ 31,039,000 2.6% 12.625% % 9.89 05/14-05/14 AA/Aa2
- ------------------------------------------------------------------------------------------------------------------------------
C $ 13,302,000 1.1% 11.500% % 9.89 05/14-05/14 AA-/Aa3
- ------------------------------------------------------------------------------------------------------------------------------
D $ 26,605,000 2.3% 9.250% % 9.89 05/14-05/14 A/A2
- ------------------------------------------------------------------------------------------------------------------------------
E $ 13,302,000 1.1% 8.125% % 9.94 05/14-06/14 A-/A3
- ------------------------------------------------------------------------------------------------------------------------------
Non-Offered Certificates
- ------------------------------------------------------------------------------------------------------------------------------
X-1 $ 1,182,418,797(4) N/A N/A Variable IO % N/A N/A AAA/Aaa
- ------------------------------------------------------------------------------------------------------------------------------
X-2 $ TBD (4)(5) N/A N/A Variable IO % N/A N/A AAA/Aaa
- ------------------------------------------------------------------------------------------------------------------------------
F $ 14,780,000 1.2% 6.875% % N/A N/A BBB+/Baa1
- ------------------------------------------------------------------------------------------------------------------------------
G $ 11,824,000 1.0% 5.875% % N/A N/A BBB/Baa2
- ------------------------------------------------------------------------------------------------------------------------------
H $ 19,214,000 1.6% 4.250% % N/A N/A BBB-/Baa3
- ------------------------------------------------------------------------------------------------------------------------------
J $ 5,913,000 0.5% 3.750% % N/A N/A BB+/Ba1
- ------------------------------------------------------------------------------------------------------------------------------
K $ 5,912,000 0.5% 3.250% % N/A N/A BB/Ba2
- ------------------------------------------------------------------------------------------------------------------------------
L $ 5,912,000 0.5% 2.750% % N/A N/A BB-/Ba3
- ------------------------------------------------------------------------------------------------------------------------------
M $ 5,912,000 0.5% 2.250% % N/A N/A B+/B1
- ------------------------------------------------------------------------------------------------------------------------------
N $ 2,956,000 0.2% 2.000% % N/A N/A B/B2
- ------------------------------------------------------------------------------------------------------------------------------
P $ 4,434,000 0.4% 1.625% % N/A N/A B-/B3
- ------------------------------------------------------------------------------------------------------------------------------
Q $ 19,214,797 1.6% N/A % N/A N/A NR/NR
- ------------------------------------------------------------------------------------------------------------------------------
PM(2) $ 3,322,214 N/A N/A Loan-Specific % N/A N/A NR/NR
- ------------------------------------------------------------------------------------------------------------------------------
R N/A N/A N/A N/A N/A N/A N/A NR/NR
- ------------------------------------------------------------------------------------------------------------------------------
Y(3) N/A N/A N/A N/A N/A N/A N/A NR/NR
- ------------------------------------------------------------------------------------------------------------------------------
(footnotes on next page)
S-5
(1) Various characteristics of the series 2004-C1 certificates shown in this
table are further discussed below under "--Key Certificate Features Shown
in the Table Above".
(2) The class PM certificates will represent an interest solely in the mortgage
loan that is secured by the mortgaged real property identified on Annex A-1
to this prospectus supplement as Pecanland Mall. The portion of the
Pecanland Mall underlying mortgage loan that is represented by the class PM
certificates is considered the non-pooled portion of that mortgage loan.
The remaining portion of the Pecanland Mall underlying mortgage loan, which
is the pooled portion of that mortgage loan, will be pooled with the other
underlying mortgage loans to back the other classes of the series 2004-C1
certificates.
(3) The class Y certificates are to be issued as three classes of certificates
with the same aggregate characteristics and entitling holders to the same
aggregate rights described in this prospectus supplement. These three
classes will be referred to in this prospectus supplement collectively as
the class Y certificates.
(4) Notional amount.
(5) "TBD" means to be determined.
(6) The approximate percentage of total initial mortgage pool balance, and the
approximate percentage of total credit support at initial issuance, of any
class shown on the table on page S-5 does not take into account the total
principal balances of, or the portion of the Pecanland Mall underlying
mortgage loan (that is, the non-pooled portion thereof) represented by, the
class PM certificates.
The offered certificates will evidence beneficial ownership interests in a
common law trust designated as the Citigroup Commercial Mortgage Trust 2004-C1.
We will form the trust at or prior to the time of initial issuance of the
offered certificates. The assets of the trust, which we sometimes collectively
refer to as the trust fund, will include a pool of multifamily and commercial
mortgage loans having the characteristics described in this prospectus
supplement.
Unless specifically indicated otherwise, statistical information with
respect to the Pecanland Mall underlying mortgage loan, except for debt service
coverage ratios, is being presented without regard to the non-pooled portion of
the Pecanland Mall underlying mortgage loan. In addition, unless specifically
indicated otherwise, statistical information in this prospectus supplement with
respect to the underlying mortgage loan secured by the mortgaged real property
identified on Annex A-1 as Ocean Key Resort excludes the related subordinate
companion loan. Furthermore, references in this prospectus supplement to the
initial mortgage pool balance are to the aggregate principal balance of the
underlying mortgage loans (without regard to the non-pooled portion of the
Pecanland Mall underlying mortgage loan) as of the cut-off date for the mortgage
pool described in this prospectus supplement, after application of all scheduled
payments of principal due with respect to the underlying mortgage loans on or
before that date.
The governing document for purposes of issuing the offered certificates and
forming the trust will be a pooling and servicing agreement to be dated as of
June 1, 2004. The series 2004-C1 pooling and servicing agreement will also
govern the servicing and administration of the mortgage loans and other assets
that back the offered certificates. The parties to the series 2004-C1 pooling
and servicing agreement will include us, a trustee, a fiscal agent, a master
servicer and a special servicer. We will file a copy of the series 2004-C1
pooling and servicing agreement with the SEC as an exhibit to a current report
on Form 8-K, within 15 days after the initial issuance of the offered
certificates. The SEC will make that current report on Form 8-K and its exhibits
available to the public for inspection. See "Available Information;
Incorporation by Reference" in the accompanying prospectus.
---------------
S-6
KEY CERTIFICATE FEATURES SHOWN IN THE TABLE ABOVE
TOTAL PRINCIPAL BALANCE
OR NOTIONAL AMOUNT AT
INITIAL ISSUANCE..................... The class A-1, A-2, A-3, A-4, B, C, D, E,
F, G, H, J, K, L, M, N, P, Q and PM
certificates will be the series 2004-C1
certificates with principal balances and
are sometimes referred to as the series
2004-C1 principal balance certificates.
The table on page S-5 of this prospectus
supplement sets forth for each of those
classes of certificates, the approximate
total principal balance of the subject
class at initial issuance. The actual
total principal balance of any class of
series 2004-C1 principal balance
certificates at initial issuance may be
larger or smaller than the amount shown
in the table on page S-5 of this
prospectus supplement, depending on,
among other things, the actual size of
the initial mortgage pool balance or, in
the case of the class PM certificates,
the actual size of the non-pooled portion
of the Pecanland Mall underlying mortgage
loan. The actual size of the initial
mortgage pool balance may be as much as
5% larger or smaller than the amount
presented in this prospectus supplement.
The principal balance of any of the
series 2004-C1 principal balance
certificates at any time represents the
maximum amount that the holder may
receive as principal out of cash flow
received on or with respect to the
underlying mortgage loans.
The class X-1 and X-2 certificates do not
have principal balances. They are
interest-only certificates. For purposes
of calculating the amount of accrued
interest with respect thereto, however,
each of those classes will have a
notional amount. The total notional
amount of the class X-1 certificates will
be equal to the total principal balance
of the class A-1, A-2, A-3, A-4, B, C, D,
E, F, G, H, J, K, L, M, N, P and Q
certificates outstanding from time to
time. The total initial notional amount
of the class X-1 certificates will be
approximately $1,182,418,797, although it
may be as much as 5% larger or smaller.
The total notional amount of the class
X-2 certificates will initially equal the
sum of (a) the lesser of $ and the total
principal balance of the class
certificates outstanding from time to
time, plus (b) the total principal
balance of the class , , , , and
certificates outstanding from time to
time, plus (c) $ and the total principal
balance of the class certificates
outstanding from time to time. The total
initial notional amount of the class X-2
certificates will be approximately $ ,
although it may be as much as 5% larger
or smaller. The total notional amount of
the class X-2 certificates will decline
over time, as described under
"Description of the Offered
Certificates--General" in this
prospectus supplement. The total notional
amount of the class X-2 certificates
will, in any event, be $0 following the
payment date in .
S-7
The class R certificates will not have
principal balances or notional amounts.
They will be residual interest
certificates. The holders of the class R
certificates are not expected to receive
any material payments.
The class Y certificates also will not
have principal balances or notional
amounts. They will represent the right to
receive any collections of additional
interest that may accrue with respect to
the mortgage loans that have anticipated
repayment dates, as described under
"--The Underlying Mortgage Loans and the
Mortgaged Real Properties" below. The
additional interest results from an
increase in the applicable accrual rate
if the subject mortgage loan remains
outstanding past its anticipated
repayment date.
TOTAL CREDIT SUPPORT
AT INITIAL ISSUANCE.................. The respective classes of the series
2004-C1 certificates, other than the
class Y and R certificates, will entitle
their holders to varying degrees of
seniority for purposes of:
o receiving payments of interest and,
except in the case of the class X-1
and X-2 certificates, payments of
principal; and
o bearing the effects of losses on the
underlying mortgage loans (or on a
specified underlying mortgage loan),
as well as default-related and other
unanticipated expenses of the trust.
Without regard to the class PM
certificates:
o the class A-1, A-2, A-3, A-4, X-1
and X-2 certificates will be the
most senior of the series 2004-C1
certificates; and
o the class B, C, D, E, F, G, H, J, K,
L, M, N, P and Q certificates will,
in the case of each such class, be
senior to each other such class, if
any, with a later alphabetic class
designation.
The class PM certificates will represent
a subordinated right to receive out of
payments and other collections (or
advances in lieu thereof) on the
non-pooled portion of the Pecanland Mall
underlying mortgage loan monthly payments
of: interest at the related pass-through
rate; and principal in the amounts
generally described under "--Payments--
Payments of Principal" below. See
"Description of the Offered
Certificates--Payments--Allocation of
Payments on the Pecanland Mall Mortgage
Loan; Payments on the Class PM
Certificates" in this prospectus
supplement.
S-8
The class Y and R certificates will not
provide any credit support for, or
receive any credit support from, any
other class of series 2004-C1
certificates.
The table on page S-5 of this prospectus
supplement shows the approximate total
credit support provided to each class of
the series 2004-C1 certificates, other
than the class X-1, X-2, Q, PM, Y and R
certificates, through the subordination
of other classes of the series 2004-C1
principal balance certificates (exclusive
of the class PM certificates). In the
case of each of those classes of series
2004-C1 certificates, the credit support
shown in the table on page S-5 of this
prospectus supplement represents the
total initial principal balance,
expressed as a percentage of the initial
mortgage pool balance, of all classes of
the series 2004-C1 principal balance
certificates (exclusive of the class PM
certificates) that are subordinate to the
indicated class.
PASS-THROUGH RATES................... Each class of the series 2004-C1
certificates, other than the class Y and
R certificates, will bear interest. The
table on page S-5 of this prospectus
supplement provides the indicated
information regarding the pass-through
rate at which each of those classes of
the series 2004-C1 certificates will
accrue interest.
Each interest-bearing class of series
2004-C1 certificates identified in the
table on page S-5 of this prospectus
supplement as having a "Fixed"
pass-through rate, has a fixed
pass-through rate that will remain
constant at the initial pass-through rate
for that class.
Each interest-bearing class of series
2004-C1 certificates identified in the
table on page S-5 of this prospectus
supplement as having a "WAC" pass-through
rate, has a variable pass-through rate
equal to a weighted average coupon
derived from certain net interest rates
on the underlying mortgage loans (without
regard to the non-pooled portion of the
Pecanland Mall underlying mortgage loan).
Each interest-bearing class of series
2004-C1 certificates identified in the
table on page S-5 of this prospectus
supplement as having a "WAC - x%"
pass-through rate, has a variable
pass-through rate equal to:
o a weighted average coupon derived
from certain net interest rates on
the underlying mortgage loans
(without regard to the non-pooled
portion of the Pecanland Mall
underlying mortgage loan), minus
o a fixed class margin.
Each interest-bearing class of series
2004-C1 certificates identified in the
table on page S-5 of this prospectus
supplement
S-9
as having a "WAC Cap" pass-through rate,
has a variable pass-through rate equal to
the lesser of:
o a weighted average coupon derived
from certain net interest rates on
the underlying mortgage loans
(without regard to the non-pooled
portion of the Pecanland Mall
underlying mortgage loan); and
o the following specified fixed rate
per annum applicable to the
particular class of series 2004-C1
certificates--
1. with respect to the class
certificates, %;
2. with respect to the class
certificates, %;
3. with respect to the class
certificates, %;
4. with respect to the class
certificates, %;
5. with respect to the class
certificates, %; and
6. with respect to the class
certificates, %.
The respective pass-through rates for the
class X-1 and X-2 certificates will each
be variable and, for any interest accrual
period, in the case of each such class,
will generally equal the weighted average
of various strip rates at which interest
accrues on the respective components of
the total notional amount of the subject
class.
The references to "certain net interest
rates on the underlying mortgage loans"
above in this "--Pass-Through Rate"
subsection, in connection with the
description of the respective
pass-through rates for the class X-1, X-2
and each class of series 2004-C1
certificates identified in the table on
page S-5 as having a "WAC", a "WAC - x%"
or a "WAC Cap" pass-through rate, mean,
as to any particular mortgage loan in the
trust, an interest rate that is generally
equal to (a) the related mortgage rate in
effect as of the date of initial issuance
of the offered certificates (without
regard to any subsequent modification,
waiver or amendment), minus (b) the sum
of:
o the annual rate at which the related
master servicing fee, including any
primary servicing fee, is
calculated; and
o the annual rate at which the trustee
fee is calculated;
provided that, if the subject underlying
mortgage loan accrues interest on the
basis of the actual number of days
elapsed during any one-month interest
accrual period in a year assumed to
S-10
consist of 360 days, then, in some
months, the "related mortgage rate"
referred to above in clause (a) of this
sentence will be converted to an annual
rate that would generally produce an
equivalent amount of interest accrued
during the same one-month interest
accrual period on the basis of an assumed
360-day year consisting of twelve 30-day
months, prior to subtracting the rates
described in clause (b) of this sentence.
The pass-through rate for the class PM
certificates will generally equal the net
interest rate described in the prior
paragraph with respect to the Pecanland
Mall underlying mortgage loan.
See "Description of the Offered
Certificates--Payments--Calculation of
Pass-Through Rates" in this prospectus
supplement.
WEIGHTED AVERAGE LIFE AND
PRINCIPAL WINDOW..................... The weighted average life of any class of
offered certificates refers to the
average amount of time, expressed in
years, that will elapse from the date of
their issuance until each dollar to be
applied in reduction of the total
principal balance of those certificates
is paid to investors. The principal
window for any class of offered
certificates is the period during which
the holders of that class of offered
certificates will receive payments of
principal.
The weighted average life and principal
window shown in the table on page S-5 of
this prospectus supplement for each class
of offered certificates were calculated
based on the following assumptions with
respect to each underlying mortgage loan:
o the related borrower timely makes
all payments on the mortgage loan;
o if the mortgage loan has an
anticipated repayment date, as
described under "--The Underlying
Mortgage Loans and the Mortgaged
Real Properties" below, the mortgage
loan will be paid in full on that
date; and
o the mortgage loan will not otherwise
be prepaid prior to stated maturity.
The weighted average life and principal
window shown in the table on page S-5 of
this prospectus supplement for each class
of offered certificates were further
calculated based on the other maturity
assumptions referred to under "--Yield
and Maturity Considerations" in, and set
forth in the glossary to, this prospectus
supplement.
S-11
RATINGS.............................. The ratings shown in the table on page
S-5 of this prospectus supplement for the
offered certificates are those of
Standard & Poor's Ratings Services, a
division of The McGraw-Hill Companies,
Inc., and Moody's Investors Service,
Inc., respectively. It is a condition to
their issuance that the respective
classes of the offered certificates
receive credit ratings no lower than
those shown in the table on page S-5 of
this prospectus supplement.
The ratings assigned to the respective
classes of the offered certificates
address the timely receipt by holders of
interest on each payment date and the
ultimate receipt by holders of principal
on or before the payment date in April
2040, which is the rated final payment
date. A security rating is not a
recommendation to buy, sell or hold
securities and the assigning rating
agency may revise or withdraw its rating
at any time.
For a description of the limitations of
the ratings of the offered certificates,
see "Ratings" in this prospectus
supplement.
RELEVANT PARTIES
WE AND US............................ Our name is Citigroup Commercial Mortgage
Securities Inc. We are a Delaware
corporation. Our address is 388 Greenwich
Street, New York, New York 10013 and our
telephone number is (212) 816-6000. We
are a wholly-owned subsidiary of
Citigroup Financial Products Inc. and an
affiliate of Citigroup Global Markets
Inc., one of the underwriters, and
Citigroup Global Markets Realty Corp.,
one of the mortgage loan sellers. We will
transfer to the trust the original
mortgage loans that will back the series
2004-C1 certificates. See "Citigroup
Commercial Mortgage Securities Inc." in
the accompanying prospectus.
INITIAL TRUSTEE...................... LaSalle Bank National Association, a
national banking association, will act as
the initial trustee on behalf of all the
series 2004-C1 certificateholders. It
maintains an office at 135 S. LaSalle
Street, Suite 1625, Chicago, Illinois
60603. See "Description of the Offered
Certificates--The Trustee" in this
prospectus supplement. The trustee will
also have, or be responsible for
appointing an agent to perform,
additional duties with respect to tax
administration. Following the transfer of
the underlying mortgage loans to the
trust, the trustee, on behalf of the
trust, will become the mortgagee of
record under each underlying mortgage
loan.
INITIAL FISCAL AGENT................. ABN AMRO Bank N.V., a Netherlands banking
corporation, will act as the initial
fiscal agent on behalf of all the series
2004-C1 certificateholders. It maintains
an office at 135 S. LaSalle Street, Suite
1625, Chicago, Illinois 60603. See
"Description of the Offered
Certificates--The Fiscal Agent" in this
prospectus supplement.
S-12
INITIAL MASTER SERVICER.............. Wachovia Bank, National Association, a
national banking association, will act as
the initial master servicer with respect
to the underlying mortgage loans.
Wachovia Bank, National Association is
one of the mortgage loan sellers and is
an affiliate of Wachovia Capital Markets,
LLC, one of the underwriters. See
"Servicing of the Underlying Mortgage
Loans--The Initial Master Servicer and
the Initial Special Servicer" in this
prospectus supplement.
INITIAL SPECIAL SERVICER............. Lennar Partners, Inc., a Florida
corporation, will act as the initial
special servicer with respect to the
underlying mortgage loans. See "Servicing
of the Underlying Mortgage Loans--The
Initial Master Servicer and the Initial
Special Servicer" in this prospectus
supplement.
CONTROLLING CLASS OF SERIES 2004-C1
CERTIFICATEHOLDERS AND THE SERIES
2004-C1 CONTROLLING CLASS
REPRESENTATIVE....................... At any time of determination, the
controlling class of series 2004-C1
certificateholders will be the holders of
the most subordinate class of series
2004-C1 certificates, exclusive of the
X-1, X-2, PM, Y and R classes, that has a
total principal balance that is (a)
greater than 25% of the total initial
principal balance of that class and (b)
equal to or greater than 1.0% of the
total initial class principal balance of
the class A-1, A-2, A-3, A-4, B, C, D, E,
F, G, H, J, K, L, M, N, P and Q
certificates. However, if no class of
series 2004-C1 certificates, exclusive of
the X-1, X-2, PM, Y and R classes
satisfies clauses (a) and (b) of the
preceding sentence at the time of
determination, then the controlling class
of series 2004-C1 certificateholders will
be the holders of the most subordinate
class of series 2004-C1 certificates,
exclusive of the X-1, X-2, PM, Y and R
certificates, that has a total principal
balance greater than zero. For purposes
of determining, and exercising the rights
of, the controlling class of series
2004-C1 certificateholders, the class
A-1, A-2, A-3 and A-4 certificateholders
will be considered a single class.
The holders -- or, if applicable, the
beneficial owners -- of certificates
representing a majority interest in the
controlling class of series 2004-C1
certificates will be entitled, among
other things, to:
o replace the special servicer,
subject to the conditions described
under "Servicing of the Underlying
Mortgage Loans--Replacement of the
Special Servicer" in this prospectus
supplement; and
o select a representative that,
subject to the conditions described
under "Servicing of the Underlying
Mortgage Loans--The Series 2004-C1
Controlling Class Representative and
the Class PM Representative" in this
S-13
prospectus supplement, may direct
the special servicer with respect to
various servicing matters.
Notwithstanding the foregoing, so long as
the total principal balance of the class
PM certificates (net of any appraisal
reduction amount with respect to the
Pecanland Mall underlying mortgage loan)
is equal to or greater than 25% of the
initial total principal balance of the
class PM certificates, then the class PM
representative, and not the series
2004-C1 controlling class representative,
will be able to direct the special
servicer with respect to the Pecanland
Mall underlying mortgage loan.
An appraisal reduction amount is
generally an assessment of
undercollateralization with respect to
the subject mortgage loan, calculated
based on, among other things, 90% of the
appraised or estimated value of the
related mortgaged real property. See the
definition of "Appraisal Reduction
Amount" in the glossary to this
prospectus supplement.
The holder -- or, if applicable, the
beneficial owner -- of series 2004-C1
certificates evidencing the largest
percentage interest of voting rights
allocated to the series 2004-C1
controlling class will have a fair value
purchase option with respect to defaulted
underlying mortgage loans that satisfy
the criteria described in this prospectus
supplement. See "Servicing of the
Underlying Mortgage Loans--Fair Value
Purchase Option" in this prospectus
supplement.
CLASS PM CERTIFICATEHOLDERS AND
CLASS PM REPRESENTATIVE.............. The class PM certificates will evidence
an interest solely in the underlying
mortgage loan secured by the mortgaged
real property identified on Annex A-1 to
this prospectus supplement as Pecanland
Mall. The holders-- or, if applicable,
the beneficial owners-- of certificates
representing a majority interest in the
class PM certificates will be entitled,
among other things, to select a
representative that, subject to the
conditions described under "Servicing of
the Underlying Mortgage Loans--The Series
2004-C1 Controlling Class Representative
and the Class PM Representative" in this
prospectus supplement:
o may direct the special servicer with
respect to various servicing matters
solely with respect to the Pecanland
Mall underlying mortgage loan; and
o has limited cure rights with respect
to the Pecanland Mall underlying
mortgage loan.
Notwithstanding the foregoing, the class
PM representative will no longer be able
to direct the special servicer with
respect to the Pecanland Mall underlying
mortgage loan, if and when the total
principal balance of the class PM
certificates, reduced (to not
S-14
less than zero) by any appraisal
reduction amount with respect to the
Pecanland Mall underlying mortgage loan,
is less than 25% of an amount equal to
the initial total principal balance of
the class PM certificates.
Under certain default scenarios, the
holder -- or, if applicable, the
beneficial owner -- of class PM
certificates evidencing the largest
percentage interest of voting rights
allocated to the PM class will have a par
purchase option with respect to the
Pecanland Mall underlying mortgage loan.
See "Servicing of the Underlying Mortgage
Loans--The Series 2004-C1 Controlling
Class Representative and the Class PM
Representative" in this prospectus
supplement.
MORTGAGE LOAN SELLERS................ We will acquire the mortgage loans that
support the offered certificates, from:
o Citigroup Global Markets Realty
Corp., which is a New York
corporation and an affiliate of both
us and Citigroup Global Markets
Inc., one of the underwriters;
o Wachovia Bank, National Association,
which is a national banking
association, the initial master
servicer and an affiliate of
Wachovia Capital Markets, LLC, one
of the underwriters; and
o CDC Mortgage Capital Inc., which is
a New York corporation and an
affiliate of CDC Securities, one of
the underwriters.
See "Description of the Mortgage
Pool--The Mortgage Loan Sellers" in this
prospectus supplement.
UNDERWRITERS......................... Citigroup Global Markets Inc., Wachovia
Capital Markets, LLC, Caisse Des Depots
Securities Inc. (doing business as CDC
Securities) and Deutsche Bank Securities
Inc. are the underwriters with respect to
this offering. With respect to this
offering, Citigroup Global Markets Inc.
and Wachovia Capital Markets, LLC are
acting as joint bookrunning managers in
the following manner: Wachovia Capital
Markets, LLC is acting as sole
bookrunning manager with respect to
60.89% of the class A-4 certificates, and
Citigroup Global Markets Inc. is acting
as sole bookrunning manager with respect
to the remainder of the class A-4
certificates and all other classes of
offered certificates. CDC Securities and
Deutsche Bank Securities Inc. are
co-managers. See "Method of Distribution"
in this prospectus supplement.
S-15
RELEVANT DATES AND PERIODS
CUT-OFF DATE......................... All payments and collections received on
each of the underlying mortgage loans
after its due date in June 2004,
excluding any payments or collections
that represent amounts due on or before
that date, will belong to the trust.
Accordingly, the respective due dates for
the underlying mortgage loans in June
2004 collectively represent the cut-off
date for the trust.
ISSUE DATE........................... The date of initial issuance of the
offered certificates will be on or about
June 24, 2004.
PAYMENT DATE......................... Payments on the offered certificates are
scheduled to occur monthly, commencing in
July 2004. During any given month, the
payment date will be 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
July 2004.
RECORD DATE.......................... The record date for each monthly payment
on an offered certificate will be the
last business day of the prior calendar
month. The registered holders of the
offered certificates at the close of
business on each record date, will be
entitled to receive, on the following
payment date, any payments on those
certificates, except that the last
payment on any offered certificate will
be made only upon presentation and
surrender of the certificate.
COLLECTION PERIOD.................... Amounts available for payment on the
series 2004-C1 certificates on any
payment date will depend on the payments
and other collections received, and any
advances of payments due, on or with
respect to the underlying mortgage loans
during the related collection period.
Each collection period:
o will relate to a particular payment
date;
o will be approximately one month
long;
o will begin when the prior collection
period ends or, in the case of the
first collection period, will begin
on the day following the cut-off
date; and
o will end at the close of business
on the determination date
immediately preceding the related
payment date.
INTEREST ACCRUAL PERIOD.............. The amount of interest payable with
respect to the interest-bearing classes
of series 2004-C1 certificates on any
payment date will be a function of the
interest accrued during the related
interest accrual period. The interest
accrual period for any
S-16
payment date will be the calendar month
immediately preceding the month in which
that payment date occurs.
RATED FINAL PAYMENT DATE............. The rated final payment date for each
class of the offered certificates is the
payment date in April 2040.
As discussed in this prospectus
supplement and in the accompanying
prospectus, the ratings assigned to each
class of offered certificates will
represent the likelihood of:
o timely receipt by the related
certificateholders of all interest
to which they are entitled on each
payment date; and
o the ultimate receipt by the related
certificateholders of all principal
to which they are entitled by the
rated final payment date.
See "Ratings" in this prospectus
supplement.
DESCRIPTION OF THE OFFERED CERTIFICATES
OFFERED CERTIFICATES................. We are offering to you the following
classes of certificates of our Commercial
Mortgage Pass-Through Certificates,
Series 2004-C1 pursuant to this
prospectus supplement:
o class A-1;
o class A-2;
o class A-3;
o class A-4;
o class B;
o class C;
o class D; and
o class E.
REGISTRATION AND DENOMINATIONS....... We intend to deliver the offered
certificates in book-entry form in
original denominations of $10,000 initial
principal balance and in any whole dollar
denomination in excess of $10,000.
You will initially hold your offered
certificates, directly or indirectly,
through The Depository Trust Company, in
the United States, or Clearstream Banking
Luxembourg or Euroclear Bank S.A./N.V.,
as operator of The Euroclear System, in
Europe. As a result, you will not receive
a fully registered physical certificate
S-17
representing your interest in any offered
certificate, except under the limited
circumstances described under
"Description of the Offered
Certificates--Registration and
Denominations" in this prospectus
supplement and under "Description of the
Certificates--Book-Entry Registration" in
the accompanying prospectus. We may elect
to terminate the book-entry system
through DTC with respect to all or any
portion of any class of offered
certificates.
PAYMENTS
A. GENERAL.......................... The trustee will remit payments of
interest and, except in the case of the
class X-1 and X-2 certificates, principal
to the following classes of series
2004-C1 certificateholders, in the
following order:
PAYMENT ORDER CLASS
------------- -----
1st.................... A-1, A-2, A-3,
A-4, X-1 and X-2
2nd.................... B
3rd.................... C
4th.................... D
5th.................... E
6th.................... F
7th.................... G
8th.................... H
9th.................... J
10th................... K
11th................... L
12th................... M
13th................... N
14th................... P
15th................... Q
Allocation of interest payments among the
class A-1, A-2, A-3, A-4, X-1 and X-2
certificates is pro rata based on the
respective amounts of interest payable on
each of those classes.
Allocation of principal payments among
the class A-1, A-2, A-3 and A-4
certificates is described under
"--Payments--Payments of Principal"
below.
The class PM certificates will represent
a subordinated right to receive out of
payments and other collections (or
advances in lieu thereof) on the
Pecanland Mall underlying mortgage loan,
monthly payments of: interest at the
related pass-through rate; and principal
in the amounts generally described under
"--Payments--Payments of Principal"
below. See "Description of the Offered
Certificates--Payments--Allocation of
Payments on the Pecanland Mall Mortgage
Loan; Payments on the Class PM
Certificates" in this prospectus
supplement.
S-18
The class Y and R certificates do not
bear interest. The class X-1, X-2, Y and
R certificates do not have principal
balances and do not entitle their
respective holders to payments of
principal.
See "Description of the Offered
Certificates--Payments--Priority of
Payments" in this prospectus supplement.
B. PAYMENTS OF INTEREST.............. Each class of series 2004-C1
certificates, other than the class Y and
R certificates, will bear interest. In
each case, that interest will accrue
during each interest accrual period based
upon:
o the pass-through rate applicable for
the particular class for that
interest accrual period;
o the total principal balance or
notional amount, as the case may be,
of the particular class outstanding
immediately prior to the related
payment date; and
o the assumption that each year
consists of twelve 30-day months.
Following the interest accrual period,
the class X-2 certificates will no longer
accrue interest and will have a
pass-through rate of 0% per annum.
On each payment date, subject to
available funds and the payment
priorities described under
"--Payments--General" above, the holders
of each class of offered certificates
will be entitled to receive:
o all interest accrued with respect to
that class of offered certificates
during the related interest accrual
period, as described above in this
"--Payments--Payments of Interest"
subsection; plus
o any interest that such class of
offered certificateholders was
entitled to receive on all prior
payment dates, to the extent not
previously received; minus
o such class' allocable share of any
shortfalls in interest collections
due to prepayments on the underlying
mortgage loans, to the extent that
such interest shortfalls are not
offset by certain payments made by
the master servicer; minus
o such class' allocable share of any
reduction in interest paid on any
underlying mortgage loan as a result
of a modification that allows the
reduction in accrued but unpaid
interest to be added to the
principal balance of the subject
mortgage loan.
S-19
See "Description of the Offered
Certificates--Payments--Payments of
Interest" and "--Payments--Priority of
Payments" in this prospectus supplement.
C. PAYMENTS OF PRINCIPAL............ Subject to:
o available funds;
o the payment priorities described
under "--Payments--General" above;
and
o the reductions in their respective
total principal balances as
described under "--Reductions of
Certificate Principal Balances in
Connection with Losses on the
Underlying Mortgage Loans and
Default-Related and Other
Unanticipated Expenses" below;
the holders of each class of offered
certificates will be entitled to receive
a total amount of principal over time
equal to the total principal balance of
their particular class.
The total payments of principal to be
made on the series 2004-C1 certificates
on any payment date will, in general, be
a function of:
o the amount of scheduled payments of
principal due or, in some cases,
deemed due on the underlying
mortgage loans during the related
collection period, which payments
are either received as of the end of
that collection period or advanced
by the master servicer, the trustee
or the fiscal agent; and
o the amount of any prepayments and
other unscheduled collections of
previously unadvanced principal with
respect to the underlying mortgage
loans that are received during the
related collection period.
However, if the master servicer, the
special servicer, the trustee or the
fiscal agent reimburses itself out of
general collections on the mortgage pool
for any advance that it has determined is
not recoverable out of collections on the
related underlying mortgage loan, then
that advance (together with accrued
interest thereon) will be deemed, to the
fullest extent permitted, to be
reimbursed first out of payments and
other collections of principal otherwise
distributable on the series 2004-C1
principal balance certificates (other
than the class PM certificates), prior to
being deemed reimbursed out of payments
and other collections of interest
otherwise distributable on the series
2004-C1 certificates (other than the
class PM certificates).
S-20
Amounts otherwise payable as interest
and/or principal on the class PM
certificates will not be available to
reimburse advances in respect of any
underlying mortgage loan other than the
Pecanland Mall underlying mortgage loan.
The trustee will remit payments of
principal in a specified sequential order
to ensure that:
o no payments of principal will be
made to the holders of the class F,
G, H, J, K, L, M, N, P and Q
certificates until the total
principal balance of the offered
certificates is reduced to zero;
o no payments of principal will be
made to the holders of the class B,
C, D or E certificates until, in the
case of each of those classes, the
total principal balance of all more
senior classes of offered
certificates is reduced to zero; and
o except as described in the paragraph
following these bullets, no payments
of principal will be made to the
holders of the class A-4
certificates until the total
principal balance of the class A-1,
A-2 and A-3 certificates is reduced
to zero, no payments of principal
will be made to the holders of the
class A-3 certificates until the
total principal balance of the class
A-1 and A-2 certificates is reduced
to zero, and no payments of
principal will be made to the
holders of the class A-2
certificates until the total
principal balance of the class A-1
certificates is reduced to zero.
Because of losses on the underlying
mortgage loans and/or default-related or
other unanticipated expenses of the
trust, the total principal balance of the
class B, C, D, E, F, G, H, J, K, L, M, N,
P and Q certificates could be reduced to
zero at a time when the class A-1, A-2,
A-3 and A-4 certificates, or any two or
more of those classes of series 2004-C1
certificates, remain outstanding. Under
those circumstances, the trustee will
remit payments of principal to the
holders of the outstanding class A-1,
A-2, A-3 and/or A-4 certificates on a pro
rata basis in accordance with the
respective total principal balances of
those classes of series 2004-C1
certificates.
So long as certain default scenarios do
not exist with respect to the Pecanland
Mall underlying mortgage loan, the
holders of the class PM certificates will
be entitled to receive, on a subordinate
basis, payments of principal equal to 50%
(or such lesser percentage as would be
sufficient to retire the class PM
certificates) of (a) all scheduled
payments of principal due or, in some
cases, deemed due on the Pecanland Mall
underlying mortgage loan from time to
time, to the extent those payments
S-21
are, in each case, either received as of
the end of the collection period when due
or deemed due or advanced by the master
servicer, the trustee or the fiscal
agent, and (b) any prepayments and other
unscheduled collections of previously
unadvanced principal with respect to the
Pecanland Mall underlying mortgage loan.
However, for so long as certain default
scenarios exist with respect to the
Pecanland Mall underlying mortgage loan,
the holders of the class PM certificates
will not receive any payments of
principal unless and until the holders of
the other series 2004-C1 principal
balance certificates collectively receive
or are deemed to receive over time
payments of principal equal to the
cut-off date principal balance of the
pooled portion of the Pecanland Mall
underlying mortgage loan. The initial
total principal balance of the class PM
certificates represents 5.06% of the
cut-off date principal balance of the
Pecanland Mall underlying mortgage loan.
Accordingly, in the absence of default,
the class PM certificates will be retired
prior to the payment in full of the
pooled portion of the Pecanland Mall
underlying mortgage loan.
The class X-1, X-2, R and Y certificates
do not have principal balances and do not
entitle their holders to payments of
principal.
See "Description of the Offered
Certificates--Payments--Payments of
Principal", "--Payments--Priority of
Payments" and "--Payments--Allocation of
Payments on the Pecanland Mall Mortgage
Loan; Payments on the Class PM
Certificates" in this prospectus
supplement.
D. PAYMENTS OF PREPAYMENT PREMIUMS
AND YIELD MAINTENANCE CHARGES.... If any prepayment premium or yield
maintenance charge is collected on any of
the underlying mortgage loans, then the
trustee will remit that amount as
described under "Description of the
Offered Certificates--Payments--Payments
of Prepayment Premiums and Yield
Maintenance Charges" in this prospectus
supplement.
REDUCTIONS OF CERTIFICATE PRINCIPAL
BALANCES IN CONNECTION WITH LOSSES ON
THE UNDERLYING MORTGAGE LOANS AND
DEFAULT-RELATED AND OTHER
UNANTICIPATED EXPENSES............... Because of losses on the underlying
mortgage loans (including, for this
purpose, advances that are reimbursed out
of general collections on the mortgage
pool because collections on the related
underlying mortgage loan are determined
to be insufficient to make such
reimbursement) and/or default-related and
other unanticipated expenses of the
trust, the total principal balance of the
mortgage pool, net of outstanding
advances of principal, may fall below the
total principal balance of the series
2004-C1 principal balance certificates.
If and to the extent that
S-22
those losses and/or expenses cause such a
deficit to exist following the payments
made on the series 2004-C1 certificates
on any payment date, then the respective
total principal balances of the following
classes of series 2004-C1 principal
balance certificates will, in general, be
sequentially reduced, in the following
order, until that deficit is eliminated
(subject to the discussion in the next
paragraph):
REDUCTION ORDER CLASS
--------------- -----
1st.............. Q
2nd.............. P
3rd.............. N
4th.............. M
5th.............. L
6th.............. K
7th.............. J
8th.............. H
9th.............. G
10th............. F
11th............. E
12th............. D
13th............. C
14th............. B
15th............. A-1, A-2, A-3 and A-4,
pro rata by total
principal balance
Notwithstanding the foregoing, losses on
and/or default-related or other
unanticipated trust fund expenses with
respect to the Pecanland Mall underlying
mortgage loan will be allocated, as and
to the extent described under
"Description of the Offered
Certificates--Reductions of Certificate
Principal Balances in Connection with
Realized Losses and Additional Trust Fund
Expenses" in this prospectus supplement,
to reduce the total principal balance of
the class PM certificates, prior to being
allocated to reduce the total principal
balance of any class identified in the
foregoing table.
See "Description of the Offered
Certificates--Reductions of Certificate
Principal Balances in Connection with
Realized Losses and Additional Trust Fund
Expenses" and "Description of the
Mortgage Pool--The Ocean Key Resort Loan
Pair-- Allocation of Payments Between the
Ocean Key Resort Mortgage Loan and the
Related Subordinate Companion Loan" in
this prospectus supplement.
ADVANCES OF DELINQUENT
MONTHLY DEBT SERVICE PAYMENTS........ Except as described below, the master
servicer will be required to make, for
each payment date, a total amount of
advances of principal and/or interest
generally equal to all monthly debt
service payments--other than balloon
payments--and
S-23
assumed monthly debt service payments, in
each case net of related master servicing
fees and special servicing fees, that:
o were due or deemed due, as the case
may be, with respect to the
underlying mortgage loans during the
related collection period; and
o were not paid by or on behalf of the
respective borrowers or otherwise
collected as of the close of
business on the last day of the
related collection period.
In addition the trustee or the fiscal
agent must make any of those advances
that the master servicer is required, but
fails, to make. As described under
"Description of the Offered
Certificates--Advances of Delinquent
Monthly Debt Service Payments" in this
prospectus supplement, any party that
makes an advance will be entitled to be
reimbursed for the advance, together with
interest at the prime rate described in
that section of this prospectus
supplement.
Notwithstanding the foregoing, none of
the master servicer, the trustee or the
fiscal agent will be required to make any
advance that it determines, or that the
special servicer determines, will not be
recoverable from proceeds of the related
underlying mortgage loan. The trustee and
the fiscal agent will be entitled to rely
on any determination of recoverability
made by the master servicer, and the
trustee, the fiscal agent and the master
servicer will be entitled to rely on any
determination of recoverability made by
the special servicer.
In addition, if any of the adverse events
or circumstances that we refer to under
"Servicing of the Underlying Mortgage
Loans--Required Appraisals" in, and
identify in the glossary to, this
prospectus supplement, occurs or exists
with respect to any underlying mortgage
loan or the mortgaged real property for
that mortgage loan, then the special
servicer will generally be obligated to
obtain a new appraisal (or, in cases
involving underlying mortgage loans with
principal balances that are, in any such
case, less than $2 million, may conduct
an internal valuation) of that property.
If, based on that appraisal or other
valuation, it is determined that:
o the principal balance of, and other
delinquent amounts due under, the
subject underlying mortgage loan,
together with various related
expenses and fees; exceed
o an amount generally equal to:
1. 90% of the new appraised or
estimated value of that real
property (net of any prior
liens and estimated liquidation
expenses), plus
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2. certain escrows and reserves
and any letters of credit
constituting additional
security for the subject
mortgage loan,
then the amount otherwise required to be
advanced with respect to interest on the
subject mortgage loan will be reduced,
thereby reducing the amounts available
for payment on the series 2004-C1
certificates. The reduction will be based
on an allocation of the amount of that
excess to one or more classes of the
series 2004-C1 principal balance
certificates and will generally equal one
month's interest at the related
pass-through rates on the respective
allocated portions.
See "Description of the Offered
Certificates--Advances of Delinquent
Monthly Debt Service Payments" and
"Servicing of the Underlying Mortgage
Loans--Required Appraisals" in this
prospectus supplement. See also
"Description of the
Certificates--Advances" in the
accompanying prospectus.
REPORTS TO CERTIFICATEHOLDERS........ On each payment date, various statements
and reports prepared by the trustee, the
master servicer and/or the special
servicer regarding the offered
certificates and the underlying mortgage
loans will be made available to you via
the trustee's internet website and will
contain the information described under
"Description of the Offered
Certificates--Reports to
Certificateholders; Available
Information" in this prospectus
supplement.
Upon reasonable prior notice, you may
also review at the offices of the
trustee, the master servicer and/or the
special servicer during normal business
hours a variety of information and
documents that pertain to the underlying
mortgage loans and the mortgaged real
properties for those loans. We expect
that the available information and
documents will include loan documents,
borrower operating statements, rent rolls
and property inspection reports, all to
the extent received by the trustee, the
master servicer and/or the special
servicer, as applicable.
See "Description of the Offered
Certificates--Reports to
Certificateholders; Available
Information" in this prospectus
supplement.
OPTIONAL TERMINATION................. Specified parties to the transaction may
terminate the trust through the purchase
of all the mortgage loans and any REO
properties in the trust fund when the
total principal balance of the underlying
mortgage loans, including the non-pooled
portion of the Pecanland Mall underlying
mortgage loan, net of outstanding
advances of principal, is less than
approximately 1.0% of the initial total
principal balance of the series 2004-C1
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principal balance certificates. See
"Description of the Offered
Certificates--Termination" in this
prospectus supplement.
THE UNDERLYING MORTGAGE LOANS AND THE MORTGAGED REAL PROPERTIES
GENERAL.............................. In this section, "--The Underlying
Mortgage Loans and the Mortgaged Real
Properties", we provide summary
information with respect to the mortgage
loans that we intend to include in the
trust fund. For more detailed information
regarding those mortgage loans, you
should review the following sections in
this prospectus supplement:
o "Risk Factors--Risks Related to the
Underlying Mortgage Loans";
o "Description of the Mortgage Pool";
o Annex A-1--Characteristics of the
Underlying Mortgage Loans and the
Mortgaged Real Properties;
o Annex A-2--Summary Characteristics
of the Underlying Mortgage Loans and
the Mortgaged Real Properties;
o Annex A-3--Characteristics of the
Multifamily Mortgaged Real
Properties; and
o Annex B--Description of Twenty
Largest Mortgage Loans, Groups of
Cross-Collateralized Mortgage Loans
and/or Groups of Borrower Affiliated
Mortgage Loans.
When reviewing the information that we
have included in this prospectus
supplement, including the Annexes hereto,
with respect to the mortgage loans that
are to back the offered certificates,
please note that--
o All numerical information provided
with respect to the underlying
mortgage loans is provided on an
approximate basis.
o References to initial mortgage pool
balance mean the aggregate principal
balance of the underlying mortgage
loans, exclusive of the principal
balance of the non-pooled portion of
the Pecanland Mall underlying
mortgage loan, as of the cut-off
date, after application of all
scheduled payments of principal due
with respect to the underlying
mortgage loans on or before that
date.
o Unless specifically indicated
otherwise, statistical information
presented in this prospectus
supplement with respect to the Ocean
Key Resort underlying
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mortgage loan excludes the related
subordinate companion loan.
o Except as otherwise described in the
next sentence, all weighted average
information provided with respect to
the underlying mortgage loans
reflects a weighting based on their
respective cut-off date principal
balances. For the purpose of
calculating weighted averages (other
than weighted average debt service
coverage ratios) the Pecanland Mall
underlying mortgage loan is
considered to exclude the non-pooled
portion of that mortgage loan.
Weighted average debt service
coverage ratio information presented
in this prospectus supplement,
insofar as it relates to the
Pecanland Mall underlying mortgage
loan, weights the relevant debt
service coverage ratio for that
mortgage loan based on a principal
balance that takes into account the
non-pooled portion of that mortgage
loan. We will transfer the cut-off
date principal balance for each of
the underlying mortgage loans
(including, in the case of the
Pecanland Mall underlying mortgage
loan, the non-pooled portion of that
mortgage loan) to the trust. We show
the cut-off date principal balance
for each of the underlying mortgage
loans (or, in the case of the
Pecanland Mall underlying mortgage
loan, its cut-off date principal
balance without regard to the
non-pooled portion of that mortgage
loan) on Annex A-1 to this
prospectus supplement.
o When information with respect to the
mortgaged real properties is
expressed as a percentage of the
initial mortgage pool balance, that
percentage is based on the cut-off
date principal balances of the
related underlying mortgage loans or
allocated portions of those balances
(or, in the case of the Pecanland
Mall underlying mortgage loan,
unless the context clearly indicates
otherwise, based on its cut-off date
principal balance without regard to
the non-pooled portion of that
mortgage loan).
o Unless specifically indicated
otherwise, statistical information
with respect to the Pecanland Mall
underlying mortgage loan, except for
debt service coverage ratios, is
being presented without regard to
the non-pooled portion of the
Pecanland Mall underlying mortgage
loan. Debt service coverage ratio
information shown in this prospectus
supplement, insofar as it relates to
the Pecanland Mall underlying
mortgage loan, takes into account
the portion of the monthly debt
service payment allocable to the
non-pooled portion of that mortgage
loan.
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o If any of the underlying mortgage
loans is secured by multiple
mortgaged real properties, a portion
of that mortgage loan has been
allocated to each of those
properties for purposes of providing
various statistical information in
this prospectus supplement.
o Whenever loan-level information,
such as loan-to-value ratios or debt
service coverage ratios, is
presented in the context of the
mortgaged real properties, the loan
level statistic attributed to a
mortgaged real property is the same
as the statistic for the related
underlying mortgage loan.
o Whenever we refer to a particular
underlying mortgage loan or
mortgaged real property by name, we
mean the underlying mortgage loan or
mortgaged real property, as the case
may be, identified by that name on
Annex A-1 to this prospectus
supplement. Whenever we refer to a
particular underlying mortgage loan
by loan number, we are referring to
the loan number for that mortgage
loan set forth on Annex A-1 to this
prospectus supplement.
o Statistical information regarding
the underlying mortgage loans may
change prior to the date of initial
issuance of the offered certificates
due to changes in the composition of
the mortgage pool prior to that
date, and the initial mortgage pool
balance may be as much as 5% larger
or smaller than indicated.
SOURCE OF THE UNDERLYING
MORTGAGE LOANS....................... We are not the originator of the mortgage
loans that we intend to include in the
trust fund. We will acquire those
mortgage loans from three separate
sellers. Each of those mortgage loans was
originated by--
o the related mortgage loan seller
from whom we acquired the mortgage
loan,
o an affiliate of the related mortgage
loan seller, or
o a correspondent in the related
mortgage loan seller's conduit
lending program.
PAYMENT AND OTHER TERMS
A. General.......................... Each of the mortgage loans that we intend
to include in the trust fund is the
obligation of a borrower to repay a
specified sum with interest.
Repayment of each of the mortgage loans
that we intend to include in the trust
fund is secured by a mortgage lien on the
fee
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simple and/or leasehold interest of the
related borrower or another party in one
or more commercial or multifamily real
properties. Except for limited permitted
encumbrances, which we identify in the
glossary to this prospectus supplement,
that mortgage lien will be a first
priority lien.
All of the mortgage loans that we intend
to include in the trust fund are or
should be considered nonrecourse. None of
those mortgage loans is insured or
guaranteed by any governmental agency or
instrumentality or by any private
mortgage insurer.
B. Mortgage Rates................... Each of the mortgage loans that we intend
to include in the trust fund currently
accrues interest at the annual rate
specified with respect to that loan on
Annex A-1 to this prospectus supplement.
Except as otherwise described below with
respect to each mortgage loan that has an
anticipated repayment date, the mortgage
rate for each mortgage loan that we
intend to include in the trust fund is,
in the absence of default, fixed for the
entire term of the loan.
C. Due Dates........................ Subject, in some cases, to a next
business day convention--
o sixty-four (64) of the mortgage
loans that we intend to include in
the trust fund, representing 49.8%
of the initial mortgage pool
balance, provide for scheduled
payments of principal and/or
interest to be due on the first day
of each month;
o two (2) of the mortgage loans that
we intend to include in the trust
fund, representing 2.4% of the
initial mortgage pool balance,
provide for scheduled payments of
principal and/or interest to be due
on the ninth day of each month; and
o forty-nine (49) of the mortgage
loans that we intend to include in
the trust fund, representing 47.8%
of the initial mortgage pool
balance, provide for scheduled
payments of principal and/or
interest to be due on the eleventh
day of each month.
D. Balloon Loans.................... Eighty-seven (87) of the mortgage loans
that we intend to include in the trust
fund, representing 83.4% of the initial
mortgage pool balance, each provide for:
o an amortization schedule that is
significantly longer than their
respective remaining terms to stated
maturity or for no amortization
prior to stated maturity; and
o a substantial balloon payment of
principal on their respective
maturity dates.
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Twelve (12) of the 87 balloon mortgage
loans that we intend to include in the
trust fund, representing 23.0% of the
initial mortgage pool balance, provide
for payments of interest only for periods
ranging from the first 12 to the first 25
payments following origination. Three (3)
of the 87 balloon mortgage loans that we
intend to include in the trust fund,
representing 1.4% of the initial mortgage
pool balance, provide for payments of
interest only until maturity.
E. ARD Loans........................ Twenty-seven (27) of the mortgage loans
that we intend to include in the trust,
representing 16.2% of the initial
mortgage pool balance, each provide
incentives to the related borrower to pay
the subject mortgage loan in full by a
specified date prior to maturity. We
consider that date to be the anticipated
repayment date for each of those mortgage
loans. There can be no assurance,
however, that these incentives will
result in any of those mortgage loans
being paid in full on or before its
anticipated repayment date. The
incentives, which in each case will
become effective as of the related
anticipated repayment date may (but need
not), include:
o the calculation of interest at an
annual rate in excess of the initial
mortgage rate, which additional
interest will be deferred, may be
compounded and will be payable only
after the outstanding principal
balance of the mortgage loan is paid
in full; and
o the application of all or a portion
of excess cash flow from the
mortgaged real property, after debt
service payments and any specified
reserves or expenses have been
funded or paid, to pay the principal
amount of the mortgage loan, which
payment of principal will be in
addition to the principal portion of
the normal monthly debt service
payment.
Nineteen (19) of the 27 mortgage loans
with anticipated repayment dates that we
intend to include in the trust fund,
representing 10.8% of the initial
mortgage pool balance, provide for
payments of interest only for periods
ranging from the first 12 to the first 48
payments following origination.
F. Fully Amortizing Loan............ One (1) mortgage loan, representing 0.4%
of the initial mortgage pool balance, has
a payment schedule that provides for the
payment of the subject mortgage loan in
full or substantially in full by its
maturity date. This mortgage loan does
not provide for any of the repayment
incentives associated with a mortgage
loan that has an anticipated repayment
date.
G. A/B Mortgage Loan................ One (1) mortgage loan, loan number 39
(the Ocean Key Resort underlying mortgage
loan), to be included in the trust that
was originated by Wachovia Bank, National
Association,
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representing 2.0% of the initial mortgage
pool balance, is evidenced by one of two
notes which are secured by a single
mortgaged real property. The related
companion loan will not be part of the
trust fund and is generally subordinated
to the Ocean Key Resort mortgage loan
that will be in the trust fund.
The intercreditor agreement for the Ocean
Key Resort loan pair, 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
initially service and administer this
underlying mortgage loan and its related
subordinate companion loan pursuant to
the series 2004-C1 pooling and servicing
agreement and the related intercreditor
agreement as more particularly set forth
in each of these agreements. In addition,
the related intercreditor agreement
allows the trust fund and the holder of
the subordinate companion loan to receive
separate collections of principal and
interest prior to any material defaults.
Amounts attributable to the subordinate
companion loan will not be assets of the
trust fund, and will be beneficially
owned by the holder of such subordinate
companion loan.
DELINQUENCY STATUS................... None of the mortgage loans that we intend
to include in the trust fund was more
than 30 days delinquent with respect to
any monthly debt service payment as of
the cut-off date.
PREPAYMENT RESTRICTIONS.............. As described more fully in Annex A-1 to
this prospectus supplement, as of the
cut-off date, all of the mortgage loans
that we intend to include in the trust
fund provide for a prepayment lockout
period or a prepayment lockout/defeasance
period during which voluntary prepayments
are prohibited, followed, in some cases,
by a prepayment consideration period
during which a voluntary prepayment must
be accompanied by prepayment
consideration, followed by an open
prepayment period during which voluntary
prepayments are permitted without payment
of any prepayment consideration.
Notwithstanding the foregoing prepayment
restrictions, prepayments may occur in
connection with loan defaults, casualties
and condemnations in respect of the
mortgaged real properties and, in certain
cases, out of cash holdbacks where
certain conditions relating to the
holdback have not been satisfied.
Prepayment premiums and/or yield
maintenance charges may not be payable in
connection with prepayments of this type.
DEFEASANCE........................... Ninety-eight (98) of the mortgage loans
to be included in the trust fund,
representing 88.2% of the initial
mortgage pool balance, permit the related
borrower to defease the mortgage loan and
obtain a release of the mortgaged real
property from the
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related mortgage lien by delivering U.S.
Treasury obligations or other government
securities as substitute collateral, but
continue to prohibit voluntary
prepayments during the defeasance period.
One of the mortgage loans that we intend
to include in the trust fund,
representing 4.8% of the initial mortgage
pool balance, concurrently allows the
borrower to elect to defease the mortgage
loan or prepay the mortgage loan with the
payment of a yield maintenance charge.
None of those 99 mortgage loans permits
defeasance prior to the second
anniversary of the date of initial
issuance of the series 2004-C1
certificates.
ADDITIONAL STATISTICAL INFORMATION... Set forth below is various statistical
information regarding the mortgage pool.
A. GENERAL CHARACTERISTICS.......... The mortgage pool will have the following
general characteristics as of the cut-off
date:
Initial mortgage pool balance................ $1,182,418,798
Number of mortgage loans..................... 115
Number of mortgaged real properties.......... 133
Largest cut-off date principal balance....... $93,000,000
Smallest cut-off date principal balance...... $781,314
Average cut-off date principal balance....... $10,281,903
Highest mortgage rate........................ 6.4600%
Lowest mortgage rate......................... 4.2765%
Weighted average mortgage rate............... 5.3450%
Longest original loan term to maturity or
anticipated repayment date................ 180 months
Shortest original loan term to maturity or
anticipated repayment date................ 60 months
Weighted average original loan term to
maturity or anticipated repayment date.... 108 months
Longest remaining loan term to maturity or
anticipated repayment date................ 177 months
Shortest remaining loan term to maturity or
anticipated repayment date................ 54 months
Weighted average remaining loan term to maturity
or anticipated repayment date............. 105 months
Highest underwritten net cash flow debt service
coverage ratio............................ 1.96x
Lowest underwritten net cash flow debt service
coverage ratio............................ 1.20x
Weighted average underwritten net cash flow debt
service coverage ratio.................... 1.48x
Highest cut-off date loan-to-value ratio..... 80.00%
Lowest cut-off date loan-to-value ratio...... 48.12%
Weighted average cut-off date loan-to-value
ratio..................................... 72.46%
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When reviewing the foregoing table,
please note the following:
o The initial mortgage pool balance is
subject to a permitted variance of
plus or minus 5%.
o Unless specifically indicated
otherwise, statistical information
with respect to the Pecanland Mall
underlying mortgage loan, except for
debt service coverage ratios, is
being presented without regard to
the non-pooled portion of the
Pecanland Mall underlying mortgage
loan. Debt service coverage ratio
information shown in this prospectus
supplement, insofar as it relates to
the Pecanland Mall underlying
mortgage loan, takes into account
the portion of the monthly debt
service payment allocable to the
non-pooled portion of that mortgage
loan. The cut-off date loan-to-value
ratio for the entire Pecanland Mall
underlying mortgage loan, including
the non-pooled portion is 69.10%.
o Unless specifically indicated
otherwise, statistical information
presented in this prospectus
supplement with respect to the Ocean
Key Resort underlying mortgage loan
excludes the related subordinate
companion loan.
o With respect to six (6) mortgage
loans that we intend to include in
the trust fund (loan numbers 22, 48,
50, 59, 60 and 61), which
collectively represent 6.4% of the
initial mortgage pool balance, the
underwritten net cash flow debt
service coverage ratio and, in the
case of loan number 22, the cut-off
date loan-to-value and maturity
date/ARD loan-to-value ratios, have
been calculated and/or presented on
an adjusted basis that (a) takes
into account various assumptions
regarding the financial performance
of the related mortgaged real
property that are consistent with
the respective performance related
criteria required to obtain the
release of a cash holdback and/or
letter of credit that serves as
additional collateral or otherwise
covers losses to a limited extent
and/or (b) reflects an application
of that cash holdback and/or letter
of credit to pay down the subject
mortgage loan, with a corresponding
reamortization of the monthly debt
service payment. IF THE
ABOVE-REFERENCED ADJUSTED VALUES ARE
NOT USED FOR THESE SIX (6)
UNDERLYING MORTGAGE LOANS: THE
UNDERWRITTEN NET CASH FLOW DEBT
SERVICE COVERAGE RATIOS FOR THE
MORTGAGE POOL RANGE FROM 1.11X TO
1.96X, WITH A WEIGHTED AVERAGE OF
1.47X; THE CUT-OFF DATE
LOAN-TO-VALUE RATIOS OF THE MORTGAGE
POOL RANGE FROM 48.12% TO 82.94%,
WITH A WEIGHTED AVERAGE OF 72.64%;
AND THE MATURITY DATE/ARD
LOAN-TO-VALUE RATIOS OF THE MORTGAGE
POOL
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RANGE FROM 0.90% TO 79.07%, WITH A
WEIGHTED AVERAGE OF 62.27%. WEIGHTED
AVERAGE UNDERWRITTEN NET CASH FLOW
DEBT SERVICE COVERAGE, CUT-OFF DATE
LOAN-TO-VALUE AND MATURITY DATE/ARD
LOAN-TO-VALUE INFORMATION FOR THE
MORTGAGE POOL (OR PORTIONS THEREOF
THAT CONTAIN ANY OF THOSE SIX (6)
UNDERLYING MORTGAGE LOANS) SET FORTH
IN THIS PROSPECTUS SUPPLEMENT
REFLECT THE RESPECTIVE ADJUSTMENTS
REFERENCED ABOVE.
B. GEOGRAPHIC CONCENTRATION......... The table below shows the number of, and
percentage of the initial mortgage pool
balance secured by, mortgaged real
properties located in the indicated
states or regions:
NUMBER OF % OF INITIAL
MORTGAGED MORTGAGE
STATE/REGION PROPERTIES POOL BALANCE
------------ ---------- ------------
Illinois............... 10 16.8
Florida................ 16 15.0
California 14 9.3
Southern California.. 10 5.3
Northern California.. 4 3.9
Texas.................. 9 8.2
Louisiana.............. 2 5.5
New York............... 6 5.0
Ohio................... 9 4.7
New Jersey............. 4 4.1
New Hampshire.......... 1 3.0
Washington............. 5 2.8
Other.................. 57 25.6
---------- ------------
Total/Wtd. Avg. 133 100.0%
The reference to "Other" in the foregoing
table includes 20 other states, as well
as the District of Columbia and Guam. No
more than 2.4% of the initial mortgage
pool balance is secured by mortgaged real
properties located in any of those other
jurisdictions. Northern California
includes areas with zip codes of 93923
and above, and Southern California
includes areas with zip codes of 93726
and below.
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C. PROPERTY TYPES................... The table below shows the number of, and
percentage of the initial mortgage pool
balance secured by, mortgaged real
properties predominantly operated for
each indicated purpose:
NUMBER OF % OF INITIAL
MORTGAGED MORTGAGE
PROPERTY TYPES PROPERTIES POOL BALANCE
-------------- ---------- ------------
Retail......................... 41 39.7%
Anchored..................... 19 16.9
Regional Mall................ 3 14.7
Single Tenant Retail, Anchor. 8 3.6
Unanchored................... 7 2.6
Shadow Anchored.............. 4 1.9
Office......................... 19 21.1
Suburban..................... 14 12.6
Central Business District.... 3 7.6
Medical Office............... 2 0.9
Mobile Home Park............... 24 9.7
Self Storage................... 23 9.4
Multifamily.................... 15 6.6
Conventional 11 5.4
Student Housing.............. 4 1.2
Mixed Use...................... 6 5.7
Hospitality.................... 3 4.5
Land........................... 1 2.3
Industrial..................... 1 1.0
---------- ------------
Total/Wtd. Avg. 133 100.0%
With respect to each of the four (4)
mortgaged real properties identified in
the foregoing table as "Shadow Anchored
Retail", none of the relevant anchor
tenants is on any portion of the
particular property that is subject to
the lien of the related mortgage
instrument.
D. ENCUMBERED INTERESTS............. The table below shows the number of, and
percentage of the initial mortgage pool
balance secured by, mortgaged real
properties for which the whole or
predominant encumbered interest is as
indicated:
NUMBER OF % OF INITIAL
MORTGAGED MORTGAGE
PROPERTY TYPES PROPERTIES POOL BALANCE
-------------- ---------- ------------
Fee Simple.............. 126 94.4%
Fee Simple in part and
Leasehold in part .... 3 3.1%
Leasehold............... 4 2.5%
It should be noted that each mortgage
loan secured by overlapping fee and
leasehold interests is presented as being
secured by a fee simple interest in this
prospectus supplement and is therefore
included within the category referred to
as "Fee Simple" in the chart above.
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LEGAL AND INVESTMENT CONSIDERATIONS
FEDERAL INCOME TAX CONSEQUENCES...... The trustee or its agent will make
elections to treat designated portions of
the assets of the trust as three separate
real estate mortgage investment conduits
-- or REMICs -- under Sections 860A
through 860G of the Internal Revenue Code
of 1986, as amended. One of those REMICs
primarily consists of the Pecanland Mall
underlying mortgage loan. The other two
of those REMICs are as follows:
o REMIC I, the lowest tier REMIC, will
hold, among other things, the
underlying mortgage loans or, in the
case of the Pecanland Mall
underlying mortgage loan, regular
interests in the related single loan
REMIC referred to above, and various
other related assets; and
o REMIC II will hold the regular
interests in REMIC I.
Notwithstanding the foregoing, neither
REMIC I nor the Pecanland Mall individual
loan REMIC will hold the collections of
additional interest accrued, and deferred
as to payment, with respect to any
underlying mortgage loan with an
anticipated repayment date. Any assets
not included in a REMIC will constitute a
grantor trust for federal income tax
purposes.
The offered certificates will be treated
as regular interests in REMIC II. This
means that they will be treated as newly
issued debt instruments for federal
income tax purposes. You will have to
report income on your offered
certificates in accordance with the
accrual method of accounting even if you
are otherwise a cash method taxpayer. The
offered certificates will not represent
any interest in the grantor trust
referred to above.
One or more classes of the offered
certificates may be issued with more than
a de minimis amount of original issue
discount. If you own an offered
certificate issued with original issue
discount, you may have to report original
issue discount income and be subject to a
tax on this income before you receive a
corresponding cash payment.
When determining the rate of accrual of
original issue discount, market discount
and premium, if any, for federal income
tax purposes, the prepayment assumption
used will be that following any date of
determination:
o the underlying mortgage loans with
anticipated repayment dates will be
paid in full on those dates;
o no mortgage loan in the trust fund
will otherwise be prepaid prior to
maturity; and
S-36
o there will be no extension of
maturity for any mortgage loan in
the trust fund.
For a more detailed discussion of the
federal income tax aspects of investing
in the offered certificates, see "Federal
Income Tax Consequences" in each of this
prospectus supplement and the
accompanying prospectus.
ERISA................................ We anticipate that, subject to
satisfaction of the conditions referred
to under "ERISA Considerations" in this
prospectus supplement, retirement plans
and other employee benefit plans and
arrangements subject to--
o Title I of the Employee Retirement
Income Security Act of 1974, as
amended, and
o Section 4975 of the Internal Revenue
Code of 1986, as amended,
initially will be able to invest in the
offered certificates without giving rise
to a prohibited transaction. This is
based upon an individual prohibited
transaction exemption granted to
Citigroup Global Markets Inc. by the U.S.
Department of Labor.
If you are a fiduciary or any other
person investing the assets of any
retirement plan or other employee benefit
plan or arrangement subject to Title I of
ERISA or Section 4975 of the Internal
Revenue Code of 1986, as amended, you
should review carefully with your legal
advisors whether the purchase or holding
of the offered certificates could give
rise to a transaction that is prohibited
under ERISA or Section 4975 of the
Internal Revenue Code of 1986, as
amended. See "ERISA Considerations" in
this prospectus supplement and in the
accompanying prospectus.
LEGAL INVESTMENT..................... The offered certificates will not be
mortgage related securities within the
meaning of the Secondary Mortgage Market
Enhancement Act of 1984.
All institutions whose investment
activities are subject to legal
investment laws and regulations,
regulatory capital requirements or review
by regulatory authorities should consult
with their own legal advisors in
determining whether and to what extent
the offered certificates will be legal
investments for you. See "Legal
Investment" in this prospectus supplement
and in the accompanying prospectus.
S-37
INVESTMENT CONSIDERATIONS............ The yield to maturity of any offered
certificate will depend upon, among other
things:
o the price paid for the offered
certificate; and
o the rate, timing and amount of
payments on the offered certificate.
The rate and timing of payments and other
collections of principal on or with
respect to the underlying mortgage loans
could affect the yield to maturity on an
offered certificate. In the case of
offered certificates purchased at a
discount, a slower than anticipated rate
of payments and other collections of
principal on the underlying mortgage
loans could result in a lower than
anticipated yield. In the case of offered
certificates purchased at a premium, a
faster than anticipated rate of payments
and other collections of principal on the
underlying mortgage loans could result in
a lower than anticipated yield.
The yield on the offered certificates
with variable or capped pass-through
rates could also be adversely affected if
the underlying mortgage loans with
relatively higher net mortgage rates pay
principal faster than the underlying
mortgage loans with relatively lower net
mortgage rates.
See "Yield and Maturity Considerations"
in this prospectus supplement and in the
accompanying prospectus.
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RISK FACTORS
The offered certificates are not suitable investments for all investors. In
particular, you should not purchase any class of offered certificates unless you
understand and are able to bear the risks associated with that class.
The offered certificates are complex securities and it is important that
you possess, either alone or together with an investment advisor, the expertise
necessary to evaluate the information contained in this prospectus supplement
and the accompanying prospectus in the context of your financial situation.
You should consider the following factors, as well as those set forth under
"Risk Factors" in the accompanying prospectus, in deciding whether to purchase
any offered certificates. The "Risk Factors" section in the accompanying
prospectus includes a number of general risks associated with making an
investment in the offered certificates.
RISKS RELATED TO THE OFFERED CERTIFICATES
The Class B, C, D and E Certificates Are Subordinate to, and Are Therefore
Riskier than, the Class A-1, A-2, A-3 and A-4 Certificates. If you purchase
class B, C, D or E certificates, then your offered certificates will provide
credit support to other classes of offered certificates, as well as to the class
X-1 and X-2 certificates. As a result, you will receive payments after, and must
bear the effects of losses on the underlying mortgage loans before, the holders
of those other classes of series 2004-C1 certificates.
When making an investment decision, you should consider, among other
things:
o the payment priorities of the respective classes of the series 2004-C1
certificates;
o the order in which the principal balances of the respective classes of
the series 2004-C1 certificates with balances will be reduced in
connection with losses and default-related shortfalls; and
o the characteristics and quality of the mortgage loans in the trust
fund.
See "Description of the Mortgage Pool" and "Description of the Offered
Certificates--Payments" and "--Reductions of Certificate Principal Balances in
Connection with Realized Losses and Additional Trust Fund Expenses" in this
prospectus supplement. See also "Risk Factors--The Investment Performance of
Your Offered Certificates Will Depend Upon Payments, Defaults and Losses on the
Underlying Mortgage Loans; and Those Payments, Defaults and Losses May Be Highly
Unpredictable", "--Any Credit Support for Your Offered Certificates May Be
Insufficient to Protect You Against All Potential Losses" and "--Payments on the
Offered Certificates Will Be Made Solely from the Limited Assets of the Related
Trust, and Those Assets May Be Insufficient to Make All Required Payments on
Those Certificates" in the accompanying prospectus.
The Offered Certificates Have Uncertain Yields to Maturity. The yield on
your offered certificates will depend on:
o the price you paid for your offered certificates; and
o the rate, timing and amount of payments on your offered certificates.
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The rate, timing and amount of payments on your offered certificates will,
in turn, depend on:
o the pass-through rate for, and the other payment terms of, your
offered certificates;
o the rate and timing of payments, including prepayments, and other
collections of principal on the underlying mortgage loans;
o the rate and timing of any purchases, including repurchases by
mortgage loan sellers as a result of material breaches of
representations and warranties and material document deficiencies, of
mortgage loans out of the trust fund;
o the rate and timing of defaults, and the severity of losses, if any,
on the underlying mortgage loans;
o the rate, timing and severity of any unanticipated or default-related
trust expenses that reduce amounts available for payment on the
offered certificates;
o the rate, timing, severity and allocation of any other shortfalls that
reduce amounts available for payment on your offered certificates;
o the collection of prepayment premiums and yield maintenance charges
with respect to the underlying mortgage loans and the extent to which
those amounts are paid to you; and
o servicing decisions with respect to the underlying mortgage loans.
In general, these factors cannot be predicted with any certainty. Accordingly,
you may find it difficult to analyze the effect that these factors might have on
the yield to maturity of your offered certificates.
See "Description of the Mortgage Pool" (particularly "Description of the
Mortgage Pool--Mortgage Loans Which Permit Partial Release and/or Substitution
of the Related Mortgaged Real Property"), "Servicing of the Underlying Mortgage
Loans", "Description of the Offered Certificates--Payments" and "--Reductions of
Certificate Principal Balances in Connection with Realized Losses and Additional
Trust Fund Expenses" and "Yield and Maturity Considerations" in this prospectus
supplement. See also "Risk Factors--The Investment Performance of Your Offered
Certificates Will Depend Upon Payments, Defaults and Losses on the Underlying
Mortgage Loans; and Those Payments, Defaults and Losses May Be Highly
Unpredictable" and "Yield and Maturity Considerations" in the accompanying
prospectus.
The Investment Performance of Your Offered Certificates May Vary Materially
and Adversely from Your Expectations Because the Rate of Prepayments and Other
Unscheduled Collections of Principal on the Underlying Mortgage Loans Is Faster
or Slower than You Anticipated. If you purchase your offered certificates at a
premium, and if payments and other collections of principal on the mortgage
loans in the trust fund occur at a rate faster than you anticipated at the time
of your purchase, then your actual yield to maturity may be lower than you had
assumed at the time of your purchase. Conversely, if you purchase your offered
certificates at a discount, and if payments and other collections of principal
on the mortgage loans in the trust fund occur at a rate slower than you
anticipated at the time of your purchase, then your actual yield to maturity may
be lower than you had assumed at the time of your purchase. You should consider
that prepayment premiums and yield maintenance charges may not be collected in
all circumstances. Furthermore, even if a prepayment premium or yield
maintenance charge is collected and payable on your offered certificates, it may
not be sufficient to offset fully any loss in yield on your offered certificates
resulting from the corresponding prepayment.
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The yield on the offered certificates with variable or capped pass-through
rates could also be adversely affected if the underlying mortgage loans with
relatively higher net mortgage rates pay principal faster than the underlying
mortgage loans with relatively lower net mortgage rates.
The Right of the Master Servicer, the Special Servicer, the Trustee and the
Fiscal Agent to Receive Interest on Advances, and the Right of the Special
Servicer to Receive Special Servicing Compensation, May Result in Additional
Losses to the Trust Fund. The master servicer, the special servicer, the trustee
and the fiscal agent will each generally be entitled to receive interest on
unreimbursed advances made by it. This interest will generally accrue from the
date on which the related advance is made through the date of reimbursement. In
addition, the special servicer will be entitled to receive special servicing
fees, liquidation fees and workout fees as compensation for performing its
obligations. The right to receive these payments of interest and fees is senior
to the rights of holders to receive distributions on the offered certificates
and, consequently, may result in losses being allocated to the offered
certificates that would not have resulted absent the accrual of this interest.
Potential Conflicts of Interest May Affect the Underwriting and Servicing
of the Underlying Mortgage Loans. The master servicer, the special servicer or
any of their respective affiliates may:
o acquire series 2004-C1 certificates; and
o engage in other financial transactions, including as a lender, with
the underlying borrowers and their respective affiliates.
The special servicer or one of its affiliates is expected to buy certain
non-offered classes of series 2004-C1 certificates, including the controlling
class.
The initial master servicer is one of the mortgage loan sellers.
The holders (or, in the case of a class of book-entry certificates, the
beneficial owners) of series 2004-C1 certificates representing a majority
interest in the controlling class of series 2004-C1 certificates will be
entitled to designate a series 2004-C1 controlling class representative to
exercise the rights and powers in respect of the mortgage pool described under
"Servicing of the Underlying Mortgage Loans--The Series 2004-C1 Controlling
Class Representative and the Class PM Representative" in this prospectus
supplement. You should expect that the series 2004-C1 controlling class
representative will exercise those rights and powers on behalf of the series
2004-C1 controlling class certificateholders, and it will not be liable to any
class of series 2004-C1 certificateholders for doing so. In addition, subject to
the conditions described under "Servicing of the Underlying Mortgage
Loans--Replacement of the Special Servicer" in this prospectus supplement, the
holders of series 2004-C1 certificates representing a majority interest in the
controlling class of series 2004-C1 certificates may remove any special
servicer, with or without cause, and appoint a successor special servicer chosen
by them without the consent of the holders of any other series 2004-C1
certificates, the trustee or the master servicer. In the absence of significant
losses on the underlying mortgage loans, the series 2004-C1 controlling class
will be a non-offered class of series 2004-C1 certificates. The series 2004-C1
controlling class certificateholders are therefore likely to have interests that
conflict with those of the holders of the offered certificates.
The holders (or, in the case of a class of book-entry certificates,
beneficial owners) of class PM certificates representing a majority interest in
the class PM certificates will be entitled to designate a class PM
representative having the rights and powers in respect of the Pecanland Mall
underlying mortgage loan described under "Servicing of the Underlying Mortgage
Loans--The Series 2004-C1 Controlling Class Representative and the Class PM
Representative" in this prospectus supplement. You should expect that the class
PM representative will exercise those rights and powers on behalf of the class
PM certificateholders, and it will not be liable to any class of series 2004-C1
certificateholders for doing so. The class PM certificates, which are not
offered by this prospectus supplement, represent an interest solely in the
Pecanland Mall underlying mortgage loan.
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Accordingly, the holders of the class PM certificates are likely to have
interests that conflict with those of the holders of the offered certificates.
The mortgage loan sellers or any of their respective affiliates may engage
in other financial transactions with the underlying borrowers, principals of the
underlying borrowers and/or their respective affiliates.
The respective underwriters are affiliated with various other participants
in the series 2004-C1 transaction. Citigroup Global Markets Inc. is affiliated
with us and with Citigroup Global Markets Realty Corp., one of the mortgage loan
sellers. Wachovia Capital Markets, LLC is affiliated with Wachovia Bank,
National Association, another of the mortgage loan sellers and the initial
master servicer. CDC Securities, another one of the underwriters, is affiliated
with CDC Mortgage Capital Inc., another of the mortgage loan sellers.
You May Be Bound by the Actions of Other Series 2004-C1 Certificateholders.
In some circumstances, the consent or approval of the holders of a specified
percentage of the series 2004-C1 certificates will be required to direct,
consent to or approve certain actions, including amending the series 2004-C1
pooling and servicing agreement. In these cases, this consent or approval will
be sufficient to bind all holders of series 2004-C1 certificates.
RISKS RELATED TO THE UNDERLYING MORTGAGE LOANS
The Absence of or Inadequacy of Insurance Coverage on the Mortgaged Real
Properties May Adversely Affect Payments on Your Certificates. After the
September 11, 2001 terrorist attacks in New York City, the Washington, D.C. area
and Pennsylvania, the cost of insurance coverage for acts of terrorism increased
and the availability of such insurance decreased. In an attempt to redress this
situation, President George W. Bush signed into law the Terrorism Risk Insurance
Act of 2002, which establishes a three-year federal back-stop program under
which the federal government and the insurance industry will share in the risk
of loss associated with certain future terrorist attacks. Under the provisions
of the act, (a) qualifying insurers must offer terrorism insurance coverage in
all property and casualty insurance policies on terms not materially different
than terms applicable to other losses, (b) the federal government will reimburse
insurers 90% of amounts paid on claims, in excess of a specified deductible,
provided that aggregate property and casualty insurance losses resulting from an
act of terrorism exceed $5,000,000, (c) the federal government's aggregate
insured losses are limited to $100 billion per program year, (d) reimbursement
to insurers will require a claim based on a loss from a terrorist act, (e) to
qualify for reimbursement, an insurer must have previously disclosed to the
policyholder the premium charged for terrorism coverage and its share of
anticipated recovery for insured losses under the federal program, and (f) the
federal program by its terms will terminate December 31, 2005 (or on December
31, 2004 if not extended through December 2005). With regard to policies in
existence on November 26, 2002, the act provides that any terrorism exclusion in
a property and casualty insurance contract in force on that date is void if the
exclusion exempts losses that would otherwise be subject to the act, provided
that an insurer may reinstate such a terrorism exclusion if the insured either
(x) authorizes such reinstatement in writing or (y) fails to pay the premium
increase related to the terrorism coverage within 30 days of receiving notice of
such premium increase and of its rights in connection with such coverage.
The Terrorism Risk Insurance Act of 2002 only applies to losses resulting
from attacks that have been committed by individuals on behalf of a foreign
person or foreign interest, and does not cover acts of purely domestic
terrorism. Further, any such attack must be certified as an "act of terrorism"
by the federal government, which decision is not subject to judicial review. As
a result, insurers may continue to try to exclude from coverage under their
policies losses resulting from terrorist acts not covered by the act. Moreover,
the act's deductible and copayment provisions still leaves insurers with high
potential exposure for terrorism-related claims. Because nothing in the act
prevents an insurer from raising premium rates on policyholders to cover
potential losses, or from obtaining reinsurance coverage to offset its increased
liability, the cost of premiums for
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such insurance terrorism coverage is still expected to be high. Finally, upon
expiration of the federal program established by the act, there is no assurance
that subsequent terrorism legislation would be passed.
With respect to each of the mortgaged real properties securing a mortgage
loan that we intend to include in the trust fund, the related borrower is
required under the related mortgage loan documents to maintain comprehensive
all-risk casualty insurance (which may be provided under a blanket insurance
policy). However, the related mortgage loan documents may not specifically
require coverage for acts of terrorism. If the related mortgage loan documents
do not expressly require insurance against acts of terrorism, but permit the
lender to require such other insurance as is reasonable, the related borrower
may challenge whether maintaining insurance against acts of terrorism is
reasonable in light of all the circumstances, including the cost.
In the case of some of the mortgaged real properties securing mortgage
loans that we intend to include in the trust fund, the insurance covering any of
such mortgaged real properties for acts of terrorism may be provided through a
blanket policy that also covers properties unrelated to the trust fund. Acts of
terrorism at those other properties could exhaust coverage under the blanket
policy. No representation is made as to the adequacy of any such insurance
coverage provided under a blanket policy, in light of the fact that multiple
properties are covered by that policy.
In the event that any mortgaged real property securing one of the
underlying mortgage loans sustains damage as a result of an uninsured terrorist
or similar act, such damaged mortgaged real property may not generate adequate
cash flow to pay, and/or provide adequate collateral to satisfy, all amounts
owing under that mortgage loan, which could result in a default on that mortgage
loan and, potentially, losses on some classes of the series 2004-C1
certificates.
We are aware of at least two (2) mortgaged real properties, securing 0.5%
of the initial mortgage pool balance, as to which the hazard insurance policies
expressly exclude coverage for acts of terrorism and other similar acts.
If a borrower is required, under the circumstances described above, to
maintain such insurance for terrorist or similar acts, the borrower may incur
higher costs for insurance premiums in obtaining such coverage which would have
an adverse effect on the net cash flow of the related mortgaged real property.
Repayment of the Underlying Mortgage Loans Depends on the Operation of the
Mortgaged Real Properties. The underlying mortgage loans are secured by mortgage
liens on fee simple and/or leasehold interests primarily in the following types
of real property:
o retail;
o office;
o self storage;
o mobile home park;
o multifamily;
o mixed use;
o hospitality;
o land; and
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o industrial.
The risks associated with lending on these types of real properties are
inherently different from those associated with lending on the security of
single-family residential properties. This is because, among other reasons,
repayment of each of the underlying mortgage loans is dependent on:
o the successful operation and value of the related mortgaged real
property; and
o the related borrower's ability to refinance the mortgage loan or sell
the related mortgaged real property.
See "Risk Factors--Repayment of a Commercial or Multifamily Mortgage Loan
Depends Upon the Performance and Value of the Underlying Real Property, Which
May Decline Over Time, and the Related Borrower's Ability to Refinance the
Property, of Which There Is No Assurance" and "Description of the Trust
Assets--Mortgage Loans--A Discussion of Various Types of Multifamily and
Commercial Properties that May Secure Mortgage Loans Underlying a Series of
Offered Certificates" in the accompanying prospectus.
Risks Associated with Condominium Ownership. Six (6) mortgage loans (loan
numbers 25, 39, 24, 89, 94 and 61), representing 2.8%, 2.0%, 0.7%, 0.5%, 0.4%
and 0.2%, respectively, of the initial mortgage pool balance, are each secured
by the related borrower's interest in residential and/or commercial condominium
units.
In the case of condominiums, a board of managers generally has discretion
to make decisions affecting the condominium building and there is no assurance
that the borrower under a mortgage loan secured by one or more interests in that
condominium will have any control over decisions made by the related board of
managers. Therefore, decisions made by that board of managers, including with
respect to assessments to be paid by the unit owners, insurance to be maintained
on the condominium building, restoration following a casualty and many other
decisions affecting the maintenance of that building, may have an adverse impact
on the underlying mortgage loans that are secured by mortgaged real properties
consisting of such condominium interests.
There can be no assurance that the related board of managers will always
act in the best interests of the borrower under those mortgage loans. Further,
due to the nature of condominiums, a default on the part of the borrower with
respect to such mortgaged real properties will not allow the special servicer
the same flexibility in realizing on the collateral as is generally available
with respect to properties that are not condominiums. The rights of other unit
owners, the documents governing the management of the condominium units and the
state and local laws applicable to condominium units must be considered. In
addition, in the event of a casualty with respect to the subject mortgaged real
property, due to the possible existence of multiple loss payees on any insurance
policy covering such mortgaged real property, there could be a delay in the
restoration of the mortgaged real property and/or the allocation of related
insurance proceeds, if any. Consequently, servicing and realizing upon the
collateral described above could subject the series 2004-C1 certificateholders
to a greater delay, expense and risk than with respect to a mortgage loan
secured by a property that does not consist of a condominium.
The Underlying Mortgage Loans Have a Variety of Characteristics That May
Expose Investors to Greater Risk of Default and Loss. When making an investment
decision, you should consider, among other things, the following characteristics
of the underlying mortgage loans and/or the mortgaged real properties for those
loans. Any or all of these characteristics can affect, perhaps materially and
adversely, the investment performance of your offered certificates. Several of
the items below include a cross-reference to where the associated risks are
further discussed in this prospectus supplement or in the accompanying
prospectus. In addition, several of those items include a cross reference to
where further information about the particular characteristic may be found in
this prospectus supplement.
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o The Mortgaged Real Property Will Be the Principal Asset Available to
Satisfy the Amounts Owing Under an Underlying Mortgage Loan in the
Event of Default. All of the mortgage loans that we intend to include
in the trust fund are or should be considered nonrecourse loans. If
the related borrower defaults on any of the underlying mortgage loans,
only the mortgaged real property (and any reserves, letters of credit
or other additional collateral for the mortgage loan), and none of the
other assets of the borrower, is or should be expected to be available
to satisfy the debt. Even if the related loan documents permit
recourse to the borrower or a guarantor, the trust may not be able to
ultimately collect the amount due under a defaulted mortgage loan or
under a guaranty. None of the mortgage loans are insured or guaranteed
by any governmental agency or instrumentality or by any private
mortgage insurer. See "Risk Factors--Repayment of a Commercial or
Multifamily Mortgage Loan Depends Upon the Performance and Value of
the Underlying Real Property, Which May Decline Over Time, and the
Related Borrower's Ability to Refinance the Property, of Which There
Is No Assurance--Most of the Mortgage Loans Underlying Your Offered
Certificates Will Be Nonrecourse" in the accompanying prospectus.
o In Some Cases, a Mortgaged Real Property Is Dependent on a Single
Tenant or on One or a Few Significant Tenants. In the case of 13
mortgaged real properties, securing 10.5% of the initial mortgage pool
balance, the related borrower has leased the particular property to a
single tenant that occupies all or substantially all of that property.
In the case of 46 mortgaged real properties, securing 41.2% of the
initial mortgage pool balance and including the 13 properties referred
to in the prior sentence, the related borrower has leased the property
to at least one tenant that occupies 25% or more of the particular
mortgaged real property. Accordingly, the full and timely payment of
each of the related mortgage loans is highly dependent on the
continued operation of a major tenant, which, in some cases, is the
sole tenant, at the mortgaged real property. See "Risk
Factors--Repayment of a Commercial or Multifamily Mortgage Loan
Depends Upon the Performance and Value of the Underlying Real
Property, Which May Decline Over Time and the Related Borrower's
Ability to Refinance the Property, of Which There Is No Assurance--The
Successful Operation of a Multifamily or Commercial Property Depends
on Tenants", "--Repayment of a Commercial or Multifamily Mortgage Loan
Depends Upon the Performance and Value of the Underlying Real
Property, Which May Decline Over Time and the Related Borrower's
Ability to Refinance the Property, of Which There Is No
Assurance--Dependence on a Single Tenant or a Small Number of Tenants
Makes a Property Riskier Collateral" and "--Repayment of a Commercial
or Multifamily Mortgage Loan Depends Upon the Performance and Value of
the Underlying Real Property, Which May Decline Over Time and the
Related Borrower's Ability to Refinance the Property, of Which There
Is No Assurance--Tenant Bankruptcy Adversely Affects Property
Performance" in the accompanying prospectus.
o Ten Percent or More of the Initial Mortgage Pool Balance Is Made Up of
Mortgage Loans Secured by Mortgage Liens on Each of the Following
Property Types: Retail and Office; and Five Percent or More of the
Initial Mortgage Pool Balance is Made Up of Mortgage Loans Secured by
Mortgage Liens on Each of the Following Property Types: Mobile Home
Parks, Self Storage Facility and Multifamily. Forty-one (41) mortgaged
real properties, securing 39.7% of the initial mortgage pool balance,
are primarily used for retail purposes. A number of factors may
adversely affect the value and successful operation of a retail
property. Some of these factors include:
1. the strength, stability, number and quality of the tenants;
2. tenants' sales;
3. tenant mix;
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4. whether the subject property is in a desirable location;
5. the physical condition and amenities of the subject building in
relation to competing buildings;
6. competition from nontraditional sources such as catalog
retailers, home shopping networks, electronic media shopping,
telemarketing and outlet centers;
7. whether a retail property is anchored, shadow anchored or
unanchored and, if anchored or shadow anchored, the strength,
stability, quality and continuous occupancy of the anchor tenant
or the shadow anchor, as the case may be, are particularly
important factors; and
8. the financial condition of the owner of the subject property.
We consider 34 of the foregoing retail properties, securing 37.1% of
the initial mortgage pool balance, to be anchored retail properties,
which signifies that there is at least one anchor tenant located at
the property. An anchor tenant is a retail tenant or retail occupant
whose space is or would be substantially larger in size than that of
other tenants at a retail mall or shopping center and whose operation
is or would be vital in attracting customers to a retail mall or
shopping center. Three (3) of the anchored retail properties referred
to in the second preceding sentence, securing 14.7% of the initial
mortgage pool balance, are regional malls. Additionally, for each of
these regional malls, some or all of the anchor tenants are on
portions of the subject property that are not subject to the lien of
the related mortgage instrument. In addition, four (4) of the anchored
retail properties, securing 1.9% of the initial mortgage pool balance,
are shadow anchored, which means that none of the anchor tenants is on
any portion of the subject property that is subject to the lien of the
related mortgage instrument. Another eight (8) anchored retail
properties, securing 3.6% of the initial mortgage pool balance, are
occupied by a single tenant. The remaining seven (7) retail
properties, securing 2.6% of the initial mortgage pool balance, are
unanchored retail properties. In addition, four (4) of the mortgaged
real properties, securing 2.6% of the initial mortgage pool balance,
are used for mixed use purposes that include a significant retail
component.
In those cases where the property owner does not control the space
occupied by the anchor tenant, the property owner may not be able to
take actions with respect to the space that it otherwise typically
would, such as granting concessions to retain an anchor tenant or
removing an ineffective anchor tenant. The presence or absence of an
anchor tenant in a retail property can be important, because anchor
tenants play a key role in generating customer traffic and making the
retail property desirable for other tenants. Some tenants, in
particular anchor tenants (or shadow anchor tenants), may have the
right to cease operations or may not be prohibited from ceasing
operations at the property while continuing to pay rent during their
lease terms. Also, if an anchor tenant or a shadow anchor tenant
ceases operations at a retail property or if their sales do not reach
a specified threshold, other tenants at the property may be entitled
to terminate their leases prior to the scheduled termination date or
to pay rent at a reduced rate for the remaining term of the leases.
See "Description of the Trust Assets--Mortgage Loans--A Discussion of
the Various Types of Multifamily and Commercial Properties that May
Secure Mortgage Loans Underlying a Series of Offered
Certificates--Retail Properties" in the accompanying prospectus.
Nineteen (19) of the mortgaged real properties, securing 21.1% of the
initial mortgage pool balance, are used entirely or primarily for
office purposes. Some of those office properties are
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heavily dependent on one or a few major tenants that lease a
substantial portion of the mortgaged real property or the entire
mortgaged real property.
A number of factors may adversely affect the value and successful
operation of an office property. Some of these factors include:
1. the strength, stability, number and quality of the tenants;
2. accessibility from surrounding highways/streets;
3. the physical condition and amenities of the subject building in
relation to competing buildings, including the condition of the
HVAC system, parking and the subject building's compatibility
with current business wiring requirements;
4. whether the area in which the office property is located is a
desirable business location, including local labor cost and
quality, access to transportation, tax environment, including tax
benefits, and quality of life issues, such as schools and
cultural amenities; and
5. the financial condition of the owner of the subject property.
See "Description of the Trust Assets--Mortgage Loans--A Discussion of
the Various Types of Multifamily and Commercial Properties that May
Secure Mortgage Loans Underlying a Series of Offered
Certificates--Office Properties" in the accompanying prospectus.
In addition, 24 of the mortgaged real properties, securing 9.7% of the
initial mortgage pool balance, are mobile home parks; 23 of the
mortgaged real properties, securing 9.4% of the initial mortgage pool
balance, are used for self storage purposes; and 15 of the mortgaged
real properties, securing 6.6% of the initial mortgage pool balance,
are multifamily rental properties. Mortgage loans that are secured by
liens on each of those types of properties are exposed to unique risks
particular to those types of properties. For a discussion of factors
uniquely affecting mobile home parks, see "Description of the Trust
Assets--Mortgage Loans--A Discussion of the Various Types of
Multifamily and Commercial Properties that May Secure Mortgage Loans
Underlying a Series of Offered Certificates--Manufactured Housing
Communities, Mobile Home Parks and Recreational Vehicle Parks" in the
accompanying prospectus. For a discussion of factors uniquely
affecting self storage facilities, see "Description of the Trust
Assets--Mortgage Loans--A Discussion of the Various Types of
Multifamily and Commercial Properties that May Secure Mortgage Loans
Underlying a Series of Offered Certificates--Warehouse, Mini-Warehouse
and Self Storage Facilities" in the accompanying prospectus. For a
discussion of factors uniquely affecting multifamily properties, see
"Description of the Trust Assets--Mortgage Loans--A Discussion of the
Various Types of Multifamily and Commercial Properties that May Secure
Mortgage Loans Underlying a Series of Offered
Certificates--Multifamily Rental Properties" in the accompanying
prospectus.
The inclusion in the trust fund of a significant concentration of
mortgage loans that are secured by mortgage liens on a particular type
of income-producing property makes the overall performance of the
mortgage pool materially more dependent on the factors that affect the
operations at and value of that property type. See "Description of the
Trust Assets--Mortgage Loans--A Discussion of Various Types of
Multifamily and Commercial Properties that May Secure Mortgage Loans
Underlying a Series of Offered Certificates" in the accompanying
prospectus.
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o Ten Percent or More of the Initial Mortgage Pool Balance Will Be
Secured by Mortgage Liens on Real Property Located in Each of Illinois
and Florida; and Five Percent or More of the Initial Mortgage Pool
Balance Will Be Secured by Mortgage Liens on Real Property Located in
California, Texas and Louisiana. Mortgage loans representing 5% or
more of the initial mortgage pool balance are secured by mortgaged
real properties located in each of the following states or regions:
NUMBER OF % OF INITIAL
MORTGAGED MORTGAGE
STATE/REGION PROPERTIES POOL BALANCE
------------ ---------- ------------
Illinois..................... 10 16.8%
Florida...................... 16 15.0
California................... 14 9.3
Southern California(1)..... 10 5.3
Northern California(2)..... 4 3.9
Texas........................ 9 8.2
Louisiana.................... 2 5.5
---------- ------------
Total 51 54.8%
---------------------
(1) Southern California includes properties that are located in
zip codes of 93726 or lower.
(2) Northern California includes properties that are located in
zip codes of 93923 or higher.
The inclusion of a significant concentration of mortgage loans that
are secured by mortgage liens on real properties located in a
particular state, region or other jurisdiction makes the overall
performance of the mortgage pool materially more dependent on economic
and other conditions or events in that state or region. See "Risk
Factors--Geographic Concentration Within a Trust Exposes Investors to
Greater Risk of Default and Loss" in the accompanying prospectus.
o The Mortgage Pool Will Include Material Concentrations of Balloon
Loans and Mortgage Loans with an Anticipated Repayment Date.
Eighty-seven (87) mortgage loans, representing 83.4% of the initial
mortgage pool balance, are balloon loans. In addition, 27 mortgage
loans, representing 16.2% of the initial mortgage pool balance,
provide incentives for the related borrowers to repay the loan by
their respective anticipated repayment dates prior to maturity. Three
(3) of the balloon loans, representing 1.4% of the initial mortgage
pool balance, provide for payments of interest only until maturity,
and another 12 of the balloon loans, representing 23.0% of the initial
mortgage pool balance, provide for payments of interest only for
periods ranging from the first 12 payments to the first 25 payments of
those mortgage loans. Nineteen (19) of the 27 mortgage loans with
anticipated repayment dates that we intend to include in the trust
fund, representing 10.8% of the initial mortgage pool balance, provide
for payments of interest only for periods ranging from the first 12 to
the first 48 payments following origination. Sixty-five (65) mortgage
loans, representing 68.2% of the initial mortgage pool balance, have
either a maturity date or an anticipated repayment date during the
12-month period from July 1, 2013 to June 30, 2014. The ability of a
borrower to make the required balloon payment on a balloon loan or
payment of the entire principal balance of an interest-only balloon
loan, at maturity, and the ability of a borrower to repay a mortgage
loan on or before any related anticipated repayment date, in each case
depends upon, among other things, the borrower's ability either to
refinance the loan or to sell the mortgaged real property. Although a
mortgage loan may provide the related borrower with incentives to
repay the loan by an anticipated repayment date prior to maturity, the
failure of that borrower to do so will not be a default under that
loan. See "Description of the Mortgage Pool--
S-48
Terms and Conditions of the Underlying Mortgage Loans" in this
prospectus supplement and "Risk Factors--The Investment Performance of
Your Offered Certificates Will Depend Upon Payments, Defaults and
Losses on the Underlying Mortgage Loans; and Those Payments, Defaults
and Losses May Be Highly Unpredictable--There Is an Increased Risk of
Default Associated with Balloon Payments" in the accompanying
prospectus.
o The Mortgage Pool Will Include Some Disproportionately Large Mortgage
Loans. The inclusion in the mortgage pool of one or more loans that
have outstanding principal balances that are each substantially larger
than the other mortgage loans in that pool can result in losses that
are more severe, relative to the size of the mortgage pool, than would
be the case if the total balance of the mortgage pool were distributed
more evenly. The ten largest mortgage loans, groups of
cross-collateralized mortgage loans and groups of mortgage loans with
affiliated borrowers to be included in the trust fund represent 45.8%
of the initial mortgage pool balance. See "Description of the Mortgage
Pool--General" and "--Cross-Collateralized Mortgage Loans and Multiple
Property Mortgage Loans" in this prospectus supplement and "Risk
Factors--Loan Concentration Within a Trust Exposes Investors to
Greater Risk of Default and Loss" in the accompanying prospectus. See
also attached to this prospectus supplement Annex B--Description of
Twenty Largest Mortgage Loans, Groups of Cross-Collateralized Mortgage
Loans and/or Groups of Borrower Affiliated Mortgage Loans.
o The Mortgage Pool Will Include Mortgage Loans Secured In Whole or In
Part By Leasehold Interests. Four (4) mortgage loans, representing
2.5% of the initial mortgage pool balance, are each secured by a
mortgage lien on the related borrower's leasehold interest in a
material portion of the corresponding mortgaged real property, but not
on the fee simple interest in that property. In addition, three (3)
mortgage loans, representing 3.1% of the initial mortgage pool
balance, are each secured by a mortgage lien on the related borrower's
leasehold interest in a portion of the mortgaged real property and the
fee simple interest in the other portion of that property. Because of
possible termination of the related ground lease, lending secured by a
leasehold interest in a real property is riskier than lending secured
by an actual ownership interest in that property. See "Description of
the Mortgage Pool--Additional Loan and Property Information--Ground
Leases" in this prospectus supplement. In addition, the terms of
certain ground leases may require that insurance proceeds or
condemnation awards be applied to restore the property or be paid, in
whole or in part, to the ground lessor rather than be applied against
the outstanding principal balance of the related mortgage loan. See
also "Risk Factors--Ground Leases Create Risks for Lenders that Are
Not Present When Lending on an Actual Ownership Interest in a Real
Property" and "Legal Aspects of Mortgage Loans--Foreclosure--Leasehold
Considerations" in the accompanying prospectus.
o Several of the Mortgaged Real Properties Are Legal Nonconforming Uses
or Legal Nonconforming Structures. Several of the mortgage loans that
we intend to include in the trust fund are secured by a mortgage lien
on a real property that is a legal nonconforming use or structure or
that is subject to a de minimis zoning violation. This may impair the
ability of the borrower to restore the improvements on a mortgaged
real property to its current form or use following a major casualty.
See "Description of the Mortgage Pool--Zoning and Building Code
Compliance" in this prospectus supplement and "Risk Factors--Changes
in Zoning may Adversely Affect the Use or Value of a Real Property" in
the accompanying prospectus.
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o Some of the Underlying Borrowers Have Incurred or Are Permitted to
Incur Additional Debt Secured by the Related Mortgaged Real Property.
In the case of the mortgage loan secured by the mortgaged real
property identified on Annex A-1 to this prospectus supplement as
Ocean Key Resort, representing 2.0% of the initial mortgage pool
balance, which mortgage loan is part of an "A/B" split loan structure,
the mortgage instrument encumbering that mortgaged real property also
secures a B-note loan that (a) has a principal balance as of the
cut-off date of $1,899,788, and (b) will not be included in the trust.
In the case of the mortgage loan secured by the mortgaged real
property identified on Annex A-1 to this prospectus supplement as
Three Flags Center, representing 0.3% of the initial mortgage pool
balance, there is currently an existing subordinated mortgage secured
by that mortgaged real property, subject to the terms of a
subordination and standstill agreement in favor of the lender. The
subordinate mortgage secures bond financing in the amount of $475,000
under which the subject bonds are owned by a parent of the borrower.
Interest only payments are due every six months with respect to the
subject bonds.
In the case of the mortgage loan secured by the mortgaged real
property identified on Annex A-1 to this prospectus supplement as
Rancho Vista MHP, representing 0.9% of the initial mortgage pool
balance, the related mortgage loan documents permit the related
borrower to encumber that mortgaged real property with a subordinate
lien securing a subordinate loan upon lender's approval, which may not
be unreasonably withheld, and upon satisfaction of specified criteria,
including specified debt service coverage and loan-to-value ratios,
execution of an intercreditor and subordination agreement, rating
agency confirmation and other standard conditions.
See "Description of the Mortgage Pool--Additional Loan and Property
Information--Additional and Other Financing" in this prospectus
supplement and "Risk Factors--Subordinate Debt Increases the
Likelihood That a Borrower Will Default on a Mortgage Loan Underlying
Your Offered Certificates" in the accompanying prospectus.
The existence of secured subordinate debt will increase the risk of
loss on the corresponding underlying mortgage loan and will subject
the trust to additional risks, including:
o the risk that the necessary maintenance of the related mortgaged
real property could be deferred to allow the borrower to pay the
required debt service on the subordinate obligation and that the
value of the mortgaged real property may fall as a result;
o the risk that a default on the subordinate loan could result in a
default on the underlying mortgage loan; and
o the risk that it may be more difficult for the borrower to
refinance the underlying mortgage loan or to sell the related
mortgaged real property for purposes of making any balloon
payment on the entire balance of both the senior obligation and
the subordinate obligation upon the maturity of the mortgage
loan.
Except as disclosed under this "--Some of the Underlying Borrowers
Have Incurred or Are Permitted to Incur Additional Debt Secured by the
Related Mortgaged Real Property" subsection and "Description of the
Mortgage Pool--Additional Loan and Property Information--Additional
and Other Financing" in this prospectus supplement, we have not been
able to confirm whether the respective borrowers under the mortgage
loans that we intend to include in the trust fund have any other debt
outstanding that is secured by the respective mortgaged real
properties; however,
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no other outstanding secured subordinate debt was indicated on the
title insurance policies that were obtained in connection with the
origination of the mortgage loans.
o Some of the Underlying Borrowers Have Incurred or Are Permitted to
Incur Additional Debt That Is Not Secured by the Related Mortgaged
Property or by Equity Interests in Those Borrowers. Three (3) of the
mortgage loans that we intend to include in the trust fund,
collectively representing 8.2% of the initial mortgage pool balance,
each permits the related borrower to incur unsecured subordinated debt
as described under "Description of the Mortgage Pool--Additional Loan
and Property Information--Additional and Other Financing" in this
prospectus supplement.
In addition to the mortgage loans referenced in the preceding
paragraph, one (1) mortgage loan that we intend to include in the
trust fund, representing 0.4% of the initial mortgage pool balance,
does not, in any such case, prohibit the related borrower from
incurring additional unsecured debt because the related borrowers are
not, by virtue of their related mortgage loan documents or related
organizational documents, special purpose entities. Furthermore, in
the case of those underlying mortgage loans that require or allow
letters of credit to be posted by the related borrower as additional
security for the mortgage loan, in lieu of reserves or otherwise, the
related borrower may be obligated to pay fees and expenses associated
with the letter of credit and/or to reimburse the letter of credit
issuer or others in the event of a draw upon the letter of credit by
the lender.
Even unsecured debt and other unsecured obligations can result in a
diversion of cash flow to pay those debts and obligations, thereby
increasing the likelihood of deferred maintenance at the subject
mortgaged real property, a default on the subject mortgage loan and/or
a borrower bankruptcy.
Except as disclosed under this "--Some of the Underlying Borrowers
Have Incurred or Are Permitted to Incur Additional Debt That Is Not
Secured by the Related Mortgaged Property or by Equity Interests in
Those Borrowers" subsection and "Description of the Mortgage
Pool--Additional Loan and Property Information--Additional and Other
Financing" in this prospectus supplement, we have not been able to
confirm whether the respective borrowers under the mortgage loans that
we intend to include in the trust fund have any other debt outstanding
that is not secured by the related mortgaged real property.
See "Description of the Mortgage Pool--Additional Loan and Property
Information--Additional and Other Financing" in this prospectus
supplement and "Risk Factors--Subordinate Debt Increases the
Likelihood That a Borrower Will Default on a Mortgage Loan Underlying
Your Offered Certificates" in the accompanying prospectus.
o In the Case of Some of the Mortgage Loans That We Intend to Include in
the Trust Fund, One or More of the Principals of the Related Borrower
Have Incurred or Are Permitted to Incur Mezzanine Debt. In the case of
15 mortgage loans that we intend to include in the trust fund,
representing 17.6% of the initial mortgage pool balance, one or more
of the principals of the related borrower have incurred or are
permitted to incur mezzanine debt as described under Description of
the Mortgage Pool--Additional Loan and Property
Information--Additional and Other Financing" in this prospectus
supplement.
Mezzanine debt is debt that is secured by the principal's ownership
interest in the borrower. This type of financing effectively reduces
the indirect equity interest of any principal in the corresponding
mortgaged real property. The existence of mezzanine debt may reduce
available cash flow on the borrower's mortgaged real property after
the payment of debt service or result in
S-51
cash flow pressures if the mezzanine debt matures or becomes payable
prior to the maturity of the related mortgage loan, and may increase
the likelihood that the owner(s) of a borrower will permit the value
or income-producing potential of a mortgaged real property to decline
and create a greater risk that a borrower will default on the mortgage
loan secured by a mortgaged real property whose value or income is
relatively weak. In addition, the current and any future mezzanine
lenders may have cure rights with respect to the related mortgage
loans and/or the option to purchase the related mortgage loans after a
default.
Generally, upon a default under a mezzanine loan, the holder of the
mezzanine loan would be entitled to foreclose upon the equity
interests in the related borrower pledged to secure payment of the
mezzanine loan. Although such a transfer of equity may not trigger the
due on sale clause under the related mortgage loan, it could cause the
obligor under such mezzanine loan to file for bankruptcy, which could
negatively affect the operation of the related mortgaged real property
and the related borrower's ability to make payments on the related
mortgage loan in a timely manner.
The holder of a 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
certain unpaid servicing expenses relating to, the subject mortgage
loan.
Except as disclosed under this "--In the Case of Some of the Mortgage
Loans That We Intend to Include in the Trust Fund, One or More of the
Principals of the Related Borrower Have Incurred or Are Permitted to
Incur Mezzanine Debt" subsection and "Description of the Mortgage
Pool--Additional Loan and Property Information--Additional and Other
Financing" in this prospectus supplement, we have not been able to
confirm whether the principals of the respective borrowers under the
mortgage loans that we intend to include in the trust fund have any
other mezzanine financing outstanding.
See "Description of the Mortgage Pool--Additional Loan and Property
Information--Additional and Other Financing" in this prospectus
supplement and "Risk Factors--Subordinate Debt Increases the
Likelihood That a Borrower Will Default on a Mortgage Loan Underlying
Your Offered Certificates" in the accompanying prospectus.
o Some of the Mortgaged Real Properties May Not Comply with the
Americans with Disabilities Act of 1990. Some of the mortgaged real
properties securing mortgage loans that we intend to include in the
trust fund may not comply with the Americans with Disabilities Act of
1990. Compliance can be expensive. See "Risk Factors--Compliance with
the Americans with Disabilities Act of 1990 May be Expensive" and
"Legal Aspects of Mortgage Loans--Americans with Disabilities Act" in
the accompanying prospectus.
o Multiple Mortgaged Real Properties Are Owned by the Same Borrower or
Affiliated Borrowers. Ten (10) separate groups of mortgage loans that
we intend to include in the trust fund, consisting of a total of 45
mortgage loans, and representing a total of 26.5% of the initial
mortgage pool balance, have borrowers that, in the case of each of
those groups, are the same or under common control. The largest of
these groups is identified on Annex A-1 to this prospectus supplement
as Related Mortgage Loan Group R1, which consists of three (3)
mortgage loans, representing 8.2% of the initial mortgage pool
balance. The next largest of these groups is identified on Annex A-1
to this prospectus supplement as Related Mortgage Loan Group R2, which
consists of 15
S-52
mortgage loans, representing 6.3% of the initial mortgage pool
balance. See "Description of the Mortgage Pool--Mortgage Loans With
Affiliated Borrowers" in this prospectus supplement.
o Multiple Mortgaged Real Properties are Occupied, in Whole or in Part,
by the Same Tenant or Affiliated Tenants. There are several tenants
that lease space at more than one mortgaged real property securing
mortgage loans that we intend to include in the trust fund. For
example, two (2) mortgage loans that we intend to include in the trust
fund, representing 1.7% of the initial mortgage pool balance, are
secured by mortgaged real properties as to which Fred Meyer Stores,
Inc. is the sole tenant at the related mortgaged real properties. In
addition, three (3) mortgage loans that we intend to include in the
trust fund, representing 5.1% of the initial mortgage pool balance,
are secured by mortgaged real properties as to which Burlington Coat
Factory is one of the three largest major tenants at each of those
mortgaged real properties. Furthermore, there may be tenants that are
related to or affiliated with a borrower. See Annex A-1 to this
prospectus supplement for a list of the three largest major tenants at
each of the mortgaged real properties used for retail, office or
industrial purposes.
The bankruptcy or insolvency of, or other financial problems with
respect to, any borrower or tenant that is, directly or through
affiliation, associated with two or more of the mortgaged real
properties could have an adverse effect on all of those properties and
on the ability of those properties to produce sufficient cash flow to
make required payments on the related mortgage loans in the trust
fund. See "Risk Factors--Repayment of a Commercial or Multifamily
Mortgage Loan Depends upon the Performance and Value of the Underlying
Real Property, which May Decline Over Time and the Related Borrower's
Ability to Refinance the Property, of which there Is No
Assurance--Tenant Bankruptcy Adversely Affects Property Performance",
"--Borrower Concentration Within a Trust Exposes Investors to Greater
Risk of Default and Loss" and "--Borrower Bankruptcy Proceedings Can
Delay and Impair Recovery on a Mortgage Loan Underlying Your Offered
Certificates" in the accompanying prospectus.
o Some Borrowers Under the Underlying Mortgage Loans Will Not Be Special
Purpose Entities. The business activities of the borrowers under
underlying mortgage loans with cut-off date principal balances below
$5,000,000 may, in some cases, not be limited to owning their
respective mortgaged real properties.
Tenancies in Common May Hinder Recovery. Certain of the mortgage loans that
we intend to include in the trust fund have borrowers that own the related
mortgaged real properties as tenants-in-common. Under certain circumstances, a
tenant-in-common can be forced to sell its property, including by a bankruptcy
trustee, by one or more tenants-in-common seeking to partition the property
and/or by a governmental lienholder in the event of unpaid taxes. Such a forced
sale or action for partition of a mortgaged real property may occur during a
market downturn and could result in an early repayment of the related mortgage
loan, a significant delay in recovery against the tenant-in-common borrowers
and/or a substantial decrease in the amount recoverable upon the related
mortgage loan. 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. Additionally, mortgaged
real properties owned by tenant-in-common borrowers may be characterized by
inefficient property management, inability to raise capital and the need to deal
with multiple borrowers in the event of a default on the loan. The mortgaged
real properties securing eight (8) mortgage loans (loan numbers 46, 47, 53, 67,
72, 81, 98 and 106), which collectively represent 5.5% of the initial mortgage
pool balance, are owned by individuals or entities as tenants-in-common. Not all
tenants-in-common for these mortgage loans are special purpose entities.
S-53
Changes in Mortgage Pool Composition Can Change the Nature of Your
Investment. If you purchase any of the class A-2, A-3, A-4, B, C, D or E
certificates, you will be more exposed to risks associated with changes in
concentrations of borrower, loan or property characteristics than are persons
who own class A-1 certificates, which are expected to have the shortest weighted
average life of the offered certificates. See "Risk Factors--Changes in Pool
Composition Will Change the Nature of Your Investment" in the accompanying
prospectus.
Lending on Income-Producing Real Properties Entails Environmental Risks.
The trust could become liable for a material adverse environmental condition at
one or more of the mortgaged real properties securing the mortgage loans in the
trust fund. Any potential environmental liability could reduce or delay payments
on the offered certificates.
A third-party consultant has conducted a Phase I environmental study at
each of the mortgaged real properties securing the respective underlying
mortgage loans. The resulting environmental reports were prepared:
o in the case of 128 mortgaged real properties, securing 98.0% of the
initial mortgage pool balance, during the 12-month period preceding
the cut-off date, and
o in the case of five (5) mortgaged real properties, securing 2.0% of
the initial mortgage pool balance, during the 12- to 18-month period
preceding the cut-off date.
There can be no assurance that the above-referenced environmental testing
identified all adverse environmental conditions and risks at the mortgaged real
properties securing the underlying mortgage loans or that adverse environmental
conditions and risks have not developed at any of those properties since that
testing.
See "Description of the Mortgage Pool--Additional Loan and Property
Information--Environmental Reports" for a discussion of specific environmental
matters with respect to certain of the mortgage loans.
See "Risk Factors--Environmental Liabilities Will Adversely Affect the
Value and Operation of the Contaminated Property and May Deter a Lender from
Foreclosing" and "Legal Aspects of Mortgage Loans--Environmental Considerations"
in the accompanying prospectus.
Lending on Income-Producing Properties Entails Risks Related to Property
Condition. Professional engineers or architects inspected all of the mortgaged
real properties. One hundred twenty-eight (128) of the mortgaged real
properties, securing 98.0% of the initial mortgage pool balance, were inspected
during the 12-month period preceding the cut-off date, and five (5) of the
mortgaged real properties, securing 2.0% of the initial mortgage pool balance,
were inspected during the 12- to 18-month period preceding the cut-off date. The
scope of those inspections included an assessment of:
o the exterior walls, roofing, interior construction, mechanical and
electrical systems; and
o general condition of the site, buildings and other improvements
located at each mortgaged real property.
There can be no assurance that the above-referenced inspections identified
all risks related to property condition at the mortgaged real properties
securing the underlying mortgage loans or that adverse property conditions,
including deferred maintenance and waste, have not developed at any of the
properties since that inspection.
S-54
Uninsured Loss; Sufficiency of Insurance. The borrowers under the mortgage
loans that we intend to include in the trust fund are, with limited exception,
required to maintain the insurance coverage described under "Description of the
Mortgage Pool--Hazard, Liability and Other Insurance" in this prospectus
supplement. Some types of losses, however, may be either uninsurable or not
economically insurable, such as losses due to riots or acts of war or terrorism
or earthquakes. Furthermore, there is a possibility of casualty losses on a
mortgaged real property for which insurance proceeds may not be adequate.
Consequently, there can be no assurance that each casualty loss incurred with
respect to a mortgaged real property securing one of the underlying mortgage
loans will be fully covered by insurance.
Twenty-six (26) mortgaged real properties, securing 17.3% of the initial
mortgage pool balance, are located in seismic zones 3 and 4, which are areas
that are considered to have a high earthquake risk. However, earthquake
insurance is not necessarily required to be maintained by a borrower, even in
the case of mortgaged real properties located in areas that are considered to
have a high earthquake risk. Earthquake insurance is generally required only if
the probable maximum loss for the subject property is greater than 20% of the
replacement cost of the improvements on the property and no retrofitting will be
done to improve that percentage. However, in the case of one mortgaged real
property, which is a mobile home park securing a mortgage loan that represents
0.2% of the initial mortgage pool balance and has been determined to have a
probable maximum of loss of 32%, no earthquake insurance was obtained because
the only insurable improvement on the subject property is a clubhouse.
In addition, the southern and eastern coasts of the continental United
States have historically been at greater risk, than other areas, of experiencing
losses due to windstorms, such as tropical storms or hurricanes. For purposes of
this prospectus supplement, we consider all areas within 20 miles of the coast
from the southern tip of Texas to the northern border of North Carolina to have
such a high windstorm risk. Twenty-two (22) mortgaged real properties, securing
22.9% of the initial mortgage pool balance, are located in high windstorm risk
areas.
The mortgage loan secured by the mortgaged real property identified on
Annex A-1 to this prospectus supplement as DFS-Guam, representing 2.3% of the
initial mortgage pool balance, is secured by a fee simple interest in the land
and therefore the related borrower is not required to obtain windstorm
insurance.
Property Managers and Borrowers May Each Experience Conflicts of Interest
in Managing Multiple Properties. In the case of many of the mortgage loans that
we intend to include in the trust fund, the related property managers and
borrowers may experience conflicts of interest in the management and/or
ownership of the related mortgaged real properties because:
o the property managers also may manage additional properties, including
properties that may compete with those mortgaged real properties; or
o affiliates of the property managers and/or the borrowers, or the
property managers and/or the borrowers themselves, also may own other
properties, including properties that may compete with those mortgaged
real properties.
Limitations on Enforceability of Cross-Collateralization Reduce Its
Benefits. The mortgage pool will include 37 mortgage loans, secured by a total
of 55 mortgaged real properties and representing 21.3% of the initial mortgage
pool balance, that are, in each case, individually or through cross-
collateralization with other mortgage loans, secured by two or more mortgaged
real properties. These mortgage loans are identified under "Description of the
Mortgage Pool--Cross-Collateralized Mortgage Loans and Multiple Property
Mortgage Loans" in this prospectus supplement. The purpose of securing any
particular mortgage loan or group of cross-collateralized mortgage loans with
multiple mortgaged real properties is to reduce the risk of default or ultimate
loss as a result of an inability of any particular property to generate
sufficient net operating income to pay debt service. However, 31 of these
mortgage loans, representing 20.3% of the initial mortgage pool balance,
permit--
S-55
o the release--and, if applicable, the substitution--of one or more of
the mortgaged real properties from the related mortgage lien, and/or
o a full or partial termination of the applicable
cross-collateralization,
in each case, upon the satisfaction of the conditions described under
"Description of the Mortgage Pool--Cross-Collateralized Mortgage Loans and
Multiple Property Mortgage Loans" and "--Mortgage Loans Which Permit Partial
Release and/or Substitution of the Related Mortgaged Real Property" in this
prospectus supplement. For example, with respect to one group of
cross-collateralized mortgage loans that we intend to include in the trust fund,
which are secured by the mortgaged real properties identified on Annex A-1 to
this prospectus supplement as the StorageMart Portfolio and collectively
represent 6.3% of the initial mortgage pool balance, the related borrowers under
these mortgage loans are permitted to substitute for one or more (or possibly
all) of the mortgaged real properties with replacement mortgaged real properties
subject to compliance with certain conditions described under "Description of
the Mortgage Pool--Mortgage Loans Which Permit Partial Release and/or
Substitution of the Related Mortgaged Real Property" in this prospectus
supplement.
If the borrower under any mortgage loan that is cross-collateralized with
the mortgage loans of other borrowers, were to become a debtor in a bankruptcy
case, the creditors of that borrower or the representative of that borrower's
bankruptcy estate could challenge that borrower's pledging of the underlying
mortgaged real property as a fraudulent conveyance. See "Risk Factors--Some
Provisions in the Mortgage Loans Underlying Your Offered Certificates May Be
Challenged as Being Unenforceable--Cross-Collateralization Arrangements" in the
accompanying prospectus.
In addition, when multiple real properties secure an individual mortgage
loan or group of cross-collateralized mortgage loans, the amount of the mortgage
encumbering any particular one of those properties may be less than the full
amount of that individual mortgage loan or group of cross-collateralized
mortgage loans, generally to avoid recording tax. This mortgage amount may equal
the appraised value or allocated loan amount for the mortgaged real property and
will limit the extent to which proceeds from the property will be available to
offset declines in value of the other properties securing the same mortgage loan
or group of cross-collateralized mortgage loans.
Limited Information Causes Uncertainty. Thirty-six (36) of the mortgage
loans that we intend to include in the trust fund, representing 25.8% of the
initial mortgage pool balance, were originated for the purpose of providing
acquisition financing. Nine (9) of the mortgage loans that we intend to include
in the trust fund, representing 4.0% of the initial mortgage pool balance (and
including one (1) mortgage loan, representing 0.6% of the initial mortgage pool
balance, that was originated for the purpose of providing acquisition
financing), are secured by mortgaged real properties that were constructed or
completed after January 1, 2003. Accordingly, there may be limited or no recent
historical operating information available with respect to the mortgaged real
properties for these mortgage loans. As a result, you may find it difficult to
analyze the historical performance of these properties.
Prior Bankruptcies May Reflect Future Performance. We are aware that, in
the case of 11 mortgage loans that we intend to include in the trust fund which
are controlled by six (6) different principals or principal groups and which
represent 5.6% of the initial mortgage pool balance, the related borrower or a
principal in the related borrower has been a party to a prior bankruptcy
proceeding. None of the aforementioned bankruptcy proceedings occurred within
the three years prior to the cut-off date. There can be no assurance that
principals or affiliates of other borrowers have not been a party to bankruptcy
proceedings.
S-56
Litigation May Adversely Affect Property Performance. There may be pending
or threatened legal proceedings against the borrowers and/or guarantors under
the underlying mortgage loans, the managers of the related mortgaged real
properties and their respective affiliates, arising out of the ordinary business
of those borrowers, managers and affiliates. We cannot assure you that
litigation will not have a material adverse effect on your investment.
Tax Considerations Related to Foreclosure. If the trust were to acquire an
underlying real property through foreclosure or similar action, the special
servicer may be required to retain an independent contractor to operate and
manage the property. Any net income from that operation and management, other
than qualifying "rents from real property" within the meaning of section 856(d)
of the Internal Revenue Code of 1986, as amended, or any rental income based on
the net profits of a tenant or sub-tenant or allocable to a service that is
non-customary in the area and for the type of building involved, will subject
the trust to federal, and possibly state or local, tax as described under
"Federal Income Tax Consequences--REMICs--Prohibited Transactions Tax and Other
Taxes" in the accompanying prospectus. Those taxes, and the cost of retaining an
independent contractor, would reduce net proceeds available for distributions
with respect to the series 2004-C1 certificates.
In addition, in connection with the trust's acquisition of an underlying
real property, through foreclosure or similar action, and/or its liquidation of
such property, the trust may in certain jurisdiction--particularly in New York
and California--be required to pay state or local transfer or excise taxes. Such
state or local taxes may reduce net proceeds available for distributions with
respect to the series 2004-C1 certificates.
With respect to one (1) of the mortgage loans that we intend to include in
the trust fund (loan number 27), representing 2.3% of the initial mortgage pool
balance, the related mortgaged real property is situated in the Territory of
Guam. If the trust were to acquire such property through foreclosure or similar
action, withholding or income taxes imposed by the Territory of Guam could
reduce any rental income derived from that property. In addition, taxes imposed
by the Territory of Guam could reduce or delay the receipt of proceeds from the
sale or other disposition of that property. Any such reduction or delay could
adversely affect the cash proceeds from the rental or liquidation of that
property available to make payments to the series 2004-C1 certificateholders.
The Underwritten Net Cash Flow Debt Service Coverage Ratios and/or
Loan-to-Value Ratios for Certain of the Underlying Mortgage Loans Have Been
Adjusted in Consideration of a Cash Holdback or a Letter of Credit. With respect
to six (6) mortgage loans that we intend to include in the trust fund (loan
numbers 22, 48, 50, 59, 60 and 61), which collectively represent 6.4% of the
initial mortgage pool balance, the underwritten net cash flow debt service
coverage ratio and, in the case of loan number 22, the cut-off date
loan-to-value and maturity date/ARD loan-to-value ratios, have been calculated
and/or presented on an adjusted basis that (a) takes into account various
assumptions regarding the financial performance of the related mortgaged real
property that are consistent with the respective performance related criteria
required to obtain the release of a cash holdback and/or letter of credit which
serves as additional collateral or otherwise covers losses to a limited extent
and/or (b) reflects an application of that cash holdback and/or letter of credit
to pay down the subject mortgage loan, with a corresponding reamortization of
the monthly debt service payment. IF THE ABOVE-REFERENCED ADJUSTED VALUES ARE
NOT USED FOR THESE SIX (6) UNDERLYING MORTGAGE LOANS: THE UNDERWRITTEN NET CASH
FLOW DEBT SERVICE COVERAGE RATIOS FOR THE MORTGAGE POOL RANGE FROM 1.11X TO
1.96X, WITH A WEIGHTED AVERAGE OF 1.47X; THE CUT-OFF DATE LOAN-TO-VALUE RATIOS
OF THE MORTGAGE POOL RANGE FROM 48.12% TO 82.94%, WITH A WEIGHTED AVERAGE OF
72.64%; AND THE MATURITY DATE/ARD LOAN-TO-VALUE RATIOS OF THE MORTGAGE POOL
RANGE FROM 0.90% TO 79.07%, WITH A WEIGHTED AVERAGE OF 62.27%. WEIGHTED AVERAGE
UNDERWRITTEN NET CASH FLOW DEBT SERVICE COVERAGE, CUT-OFF DATE LOAN-TO-VALUE AND
MATURITY DATE/ARD LOAN-TO-VALUE INFORMATION FOR THE MORTGAGE POOL (OR PORTIONS
THEREOF THAT CONTAIN ANY OF THOSE SIX (6) UNDERLYING MORTGAGE LOANS) SET FORTH
IN THIS PROSPECTUS SUPPLEMENT REFLECT THE RESPECTIVE ADJUSTMENTS REFERENCED
ABOVE.
S-57
Future Terrorist Attacks and Military Actions May Adversely Affect the
Value of the Offered Certificates and Payments on the Underlying Mortgage Loans.
It is impossible to predict whether, or the extent to which, future terrorist
activities may occur in the United States or with respect to U.S. interests
around the world. It is uncertain what effects any future terrorist activities
in the United States or abroad and/or any consequent actions on the part of the
United States Government and others, including military action, will have on:
(a) U.S. and world financial markets; (b) local, regional and national
economies; (c) real estate markets across the U.S.; (d) particular business
segments, including those that are important to the performance of the mortgaged
real properties that secure the underlying mortgage loans; and/or (e) insurance
costs and the availability of insurance coverage for terrorist acts in the
future. Any negative financial impact in respect of any of the foregoing could
adversely affect the cash flow at the related mortgaged real properties and
ultimately the ability of borrowers to pay interest and/or principal on the
underlying mortgage loans. Among other things, reduced investor confidence could
result in substantial volatility in securities markets and a decline in real
estate-related investments. In addition, reduced consumer confidence, as well as
a heightened concern for personal safety, could result in a material decline in
personal spending and travel.
As a result of the foregoing factors, defaults on commercial real estate
loans could increase; and, regardless of the performance of the underlying
mortgage loans, the liquidity and market value of the offered certificates may
be impaired. See "Risk Factors--Lack of Liquidity Will Impair Your Ability to
Sell Your Offered Certificates and May Have an Adverse Effect on the Market
Value of Your Offered Certificates," "--The Market Value of Your Offered
Certificates May Be Adversely Affected by Factors Unrelated to the Performance
of Your Offered Certificates and the Underlying Mortgage Assets, Such as
Fluctuations in Interest Rates and the Supply and Demand of CMBS Generally" and
"--Repayment of a Commercial or Multifamily Mortgage Loan Depends on the
Performance and Value of the Underlying Real Property, Which May Decline Over
Time, and the Related Borrower's Ability to Refinance the Property, of Which
There Is No Assurance" in the accompanying prospectus.
CAPITALIZED TERMS USED IN THIS PROSPECTUS SUPPLEMENT
From time to time we use capitalized terms in this prospectus supplement,
including in the annexes to this prospectus supplement. Each of those
capitalized terms will have the meaning assigned to it in the glossary attached
to this prospectus supplement.
FORWARD-LOOKING STATEMENTS
This prospectus supplement and the accompanying prospectus include the
words "expects", "intends", "anticipates", "estimates" and similar words and
expressions. These words and expressions are intended to identify
forward-looking statements. Any forward-looking statements are made subject to
risks and uncertainties that could cause actual results to differ materially
from those stated. These risks and uncertainties include, among other things,
declines in general economic and business conditions, increased competition,
changes in demographics, changes in political and social conditions, regulatory
initiatives and changes in customer preferences, many of which are beyond our
control and the control of any other person or entity related to this offering.
The forward-looking statements made in this prospectus supplement are accurate
as of the date stated on the cover of this prospectus supplement. We have no
obligation to update or revise any forward-looking statement.
S-58
DESCRIPTION OF THE MORTGAGE POOL
GENERAL
We intend to include the 115 mortgage loans identified on Annex A-1 to this
prospectus supplement in the trust fund. The mortgage pool consisting of those
loans will have an Initial Mortgage Pool Balance of $1,182,418,798. However, the
actual Initial Mortgage Pool Balance may be as much as 5.0% smaller or larger
than that amount if any of those mortgage loans are removed from the mortgage
pool or any other mortgage loans are added to the mortgage pool. See "--Changes
in Mortgage Pool Characteristics" below.
Subject to the discussion in the second following paragraph, the cut-off
date principal balance of any underlying mortgage loan is equal to its unpaid
principal balance as of the cut-off date, after application of all scheduled
payments of principal due with respect to the mortgage loan on or before that
date, whether or not those payments were received. The cut-off date principal
balance of each mortgage loan that we intend to include in the trust fund (or,
in the case of the Pecanland Mall Mortgage Loan, of the Pecanland Mall Pooled
Portion) is shown on Annex A-1 to this prospectus supplement.
Each of the mortgage loans that we intend to include in the trust fund is
an obligation of the related borrower to repay a specified sum with interest.
Each of those mortgage loans is evidenced by a promissory note and secured by a
mortgage, deed of trust or other similar security instrument that creates a
mortgage lien on the fee simple and/or leasehold interest of the related
borrower or another party in one or more commercial or multifamily real
properties. That mortgage lien will, in all cases, be a first priority lien,
subject only to Permitted Encumbrances.
The Pecanland Mall Mortgage Loan has a cut-off date principal balance of
$65,644,429. In connection with distributions on the series 2004-C1
certificates, the Pecanland Mall Mortgage Loan will be treated as if it consists
of two (2) portions, which we refer to as the Pecanland Mall Pooled Portion and
the Pecanland Mall Non-Pooled Portion, respectively. The Pecanland Mall Pooled
Portion consists of $62,322,215 of the entire cut-off date principal balance of
the Pecanland Mall Mortgage Loan. The Pecanland Mall Non-Pooled Portion consists
of the remaining $3,322,215 of the cut-off date principal balance of the
Pecanland Mall Mortgage Loan. The class PM certificates represent beneficial
ownership of the Pecanland Mall Non-Pooled Portion, and the holders of those
2004-C1 certificates will be entitled to collections of principal and interest
on the Pecanland Mall Mortgage Loan that are allocable to the Pecanland Mall
Non-Pooled Portion. The holders of the class A-1, A-2, A-3, A-4, B, C, D, E, F,
G, H, J, K, L, M, N, P, Q, X-1 and X-2 certificates will be entitled to receive
collections of principal and/or interest on the Pecanland Mall Mortgage Loan
that are allocable to the Pecanland Mall Pooled Portion. As and to the extent
described under "Description of the Offered Certificates--Payments--Allocation
of Payments on the Pecanland Mall Mortgage Loan; Payments on the Class PM
Certificates" in this prospectus supplement, the rights of the holders of the
class PM certificates to receive payments to which they are entitled with
respect to the Pecanland Mall Mortgage Loan will be subordinated to the rights
of the holders of the class A-1, A-2, A-3, A-4, B, C, D, E, F, G, H, J, K, L, M,
N, P, Q, X-1 and X-2 certificates to receive payments to which they are entitled
with respect to the Pecanland Mall Mortgage Loan in certain default scenarios.
You should consider each of the underlying mortgage loans to be a
nonrecourse obligation of the related borrower. In the event of a payment
default by the related borrower, recourse will be, or you should expect recourse
to be, limited to the corresponding mortgaged real property or properties (and
any reserves, letters of credit or other additional collateral for the mortgage
loan) for satisfaction of that borrower's obligations. In those cases where
recourse to a borrower or guarantor is permitted under the related loan
documents, we have not undertaken an evaluation of the financial condition of
any of these persons. None of the underlying mortgage loans will be insured or
guaranteed by any governmental agency or instrumentality.
S-59
We provide in this prospectus supplement a variety of information regarding
the mortgage loans that we intend to include in the trust fund. When reviewing
this information, please note that:
o All numerical information provided with respect to the underlying
mortgage loans is provided on an approximate basis.
o References to Initial Mortgage Pool Balance mean the aggregate
principal balance of the underlying mortgage loans (or, in the case of
the Pecanland Mall Mortgage Loan, the Allocated Principal Balance of
the Pecanland Mall Pooled Portion), as of the cut-off date, after
application of all scheduled payments of principal due with respect to
the underlying mortgage loans on or before that date.
o Unless we indicate otherwise, the statistical information presented in
this prospectus supplement with respect to the Ocean Key Resort
Mortgage Loan excludes the related subordinate companion loan.
o Except as otherwise described in the next sentence, all weighted
average information provided with respect to the underlying mortgage
loans reflects a weighting based on their respective cut-off date
principal balances. For the purposes of calculating weighted averages
(other than weighted average debt service coverage ratios), the
Pecanland Mall Mortgage Loan is considered to exclude the Pecanland
Mall Non-Pooled Portion. Weighted average debt service coverage ratio
information presented in this prospectus supplement, insofar as it
relates to the Pecanland Mall Mortgage Loan, weights the debt service
coverage ratio for that mortgage loan based on a principal balance
that takes into account the Pecanland Mall Non-Pooled Portion. We will
transfer the cut-off date principal balance for each of the underlying
mortgage loans (including, in the case of the Pecanland Mall Mortgage
Loan, the Allocated Principal Balance of the Pecanland Mall Non-Pooled
Portion) to the trust. We show the cut-off date principal balance for
each of the underlying mortgage loans (or, in the case of the
Pecanland Mall Mortgage Loan, the Allocated Principal Balance, as of
the cut-off date, of the Pecanland Mall Pooled Portion).
o When information with respect to the mortgaged real properties is
expressed as a percentage of the Initial Mortgage Pool Balance, that
percentage is based on the cut-off date principal balances of the
related underlying mortgage loans or allocated portions of those
balances (or, in the case of the Pecanland Mall Mortgage Loan, unless
the context clearly indicates otherwise, based on the Allocated
Principal Balance of the Pecanland Mall Pooled Portion).
o Unless specifically indicated otherwise, all statistical information
with respect to the Pecanland Mall Mortgage Loan, excluding debt
service coverage ratios, is being presented solely with respect to the
Pecanland Mall Pooled Portion. Debt service coverage ratio information
shown in this prospectus supplement, insofar as it relates to the
Pecanland Mall Mortgage Loan, takes into account the portion of the
monthly debt service payment allocable to the Pecanland Mall
Non-Pooled Portion.
o If any of the underlying mortgage loans is secured by multiple
mortgaged real properties, a portion of that mortgage loan has been
allocated to each of those properties for purposes of providing
various statistical information in this prospectus supplement.
o Whenever loan-level information, such as loan-to-value ratios or debt
service coverage ratios, is presented in the context of the mortgaged
real properties, the loan level statistic attributed to a mortgaged
real property is the same as the statistic for the related underlying
mortgage loan.
S-60
o Whenever we refer to a particular underlying mortgage loan or
mortgaged real property by name, we mean the underlying mortgage loan
or mortgaged real property, as the case may be, identified by that
name on Annex A-1 to this prospectus supplement. Whenever we refer to
a particular underlying mortgage loan by loan number, we are referring
to the loan number for that mortgage loan set forth on Annex A-1 to
this prospectus supplement.
o Statistical information regarding the underlying mortgage loans may
change prior to the date of initial issuance of the offered
certificates due to changes in the composition of the mortgage pool
prior to that date, and the Initial Mortgage Pool Balance may be as
much as 5% larger or smaller than indicated.
In addition, unless otherwise noted, for purposes of the tables in this
"Description of Mortgage Pool" section, we have assumed that each ARD Loan
matures on its anticipated repayment date. See "--Terms and Conditions of the
Underlying Mortgage Loans--ARD Loans" below.
The table below shows the number of, and the approximate percentage of the
Initial Mortgage Pool Balance secured by, mortgaged real properties operated for
each indicated purpose:
PROPERTY TYPES
WEIGHTED AVERAGES
--------------------------------
% OF CUT-OFF
INITIAL MAXIMUM STATED DATE MIN/MAX
NUMBER OF AGGREGATE MORTGAGE CUT-OFF REMAINING U/W LOAN-TO- MIN/MAX CUT-OFF DATE
MORTGAGED CUT-OFF POOL DATE MORTGAGE TERM NCF VALUE U/W NCF LOAN-TO-VALUE
PROPERTY TYPES PROPERTIES DATE BALANCE BALANCE BALANCE RATE (MO.) DSCR RATIO DSCR RATIO
- ----------------------- ---------- ------------ ------- ----------- --------- -------- ----- ------- ----------- --------------
Retail.................. 41 $469,680,857 39.7% $93,000,000 5.3194% 112 1.53x 70.12% 1.20x/1.96x 57.97%/80.00%
Anchored.............. 19 200,048,074 16.9 35,500,000 5.6561 119 1.34 76.36 1.21x/1.72x 57.97%/80.00%
Regional Mall......... 3 174,108,602 14.7 93,000,000 4.6416 100 1.82 61.62 1.44x/1.96x 58.13%/65.69%
Single Tenant, Anchor. 8 42,571,553 3.6 11,447,417 5.9283 124 1.30 75.33 1.22x/1.55x 61.11%/78.95%
Unanchored............ 7 30,554,773 2.6 7,500,000 5.8002 114 1.49 72.51 1.22x/1.77x 64.77%/79.72%
Shadow Anchored....... 4 22,397,855 1.9 9,846,801 5.7678 112 1.41 67.28 1.20x/1.49x 58.61%/75.66%
Office.................. 19 249,675,342 21.1 57,000,000 5.4343 107 1.41 75.30 1.20x/1.61x 65.71%/79.70%
Suburban.............. 14 149,137,446 12.6 28,355,938 5.6243 108 1.35 74.41 1.20x/1.49x 65.71%/78.55%
CBD................... 3 89,790,641 7.6 57,000,000 5.1356 112 1.51 76.35 1.35x/1.61x 72.86%/79.70%
Medical Office........ 2 10,747,256 0.9 5,576,256 5.2939 66 1.30 79.03 1.27x/1.33x 78.54%/79.55%
Mobile Home Park........ 24 114,107,166 9.7 12,634,587 5.3995 104 1.43 74.25 1.38x/1.53x 48.12%/80.00%
Self Storage............ 23 111,358,166 9.4 12,960,663 4.6950 65 1.53 74.80 1.48x/1.64x 64.80%/78.02%
Multifamily............. 15 78,317,029 6.6 17,500,000 5.2307 105 1.41 76.90 1.22x/1.78x 70.80%/79.78%
Conventional.......... 11 64,284,557 5.4 17,500,000 5.1628 102 1.42 77.99 1.22x/1.78x 72.92%/79.78%
Student Housing....... 4 14,032,472 1.2 9,700,000 5.5419 116 1.35 71.92 1.33x/1.36x 70.80%/74.44%
Mixed Use............... 6 67,127,595 5.7 32,670,000 5.7145 117 1.35 72.67 1.29x/1.45x 69.92%/77.67%
Hospitality............. 3 53,097,612 4.5 23,067,933 5.7307 103 1.65 63.01 1.44x/1.79x 60.71%/67.82%
Land.................... 1 26,864,655 2.3 26,864,655 5.6900 115 1.55 72.61 1.55x/1.55x 72.61%/72.61%
Industrial.............. 1 12,190,377 1.0 12,190,377 6.1860 119 1.36 77.15 1.36x/1.36x 77.15%/77.15%
--- -------------- ------
Totals/Wtd. Avg......... 133 $1,182,418,798 100.0% 5.3450% 105 1.48x 72.46% 1.20x/1.96x 48.12%/80.00%
=== ============== ======
S-61
Forty-one (41) mortgaged real properties, securing 39.7% of the Initial
Mortgage Pool Balance, are used for retail purposes and consist of anchored
retail properties, including anchored retail regional malls, shadow anchored
retail, anchored single tenant retail and unanchored retail properties. In
addition, four (4) of the mortgaged real properties, securing 2.6% of the
Initial Mortgage Pool Balance, are each used for mixed use purposes that include
a significant retail component.
With respect to each of the four (4) mortgaged real properties identified
in the preceding table as "Shadow Anchored Retail", none of the relevant anchor
tenants is on any portion of the particular property that is subject to the lien
of the related mortgage instrument.
The table below shows the number of, and the approximate percentage of the
Initial Mortgage Pool Balance secured by, first mortgage liens on each of the
specified interests in the corresponding mortgaged real properties:
ENCUMBERED INTEREST
WEIGHTED AVERAGES
------------------------------------------------
% OF MAXIMUM
AGGREGATE INITIAL CUT-OFF
NUMBER OF CUT-OFF DATE MORTGAGE DATE MORTGAGE STATED CUT-OFF DATE
MORTGAGED PRINCIPAL POOL PRINCIPAL INTEREST REMAINING U/W NCF LOAN TO
ENCUMBERED INTEREST PROPERTIES BALANCE BALANCE BALANCE RATE TERM (MO.) DSCR VALUE RATIO
------------------- ---------- ------- ------- ------- ---- ---------- ---- -----------
Fee Simple......... 126 $1,115,973,974 94.4% $93,000,000 5.3310% 105 1.47x 72.82%
Fee Simple in part
and Leasehold in
part............ 3 37,003,723 3.1 23,067,933 5.6617 97 1.67 61.93
Leasehold.......... 4 29,441,101 2.5 11,964,176 5.4754 111 1.54 72.01
--- -------------- -------
Totals/Wtd. Avg.... 133 $1,182,418,798 100.00% 5.3450% 105 1.48x 72.46%
=== ============== =======
It should be noted that each mortgage loan secured by overlapping fee and
leasehold interests is presented as being secured by a fee simple interest in
this prospectus supplement and is therefore included within the category
referred to as "Fee Simple" in the chart above.
The table below shows the number of, and the approximate percentage of the
Initial Mortgage Pool Balance secured by, mortgaged real properties located in
the indicated states:
STATE CONCENTRATIONS
WEIGHTED AVERAGES
---------------------------------------------
% OF
AGGREGATE INITIAL CUMULATIVE
NUMBER OF CUT-OFF DATE MORTGAGE % OF INITIAL MORTGAGE STATED CUT-OFF DATE
MORTGAGED PRINCIPAL POOL MORTGAGE INTEREST REMAINING U/W NCF LOAN TO
STATE/REGION PROPERTIES BALANCE BALANCE POOL BALANCE RATE TERM (MO.) DSCR VALUE RATIO
------------ ---------- ------- ------- ------------ ---- ---------- ---- -----------
Illinois 10 $ 198,591,011 16.8% 16.8% 4.9203% 116 1.71x 67.65%
Florida 16 177,099,898 15.0 31.8 5.2603 95 1.46 73.04
California 14
Southern California (1) 10 63,202,834 5.3 37.1 5.4408 109 1.45 69.83
Northern California (2) 4 46,319,066 3.9 41.0 5.9493 116 1.39 75.96
Texas 9 97,428,390 8.2 49.3 5.7462 110 1.42 70.71
Louisiana 2 65,064,076 5.5 54.8 4.3525 70 1.71 66.07
New York 6 59,038,245 5.0 59.8 5.3212 112 1.42 76.00
Ohio 9 56,017,503 4.7 64.5 5.3958 92 1.44 75.42
New Jersey 4 48,535,989 4.1 68.6 5.4431 103 1.38 75.88
New Hampshire 1 35,500,000 3.0 71.6 6.1200 120 1.24 76.84
Washington 5 33,198,274 2.8 74.4 5.7035 113 1.38 74.76
-- ------------- -----
Totals/Wtd. Avg.. 76 $ 879,995,286 74.4% 5.2937% 105 1.51x 71.70%
== ============= =====
Other............. 57 $ 302,423,512 25.6% 5.4942% 107 1.40x 74.66%
== ============= =====
(footnotes on next page)
S-62
- -----------------------------
(1) Southern CA includes properties that are located in zip codes of 93726 or
lower.
(2) Northern CA includes properties that are located in zip codes of 93923 or
higher.
The reference to "Other" in the preceding table includes 20 other states,
as well as the District of Columbia and Guam. No more than 2.4% of the Initial
Mortgage Pool Balance is secured by mortgaged real properties located in any of
those other jurisdictions.
CROSS-COLLATERALIZED MORTGAGE LOANS AND MULTIPLE PROPERTY MORTGAGE LOANS
The mortgage pool will include 37 mortgage loans, secured by a total of 55
mortgaged real properties and representing 21.3% of the Initial Mortgage Pool
Balance, that are, in each case, individually or through cross-collateralization
with other mortgage loans, secured by two or more mortgaged real properties.
The amount of the mortgage lien encumbering any particular one of those
mortgaged real properties may be less than the full amount of the related
mortgage loan or group of cross-collateralized mortgage loans, generally to
avoid mortgage recording tax. The mortgage amount may equal the appraised value
or allocated loan amount for the particular mortgaged real property. This would
limit the extent to which proceeds from that property would be available to
offset declines in value of the other mortgaged real properties securing the
same mortgage loan or group of cross-collateralized mortgage loans.
The following table identifies the various individual multiple property
mortgage loans and cross-collateralized mortgage loan groups that we will
include in the trust fund.
S-63
CROSS-COLLATERALIZED MORTGAGE LOAN GROUPS AND MULTIPLE PROPERTY MORTGAGE LOANS
TOTAL % OF INITIAL
CROSS-COLLATERALIZED MORTGAGE LOAN GROUP/MULTIPLE PROPERTY CUT-OFF DATE MORTGAGE
MORTGAGE LOAN BY PROPERTY/PORTFOLIO NAME RELATIONSHIP PRINCIPAL BALANCE POOL BALANCE
---------------------------------------- ------------ ----------------- ------------
1. StorageMart Portfolio ............................ Cross-Collateralized $75,000,000 6.3%
Mortgage Loan Group
a. StorageMart - Brooklyn, NY.................... 11,840,000 1.0
b. StorageMart - Secaucus, NJ.................... 8,760,000 0.7
c. StorageMart - Pompano Beach, FL............... 6,960,000 0.6
d. StorageMart - Kansas City, MO (Wornall Road).. 6,760,000 0.6
e. StorageMart - Dania Beach, FL................. 5,920,000 0.5
f. StorageMart - Miami, FL (NW 7th Street)....... 5,196,000 0.4
g. StorageMart - Kansas City, MO (Prairie View).. 4,512,000 0.4
h. StorageMart - Overland Park, KS............... 4,053,000 0.3
i. StorageMart - Miami, FL (SW 2nd Avenue)....... 3,886,000 0.3
j. StorageMart - Lenexa, KS...................... 3,369,000 0.3
k. StorageMart - Kansas City, KS................. 3,280,000 0.3
l. StorageMart - Lombard, IL..................... 3,240,000 0.3
m. StorageMart - Merriam, KS..................... 3,056,000 0.3
n. StorageMart - Kansas City, MO (North Main).... 2,552,000 0.2
o. StorageMart - Olathe, KS...................... 1,616,000 0.1
2. ARC Portfolio 10-6 (1)............................ Multiple Property $37,839,210 3.2%
Mortgage Loan
a. Sunshine City................................. 10,129,805 0.9
b. Country Club Mobile Estates................... 9,930,400 0.8
c. Windsor Mobile Estates........................ 7,736,938 0.7
d. Big Country Estates........................... 4,546,448 0.4
e. Harper Woods MHP.............................. 2,352,986 0.2
f. The Vineyards................................. 1,834,532 0.2
g. Rockview Heights.............................. 1,308,101 0.1
Cross-Collateralized 34,700,000 2.9%
3. Crossroads Center Portfolio ...................... Mortgage Loan Group
a. Crossroads Center............................. 26,960,000 2.3
a. Auburn Mile Shopping Center................... 7,740,000 0.7
4. ARC Portfolio 10-4 (1)............................ Multiple Property $34,152,200 2.9%
Mortgage Loan
a. The Meadows................................... 11,665,739 1.0
b. Foxhall Village............................... 7,291,087 0.6
c. New Twin Lakes................................ 7,029,356 0.6
d. Sundown....................................... 3,552,068 0.3
e. Meadowood..................................... 3,028,605 0.3
f. Blue Valley................................... 927,277 0.1
g. Connie Jean................................... 658,067 0.1
5. ARC Portfolio 5-1 (1)............................. Multiple Property $24,654,246 2.1%
Mortgage Loan
a. Countryside Village Jacksonville.............. 12,634,587 1.1
b. Parkview Estates.............................. 3,494,673 0.3
c. Falcon Farms.................................. 3,477,872 0.3
d. Forest Park................................... 2,419,389 0.2
e. Green Valley Village.......................... 1,142,489 0.1
f. Pleasant Grove................................ 840,066 0.1
g. Rose Country Estates.......................... 645,170 0.1
S-64
CROSS-COLLATERALIZED MORTGAGE LOAN GROUPS AND MULTIPLE PROPERTY MORTGAGE LOANS (CONTINUED)
TOTAL % OF INITIAL
CROSS-COLLATERALIZED MORTGAGE LOAN GROUP/MULTIPLE PROPERTY CUT-OFF DATE MORTGAGE
MORTGAGE LOAN BY PROPERTY/PORTFOLIO NAME RELATIONSHIP PRINCIPAL BALANCE POOL BALANCE
---------------------------------------- ------------ ----------------- ------------
Cross-Collateralized $23,397,503 2.0%
6. Wildcat Self Storage Portfolio ................... Mortgage Loan Group
a. Wildcat Self Storage - Kettering, OH.......... 4,321,832 0.4
b. Wildcat Self Storage - Norwood, OH............ 4,046,625 0.3
c. Wildcat Self Storage - South Fairmount, OH.... 3,977,079 0.3
d. Wildcat Self Storage - Deerfield, OH.......... 3,477,336 0.3
e. Wildcat Self Storage - Forest Park, OH........ 3,389,906 0.3
f. Wildcat Self Storage - Huber Heights, OH...... 2,295,042 0.2
g Wildcat Self Storage - Blue Ash, OH........... 1,889,684 0.2
Cross-Collateralized $6,925,366 0.6%
7. Oklahoma City Apartments Portfolio ............... Mortgage Loan Group
a. Newport Granada Apartments.................... 2,477,975 0.2
b. Emerald Court Apartments...................... 2,253,611 0.2
c. Casa Linda Apartments......................... 2,193,780 0.2
Cross-Collateralized 5,336,837 0.5%
8. Eckerds Portfolio ................................ Mortgage Loan Group
a. Eckerd - Baton Rouge, LA...................... 2,741,861 0.2
b. Eckerd - Gulfport, MS......................... 2,594,976 0.2
Cross-Collateralized $5,025,373 0.4%
9. Walgreens Portfolio .............................. Mortgage Loan Group
a. Walgreens - 4285 West Powell, Gresham, OR..... 2,577,369 0.2
b. Walgreens - 16200 Northeast Glisan Gresham, OR 2,448,003 0.2
Cross-Collateralized 4,332,472 0.4%
10. Edmond Apartments Portfolio ...................... Mortgage Loan Group
a. Christopher Place Apartments.................. 2,099,720 0.2
b. University Park Apartments.................... 1,451,438 0.1
c. 909 North Place Apartments.................... 781,314 0.1
- -----------------------------
(1) The three ARC Portfolio underlying mortgage loans are not cross-defaulted
or cross-collateralized, but they do have affiliated borrowers and common
sponsorship.
The loan documents for one (1) group of cross-collateralized and
cross-defaulted mortgage loans that we intend to include in the trust fund,
which is comprised of two mortgage loans (loan numbers 90 and 91) that
collectively represent 0.5% of the Initial Mortgage Pool Balance, entitle the
related borrower(s) to obtain (i) a release of one of the related mortgage real
properties from the related lien and (ii) a corresponding termination of the
subject cross-collateralization, subject, in each case, to the following
conditions--
o the pay down or defeasance of the mortgage loan(s) in an amount equal
to 125% of the portion of the total loan amount allocated to the
property to be released, and
o the satisfaction of debt service coverage and/or loan-to-value tests
for the property that will remain as collateral.
The loan documents for one group of cross-collateralized and
cross-defaulted mortgage loans that we intend to include in the trust fund,
which is comprised of two mortgage loans (loan numbers 28 and 29) that
collectively represent 0.4% of the Initial Mortgage Pool Balance, entitle the
related borrower(s) to obtain (i) a release of one of the related mortgaged real
properties and/or (ii) a termination of the subject cross-collateralization,
upon the occurrence of any of the following--
S-65
o the defeasance of either mortgage loan, or
o in the event of a casualty or condemnation where the proceeds or award
is applied to one of those crossed mortgage loans and that crossed
mortgage loan is paid off in full as a result; or
o in connection with an approved transfer of one of the related
mortgaged real properties and an assumption of either of those crossed
mortgage loans.
With respect to the group of cross-collateralized and cross-defaulted
mortgage loans secured by the mortgaged real properties identified on Annex A-1
to this prospectus supplement as StorageMart Portfolio, which collectively
represent 6.3% of the Initial Mortgage Pool Balance, the cross-collateralization
and cross-default provisions may be altered and/or released with respect to one
or more of the related mortgage loans--
o by the lender upon its request to the related borrower to split one or
more of the mortgage loans in the portfolio into two or more mortgage
pools of cross-collateralized and cross-defaulted mortgage loans as
more particularly set forth in the related mortgage loan documents,
and
o as described in this prospectus supplement under "-Mortgage Loans
Which Permit Partial Release and/or Substitution of the Related
Mortgaged Property".
MORTGAGE LOANS WHICH PERMIT PARTIAL RELEASE AND/OR SUBSTITUTION OF THE
RELATED MORTGAGED REAL PROPERTY
The Pecanland Mall Mortgage Loan permits a partial release of a portion of
the related mortgaged real property, provided that, among other things:
o the release parcel is vacant, non-income producing and unimproved
(unless this requirement is waived by the applicable rating agencies)
or improved only by surface parking areas;
o either--
1. the related borrower provides evidence that the land value of the
parcel sought to be released is less than 5% of the total land
value of the related mortgaged real property, or
2. the applicable rating agencies have confirmed that the release
will not result in a qualification, downgrade or withdrawal of
any of the ratings then assigned by the rating agency to any
class of the series 2004-C1 certificates; and
o the borrower delivers an opinion of counsel to the effect that stating
that none of the loan REMIC, REMIC I or REMIC II will fail to maintain
its status as a REMIC as a result of such release.
In the case of the mortgage loan secured by the mortgaged real property
identified on Annex A-1 to this prospectus supplement as Auburn Mile Shopping
Center, representing 0.7% of the Initial Mortgage Pool Balance, the related loan
documents permit a partial release of two portions of the related mortgaged real
property, subject to the payment by the purchaser of those parcels of a
specified option purchase price, which funds are to be placed in a reserve
account and held in trust as security for the borrower's obligations under the
related loan documents. The borrower, however, has the option to deliver to the
lender a letter of credit in lieu of placing the option purchase price in a
reserve account.
In the case of the mortgage loan secured by the mortgaged real property
identified on Annex A-1 to this prospectus supplement as Crossroads Center,
representing 2.3% of the Initial Mortgage Pool Balance, the related
S-66
loan documents permit the partial release of an outparcel that is currently a
part of the related mortgaged real property, provided that: (a) the outparcel
does not exceed 85,000 square feet; and (b) in the event the partial release
does not occur on or before the date that is 90 days after April 16, 2004, then,
if required by lender, the related borrower shall have provided to the lender an
opinion of counsel to the effect among other things, that the release of the
outparcel would not, if the related loan were in a REMIC pool, the partial
release would not cause that REMIC pool to fail to maintain its status as a
REMIC.
In the case of three (3) separate, non-crossed, multiple property mortgage
loans, which are secured by the mortgaged real properties identified on Annex
A-1 to this prospectus supplement as ARC Portfolio 10-6, ARC Portfolio 10-4 and
ARC Portfolio 5-1, respectively, and collectively representing 8.2% of the
Initial Mortgage Pool Balance, the related loan documents permit a release of a
related mortgaged real property in connection with a defeasance, provided that,
among other things--
o 125% of the allocated loan amount for the released mortgaged real
property is defeased; and
o certain debt service coverage and loan-to-value ratio tests are
satisfied with respect to the remaining mortgaged real properties
after the defeasance.
With respect to the group of cross-collateralized and cross-defaulted
mortgage loans secured by the mortgaged real properties identified on Annex A-1
to this prospectus supplement as StorageMart Portfolio, which collectively
represent 6.3% of the Initial Mortgage Pool Balance, prior to the related
anticipated repayment date, one or more of the related mortgaged real properties
may be removed and a replacement real property may be substituted in its place
upon satisfaction of certain conditions set forth under the related mortgage
loan documents which include:
o receipt by the lender from the rating agencies of written confirmation
that the proposed substitution will not result in a downgrade,
qualification or withdrawal of the then current ratings of the series
2004-C1 certificates;
o an appraisal of the substitute real property by an appraiser
acceptable to the rating agencies indicating that the appraised value
of the substitute real property is equal to or greater than the
appraised value of the mortgaged real property to be substituted at
the time the mortgaged real property to be replaced was encumbered by
the related mortgage instrument;
o the debt service coverage ratio as determined by the lender for the
substitute real property is not less than the debt service coverage
ratio for the mortgaged real property to be replaced as of the closing
date of the loan and as of the date immediately preceding
substitution;
o the net operating income as determined by the lender for the
substitute real property is greater than or equal to the net operating
income of the mortgaged real property to be replaced for the 12-month
period immediately preceding substitution; and
o the lender receives environmental and/or inspections reports with
respect to the substitute real property meets certain conditions set
forth in the related mortgage loan documents.
In addition with respect to the same group of cross-collateralized and
cross-defaulted mortgage loans secured by the StorageMart Portfolio, a related
mortgaged real property may be released and sold to an unaffiliated buyer
provided that such release and sale meets certain conditions set forth in the
related mortgage loan documents which include:
S-67
o the payment of the yield maintenance fee more particularly set forth
on Annex A-1 to this prospectus supplement (if the prepayment price
for the release occurs during the time frame set forth in the related
mortgage note);
o payment of 115% of the then current principal balance of the related
mortgage note (in addition to any required yield maintenance fee),
which the related borrower may with respect to the additional 15%
premium (provided that no event of default under the related mortgage
loan document has occurred) have the mortgagee (i) hold as additional
collateral for the remaining mortgages notes or (ii) apply to reduce
the principal balance of the remaining mortgage notes in accordance
with the terms of the related mortgage loan documents (and, in
connection with the foregoing, the mortgagee will recast and
reamortize the principal and interest payments under any related
mortgage note prepaid based on a 360-month schedule less the period
since the first payment date of the mortgage note prepaid);
o the related borrower reimburses the lender for all reasonable costs
and expenses involved in the related release;
o after giving effect to the related release, the debt service coverage
ratio of the remaining mortgaged real properties as determined by the
lender in accordance with the mortgage loan documents is 1.25x; and
o after giving effect to the related release, the loan-to-value ratio of
the remaining mortgaged real properties is not greater than 75%.
The mortgage pool will additionally include mortgage loans that permit a
partial release of an unimproved portion of the related mortgaged real property
upon the satisfaction of certain legal and underwriting requirements. For
example, in the case of one (1) mortgage loan secured by the mortgaged real
property identified on Annex A-1 to this prospectus supplement as Yorktown
Center, which mortgage loan represents 7.9% of the Initial Mortgage Pool
Balance, the related borrower may obtain the release of certain non-improved,
non-income producing property upon the satisfaction of certain conditions,
including, without limitation: (a) the borrower provides evidence that the
proposed use of the released property will be consistent with the use of the
related mortgaged real property or, if not consistent, the proposed use will not
have a material adverse effect on the mortgaged real property and (b) no event
of default has occurred and is continuing.
MORTGAGE LOANS WITH AFFILIATED BORROWERS
Ten (10) separate groups of mortgage loans that we intend to include in the
trust fund, consisting of a total of 45 mortgage loans, and representing a total
of 26.5% of the Initial Mortgage Pool Balance, have borrowers that, in the case
of the mortgage loans contained within a particular group, are related such that
they have at least one controlling sponsor or principal in common.
SIGNIFICANT UNDERLYING MORTGAGE LOANS
Set forth on Annex B to this prospectus supplement are summary discussions
of the 20 largest mortgage loans, groups of cross-collateralized mortgage loans
and/or groups of mortgage loans with affiliated borrowers that we intend to
include in the trust fund.
The following table shows certain characteristics of the 20 largest
mortgage loans, groups of cross-collateralized mortgage loans and/or groups of
mortgage loans with affiliated borrowers that we intend to include in the trust,
by cut-off date principal balance.
S-68
CUT-OFF
DATE
PRINCIPAL % OF
CUT-OFF BALANCE INITIAL CUT-OFF
MORTGAGE DATE PER MORTGAGE DATE
LOAN PROPERTY TYPE, PRINCIPAL SF/UNIT/ POOL U/W NCF LOAN-TO-VALUE
LOAN NAME SELLER SUB-TYPE BALANCE ROOM/PAD BALANCE DSCR (3) RATIO (3)
--------- ------ -------- ------- -------- ------- -------- ---------
1. ARC Portfolio Related Loan Group (1)
ARC Portfolio 10-6 CGM Mobile Home Park $37,839,210 $24,960 3.2% 1.42x 79.76%
ARC Portfolio 10-4 CGM Mobile Home Park 34,152,200 22,249 2.9 1.38 74.78
ARC Portfolio 5-1 CGM Mobile Home Park 24,654,246 16,177 2.1 1.46 67.21
2. Yorktown Center Wachovia Retail, Regional 93,000,000 150 7.9 1.96 58.13
Mall
3. StorageMart Portfolio (2) Wachovia 75,000,000 65 6.3 1.48 78.02
StorageMart - Brooklyn, NY Self Storage 11,840,000 207 1.0
StorageMart - Secaucus, NJ Self Storage 8,760,000 92 0.7
StorageMart - Pompano Beach, FL Self Storage 6,960,000 74 0.6
StorageMart - Kansas City, MO Self Storage 6,760,000 78 0.6
(Wornall Road)
StorageMart - Dania Beach, FL Self Storage 5,920,000 68 0.5
StorageMart - Miami, FL (NW 7th Self Storage 5,196,000 69 0.4
Street)
StorageMart - Kansas City, MO Self Storage 4,512,000 49 0.4
(Prairie View)
StorageMart - Overland Park, KS Self Storage 4,053,000 41 0.3
StorageMart - Miami, FL (SW 2nd Self Storage 3,886,000 109 0.3
Avenue)
StorageMart - Lenexa, KS Self Storage 3,369,000 42 0.3
StorageMart - Kansas City, KS Self Storage 3,280,000 53 0.3
StorageMart - Lombard, IL Self Storage 3,240,000 39 0.3
StorageMart - Merriam, KS Self Storage 3,056,000 46 0.3
StorageMart - Kansas City, MO Self Storage 2,552,000 34 0.2
(North Main)
StorageMart - Olathe, KS Self Storage 1,616,000 26 0.1
4. Pecanland Mall CGM Retail, Regional 62,322,215 179 5.3 1.73 65.60
Mall
5. Lake Shore Place Wachovia Office, CBD 57,000,000 117 4.8 1.61 76.72
6. Nashua Mall CGM Retail, Anchored 35,500,000 111 3.0 1.24 76.84
7. Crossroads Center Portfolio (2) CGM 34,700,000 107 2.9 1.30 79.22
Crossroads Center Retail, Anchored 26,960,000 113 2.3
Auburn Mile Shopping Center Retail, Anchored 7,740,000 89 0.7
8. Waterfront Clematis CGM Mixed Use, 32,670,000 221 2.8 1.29 72.60
Office(76%),
Retail(24%)
9. 305 Madison CDCMC Office, Suburban 28,355,938 134 2.4 1.36 75.62
10. DFS-Guam CDCMC Land, Fee Simple 26,864,655 365 2.3 1.55 72.61
Interest ------------ ----
SUBTOTAL/WTD. AVG. $542,058,462 45.8% 1.55X 71.75%
============ ====
11. Wildcat Self Storage Portfolio (2) CGM 23,397,503 37 2.0 1.64 70.00
Wildcat Self Storage - Self Storage 4,321,832 48 0.4
Kettering, OH
Wildcat Self Storage - Norwood, Self Storage 4,046,625 38 0.3
OH
Wildcat Self Storage - South Self Storage 3,977,079 42 0.3
Fairmount, OH
Wildcat Self Storage - Self Storage 3,477,336 38 0.3
Deerfield, OH
Wildcat Self Storage - Forest Self Storage 3,389,906 32 0.3
Park, OH
Wildcat Self Storage - Huber Self Storage 2,295,042 32 0.2
Heights, OH
Wildcat Self Storage - Blue Ash, Self Storage 1,889,684 27 0.2
OH
12. Ocean Key Resort Wachovia Hospitality, Full 23,067,933 230,679 2.0 1.79 60.71
Service
13. Hall Office Park CDCMC Office, Suburban 21,914,934 94 1.9 1.30 73.05
14. Sheraton Suites CGM Hospitality, Full 20,941,941 74,526 1.8 1.44 63.46
Service
15. 400 Atlantic Avenue CGM Office, CBD 19,161,641 192 1.6 1.35 72.86
16. Victoria Mall CDCMC Retail, Regional 18,786,388 42 1.6 1.44 65.69
Mall
17. Delray Bay Apartments Wachovia Multifamily 17,500,000 105,422 1.5 1.56 78.48
18. The Yards Plaza Wachovia Retail, Anchored 17,460,861 66 1.5 1.24 79.37
19. Carmel Rancho Shopping Center CGM Retail, Anchored 15,689,288 137 1.3 1.25 78.84
20. Cumberland Office Park Wachovia Office, Suburban 15,000,000 105 1.3 1.34 74.44
------------ ----
SUBTOTAL/WTD. AVG. $192,920,487 16.3% 1.42X 71.07%
============ ====
TOTAL / WTD. AVG. $734,978,949 62.2% 1.53X 71.57%
============ ====
(footnotes on next page)
S-69
- -----------------------------
(1) Represents a related or affiliated borrower loan group. The three (3) ARC
Portfolio underlying mortgage loans are not --- cross-collateralized or
cross-defaulted.
(2) Represents Crossed Group.
(3) Calculated with respect to Crossed Loans based on entire Crossed Group and
all related mortgaged real properties.
TERMS AND CONDITIONS OF THE UNDERLYING MORTGAGE LOANS
Due Dates. Subject, in some cases, to a next business day convention:
o sixty-four (64) of the mortgage loans, representing 49.8% of the
Initial Mortgage Pool Balance, provide for scheduled payments of
principal and/or interest to be due on the first day of each month;
o two (2) of the mortgage loans that we intend to include in the trust
fund, representing 2.4% of the Initial Mortgage Pool Balance, provide
for scheduled payments of principal and/or interest to be due on the
ninth day of each month; and
o forty-nine (49) of the mortgage loans, representing 47.8% of the
Initial Mortgage Pool Balance, provide for scheduled payments of
principal and/or interest to be due on the eleventh day of each month.
Mortgage Rates; Calculations of Interest. In general, each of the mortgage
loans that we intend to include in the trust fund bears interest at a mortgage
rate that, in the absence of default, is fixed until maturity. However, as
described under "--ARD Loans" below, each ARD Loan will accrue interest after
its anticipated repayment date at a rate that is in excess of its mortgage rate
prior to that date.
The current mortgage rate for each of the mortgage loans that we intend to
include in the trust fund is shown on Annex A-1 to this prospectus supplement.
As of the cut-off date, those mortgage rates ranged from 4.2765% per annum to
6.4600% per annum, and the weighted average of those mortgage rates was 5.3450%
per annum.
Except if an ARD Loan remains outstanding past its anticipated repayment
date, none of the mortgage loans that we intend to include in the trust fund
provides for negative amortization or for the deferral of interest.
Each of the underlying mortgage loans will accrue interest on the basis of
one of the following conventions:
o the actual number of days elapsed during each one-month accrual period
in a year assumed to consist of 360 days; or
o a 360-day year consisting of twelve 30-day months.
The table below shows the number of, and percentage of Initial Mortgage
Pool Balance represented by, underlying mortgage loans that will accrue interest
based on each of the foregoing conventions.
S-70
ACCRUAL TYPE
WEIGHTED AVERAGES
-----------------------------------------------------
TOTAL
NUMBER OF CUT-OFF DATE % OF INITIAL MORTGAGE STATED
MORTGAGE PRINCIPAL MORTGAGE INTEREST REMAINING U/W NCF CUT-OFF DATE
ACCRUAL TYPE LOANS BALANCE POOL BALANCE RATE TERM (MO.) DSCR LTV RATIO
------------ ----- ------- ------------ ---- ---------- ---- ---------
Actual/360 Basis...... 114 $1,146,918,798 97.0% 5.3210% 105 1.49x 72.32%
30/360 Basis.......... 1 35,500,000 3.0 6.1200 120 1.24 76.84
--- -------------- ------
Total/Wtd. Avg........ 115 $1,182,418,798 100.0% 5.3450% 105 1.48x 72.46%
=== ============== ======
Balloon Loans. Eighty-seven (87) of the mortgage loans that we intend to
include in the trust fund, representing 83.4% of the Initial Mortgage Pool
Balance, are characterized by:
o an amortization schedule that is significantly longer than the actual
term of the mortgage loan or for no amortization prior to stated
maturity; and
o a substantial payment, or balloon payment, being due with respect to
the mortgage loan on its stated maturity date.
Three (3) of the 87 mortgage loans referred to in the preceding paragraph,
representing 1.4% of the Initial Mortgage Pool Balance, provide for payments of
interest only until maturity, and another 12 of the 87 mortgage loans referred
to in the preceding paragraph, representing 23.0% of the Initial Mortgage Pool
Balance, provide for payments of interest only for periods ranging from the
first 12 to the first 25 payments following origination and prior to
amortization.
ARD Loans. Twenty-seven (27) mortgage loans that we intend to include in
the trust fund, representing 16.2% of the Initial Mortgage Pool Balance, are
each characterized by the following features:
o A maturity date that is generally 25 to 30 years following
origination.
o The designation of an anticipated repayment date that is generally
five to 10 years following origination. The anticipated repayment date
for each ARD Loan is listed on Annex A-1 to this prospectus
supplement.
o The ability of the related borrower to prepay the mortgage loan,
without restriction, including without any obligation to pay a
prepayment premium or a yield maintenance charge, at any time on or
after a date that is generally three to five months prior to the
related anticipated repayment date.
o Until its anticipated repayment date, the calculation of interest at
its initial mortgage rate.
o From and after its anticipated repayment date, the accrual of interest
at a revised annual rate that will be at least two percentage points
in excess of its initial mortgage interest rate.
o The deferral of any additional interest accrued with respect to the
mortgage loan from and after the related anticipated repayment date at
the difference between its revised mortgage rate and its initial
mortgage rate. This Post-ARD Additional Interest may, in some cases,
to the extent permitted by applicable law, compound at the new revised
mortgage rate. Any Post-ARD Additional Interest accrued with respect
to the mortgage loan following its anticipated repayment date will not
be payable until the entire principal balance of the mortgage loan has
been paid in full.
S-71
o From and after its anticipated repayment date, the accelerated
amortization of the mortgage loan out of any and all monthly cash flow
from the corresponding mortgaged real property that remains after
payment of the applicable monthly debt service payments and permitted
operating expenses and capital expenditures and the funding of any
required reserves. These accelerated amortization payments and the
Post-ARD Additional Interest are considered separate from the monthly
debt service payments due with respect to the mortgage loan.
Nineteen (19) of the 27 ARD Loans that we intend to include in the trust
fund, representing 10.8% of the Initial Mortgage Pool Balance, provide for
payments of interest only for periods ranging from the first 12 to the first 48
payments following origination and prior to amortization.
In the case of each of the ARD Loans that we intend to include in the trust
fund, the related borrower has either entered into a cash management agreement
or has agreed to enter into a cash management agreement on or prior to the
anticipated repayment date if it has not previously done so. The related
borrower or the manager of the corresponding mortgaged real property will be
required under the terms of that cash management agreement to deposit or cause
the deposit of all revenue from that property received after the anticipated
repayment date into a lockbox account designated by the lender under the loan
documents for the related ARD Loan.
Fully Amortizing Loans. One (1) of the mortgage loans that we intend to
include in the trust fund, representing 0.4% of the Initial Mortgage Pool
Balance, is characterized by:
o constant monthly debt service payments throughout the substantial term
of the mortgage loan; and
o an amortization schedule that is approximately equal to the actual
term of the mortgage loan.
However, the fully amortizing loan does not have either:
o an anticipated repayment date; or
o the associated repayment incentives.
Amortization of Principal. The tables below show the indicated information
for the specified sub-groups of underlying mortgage loans. For purposes of the
following tables, we have assumed that the ARD Loans mature on their respective
anticipated repayment dates.
MORTGAGE LOAN TYPE
WEIGHTED AVERAGES
------------------------------------------------
% OF MAXIMUM
TOTAL CUT-OFF INITIAL CUT-OFF
NUMBER OF DATE MORTGAGE DATE MORTGAGE STATED CUT-OFF DATE
MORTGAGE PRINCIPAL POOL PRINCIPAL INTEREST REMAINING U/W NCF LOAN-TO-VALUE
LOAN TYPE LOANS BALANCE BALANCE BALANCE RATE TERM (MO.) DSCR RATIO
--------- ----- ------- ------- ------- ---- ---------- ---- -----
Balloon............ 72 $ 697,660,996 59.0% $62,322,215 5.5610% 105 1.43x 72.72%
Partial IO/Balloon. 12 272,524,000 23.0 93,000,000 5.0165 113 1.62 69.18
Partial IO/ARD..... 19 127,680,000 10.8 17,500,000 4.7637 84 1.47 77.28
ARD................ 8 63,503,505 5.4 17,460,861 5.5707 116 1.37 75.22
Interest Only...... 3 16,100,000 1.4 7,500,000 5.0298 80 1.77 71.07
Fully Amortizing... 1 4,950,297 0.4 4,950,297 6.1000 177 1.22 61.11
--- -------------- ------
Totals/Wtd. Avg. 115 $1,182,418,798 100.0% 5.3450% 105 1.48x 72.46%
=== ============== ======
S-72
LOAN TERM, AMORTIZATION TERM AND SEASONING BY MORTGAGE LOAN TYPE
ORIGINAL CALCULATED REMAINING CALCULATED
TOTAL % OF TERM TO ORIGINAL TERM TO REMAINING
NUMBER OF CUT-OFF DATE INITIAL MATURITY/ AMORTIZATION MATURITY/ AMORTIZATION
MORTGAGE PRINCIPAL MORTGAGE ARD TERM SEASONING ARD TERM
LOAN TYPE LOANS BALANCE POOL BALANCE (MONTHS) (MONTHS) (MONTHS) (MONTHS) (MONTHS)
--------- ----- ------- ------------ -------- -------- -------- -------- --------
Balloon............ 72 $ 697,660,996 59.0%
Shortest........ 60 240 0 54 240
Longest......... 144 360 15 143 360
Wtd. Avg........ 109 344 4 105 341
Partial IO/Balloon. 12 272,524,000 23.0
Shortest........ 60 309 1 56 309
Longest......... 120 360 9 119 360
Wtd. Avg........ 116 358 2 113 358
Partial IO/ARD..... 19 127,680,000 10.8
Shortest........ 60 360 0 59 360
Longest......... 120 360 4 120 360
Wtd. Avg........ 85 360 1 84 360
ARD................ 8 63,503,505 5.4
Shortest........ 60 300 1 57 297
Longest......... 132 360 12 127 358
Wtd. Avg........ 120 345 4 116 341
Interest Only...... 3 16,100,000 1.4
Shortest........ 60 NAP 2 57 NAP
Longest......... 108 NAP 3 105 NAP
Wtd. Avg........ 82 NAP 3 80 NAP
Fully Amortizing... 1 4,950,297 0.4
Shortest........ 180 180 3 177 177
Longest......... 180 180 3 177 177
Wtd. Avg........ 180 180 3 177 177
--- -------------- -----
Totals/Wtd. Avg. 115 $1,182,418,798 100.0% 108 344 3 105 341
=== ============== =====
Voluntary Prepayment Provisions. All of the mortgage loans that we intend
to include in the trust fund provided as of the cut-off date for:
o a prepayment lock-out period or a prepayment lock-out/defeasance
period during which voluntary prepayments are prohibited; followed by
o one of the following:
1. in the case of 17 mortgage loans, representing 11.8% of the
Initial Mortgage Pool Balance, a prepayment consideration period
during which any voluntary principal prepayment must be
accompanied by prepayment consideration, followed by an open
prepayment period during which voluntary principal prepayments
may be made without any prepayment consideration; and
2. in the case of 98 mortgage loans, representing 88.2% of the
Initial Mortgage Pool Balance, just by an open prepayment period;
provided that one (1) of the 17 mortgage loans referred to in clause 1. of the
second bullet of this sentence, representing 4.8% of the Initial Mortgage Pool
Balance, provides that during its prepayment consideration period, the borrower
may also elect to defease the subject mortgage loan.
S-73
The prepayment terms of each of the mortgage loans that we intend to
include in the trust fund are set forth in Annex A-1 to this prospectus
supplement.
Generally, the prepayment restrictions relating to each of the underlying
mortgage loans do not apply to prepayments arising out of a casualty or
condemnation of the corresponding mortgaged real property. Prepayments of this
type are generally not required to be accompanied by any prepayment
consideration. In addition, several of the mortgage loans that we intend to
include in the trust fund also permit the related borrower to prepay the entire
principal balance of the mortgage loan remaining, without prepayment
consideration, after application of insurance proceeds or a condemnation award
to a partial prepayment of the mortgage loan, provided that such prepayment of
the entire principal balance is made within a specified time period following
the date of such application. In the case of certain mortgage loans, if the
entire principal balance is not prepaid, the monthly principal and interest
payment is reduced to reflect the smaller principal balance.
Also notwithstanding the foregoing prepayment restrictions, prepayments may
occur in connection with loan defaults and, in certain cases, out of cash
holdbacks where certain conditions relating to the holdback have not been
satisfied. Prepayment premiums and/or yield maintenance charges may not be
collectable in connection with prepayments of this type.
The aggregate characteristics of the prepayment provisions of the
underlying mortgage loans will vary over time as:
o lock-out periods expire and mortgage loans enter periods during which
prepayment consideration may be required in connection with principal
prepayments and, thereafter, enter open prepayment periods; and
o mortgage loans are prepaid, repurchased, replaced or liquidated
following a default or as a result of a delinquency.
Prepayment Lock-out Periods. All of the mortgage loans that we intend to
include in the trust fund provide for prepayment lock-out periods as of the
cut-off date. For those mortgage loans--
o the longest remaining prepayment lock-out period as of that date
(including any part of the relevant period during which a defeasance
could occur) is 174 months,
o the shortest remaining prepayment lock-out period as of that date
(including any part of the relevant period during which a defeasance
could occur) is 11 months, and
o the weighted average remaining prepayment lock-out period as of that
date (including any part of the relevant period during which a
defeasance could occur) is 99 months.
Prepayment Consideration. Seventeen (17) of the mortgage loans that we
intend to include in the trust fund, representing 11.8% of the Initial Mortgage
Pool Balance, provide for the payment of prepayment consideration in connection
with a voluntary prepayment during part of the loan term, commencing at the
expiration of an initial prepayment lock-out period. That prepayment
consideration is calculated on the basis of a yield maintenance formula that is,
in some cases, subject to a minimum amount equal to a specified percentage of
the principal amount prepaid.
Prepayment premiums and yield maintenance charges received on the
underlying mortgage loans, whether in connection with voluntary or involuntary
prepayments, will be allocated and paid to the series 2004-C1
certificateholders, in the amounts and in accordance with the priorities,
described under "Description of the Offered Certificates--Payments--Payments of
Prepayment Premiums and Yield Maintenance Charges" in this
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prospectus supplement. Certain limitations exist under applicable state law on
the enforceability of the provisions of the underlying mortgage loans that
require payment of prepayment premiums or yield maintenance charges. Neither we
nor any of the underwriters and/or mortgage loan sellers makes any
representation or warranty as to the collectability of any prepayment premium or
yield maintenance charge with respect to any of those mortgage loans. See
"Certain Legal Aspects of Mortgage Loans--Default Interest and Limitations on
Prepayments" in the accompanying prospectus.
Proceeds received in connection with the liquidation of any defaulted
mortgage loan in the trust fund may be insufficient to pay any prepayment
premium or yield maintenance charge due in connection with such involuntary
prepayment.
Due-on-Sale and Due-on-Encumbrance Provisions. All of the mortgage loans
that we intend to include in the trust fund contain both a due-on-sale clause
and a due-on-encumbrance clause. In general, except for the permitted transfers
discussed below, these clauses either:
o permit the holder of the related mortgage to accelerate the maturity
of the mortgage loan if the borrower sells or otherwise transfers or
encumbers the corresponding mortgaged real property; or
o prohibit the borrower from doing so without the consent of the holder
of the mortgage.
See "Legal Aspects of Mortgage Loans--Due-on-Sale and Due-on-Encumbrance
Provisions" in the accompanying prospectus.
All of the mortgage loans that we intend to include in the trust fund
permit one or more of the following types of transfers:
o transfers of the corresponding mortgaged real property or of ownership
interests in the related borrower if specified conditions are
satisfied, which conditions normally include the reasonable
acceptability of the transferee to the lender;
o a transfer of the corresponding mortgaged real property or of
ownership interests in the related borrower to a person that is
affiliated with or otherwise related to the borrower;
o transfers of the corresponding mortgaged real property or of ownership
interests in the related borrower to specified entities or types of
entities;
o transfers of ownership interests in the related borrower for
estate-planning purposes;
o transfers of non-controlling ownership interests in the related
borrower;
o involuntary transfers caused by the death of any owner, general
partner or manager of the related borrower;
o changes of ownership among existing partners or members of the related
borrower;
o issuance by a related borrower of new partnership or membership
interests; or
o other transfers similar to the foregoing.
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Mortgage Loans Which May Require Principal Paydowns. In the case of 17
mortgage loans, representing approximately 9.8% of the Initial Mortgage Pool
Balance, letters of credit have been provided and/or cash reserves have been
maintained, which letters of credit or cash reserves are to be released to the
related borrowers upon satisfaction of certain performance-related conditions,
which may include, in some cases, meeting debt service coverage ratio levels
and/or satisfying leasing conditions. If not so released, such letters of credit
and/or cash reserves will--or, at the discretion of the lender, may--prior to
loan maturity (or earlier loan default or loan acceleration), be drawn on and/or
applied to prepay the subject mortgage loan if such performance-related
conditions are not satisfied within specified time periods. The total amount of
the letters of credit and/or cash reserves which could be used to pay down the
mortgage loans to which they relate was $10,000,000 as of the cut-off date.
Defeasance Loans. Ninety-eight (98) of the mortgage loans that we intend to
include in the trust fund, representing 88.2% of the Initial Mortgage Pool
Balance, permit the borrower to deliver U.S. Treasury obligations or other U.S.
government-related securities as substitute collateral, but prohibit voluntary
prepayments during the defeasance period.
In addition, one (1) mortgage loan that we intend to include in the trust
fund, representing 4.8% of the Initial Mortgage Pool Balance, allows the related
borrower concurrently to elect to defease the mortgage loan or prepay the
mortgage loan with the payment of a yield maintenance charge.
Each of these mortgage loans permits the related borrower, during specified
periods and subject to specified conditions, to pledge to the holder of the
mortgage loan the requisite amount of U.S. Treasury obligations or other U.S.
government-related securities and obtain a full or partial release of the
mortgaged real property or properties. In general, the U.S. Treasury obligations
or other U.S. government-related securities that are to be delivered in
connection with the defeasance of any mortgage loan must provide for a series of
payments that:
o will be made on or prior, but as closely as possible, to all
successive due dates through and including the maturity date (or, in
some cases, through and including the beginning of the subject
mortgage loan's open prepayment period); and
o will, in the case of each due date, be in a total amount equal to or
greater than the monthly debt service payment, including any
applicable balloon payment, scheduled to be due on that date, with any
excess to be returned to the related borrower.
For purposes of determining the defeasance collateral for an ARD Loan,
however, that mortgage loan will be treated as if a balloon payment is due on
its anticipated repayment date.
Generally, in connection with any delivery of defeasance collateral, the
related borrower will be required to deliver a security agreement granting the
trust a first priority security interest in the collateral.
No borrower will be permitted to defease the related mortgage loan prior to
the second anniversary of the date of initial issuance of the offered
certificates.
ADDITIONAL LOAN AND PROPERTY INFORMATION
Escrows and Reserves. Information regarding escrows and reserves with
respect to the underlying mortgage loans is presented on Annex A-1 to this
prospectus supplement.
Delinquencies. None of the mortgage loans that we intend to include in the
trust fund were, as of the cut-off date, more than 30 days delinquent with
respect to any monthly debt service payment.
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Tenant Matters. Described and listed below are special considerations
regarding tenants at the mortgaged real properties securing the mortgage loans
that we intend to include in the trust fund:
o Forty-six (46) of the mortgaged real properties, securing 41.2% of the
Initial Mortgage Pool Balance, are, in each case, a commercial
property that is leased to one or more tenants that each occupy at
least 25% or more of the net rentable area of the particular property.
A number of companies are tenants at more than one of the mortgaged
real properties.
o There are several cases in which a particular entity is a tenant at
more than one of the mortgaged real properties, and although it may
not be a major tenant at any of those properties, it is significant to
the success of the properties.
o Four (4) mortgaged real properties, securing 1.2% of the Initial
Mortgage Pool Balance, are multifamily rental properties that have a
material concentration of student tenants or are student housing
facilities.
o With respect to certain of the mortgage loans, the related borrower
has given to certain tenants, or the project developer has retained,
an option to purchase, a right of first refusal or a right of first
offer to purchase all or a portion of the related mortgaged real
property in the event a sale is contemplated. This may impede the
lender's ability to sell the related mortgaged real property at
foreclosure, or, upon foreclosure, this may affect the value and/or
marketability of the related mortgaged real property.
Ground Leases. Four (4) of the mortgage loans that we intend to include in
the trust fund, representing 2.5% of the Initial Mortgage Pool Balance, are
secured by a mortgage lien on the borrower's leasehold interest in the
corresponding mortgaged real property, but not on the fee simple interest in
that property. In addition, three (3) mortgage loans, representing 3.1% of the
Initial Mortgage Pool Balance, are each secured by a mortgage lien on the
related borrower's leasehold interest in a portion of the mortgaged real
property and on the fee simple interest in the other portion of that property.
For three (3) of the seven (7) mortgage loans described above, the term of the
related ground lease, after giving effect to all extension options exercisable
by the lender, expires more than 20 years after the stated maturity or
anticipated repayment date of the related mortgage loan. With respect to six (6)
of these seven (7) mortgage loans, the related ground lessor has agreed to give
the holder of each leasehold mortgage loan we intend to include in the trust
notice of, and the right to cure, any default or breach by the ground lessee.
The seven (7) mortgage loans identified in the preceding paragraph do not
include mortgage loans secured by overlapping fee simple and leasehold interests
in the related mortgaged real property.
Additional and Other Financing. As indicated under "Risk Factors--Risks
Related to the Underlying Mortgage Loans--Some of the Underlying Borrowers Have
Incurred or Are Permitted to Incur Additional Debt Secured by the Related
Mortgaged Real Property" in this prospectus supplement, the mortgaged real
properties securing two (2) mortgage loans have been encumbered by subordinate
debt as described below.
In the case of the mortgage loan secured by the mortgaged real property
identified on Annex A-1 to this prospectus supplement as Ocean Key Resort,
representing 2.0% of the Initial Mortgage Pool Balance, which mortgage loan is
part of an "A/B" split loan structure, the mortgage on that mortgaged real
property also secures a B-note loan that (a) has a principal balance as of the
cut-off date of $1,899,788, and (b) will not be included in the trust fund. See
"--The Ocean Key Resort Loan Pair" below.
In the case of the mortgage loan secured by the mortgaged real property
identified on Annex A-1 to this prospectus supplement as Three Flags Center,
representing 0.3% of the Initial Mortgage Pool Balance, there is
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currently an existing subordinated mortgage secured by that mortgaged real
property, subject to the terms of a subordination and standstill agreement in
favor of the lender. The subordinate mortgage secures bond financing in the
amount of $475,000 under which the subject bonds are owned by a parent of the
borrower. Interest only payments are due every six months with respect to the
subject bonds.
In addition, in the case of the mortgage loan secured by the mortgaged real
property identified on Annex A-1 to this prospectus supplement as Rancho Vista
MHP, representing 0.9% of the Initial Mortgage Pool Balance, the related
mortgage loan documents permit the related borrower to encumber that mortgaged
real property with a subordinate lien securing a subordinate loan upon lender's
approval, which may not be unreasonably withheld, and upon satisfaction of
specified criteria, including specified debt service coverage and loan-to-value
ratios, execution of an intercreditor and subordination agreement, rating agency
confirmation and other standard conditions.
As indicated under "Risk Factors--Risks Related to the Underlying Mortgage
Loans--Some of the Underlying Borrowers Have Incurred or Are Permitted to Incur
Additional Debt That Is Not Secured by the Related Mortgaged Property or by
Equity Interests in Those Borrowers" in this prospectus supplement, three (3) of
the mortgage loans, collectively representing 8.2% of the Initial Mortgage Pool
Balance, each permits the related borrower to incur unsecured subordinated debt
as described below.
In the case of the Pecanland Mall Mortgage Loan, representing 5.3% of the
Initial Mortgage Pool Balance, the related mortgage permits capital expenditures
and trade debt provided that, among other things, the aggregate outstanding
balance of the capital expenditures and trade debt does not exceed $4,950,000.
In the case of each of two (2) mortgage loans, secured by the mortgaged
real properties identified on Annex A-1 to this prospectus supplement as
Crossroads Center and Auburn Mills Shopping Center, respectively, and
representing 2.3% and 0.7%, respectively, of the Initial Mortgage Pool Balance,
the related mortgage instrument permits the borrower to incur unsecured
subordinated debt, provided that such subordinated debt is for the sole purpose
of funding, and is used by the borrower solely for, working capital, and
provided that the following additional conditions, among others, are satisfied:
1. the combined loan-to-value ratio of the subject mortgage loan and the
corresponding unsecured loan(s) does not exceed 80%;
2. no payments under the subordinate loan(s) may be due and payable prior
to payment in full of the subject underlying mortgage loan;
3. the related borrower delivers a subordination and standstill agreement
acceptable to the lender; and
4. the related borrower pays all fees incurred by the lender in
connection with the proposed transaction.
In addition to the mortgage loans referenced in the two preceding
paragraphs, one (1) mortgage loan that we intend to include in the trust fund,
representing 0.4% of the initial mortgage pool balance, does not, in any such
case, prohibit the related borrower from incurring additional unsecured debt
because the related borrowers are not, by virtue of their related mortgage loan
documents or related organizational documents, special purpose entities.
Furthermore, in the case of those underlying mortgage loans that require or
allow letters of credit to be posted by the related borrower as additional
security for the subject mortgage loan, in lieu of reserves or otherwise, the
related borrower may be obligated to pay fees and expenses associated with the
letter of credit and/or to reimburse the letter of credit issuer or others in
the event of a draw upon the letter of credit by the lender.
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As indicated under "Risk Factors--Risks Related to the Underlying Mortgage
Loans--In the Case of Some of the Mortgage Loans That We Intend to Include in
the Trust Fund, One or More of the Principals of the Related Borrower Have
Incurred or Are Permitted to Incur Mezzanine Debt" in this prospectus
supplement, in the case of 15 mortgage loans that we intend to include in the
trust fund, representing 17.6% of the Initial Mortgage Pool Balance, one or more
of the principals of the related borrower have incurred or are permitted to
incur mezzanine debt as described below.
In the case of seven (7) mortgage loans (loan numbers 32, 33, 34, 35, 36,
37 and 38), which mortgage loans are made to affiliated borrowers and represent
0.4%, 0.3%, 0.3%, 0.3%, 0.3%, 0.2% and 0.2%, respectively, of the Initial
Mortgage Pool Balance, the direct or indirect equity interest in each related
borrower has been pledged to secure mezzanine loans collectively in the original
principal amount of $3,500,000. A subordination and standstill agreement has
been entered into between the mortgage lender and the holder of that mezzanine
loan and payments to the mezzanine lender are required to be made from excess
cash flow only.
In the case of one (1) mortgage loan (loan number 88), which mortgage loan
represents 0.5% of the Initial Mortgage Pool Balance, the direct or indirect
equity interest in the related borrower has been pledged to secure a single
mezzanine loan having a current principal balance of $200,000. The intercreditor
agreement with the mezzanine lender:
1. permits the related borrower to prepay the mezzanine debt after a
one-year lockout period;
2. requires the funds in a $103,000 holdback reserve held by the mortgage
lender for leasing purposes to be used to pay down the mezzanine debt
when released; and
3. provides the mortgage lender with notice but no right to cure the
related borrower's defaults under the mezzanine loan.
In the case of one (1) mortgage loan (loan number 77), which mortgage loan
represents 0.6% of the Initial Mortgage Pool Balance, the direct or indirect
equity interest in all of the related borrowers has been pledged to secure a
single mezzanine loan having a current principal balance of $1,381,511. A
subordination and standstill agreement has been entered into between the
mortgage lender and the holder of that mezzanine loan and payments to the
mezzanine lender are required to be made from excess cash flow only.
Further, with respect to six (6) mortgage loans (loan numbers 20, 21, 39,
49, 70 and 108), which mortgage loans collectively represent 14.6% of the
Initial Mortgage Pool Balance, the equity holders of each of the related
borrowers have a right to obtain mezzanine financing from an approved lender,
secured by a pledge of the direct or indirect ownership interests in the subject
borrower.
Mezzanine debt is debt that is secured by the principal's ownership
interest in the borrower. This type of financing effectively reduces the
indirect equity interest of any principal in the corresponding mortgaged real
property.
Except as disclosed under this "--Additional and Other Financing"
subsection and "Risk Factors--Risks Related to the Underlying Mortgage
Loans--Some of the Underlying Borrowers Have Incurred or Are Permitted to Incur
Additional Debt Secured by the Related Mortgaged Real Property", "--Risks
Related to the Underlying Mortgage Loans--Some of the Underlying Borrowers Have
Incurred or Are Permitted to Incur Additional Debt That Is Not Secured by the
Related Mortgaged Property or by Equity Interests in Those Borrowers" and "--In
the Case of Some of the Mortgage Loans That We Intend to Include in the Trust
Fund, One or More of the Principals of the Related Borrower Have Incurred or Are
Permitted to Incur Mezzanine Debt" in this prospectus supplement, we have not
been able to confirm whether the respective borrowers under the mortgage loans
that we intend to
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include in the trust fund have any other debt outstanding or whether the
principals of those borrowers have any mezzanine debt outstanding.
Environmental Reports. For all of the mortgaged real properties, a
third-party environmental consultant conducted a Phase I environmental study
meeting ASTM standards for each of those mortgaged real properties. The
resulting Environmental Reports were prepared:
o in the case of 128 mortgaged real properties, securing 98.0% of the
Initial Mortgage Pool Balance, during the 12-month period preceding
the cut-off date; and
o in the case of five (5) mortgaged real properties, securing 2.0% of
the Initial Mortgage Pool Balance, during the 12- to 18-month period
preceding the cut-off date.
The environmental investigation at any particular mortgaged real property
did not necessarily cover all potential environmental issues. For example, tests
for radon, mold, lead-based paint, and lead in drinking water were generally
performed only at multifamily rental properties and only when the environmental
consultant or originator of the related mortgage loan believed this testing was
warranted under the circumstances.
The above-described environmental investigations identified various adverse
or potentially adverse environmental conditions at some of the mortgaged real
properties. If the particular condition is significant, it could result in a
claim for damages by any party injured by that condition. In many cases, the
identified condition related to the suspected or confirmed presence of
asbestos-containing materials, mold, lead-based paint and/or radon. Where these
substances were suspected or present, and depending upon the condition of the
substances, the environmental consultant generally recommended, and the lender
required, the implementation of the recommendations prior to closing, or the
escrowing of funds sufficient to affect such recommendations, including:
o that the substances not be disturbed and that additional testing be
performed prior to any renovation or demolition activities; or
o the establishment of an operation and maintenance plan to address the
issue; or
o an abatement or removal program and, where appropriate, a notification
program.
In other cases, where the environmental consultant recommended specific
remediation of a material adverse environmental condition, the related
originator of the mortgage loan generally required the related borrower:
1. to carry out the specific remedial measures prior to closing;
2. to carry out the specific remedial measures post-closing and deposit
with the lender a cash reserve in an amount equal to at least 100% of
the estimated cost to complete the remedial measures; or
3. to obtain from a party with financial resources reasonably estimated
to be adequate to cure the subject violation in all material respects
a guaranty or indemnity to cover the costs of any necessary remedial
measures.
4. to obtain environmental insurance (in the form of a secured creditor
impaired property policy or other form of environmental insurance).
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However, some borrowers under the mortgage loans have not yet satisfied all
post-closing obligations required by the related loan documents with respect to
environmental matters. In addition, there can be no assurance that these
obligations or the recommended operations and maintenance plans have been or
will continue to be implemented, or that the cost of implementing them will not
exceed the estimated cost. If any adverse environmental conditions are not
properly addressed or monitored over time by the related borrower, it could
result in a significant loss or environmental liability for the trust.
In some cases, residual contamination does or will remain at a mortgaged
real property after remedial action is performed. While the presence of this
residual contamination may be acceptable today, there can be no assurance that
future legal requirements, prospective purchasers or future owners will not
require additional investigation or cleanup.
In some cases, the environmental consultant did not recommend that any
action be taken with respect to a potential adverse environmental condition at a
mortgaged real property because:
o an environmental consultant investigated those conditions and
recommended no further investigations or remediation; or
o the responsible party or parties with respect to that condition had
already been identified; or
o the responsible party or parties currently monitor actual or potential
adverse environmental conditions at that property; or
o the levels of hazardous substances at that property were found to be
below or very close to applicable thresholds for reporting, abatement
or remediation; or
o the property had been accepted into a state-funded remediation
program; or
o a letter was obtained from the applicable regulatory authority stating
that no further action was required, or the issue has received proper
closure with the applicable regulatory authority.
However, there can be no assurance that the responsible party or parties, in
each case, are financially able or will actually correct the problem. In some of
these cases, the responsible party or parties have installed monitoring wells on
the mortgaged real property and/or need access to the mortgaged real property
for monitoring or to perform remedial action.
In some cases, the Environmental Report for a mortgaged real property
identified potential environmental problems at nearby properties, including but
not limited to spills of hazardous materials and leaking underground storage
tanks. In those cases, the environmental reports indicated that:
o the subject mortgaged real property had not been affected;
o the potential for the problem to affect the subject mortgaged real
property was limited;
o the party or parties responsible for remediating the potential
environmental problems had been identified; or
o there was no evidence to suggest that there has been an adverse
environmental impact to the subject mortgaged real property.
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In those cases where the party or parties responsible for remediation had
been identified, there can be no assurance that such party or parties, in each
case, are financially able or will actually correct the problem.
In the case of the mortgage loan secured by the mortgaged real property
identified on Annex A-1 to this prospectus supplement as Yorktown Center,
representing 7.9% of the Initial Mortgage Pool Balance, the related mortgage
loan seller took an environmental upfront escrow of approximately $500,000 for
the following items:
o soil samples found in 2003 revealed dry cleaning solvents in excess of
amounts under the Illinois Environmental Protection Agency's Tier I
Remediation Objectives (however, no ground water contamination was
identified and the site has been accepted into the Dry Cleaner
Environmental Response Trust Fund of Illinois which will provide
certain financial assistance for investigation and remediation);
o several drums were identified that the environmental assessor
recommended be removed;
o investigation and/or any remediation required in connection with the
removal of certain hydraulic lifts from an automobile store formerly
located on the subject property; and
o removal of several underground storage tanks at the subject mortgaged
real property, one of which was reported to have had a release for
which the Illinois Environmental Protection Agency has issued a letter
that no further action was required in connection with this release.
In the case of the mortgage loan secured by the mortgaged real property
identified on Annex A-1 to this prospectus supplement as The Yards Plaza,
representing 1.5% of the Initial Mortgage Pool Balance, an environmental
impairment liability insurance policy is in place because the subject site was a
city dump that closed approximately 100 years ago. The environmental assessment
noted that there were no known adverse events related to the dump.
The information contained in this prospectus supplement regarding
environmental conditions at the mortgaged real properties is based on the
environmental site assessments referred to in this "--Environmental Reports"
subsection and has not been independently verified by:
o us;
o any of the mortgage loan sellers;
o any of the underwriters;
o the master servicer;
o the special servicer;
o the trustee; or
o the affiliates of any of these parties.
There can be no assurance that the environmental assessments or studies, as
applicable, identified all adverse environmental conditions and risks at, or
that any environmental conditions will not have a material adverse effect on the
value of or cash flow from, one or more of the mortgaged real properties or will
not result in a claim for damages by a party injured by the condition.
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The series 2004-C1 pooling and servicing agreement requires that the
special servicer obtain an environmental site assessment of a mortgaged real
property prior to acquiring title to the property or assuming its operation.
This requirement precludes enforcement of the security for the related mortgage
loan until a satisfactory environmental site assessment is obtained or until any
required remedial action is taken. In addition, there can be no assurance that
the requirements of the series 2004-C1 pooling and servicing agreement will
effectively insulate the trust from potential liability for a materially adverse
environmental condition at any mortgaged real property.
Property Condition Assessments. All of the mortgaged real properties were
inspected by professional engineers or architects. One hundred twenty-eight
(128) of those mortgaged real properties, securing 98.0% of the Initial Mortgage
Pool Balance, were inspected during the 12-month period preceding the cut-off
date. Five (5) of those mortgaged real properties, securing 2.0% of the Initial
Mortgage Pool Balance, were inspected during the 12- to 18-month period
preceding the cut-off date. These inspections included an assessment of the
mortgaged real properties' exterior walls, roofing, interior construction,
mechanical and electrical systems and general condition of the site, buildings
and other improvements located at each of the mortgaged real properties.
The inspections identified various deferred maintenance items and necessary
capital improvements at some of the mortgaged real properties. The resulting
inspection reports generally included an estimate of cost for any recommended
repairs or replacements at a mortgaged real property. When repairs or
replacements were recommended, the related borrower was generally required to:
o carry out necessary repairs or replacements; or
o establish reserves, generally in the amount of 125% of the estimated
cost of the repairs or replacements necessary to cure the deferred
maintenance items identified in the inspection report that, at the
time of origination, remained outstanding, with that estimated cost
being based upon the estimates given in the inspection report, or, in
certain cases, upon an actual contractor's estimate.
There can be no assurance that another inspector would not have discovered
additional maintenance problems or risks, or arrived at different, and perhaps
significantly different, judgments regarding the problems and risks disclosed by
the respective inspection reports and the cost of corrective action.
Appraisals and Market Studies. An independent appraiser that is
state-certified and/or a member of the Appraisal Institute prepared an appraisal
of each of the mortgaged real properties securing the mortgage loans that we
intend to include in the trust fund, in order to establish the approximate value
of the property. Those appraisals are the basis for the appraised values for the
respective mortgaged real properties set forth on Annex A-1 to this prospectus
supplement. For 128 mortgaged properties, securing 98.0% of the Initial Mortgage
Pool Balance, the appraised value is as of a date within 12 months of the
cut-off date. For five (5) mortgaged real properties, securing 2.0% of the
Initial Mortgage Pool Balance, the appraised value is as of a date during the
12-to 18-month period preceding the cut-off date.
In some cases, an appraisal contained an "as is" value, with an "as of"
date consistent with the date that the appraisal was prepared, and a
"stabilized" value, with a specified future "as of" date. For mortgaged real
properties where the specified conditions for the stabilized value were met, the
stabilized value "as of" date was used in the above analysis, with certain
exceptions, where stabilized values were used even when specified conditions
have not been met.
Each of the appraisals referred to above represents the analysis and
opinions of the appraiser at or before the origination of the related underlying
mortgage loan. The appraisals are not guarantees of, and may not be indicative
of, the present or future value of the subject mortgaged real property. There
can be no assurance that
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another appraiser would not have arrived at a different valuation of any
particular mortgaged real property, even if the appraiser used the same general
approach to, and the same method of, appraising that property. Neither we nor
any of the underwriters has confirmed the values of the respective mortgaged
real properties in the appraisals referred to above.
In general, appraisals seek to establish the amount a typically motivated
buyer would pay a typically motivated seller. However, this amount could be
significantly higher than the amount obtained from the sale of a property under
a distress or liquidation sale.
The appraisal upon which the appraised value for each mortgaged real
property is based contains, or is accompanied by a separate letter that
contains, a statement by the respective appraiser, to the effect that the
appraisal guidelines set forth in Title XI of the Financial Institutions Reform,
Recovery and Enforcement Act of 1989 were followed in preparing that appraisal.
However, neither we nor any of the underwriters, the related mortgage loan
seller or the related originator has independently verified the accuracy of this
statement.
Zoning and Building Code Compliance. Each mortgage loan seller has, with
respect to the mortgage loans that it is selling to us for inclusion in the
trust fund, examined whether the use and operation of the related mortgaged real
properties were in material compliance with all zoning and land-use ordinance,
rules, regulations and orders applicable to those real properties at the time of
origination. The mortgage loan sellers may have considered--
o legal opinions or zoning consultant's reports,
o certifications from, and/or discussions with, government officials,
o information contained in appraisals, surveys and site plan,
o title insurance endorsements,
o representations by the related borrower contained in the related
mortgage loan documents, or
o property condition assessments undertaken by independent licensed
engineers,
in determining whether the mortgaged real properties were in compliance.
In some cases, the use, operation or structure of a mortgaged real property
constitutes a permitted nonconforming use or structure. Generally, the
improvements on that mortgaged real property may not be rebuilt to their current
state in the event that those improvements are materially damaged or destroyed.
Generally, where a mortgaged real property constitutes a permitted nonconforming
use or structure and the improvements on the particular property may not be
rebuilt to their current specifications in the event of a major casualty, the
related mortgage loan seller conducted an analysis as to:
o whether the extent of the nonconformity is material;
o whether sufficient insurance proceeds would be available to restore
the mortgaged real property in accordance with then-applicable
requirements, and whether the mortgaged real property, if permitted to
be repaired or restored in conformity with current law, would be
adequate security for the related mortgage loan;
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o the extent of the risk that the mortgaged real property would suffer a
material casualty of a magnitude that applicable ordinances would
require conformity with current requirements, is remote; and/or
o whether the insurance proceeds, together with the value of the
remaining property, would be sufficient to pay the loan.
There is no assurance, however, that any such analysis was correct, or that
the above determinations were made in each and every case.
Hazard, Liability and Other Insurance. Although exceptions exist, the loan
documents for each of the mortgage loans we intend to include in the trust fund
generally require the related borrower to maintain with respect to the
corresponding mortgaged real property the following insurance coverage:
o except in the case of mobile home parks, hazard insurance in an
amount, subject to a customary deductible, that is at least equal to
the lesser of--
1. the outstanding principal balance of the mortgage loan, and
2. replacement cost or the full insurable replacement cost of the
improvements located on the insured property;
o if any portion of the improvements at the property are in an area
identified in the federal register by the Flood Emergency Management
Agency as having special flood hazards, flood insurance meeting the
requirements of the Federal Insurance Administration guidelines in an
amount that is equal to the least of--
1. the outstanding principal balance of the related mortgage loan,
2. the full insurable value of the insured property, and
3. the maximum amount of insurance available under the National
Flood Insurance Act of 1968;
o comprehensive general liability insurance against claims for personal
and bodily injury, death or property damage occurring on, in or about
the insured property, in an amount at least equal to $1,000,000 per
occurrence;
o business interruption or rent loss insurance either in an amount not
less than 100% of the projected rental income or revenue from the
insured property for at least 12 months or, alternatively, in an
amount as may be required by the lender; and
o if the mortgaged real property is in an area identified as having a
high risk of loss due to windstorms, as described under "Risk
Factors--Risks Related to the Underlying Mortgage Loans--Uninsured
Loss; Sufficiency of Insurance", windstorm insurance.
In general, the mortgaged real properties for the mortgage loans that we
intend to include in the trust fund are not insured against earthquake risks.
Twenty-six (26) mortgaged real properties, securing 17.3% of the Initial
Mortgage Pool Balance, are located in seismic zones 3 and 4, which are areas
that are considered to have a high earthquake risk. In most of these cases, a
third-party consultant conducted seismic studies to assess the probable maximum
loss for the property. In general, those studies were performed in accordance
with generally accepted
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industry standard assumptions and methodologies. In the case of two (2) of these
mortgaged real properties, securing 1.3% of the Initial Mortgage Pool Balance,
the resulting reports indicated a probable maximum loss in excess of 20% of the
estimated replacement cost of the improvements. In one (1) of these cases, the
related originator required the borrower to obtain earthquake insurance. In the
other case, in which the mortgaged real property is a mobile home park, securing
a mortgage loan that represents 0.2% of the Initial Mortgage Pool Balance, that
has been determined to have a probable maximum of loss of 32%, no earthquake
insurance was obtained because the only insurable improvement on the subject
property is a club house.
In the case of some of the mortgaged real properties securing mortgage
loans that we intend to include in the trust fund, the insurance covering any of
such mortgaged real properties for acts of terrorism may be provided through a
blanket policy that also covers properties unrelated to the trust fund. Acts of
terrorism at those other properties could exhaust coverage under the blanket
policy. No representation is made as to the adequacy of any such insurance
coverage provided under a blanket policy, in light of the fact that multiple
properties are covered by that policy.
We are aware of at least two (2) mortgaged real properties, securing 0.5%
of the Initial Mortgage Pool Balance, as to which the hazard insurance policies
expressly exclude coverage for acts of terrorism and other similar acts.
THE OCEAN KEY RESORT LOAN PAIR
General. The Ocean Key Resort Mortgage Loan, which represents 2.0% of the
Initial Mortgage Pool Balance, is secured by the mortgaged real property
identified on Annex A-1 to this prospectus supplement as Ocean Key Resort. The
related borrower has encumbered the related mortgaged real property with junior
debt, which constitutes the related subordinate companion loan. The aggregate
debt consisting of the Ocean Key Resort Mortgage Loan and the related
subordinate companion loan, which two mortgage loans constitute the Ocean Key
Resort Loan Pair, is secured by a single mortgage instrument on the subject
mortgaged real property. We intend to include the Ocean Key Resort Mortgage Loan
in the trust fund. The related subordinate companion loan was sold to an
unaffiliated third party and will not be included in the trust fund.
The Ocean Key Resort Mortgage Loan and related subordinate companion loan
comprising the Ocean Key Resort Loan Pair are cross-defaulted. The outstanding
principal balance of the related subordinate companion loan does not exceed 5.0%
of the underwritten appraised value of the related mortgaged real property that
secures the Ocean Key Resort Loan Pair. The related subordinate companion loan
has an interest rate of 12.75% per annum and has the same maturity date,
amortization schedule and prepayment structure as the Ocean Key Resort Mortgage
Loan. For purposes of the information presented in this prospectus supplement
with respect to the Ocean Key Resort Mortgage Loan, the loan-to-value ratio and
debt service coverage ratio information reflects only the Ocean Key Resort
Mortgage Loan and does not take into account the related subordinate companion
loan. The Cut-off Date Loan-to-Value Ratio and the Underwritten Net Cash Flow
Debt Service Coverage Ratio for the entire Ocean Key Resort Loan Pair
(calculated as if it was a single underlying mortgage loan) are 65.70% and
1.56x, respectively.
The trust, as the holder of the Ocean Key Resort Mortgage Loan, and the
holder of the related subordinate companion loan will be successor parties to a
separate intercreditor agreement, which we refer to as the Ocean Key Resort
Intercreditor Agreement, with respect to the Ocean Key Resort Loan Pair. The
holder of the Ocean Key Resort Mortgage Loan must cause its servicer to provide
certain information and reports related to the Ocean Key Resort Loan Pair to the
holder of the related subordinate companion loan. The master servicer will
collect payments with respect to the related subordinate companion loan prior to
the inclusion of such subordinate companion loan in a securitization and after
the occurrence of certain events of default as described under "--Servicing of
the Ocean Key Resort Loan Pair" below. The following describes certain
provisions of the
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Ocean Key Resort Intercreditor Agreement. The following does not purport to be
complete and is subject, and qualified in its entirety by reference to the
actual provisions of the Ocean Key Resort Intercreditor Agreement.
Allocation of Payments Between the Ocean Key Resort Mortgage Loan and the
Related Subordinate Companion Loan. The right of the holder of the related
subordinate companion loan to receive payments of interest, principal and other
amounts are subordinated to the rights of the holder of the Ocean Key Resort
Mortgage Loan to receive such amounts. So long as an Ocean Key Resort Material
Default has not occurred or, if an Ocean Key Resort Material Default has
occurred, that Ocean Key Resort Material Default is no longer continuing with
respect to the Ocean Key Resort Loan Pair, the related borrower under the Ocean
Key Resort Loan Pair will make separate payments of principal and interest to
the respective holders of the Ocean Key Resort Mortgage Loan and related
subordinate companion loan. Escrow and reserve payments will be made to the
master servicer on behalf of the trust (as the holder of the Ocean Key Resort
Mortgage Loan). Any proceeds under title, hazard or other insurance policies, or
awards or settlements in respect of condemnation proceedings or similar
exercises of the power of eminent domain, or any other principal prepayment of
the Ocean Key Resort Loan Pair (together with any applicable yield maintenance
charges), will generally be applied first to the principal balance of the Ocean
Key Resort Mortgage Loan and then to the principal balance of the related
subordinate companion loan. If an Ocean Key Resort Material Default occurs and
is continuing with respect to the Ocean Key Resort Loan Pair, then all payments
and proceeds (of whatever nature) on the related subordinate companion loan will
be subordinated to all payments due on the Ocean Key Resort Mortgage Loan and
the amounts with respect to such loan pair will be paid first, to the master
servicer, the special servicer, the trustee or the fiscal agent, 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 them; third, to the trust, in an amount equal to interest (other
than Default Interest) due with respect to the Ocean Key Resort Mortgage Loan;
fourth, to the trust, in an amount equal to the principal balance of the Ocean
Key Resort Mortgage 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
Ocean Key Resort Mortgage Loan; sixth, to the holder of the related subordinate
companion loan up to the amount of any unreimbursed costs and expenses paid by
the holder of the related subordinate companion loan; seventh, to the holder of
the related subordinate companion loan, in an amount equal to interest (other
than Default Interest) due with respect to the related subordinate companion
loan; eighth, to the holder of the related subordinate companion loan, in an
amount equal to the principal balance of the related subordinate companion loan
until paid in full; ninth, 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; tenth, to the trust and the
holder of the related subordinate companion loan, in that order, in an amount
equal to any unpaid Default Interest accrued on the Ocean Key Resort Mortgage
Loan and the related subordinate companion loan, respectively; and eleventh, 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.
If, after the expiration of the right of the holder of the related
subordinate companion loan to purchase the Ocean Key Resort Mortgage Loan (as
described below), the Ocean Key Resort Mortgage Loan or the related subordinate
companion loan is modified in connection with a work-out so that, with respect
to either the Ocean Key Resort Mortgage Loan or the related subordinate
companion loan, (a) the outstanding principal balance is decreased, (b) payments
of interest or principal are waived, reduced or deferred or (c) any other
adjustment is made to any of the terms of that mortgage loan, then all payments
to the trust (as the holder of the Ocean Key Resort Mortgage Loan) will be made
as though that work-out did not occur and the payment terms of the Ocean Key
Resort Mortgage Loan will remain the same. In that case, the holder of the
related subordinate companion loan will bear the full economic effect of all
waivers, reductions or deferrals of amounts due on either the Ocean Key Resort
Mortgage Loan or the related subordinate companion loan attributable to such
work-out (up to the outstanding principal balance, together with accrued
interest thereon, of the related subordinate companion loan).
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On or before each payment date, amounts payable to the trust as holder of
the Ocean Key Resort Mortgage Loan pursuant to the Ocean Key Resort
Intercreditor Agreement will be included in the Total Available P&I Funds for
that payment date to the extent described in this prospectus supplement and
amounts payable to the holder of the related subordinate companion loan will be
distributed to the holder net of fees and expenses on such related subordinate
companion loan.
Any losses and expenses that are associated with the Ocean Key Resort
Mortgage Loan and the related subordinate companion loan will be allocated in
accordance with the terms of the Ocean Key Resort Intercreditor Agreement,
first, to the related subordinate companion loan and, second, to the Ocean Key
Resort Mortgage Loan. The portion of those losses and expenses allocated to the
Ocean Key Resort Mortgage Loan will be allocated among the series 2004-C1
certificates in the manner described under "Description of the Offered
Certificates--Reductions of Certificate Principal Balances in Connection with
Realized Losses and Additional Trust Fund Expenses" in this prospectus
supplement.
Servicing of the Ocean Key Resort Loan Pair. The Ocean Key Resort Mortgage
Loan and the mortgaged real property will be serviced and administered by the
master servicer pursuant to the series 2004-C1 pooling and servicing agreement.
The master servicer and/or special servicer will service and administer the
related subordinate companion loan to the extent described below. The Servicing
Standard set forth in the series 2004-C1 pooling and servicing agreement will
require the master servicer and the special servicer to take into account the
interests of both the series 2004-C1 certificateholders and the holder of the
related subordinate companion loan when servicing the Ocean Key Resort Loan
Pair, with a view to maximizing the realization for both as a collective whole.
Any reference in this prospectus supplement to the interests of the series
2004-C1 certificateholders will mean, with respect to the servicing and
administration of the Ocean Key Resort Loan Pair, the series 2004-C1
certificateholders and the holder of the related subordinate companion loan, as
a collective whole.
The master servicer and the special servicer have the initial authority to
service and administer, and to exercise the rights and remedies with respect to,
the Ocean Key Resort Loan Pair. Subject to certain limitations with respect to
modifications and certain rights of the holder of the related subordinate
companion loan to purchase the Ocean Key Resort Mortgage Loan, the holder of the
related subordinate companion loan has no voting, consent or other rights
whatsoever with respect to the master servicer's or special servicer's
administration of, or the exercise of its rights and remedies with respect to,
the Ocean Key Resort Loan Pair.
Prior to a securitization of the related subordinate companion loan, the
holder of the Ocean Key Resort Mortgage Loan will service or cause to be
serviced the related subordinate companion loan. When the related subordinate
companion loan is included within a securitization, primary and master servicers
of the related subordinate companion loan will be designated, and such servicers
will be responsible for collecting from the related borrower and distributing
payments in respect of the related subordinate companion loan. The master
servicer under the 2004-C1 pooling and servicing agreement will otherwise
administer the Ocean Key Resort Mortgage Loan and the related subordinate
companion loan unless: (i) there shall occur and be continuing an Ocean Key
Resort Material Default, in which case the master servicer and the special
servicer shall collect and distribute such payments with respect to the Ocean
Key Resort Loan Pair, subject to the terms of the Ocean Key Resort Intercreditor
Agreement, or (ii) the holder of the related subordinate companion loan
purchases the Ocean Key Resort Mortgage Loan pursuant to the terms of the Ocean
Key Resort Intercreditor Agreement, in which case the servicers designated to
service the related subordinate companion loan shall assume all responsibility
with respect to the servicing of the Ocean Key Resort Loan Pair.
Modifications. The holder of the related subordinate companion loan may
exercise certain approval rights relating to a modification of such subordinate
companion loan that materially and adversely affects the holder of such
subordinate companion loan prior to the expiration of the repurchase period
described in the following paragraph. Furthermore, the holder of the related
subordinate companion loan may exercise certain approval
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rights relating to a modification of the Ocean Key Resort Mortgage Loan or the
related subordinate companion loan that materially and adversely affects the
holder of such subordinate companion loan and certain other matters related to
defaulted lease claims.
Purchase of the Ocean Key Resort Mortgage Loan by the Holder of the Related
Subordinate Companion Loan. In the event that (i) any payment of principal or
interest on the Ocean Key Resort Mortgage Loan or the related subordinate
companion loan becomes 90 or more days delinquent, (ii) the principal balance of
such Ocean Key Resort Mortgage Loan or the related subordinate companion loan
has been accelerated, (iii) the principal balance of such Ocean Key Resort
Mortgage Loan or the related subordinate companion loan is not paid at maturity,
(iv) the borrower declares bankruptcy or (v) any other event where the cash flow
payment under the related subordinate companion loan has been interrupted and
payments are made pursuant to the event of default waterfall, the holder of the
related subordinate companion loan will be entitled to purchase the Ocean Key
Resort Mortgage 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 Ocean
Key Resort Intercreditor Agreement. The purchase price will generally equal the
unpaid principal balance of the Ocean Key Resort Mortgage Loan, together with
all unpaid interest on the Ocean Key Resort Mortgage 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 Ocean Key
Resort Mortgage Loan is responsible. Unless the borrower or an affiliate is
purchasing the Ocean Key Resort Mortgage Loan, no prepayment consideration will
be payable in connection with the purchase of the Ocean Key Resort Mortgage
Loan.
The holder of the related subordinate companion loan does not have any
rights to cure any defaults with respect to the Ocean Key Resort Loan Pair.
THE MORTGAGE LOAN SELLERS
We will acquire the mortgage loans from the respective mortgage loan
sellers on or prior to the Closing Date pursuant to separate mortgage loan
purchase agreements.
Seventy-seven (77) of the mortgage loans, representing 57.4% of the Initial
Mortgage Pool Balance, were originated by Citigroup Global Markets Realty Corp.,
a New York corporation whose principal offices are located in New York, New York
and that is primarily engaged in the business of purchasing and originating
commercial mortgage loans. CGM is a subsidiary of Citigroup Financial Products,
Inc. and is also one of our affiliates. Citigroup Global Markets Inc., an
affiliate of CGM, is acting as an underwriter for this transaction.
Twenty-six (26) of the mortgage loans, representing 28.2% of the Initial
Mortgage Pool Balance, were originated by Wachovia Bank, National Association.
Wachovia is a national banking association whose principal offices are located
in Charlotte, North Carolina. Wachovia's business is subject to examination and
regulation by federal banking authorities and its primary federal bank
regulatory authority is the Office of the Comptroller of the Currency. Wachovia
is a wholly owned subsidiary of Wachovia Corporation. Wachovia is acting as the
initial master servicer. Wachovia Capital Markets, LLC, an affiliate of
Wachovia, is acting as an underwriter for this transaction and is an affiliate
of Wachovia.
Twelve (12) of the mortgage loans, representing 14.4% of the Initial
Mortgage Pool Balance, were originated by CDC Mortgage Capital Inc. CDCMC is a
New York corporation whose principal offices are located in New York, New York.
CDCMC is a wholly owned subsidiary of CDC IXIS North America, Inc.
CGM has no obligation to repurchase or replace any of the Wachovia Mortgage
Loans or any of the CDC Mortgage Loans, Wachovia has no obligation to repurchase
or replace any of the CDC Mortgage Loans or any of the Citigroup Mortgage Loans
and CDCMC has no obligation to repurchase or replace any of the Wachovia
Mortgage Loans or any of the Citigroup Mortgage Loans.
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All information concerning the Citigroup Mortgage Loans contained herein or
used in the preparation of this prospectus supplement is as underwritten by CGM.
All information concerning the Wachovia Mortgage Loans contained herein or used
in the preparation of this prospectus supplement is as underwritten by Wachovia.
All information concerning the CDC Mortgage Loans contained herein or used in
the preparation of this prospectus supplement is as underwritten by CDCMC.
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 property 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
property 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, search
reports on judgments, liens, bankruptcies and pending litigation 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 historical
property operating statements, rent rolls, operating budgets, a projection of
future performance, if applicable, and a review of tenant leases. Each mortgage
loan seller generally requires third-party appraisals, as well as environmental
and building condition reports. Each report is reviewed for acceptability by a
staff member of the applicable mortgage loan seller or a third-party consultant
for compliance with program standards. Generally, the results of these reviews
are incorporated into the underwriting report. In some instances, one or more
provisions of its underwriting 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 or similar 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.
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Escrow Requirements. Generally, each mortgage loan seller requires most
borrowers to fund various escrows for taxes and insurance, capital expenses and
replacement reserves. Generally, the required escrows for mortgage loans
originated by each mortgage loan seller are as follows:
o Taxes--Typically an initial deposit and monthly escrow deposits equal
to 1/12th of the annual property taxes (based on the most recent
property assessment and the current millage rate) are required to
provide the mortgage loan seller with sufficient funds to satisfy all
taxes and assessments. This escrow requirement may be sometimes
waived.
o Insurance--If the property is insured under an individual policy
(i.e., the property is not covered by a blanket policy), typically an
initial deposit and monthly escrow deposits equal to 1/12th of the
annual property insurance premium are required to provide the mortgage
loan seller with sufficient funds to pay all insurance premiums. This
escrow requirement may be sometimes waived.
o Replacement Reserves--Replacement reserves are generally calculated in
accordance with the expected useful life of the components of the
mortgaged real property during the term of the related 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 prior to the expiration of the term of the
related mortgage loan. 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, we will transfer the mortgage loans, without recourse,
to the trustee for the benefit of the series 2004-C1 certificateholders. In
connection with such transfer, the applicable mortgage loan seller is required
to deliver to the trustee or to a document custodian appointed by the trustee,
among other things, the following documents with respect to each mortgage loan
that we intend to include in the trust fund (the "Mortgage File"):
(a) 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);
(b) the original or a copy of the mortgage instrument, together with an
original or copy of any intervening assignments of the mortgage
instrument, 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;
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(c) 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 related mortgage instrument), 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;
(d) an original assignment of the mortgage instrument in favor of the
trustee or in blank and (subject to the completion of certain missing
recording information and, if delivered in blank, completion of the
name of the trustee) in recordable form;
(e) an original assignment of any related assignment of leases (if such
item is a document separate from the related mortgage instrument) in
favor of the trustee or in blank and (subject to the completion of
certain missing recording information and, if delivered in blank,
completion of the name of the trustee) in recordable form;
(f) the original assignment of all unrecorded documents relating to the
mortgage loan, if not already assigned pursuant to items (d) or (e)
above;
(g) originals or copies of all modification, consolidation, assumption and
substitution agreements in those instances in which the terms or
provisions of the mortgage instrument or mortgage note have been
modified or the mortgage loan has been assumed or consolidated;
(h) 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;
(i) any filed copies (bearing evidence of filing) or other evidence of
filing satisfactory to the trustee of any UCC financing statements,
related amendments and continuation statements in the possession of
the applicable mortgage loan seller;
(j) 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;
(k) any intercreditor agreement relating to permitted debt of the related
borrower;
(l) copies of any loan agreement, escrow agreement, security agreement or
letter of credit relating to such mortgage loan; and
(m) the original or copy of any ground lease, ground lessor estoppel,
environmental insurance policy or guaranty relating to such mortgage
loan.
As provided in the series 2004-C1 pooling and servicing agreement, the
trustee or a custodian on its behalf is required to review each Mortgage File
within a specified period following its receipt thereof. If any of the documents
described in the preceding paragraph is found during the course of such review
to be missing from any Mortgage File or defective, and in either case such
omission or defect materially and adversely affects the value of the applicable
mortgage loan or the interests of the series 2004-C1 certificateholders therein,
the applicable mortgage loan seller, if it does not deliver the document or cure
the defect (other than omissions solely due to a document not having been
returned by the related recording office) within a period of 90 days following
such mortgage loan seller's receipt of notice thereof, will be obligated
pursuant to the applicable mortgage loan purchase agreement (the relevant rights
under which will be assigned by us the trustee) to: (1) repurchase the
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affected mortgage loan within such 90-day period at a price (the "Purchase
Price") generally equal to the sum of (a) the unpaid principal balance of such
mortgage loan, (b) the unpaid accrued interest on such mortgage loan (other than
any Default Interest and/or Post-ARD Additional Interest) to but not including
the due date in the collection period in which the purchase is to occur, (c) all
related and unreimbursed servicing advances plus any accrued and unpaid interest
thereon, (d) any reasonable costs and expenses, including, but not limited to,
the cost of any enforcement action, incurred by the master servicer, the special
servicer or the trustee in connection with any purchase by a mortgage loan
seller (to the extent not included in clause (c) above), and (e) any other
Additional Trust Fund Expenses in respect of such underlying mortgage loan
(including any Additional Trust Fund Expenses previously reimbursed or paid by
the trust fund but not so reimbursed by the related borrower or other party or
from insurance proceeds or condemnation proceeds or any other collections in
respect of the underlying mortgage loan or the related mortgaged real property
from a source other than the trust fund, and including, if the subject
underlying mortgage loan is repurchased after the end of the required cure
period (as it may be extended as described below), any liquidation fee payable
to the special servicer in respect of such underlying mortgage loan, as
described under "Servicing of the Underlying Mortgage Loans--Servicing and Other
Compensation and Payment of Expenses--Principal Special Servicing
Compensation--The Liquidation Fee"); or (2) substitute a Qualified Substitute
Mortgage Loan for such mortgage loan and pay the master servicer for deposit
into the master servicer's collection 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 document omission or defect would
cause the subject mortgage loan not to be a qualified mortgage within the
meaning of Section 860G(a)(3) of the Internal Revenue Code, the applicable
mortgage loan seller will generally have an additional 90-day period to deliver
the missing document or cure the defect, as the case may be, if it is diligently
proceeding to effect such delivery or cure; and provided, further, that no such
document omission or defect (other than with respect to the mortgage note, the
mortgage instrument, the title insurance policy, the ground lease or any letter
of credit) will be considered to materially and adversely affect the interests
of the series 2004-C1 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
lender's rights or remedies under the related mortgage loan, defending any claim
asserted by any borrower or third party with respect to the mortgage loan,
establishing the validity or priority of any lien or any collateral securing the
mortgage loan or for any immediate significant servicing obligation. The
foregoing repurchase or substitution obligation constitutes the sole remedy
available to the series 2004-C1 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 those obligations will not be our
responsibility. Any substitution of a Qualified Substitute Mortgage Loan for a
defective mortgage loan in the trust fund must occur no later than the second
anniversary of the date of initial issuance of the offered certificates, and the
Pecanland Mall Mortgage Loan may not be substituted for.
The series 2004-C1 pooling and servicing agreement requires the trustee
promptly to cause each of the assignments described in clauses (d), (e) and (j)
of the second preceding paragraph to be submitted for recording or filing, as
applicable, in the appropriate public records.
REPRESENTATIONS AND WARRANTIES; REPURCHASES AND SUBSTITUTIONS
In the related mortgage loan purchase agreement, the applicable mortgage
loan seller has represented and warranted with respect to each mortgage loan
that we intend to include in the trust fund (subject to certain exceptions
specified in the related mortgage loan purchase agreement), as of the date of
initial issuance of the offered certificates, or as of such other date
specifically provided in the representation and warranty, among other things,
generally that:
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(i) the information with respect to the subject mortgage loan 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, the subject 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 the subject mortgage loan;
(iii) immediately prior to the sale, transfer and assignment to us, the
applicable mortgage loan seller had good and marketable title to,
and was the sole owner of, each mortgage loan, and is transferring
the mortgage loan free and clear of any and all liens, pledges,
charges or security interests of any nature encumbering the subject
mortgage loan;
(iv) the proceeds of the subject mortgage loan have been fully disbursed
and there is no requirement for future advances thereunder by the
lender;
(v) each related mortgage note, mortgage instrument, assignment of
leases, if any, and other agreement executed in connection with the
subject mortgage loan is a legal, valid and binding obligation of
the related borrower (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 note, mortgage instrument 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
instrument or other agreements, except in each case with respect to
the enforceability of any provisions requiring the payment of
Default Interest, late fees, Post-ARD Additional Interest,
prepayment premiums or yield maintenance charges;
(vii) each related assignment of the related mortgage instrument and
assignment of any related 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 clause
(v) above);
(viii) the related mortgage instrument is a valid and enforceable first
lien on the related mortgaged real property except for the
exceptions set forth in clause (v) above and subject to (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 related mortgaged real property or the security intended to
be provided by such mortgage instrument or with the borrower's
ability to pay its obligations under
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the subject mortgage loan when they become due or materially and
adversely affects the value of the related mortgaged real property,
(c) the exceptions (general and specific) and exclusions set forth
in the related title insurance policy or appearing of record, none
of which, individually or in the aggregate, materially interferes
with the current use of the related mortgaged real property or the
security intended to be provided by such mortgage instrument or
with the borrower's ability to pay its obligations under the
subject mortgage loan when they become due or materially and
adversely affects the value of the related mortgaged real 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 instrument
or with the borrower's ability to pay its obligations under the
subject mortgage loan when they become due or materially and
adversely affects the value of the mortgaged real property, (e) the
right of tenants (whether under ground leases, space leases or
operating leases) at the related mortgaged real property to remain
following a foreclosure or similar proceeding (provided that such
tenants are performing under such leases) and (f) if the subject
mortgage loan is cross-collateralized with any other mortgage loan,
the lien of such mortgage instrument for such other mortgage loan,
none of which, individually or in the aggregate, materially and
adversely interferes with the current use of the related mortgaged
real property or the security intended to be provided by such
mortgage instrument or with the mortgagor's ability to pay its
obligations under the subject mortgage loan when they become due or
materially and adversely affects the value of the related mortgaged
real property;
(ix) all real estate taxes and governmental assessments, or installments
thereof, which would be a lien on the related mortgaged real
property and that prior to the cut-off date have become delinquent
in respect of the related mortgaged real property, have been paid,
or an escrow of funds in an amount sufficient to cover such
payments has been established;
(x) to the applicable mortgage loan seller's actual knowledge as of the
cut-off date, and to the applicable mortgage loan seller's actual
knowledge based solely upon due diligence customarily performed
with the origination of comparable mortgage loans by the applicable
mortgage loan seller, each related mortgaged real property was free
and clear of any material damage (other than deferred maintenance
for which escrows were established at origination) that would
affect materially and adversely the value of such mortgaged real
property as security for the subject mortgage loan and to the
applicable mortgage loan seller's actual knowledge as of the
cut-off date there was no proceeding pending for the total or
partial condemnation of such mortgaged real property;
(xi) as of the date of its origination, all insurance coverage required
under each related mortgage instrument, which insurance covered
such risks as were customarily acceptable to prudent commercial and
multifamily mortgage lending institutions lending on the security
of property comparable to the related mortgaged property in the
jurisdiction in which such mortgaged property is located, and with
respect to a fire and extended perils insurance policy, was in an
amount (subject to a customary deductible) at least equal to the
lesser of (a) the replacement cost of improvements located on such
mortgaged property, or (b) the initial principal balance of the
subject mortgage loan, and in any event, the amount necessary to
prevent operation of any co-insurance provisions, was in full force
and effect with respect to each related mortgaged real property;
(xii) as of the date of initial issuance of the offered certificates, the
subject mortgage loan is not, and in the prior 12 months (or since
the date of origination if the subject mortgage loan has been
originated within the past 12 months), has not been, 30 days or
more past due in respect of any scheduled payment; and
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(xiii) one or more environmental site assessments, updates or transaction
screens thereof were performed by an environmental consulting firm
independent of the applicable mortgage loan seller and the
applicable mortgage loan seller's affiliates with respect to each
related mortgaged real property during the 18-month period
preceding the origination of the subject 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 loan-level representations and
warranties in any mortgage loan purchase agreement that materially and adversely
affects the value of any of the underlying mortgage loans or the interests of
the series 2004-C1 certificateholders therein, the applicable mortgage loan
seller, if it does not cure such breach within a period of 90 days following its
receipt of notice thereof, is obligated pursuant to the applicable mortgage loan
purchase agreement (the relevant rights under which have been assigned by us 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 Internal Revenue 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 our responsibility. Any substitution of a
Qualified Substitute Mortgage Loan for a defective mortgage loan in the trust
fund must occur no later than the second anniversary of the date of initial
issuance of the offered certificates, and the Pecanland Mall Mortgage Loan may
not be substituted for.
The foregoing substitution or repurchase obligation constitutes the sole
remedy available to the series 2004-C1 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 that mortgage loan
seller to us, and no other person or entity will be obligated to substitute or
repurchase any such affected mortgage loan in connection with a breach of a
mortgage loan seller's representations and warranties if such mortgage loan
seller defaults on its obligation to do so.
REPURCHASE OR SUBSTITUTION OF CROSS-COLLATERALIZED MORTGAGE LOANS
If (a) any underlying 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," (b) that mortgage loan is cross-collateralized
and cross-defaulted with one or more other mortgage loans in the trust fund and
(c) the applicable document omission or defect or breach of a representation and
warranty giving rise to the repurchase/substitution obligation does not
otherwise relate to any other Crossed Loan in the subject Crossed Group (without
regard to this paragraph), then the applicable document omission or defect or
the applicable breach, as the case may be, will be deemed to relate to the other
Crossed Loans in the subject 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 subject 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 actually 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
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the actually 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 of the
Internal Revenue Code. In the event that the remaining Crossed Loans satisfy the
aforementioned criteria, the applicable mortgage loan seller may elect either to
repurchase or substitute for only the actually affected Crossed Loan as to which
the related breach or the related document omission or defect, as the case may
be, 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, we and the related mortgage loan seller have agreed in the related
mortgage loan purchase agreement to forbear from enforcing any remedies against
the other's Primary Collateral, 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
related mortgage loan purchase agreement to remove the threat of material
impairment as a result of the exercise of remedies.
CHANGES IN MORTGAGE POOL CHARACTERISTICS
The description in this prospectus supplement of the underlying mortgage
loans and the related mortgaged real properties is based upon the mortgage pool
as it is expected to be constituted at the time the offered certificates are
issued 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 offered
certificates, mortgage loans may be removed from the Mortgage Pool as a result
of prepayments, delinquencies, incomplete documentation or otherwise, if we or
the applicable mortgage loan seller deems that 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 offered certificates, unless
including those mortgage loans would materially alter the characteristics of the
Mortgage Pool as described in this prospectus supplement. We believe that the
information set forth in this prospectus supplement will be representative of
the characteristics of the mortgage pool as it will be constituted at the time
the offered certificates are issued, although the range of mortgage rates and
maturities, as well as other characteristics, of the subject mortgage loans
described in this prospectus supplement may vary.
A current report on Form 8-K will be available to purchasers of the offered
certificates on or shortly after the date of initial issuance of the offered
certificates. That current report on Form 8-K will be filed, together with the
series 2004-C1 pooling and servicing agreement, with the Securities and Exchange
Commission within 15 days after the initial issuance of the offered
certificates.
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SERVICING OF THE UNDERLYING MORTGAGE LOANS
GENERAL
The series 2004-C1 pooling and servicing agreement will govern the
servicing and administration of the mortgage loans in the trust fund. The
following summaries describe some of the provisions of the series 2004-C1
pooling and servicing agreement relating to the servicing and administration of
those mortgage loans and any related REO Properties. You should also refer to
the accompanying prospectus, in particular the section captioned "Description of
the Governing Documents", for additional important information regarding
provisions of the series 2004-C1 pooling and servicing agreement that relate to
the rights and obligations of the master servicer and the special servicer.
The master servicer and the special servicer must each service and
administer the underlying mortgage loans and any related REO Properties for
which it is responsible, directly or through sub-servicers, in accordance with:
o any and all applicable laws;
o the express terms of the series 2004-C1 pooling and servicing
agreement;
o the express terms of the related loan documents, including any
intercreditor agreements; and
o to the extent consistent with the foregoing, the Servicing Standard.
In general, the master servicer will be responsible for the servicing and
administration of:
o all mortgage loans in the trust fund as to which no Servicing Transfer
Event has occurred; and
o all worked-out mortgage loans in the trust fund as to which no new
Servicing Transfer Event has occurred.
The special servicer, on the other hand, will be responsible for the
servicing and administration of each mortgage loan in the trust fund as to which
a Servicing Transfer Event has occurred and which has not yet been worked-out
with respect to that Servicing Transfer Event. The special servicer will also be
responsible for the administration of each REO Property in the trust fund.
Despite the foregoing, the series 2004-C1 pooling and servicing agreement
will require the master servicer to continue to receive payments, make certain
calculations and, subject to the master servicer's timely receipt of information
from the special servicer, prepare certain reports to the trustee with respect
to any specially serviced mortgage loans and REO Properties in the trust fund.
The master servicer may also render other incidental services with respect to
any specially serviced mortgage loans and REO Properties in the trust fund.
Neither the master servicer nor the special servicer will have responsibility
for the performance by the other of its respective obligations and duties under
the series 2004-C1 pooling and servicing agreement.
The master servicer will transfer servicing of an underlying mortgage loan
to the special servicer, if it has not already done so, upon the occurrence of a
Servicing Transfer Event with respect to that mortgage loan. The special
servicer will return the servicing of that mortgage loan to the master servicer,
and that mortgage loan will be considered to have been worked-out, if and when
all Servicing Transfer Events with respect to that mortgage loan cease to exist
as contemplated by the definition of Servicing Transfer Event.
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Some of the mortgage loans that we intend to include in the trust fund are
currently being serviced by third-party servicers that are entitled to and will
become sub-servicers of these loans on behalf of the master servicer.
Notwithstanding the foregoing, the subordinate companion loan related to
the Ocean Key Resort Mortgage Loan will also be initially serviced by the master
servicer and the special servicer under the series 2004-C1 pooling and servicing
agreement under certain circumstances as described under "Description of the
Mortgage Pool--The Ocean Key Resort Loan Pair--Servicing of the Ocean Key Resort
Loan Pair" in this prospectus supplement.
THE INITIAL MASTER SERVICER AND THE INITIAL SPECIAL SERVICER
The Initial Master Servicer. Wachovia Bank, National Association, a
national banking association, will be the initial master servicer with respect
to the mortgage pool. Wachovia is a wholly owned subsidiary of Wachovia
Corporation, and is one of the mortgage loan sellers and an affiliate of one of
the underwriters. Wachovia's principal servicing offices are located at NC 1075,
8739 Research Drive URP4, Charlotte, North Carolina 28262.
As of April 30, 2004, Wachovia and its affiliates were responsible for
master or primary servicing approximately 10,421 commercial and multifamily
loans, totaling approximately $98 billion in aggregate outstanding principal
amounts, including loans securitized in mortgage-backed securitization
transactions.
The information set forth in this prospectus supplement concerning Wachovia
has been provided by Wachovia. Neither we nor any of the underwriters makes any
representation or warranty as to the accuracy or completeness of this
information. Wachovia (apart from its obligations as a mortgage loan seller and
except for the information in the first two paragraphs under this heading) will
make no representations as to the validity or sufficiency of the series 2004-C1
pooling and servicing agreement, the series 2004-C1 certificates, the underlying
mortgage loans, this prospectus supplement or related documents.
The Initial Special Servicer. Lennar Partners, Inc., a Florida corporation
and a subsidiary of LNR Property Corporation, will act as initial special
servicer with respect to the mortgage pool and any related REO Properties. The
principal executive offices of Lennar are located at 1601 Washington Avenue,
Miami Beach, Florida 33139, and its telephone number is (305) 695-5600.
LNR, its subsidiaries and affiliates, are involved in the real estate
investment, finance and management business and engage principally in:
o acquiring, developing, repositioning, managing and selling commercial
and multifamily residential real estate properties,
o investing in high-yielding real estate loans, and
o investing in, and managing as special servicer, unrated and
non-investment grade rated commercial mortgage-backed securities.
LNR and its affiliates have regional offices located across the country in
Florida, Georgia, Oregon and California. As of November 30, 2003, Lennar and its
affiliates were managing a portfolio which included an original count of 15,200
assets in most states across the country and in Europe with an original face
value of $100 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 acts as servicer
or special servicer. Lennar and its affiliates own and are in the business of
acquiring assets similar in type to the
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assets of the trust. Accordingly, the assets of Lennar and its affiliates may,
depending upon the particular circumstances, including the nature and location
of such assets, compete with the mortgaged real properties securing the
underlying mortgage loans for tenants, purchasers, financing and so forth.
The information set forth in this prospectus supplement concerning Lennar
and LNR has been provided by them. Neither we nor any of the underwriters makes
any representation or warranty as to the accuracy or completeness of this
information. Lennar (except for the information in the first three paragraphs
under this heading) will make no representations as to the validity or
sufficiency of the series 2004-C1 pooling and servicing agreement, the series
2004-C1 certificates, the underlying mortgage loans, this prospectus supplement
or related documents.
SERVICING AND OTHER COMPENSATION AND PAYMENT OF EXPENSES
The Master Servicing Fee. The principal compensation to be paid to the
master servicer with respect to its master servicing activities will be the
master servicing fee.
The master servicing fee will be earned with respect to each and every
mortgage loan in the trust fund, including:
o each specially serviced mortgage loan, if any;
o each mortgage loan, if any, as to which the corresponding mortgaged
real property has become an REO Property; and
o each mortgage loan, if any, that has been defeased.
In the case of each mortgage loan in the trust, the master servicing fee
will:
o be calculated on a 30/360 Basis, except in the case of partial periods
of less than a month, when it will be computed on the basis of the
actual number of days elapsed in the partial period and a 360-day
year;
o accrue at the related master servicing fee rate, which on a
loan-by-loan basis will range from 0.04% per annum to 0.12% per annum;
o accrue on the same principal amount as interest accrues or is deemed
to accrue, from time to time with respect to that mortgage loan; and
o be payable monthly from amounts received with respect to, or allocable
as recoveries of, interest on that mortgage loan or, following
liquidation of that mortgage loan and any related REO Property, from
general collections on the other mortgage loans and REO Properties in
the trust.
For purposes of this prospectus supplement, master servicing fees include
primary servicing fees.
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Prepayment Interest Shortfalls. The series 2004-C1 pooling and servicing
agreement will provide that, if any Prepayment Interest Shortfall is incurred by
reason of a voluntary principal prepayment being made by a borrower with respect
to any of the underlying mortgage loans (other than a specially serviced
mortgage loan and other than any mortgage loan for which the special servicer
has waived a prepayment restriction) during any collection period, then the
master servicer must make a non-reimbursable payment with respect to the related
payment date in an amount equal to the lesser of:
o the amount of the subject Prepayment Interest Shortfall; and
o the sum of--
1. the master servicing fee (calculated for this purpose only at a
rate of 0.02% per annum) received by the master servicer during
such collection period on the subject prepaid mortgage loan, and
2. any investment income earned on the related principal prepayment
during such collection period while on deposit in the master
servicer's collection account.
No other master servicing compensation will be available to cover
Prepayment Interest Shortfalls.
Any payments made by the master servicer with respect to any payment date
to cover Prepayment Interest Shortfalls will be included in the Standard
Available P&I Funds for that payment date, as described under "Description of
the Offered Certificates--Payments" in this prospectus supplement. If the amount
of Prepayment Interest Shortfalls incurred with respect to the mortgage pool
during any collection period exceeds the total of any and all payments made by
the master servicer with respect to the related payment date to cover those
Prepayment Interest Shortfalls, then the resulting Net Aggregate Prepayment
Interest Shortfall will be allocated among the respective interest-bearing
classes of the series 2004-C1 certificates, in reduction of the interest payable
on those certificates, as and to the extent described under "Description of the
Offered Certificates--Payments--Payments of Interest" in this prospectus
supplement.
The master servicer will not cover any interest shortfalls similar to
Prepayment Interest Shortfalls that occur by reason of involuntary prepayments
made with insurance proceeds, condemnation proceeds and/or liquidation proceeds.
Principal Special Servicing Compensation. The principal compensation to be
paid to the special servicer with respect to its special servicing activities in
respect of the mortgage pool will be:
o the special servicing fee;
o the workout fee; and
o the liquidation fee.
The Special Servicing Fee. The special servicing fee will be earned with
respect to each underlying mortgage loan, if any:
o that is being specially serviced; or
o as to which the corresponding mortgaged real property has become an
REO Property.
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In the case of each underlying mortgage loan that satisfies the criteria
described in the foregoing paragraph, the special servicing fee will:
o be calculated on a 30/360 Basis, except in the case of partial periods
of less than a month, when it will be computed on the basis of the
actual number of days elapsed in the partial period and a 360-day
year;
o accrue at a special servicing fee rate of 0.25% per annum;
o accrue on the same principal amount as interest accrues or is deemed
to accrue from time to time with respect to that mortgage loan; and
o generally be payable monthly from general collections on all the
mortgage loans and any REO Properties in the trust fund, that are on
deposit in the master servicer's collection account from time to time.
The Workout Fee. The special servicer will, in general, be entitled to
receive a workout fee with respect to each underlying mortgage loan as to which,
following a period of special servicing and resolution of all Servicing Transfer
Events, servicing thereof has been returned to the master servicer. The workout
fee for any such underlying mortgage loan will generally be payable out of, and
will be calculated by application of a workout fee rate of 1.0% to, each
collection of interest, other than Default Interest and Post-ARD Additional
Interest, and principal received on the subject mortgage loan for so long as it
remains a worked-out mortgage loan.
The workout fee with respect to any underlying mortgage loan referred to in
the prior paragraph will cease to be payable if a new Servicing Transfer Event
occurs with respect to that loan or if the related mortgaged real property
becomes an REO Property. However, a new workout fee would become payable if the
subject underlying mortgage loan again became a worked-out mortgage loan with
respect to that new Servicing Transfer Event.
If the special servicer is terminated or resigns, then it will retain the
right to receive any and all workout fees payable with respect to mortgage loans
that were worked-out -- or, in some cases, about to be worked out -- by it
during the period that it acted as special servicer and as to which no new
Servicing Transfer Event had occurred as of the time of its termination or
resignation. The successor special servicer will not be entitled to any portion
of those workout fees.
Although workout fees are intended to provide the special servicer with an
incentive to better perform its duties, the payment of any workout fee may
reduce amounts payable to the holders of the offered certificates.
The Liquidation Fee. The special servicer will be entitled to receive a
liquidation fee with respect to any specially serviced mortgage loan in the
trust fund for which it obtains a full, partial or discounted payoff. Except as
described in the next paragraph, the special servicer will also be entitled to
receive a liquidation fee with respect to any specially serviced mortgage loan
or REO Property in the trust fund (or any Qualified Substitute Mortgage Loan
delivered in replacement thereof by the related mortgage loan seller) as to
which it receives any liquidation proceeds, sale proceeds or REO revenues,
including any specially serviced mortgage loan repurchased by the applicable
mortgage loan seller outside of the required cure period (as that cure period
may be extended) as described above 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. As to each such specially serviced mortgage loan and REO
Property, the liquidation fee will generally be payable from, and will be
calculated by application of a liquidation fee rate of 1.0% to, the portion of
the related payment, proceeds or revenues allocable as a full or partial
recovery of principal, interest or expenses.
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Despite anything to the contrary described in the prior paragraph, no
liquidation fee will be payable based on, or out of, insurance proceeds,
condemnation proceeds or proceeds received in connection with:
o the repurchase of any mortgage loan in the trust fund by or on behalf
of a mortgage loan seller for a breach of representation or warranty
or for defective or deficient mortgage loan documentation, within the
required cure period (as that cure period may be extended), 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;
o the purchase of any Defaulted Mortgage Loan out of the trust fund by
the special servicer, by the Majority Controlling Class
Certificateholder or, in the case of the Pecanland Mall Mortgage Loan,
by the holder -- or, if applicable, beneficial owner -- of class PM
certificates representing the largest percentage interest in the PM
class (if effected within 60 days of the Pecanland Mall Mortgage Loan
having become a Defaulted Mortgage Loan), as described under "--Fair
Value Purchase Option" below;
o the purchase of the Ocean Key Resort Mortgage Loan by the holder of
the related subordinate companion loan, as described under
"Description of the Mortgage Pool--The Ocean Key Resort Loan
Pair--Purchase of the Ocean Key Resort Mortgage Loan by the Holder of
the Related Subordinate Companion Loan" in this prospectus supplement;
or
o the purchase of all of the mortgage loans and REO Properties in the
trust fund by the master servicer, the special servicer or the
Majority Controlling Class Certificateholder in connection with the
termination of the trust, all as described under "Description of the
Offered Certificates--Termination" in this prospectus supplement.
Although liquidation fees are intended to provide the special servicer with
an incentive to better perform its duties, the payment of any liquidation fee
may reduce amounts payable to the holders of the offered certificates.
Additional Servicing Compensation. As additional master servicing
compensation, the master servicer will be entitled to receive any Prepayment
Interest Excesses collected with respect to the underlying mortgage loans.
In addition, the following items collected on any particular mortgage loan
in the trust fund will be allocated between the master servicer and the special
servicer as additional compensation in accordance with the series 2004-C1
pooling and servicing agreement:
o any late payment charges and Default Interest actually collected on
any particular mortgage loan in the trust fund, which late payment
charges and Default Interest are not otherwise applied to reimburse
the parties to the series 2004-C1 pooling and servicing agreement for,
or to offset, certain expenses of the trust (including interest on
advances), each as provided in the series 2004-C1 pooling and
servicing agreement; and
o any modification fees, assumption fees, assumption application fees,
earnout fees, consent/waiver fees and other comparable transaction
fees and charges.
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The master servicer will be authorized to invest or direct the investment
of funds held in its collection account, in its interest reserve account, or in
any escrow and/or reserve account maintained by it, in Permitted Investments.
See "--Collection Account" below and "Description of the Offered Certificates"
in this prospectus supplement. The master servicer:
o will generally be entitled to retain any interest or other income
earned on those funds; and
o will be required to cover any losses of principal of those investments
from its own funds, to the extent those losses are incurred with
respect to investments made for that master servicer's benefit.
The master servicer will not be obligated, however, to cover any losses
resulting solely from the bankruptcy or insolvency of any depository institution
or trust company holding any of those accounts so long as those institutions or
trust companies meet certain eligibility requirements set forth in the series
2004-C1 pooling and servicing agreement.
The special servicer will be authorized to invest or direct the investment
of funds held in its REO account in Permitted Investments. See "--REO
Properties" below. The special servicer:
o will be entitled to retain any interest or other income earned on
those funds; and
o will be required to cover any losses of principal of those investments
from its own funds.
The special servicer will not be obligated, however, to cover any losses
resulting solely from the bankruptcy or insolvency of any depository institution
or trust company holding its REO account so long as that institution or trust
company meets certain eligibility requirements set forth in the series 2004-C1
pooling and servicing agreement.
Payment of Expenses; Servicing Advances. Each of the master servicer and
the special servicer will be required to pay its overhead costs and any general
and administrative expenses incurred by it in connection with its servicing
activities under the series 2004-C1 pooling and servicing agreement. The master
servicer and the special servicer will not be entitled to reimbursement for
these expenses except as expressly provided in the series 2004-C1 pooling and
servicing agreement.
Any and all customary, reasonable and necessary out-of-pocket costs and
expenses incurred by or on behalf of the master servicer, the special servicer,
the trustee or the fiscal agent in connection with the servicing of a mortgage
loan in the trust fund or in connection with the administration of any REO
Property in the trust fund, will be servicing advances. Servicing advances will
be reimbursable from future payments and other collections, including insurance
proceeds, condemnation proceeds and liquidation proceeds, received in connection
with the related mortgage loan or REO Property.
The special servicer will generally be required to give the master servicer
not less than five business days' notice (or two business days' notice, if
required to be made on an emergency or urgent basis) with respect to servicing
advances to be made on a specially serviced mortgage loan or REO Property in the
trust fund, before the date on which the master servicer is required to make any
servicing advance with respect to such mortgage loan or REO Property.
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If the master servicer is required under the series 2004-C1 pooling and
servicing agreement to make a servicing advance, but it does not do so within 15
days (or such shorter period as may be required to avoid foreclosure of liens
for delinquent real estate taxes or a lapse in insurance coverage) after the
servicing advance is required to be made, then the trustee will be required:
o if any of certain officers of the trustee has actual knowledge of the
failure, to give the master servicer notice of the failure; and
o if the failure continues for five more business days after such
notice, to make the servicing advance.
The fiscal agent will be required to make any servicing advances that the
trustee was required, but failed, to make.
Despite the foregoing discussion or anything else to the contrary in this
prospectus supplement, none of the master servicer, the special servicer, the
trustee or the fiscal agent will be obligated to make servicing advances that,
in the judgment of the party making the advance, or in the judgment of the
special servicer (in the case of a servicing advance by the master servicer, the
trustee or the fiscal agent), would not be ultimately recoverable from expected
collections on the related mortgage loan or REO Property. If the master
servicer, the special servicer, the trustee or the fiscal agent makes any
servicing advance that it subsequently determines, or that the special servicer
determines (in the case of servicing advances by the master servicer, the
trustee or the fiscal agent), is not recoverable from expected collections on
the related mortgage loan or REO Property, it may obtain reimbursement for that
advance, together with interest on that advance, out of general collections on
the underlying mortgage loans and any related REO Properties that are on deposit
in the master servicer's collection account from time to time as more
particularly described in this prospectus supplement. The trustee and the fiscal
agent may conclusively rely on the determination of the master servicer or the
special servicer, and the master servicer may conclusively rely on the
determination of the special servicer, regarding the nonrecoverability of a
servicing advance.
Notwithstanding the foregoing, upon a determination that a previously made
servicing advance is not recoverable from expected collections on the related
underlying mortgage loan or REO Property in the trust fund, instead of obtaining
reimbursement out of general collections on the mortgage pool immediately, any
of the master servicer, the special servicer, the trustee or the fiscal agent,
as applicable, may, in its sole discretion, elect to obtain reimbursement for
such nonrecoverable servicing advance over a period of time (not to exceed six
months or such longer period as agreed to by the series 2004-C1 controlling
class representative and the advancing party, each in its sole discretion) and
the unreimbursed portion of that advance will accrue interest at the prime rate
described below. At any time after such a determination to obtain reimbursement
over time in accordance with the preceding sentence, the master servicer, the
special servicer, the trustee or the fiscal agent, as applicable, may, in its
sole discretion, decide to obtain reimbursement from general collections on the
mortgage pool immediately. The fact that a decision to recover a nonrecoverable
servicing advance over time, or not to do so, benefits some classes of series
2004-C1 certificateholders to the detriment of other classes of series 2004-C1
certificateholders will not, with respect to the master servicer or the special
servicer, constitute a violation of the Servicing Standard or, with respect to
the trustee or the fiscal agent, constitute a violation of any fiduciary duty to
the series 2004-C1 certificateholders and/or contractual duty under the series
2004-C1 pooling and servicing agreement. In the event that the master servicer,
the special servicer, the trustee or the fiscal agent, as applicable, elects not
to recover such nonrecoverable advances over time, the master servicer, the
special servicer, the trustee or the fiscal agent, 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, the special servicer, the trustee or
the fiscal agent, as applicable, makes a determination not to give such notices
in accordance with the terms of the series 2004-C1 pooling and servicing
agreement.
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If the master servicer, the special servicer, the trustee or the fiscal
agent reimburses itself out of general collections on the mortgage pool for any
servicing advance that it has determined is not recoverable out of collections
on the related mortgage loan, then that advance (together with accrued interest
thereon) will be deemed, to the fullest extent permitted, to be reimbursed first
out of payments and other collections of principal on the underlying mortgage
loans otherwise distributable on the series 2004-C1 principal balance
certificates (prior to being deemed reimbursed out of payments and other
collections of interest on the underlying mortgage loans otherwise distributable
on the series 2004-C1 certificates), thereby reducing the payments of principal
on the series 2004-C1 principal balance certificates; provided that amounts
otherwise payable with respect to the class PM certificates will not be
available to reimburse advances on any underlying mortgage loan other than the
Pecanland Mall Mortgage Loan.
The series 2004-C1 pooling and servicing agreement will permit the master
servicer to pay, and will permit the special servicer to direct the master
servicer to pay, some servicing expenses out of general collections on the
underlying mortgage loans and any REO Properties on deposit in the master
servicer's collection account, including, to the extent not advanced, for the
remediation of any adverse environmental circumstance or condition at any of the
mortgaged real properties. In addition, under the series 2004-C1 pooling and
servicing agreement, the master servicer will be permitted (or, if the special
servicer directs, the master servicer will be required) to pay directly out of
the master servicer's collection account any servicing expense that, if advanced
by the master servicer, would not be recoverable from expected collections on
the related mortgage loan or REO Property. This is only to be done, however,
when the master servicer or the special servicer has determined in accordance
with the Servicing Standard that making the payment is in the best interests of
the series 2004-C1 certificateholders, as a collective whole. The master
servicer will be able to conclusively rely on any such determination made by the
special servicer.
The master servicer, the special servicer, the trustee and the fiscal agent
will be entitled to receive interest on servicing advances made by them. The
interest will accrue on the amount of each servicing advance, and compound
annually, for so long as the servicing advance is outstanding, at a rate per
annum equal to the prime rate as published in the "Money Rates" section of The
Wall Street Journal, as that prime rate may change from time to time. Interest
accrued with respect to any servicing advance will generally be payable:
o first, out of any late payment charges and Default Interest collected
on the related underlying mortgage loan in the collection period in
which that servicing advance was reimbursed; and
o then, after or at the same time that advance is reimbursed, but only
if and to the extent that the late payment charges and Default
Interest referred to in clause first above is insufficient to cover
the advance interest, out of any other amounts then on deposit in the
master servicer's collection account.
If any payment of interest on advances is paid out of general collections on the
mortgage pool as contemplated by the second bullet of the prior sentence, then
any late payment charges and Default Interest collected during the following 12
months on the underlying mortgage loan as to which those advances were made will
be applied to reimburse the trust for that payment prior to being applied as
additional compensation to the master servicer or the special servicer.
THE SERIES 2004-C1 CONTROLLING CLASS REPRESENTATIVE AND THE CLASS PM
REPRESENTATIVE
Series 2004-C1 Controlling Class. As of any date of determination, the
controlling class of series 2004-C1 certificateholders will be the holders of
the most subordinate class of series 2004-C1 certificates then outstanding,
other than the class X-1, X-2, PM, Y and R certificates, that has a total
principal balance that is (a) greater than 25% of that class's original total
principal balance and (b) equal to or greater than 1.0% of the initial total
principal balance of the class A-1, A-2, A-3, A-4, B, C, D, E, F, G, H, J, K, L,
M, N, P and Q
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certificates. However, if no class of series 2004-C1 certificates, exclusive of
the class X-1, X-2, PM, Y and R certificates, has a total principal balance that
satisfies this requirement, then the controlling class of series 2004-C1
certificateholders will be the holders of the most subordinate class of series
2004-C1 certificates then outstanding, other than the class X-1, X-2, PM, Y and
R certificates, that has a total principal balance greater than zero. For
purposes of determining, and exercising the rights of, the series 2004-C1
controlling class, the class A-1, A-2, A-3 and A-4 certificates will represent a
single class.
Election of the Series 2004-C1 Controlling Class Representative. The series
2004-C1 controlling class certificateholders entitled to a majority of the
voting rights allocated to the series 2004-C1 controlling class, will be
entitled to:
o select a representative having the rights and powers described under
"--The Series 2004-C1 Controlling Class Representative and the Class
PM Representative--Rights and Powers of the Series 2004-C1 Controlling
Class Representative and the Class PM Representative" below and
elsewhere in this prospectus supplement; or
o replace an existing series 2004-C1 controlling class representative.
The trustee will be required to notify promptly all the certificateholders
of the series 2004-C1 controlling class that they may select a series 2004-C1
controlling class representative upon:
o the receipt by the trustee of written requests for the selection of a
successor series 2004-C1 controlling class representative from series
2004-C1 certificateholders entitled to a majority of the voting rights
allocated to the series 2004-C1 controlling class;
o the resignation or removal of the person acting as series 2004-C1
controlling class representative; or
o a determination by the trustee that the series 2004-C1 controlling
class has changed.
The notice will explain the process for selecting a series 2004-C1 controlling
class representative. The appointment of any person (other than LNR) as a series
2004-C1 controlling class representative will not be effective until that person
provides the trustee and the master servicer with:
1. written confirmation of its acceptance of its appointment;
2. an address and telecopy number for the delivery of notices and other
correspondence; and
3. a list of officers or employees of the person with whom the parties to
the series 2004-C1 pooling and servicing agreement may deal, including
their names, titles, work addresses and telecopy numbers.
Resignation and Removal of the Series 2004-C1 Controlling Class
Representative. The series 2004-C1 controlling class representative may at any
time resign by giving written notice to the trustee and each series 2004-C1
certificateholder of the series 2004-C1 controlling class. The series 2004-C1
certificateholders entitled to a majority of the voting rights allocated to the
series 2004-C1 controlling class, will be entitled to remove any existing series
2004-C1 controlling class representative by giving written notice to the trustee
and to the existing series 2004-C1 controlling class representative.
S-107
Election, Resignation and Removal of the Class PM Representative. The class
PM certificateholders entitled to a majority of the voting rights allocated to
the PM class may elect and/or remove a class PM representative, and a class PM
representative may resign, in each case in a manner substantially similar to
that discussed above as being applicable to the series 2004-C1 controlling class
certificateholders and the series 2004-C1 controlling class representative.
Rights and Powers of the Series 2004-C1 Controlling Class Representative
and the Class PM Representative. The special servicer will be required to
prepare a report, referred to as an "Asset Status Report", for each mortgage
loan in the trust fund that becomes a specially serviced mortgage loan, not
later than 30 days after the servicing of the mortgage loan is transferred to
the special servicer. Each Asset Status Report is to include, among other
things, a summary of the status of the subject specially serviced mortgage loan
and negotiations with the related borrower and a summary of the special
servicer's recommended action with respect to the subject specially serviced
mortgage loan. Each Asset Status Report will be delivered to the series 2004-C1
controlling class representative, among others, by the special servicer.
If within ten business days of receiving an Asset Status Report that
relates to a recommended action to which the series 2004-C1 controlling class
representative is entitled to object, as described below, the series 2004-C1
controlling class representative does not disapprove such Asset Status Report in
writing, then the special servicer shall implement the recommended action as
outlined in such Asset Status Report; provided, however, that the special
servicer may not take any action that is contrary to applicable law, the
Servicing Standard or the terms of the applicable mortgage loan documents. If
the series 2004-C1 controlling class representative disapproves such Asset
Status Report, the special servicer must revise such Asset Status Report and
deliver to the series 2004-C1 controlling class representative, among others, a
new Asset Status Report as soon as practicable, but in no event later than 30
days after such disapproval.
The special servicer must continue to revise such Asset Status Report as
described above until the series 2004-C1 controlling class representative fails
to disapprove such revised Asset Status Report in writing within ten business
days of receiving such revised Asset Status Report or until the special servicer
makes one of the determinations described below. The special servicer may, from
time to time, modify any Asset Status Report it has previously delivered and
implement such report; provided that such report shall have been prepared,
reviewed and not rejected pursuant to the terms of this discussion.
Notwithstanding the foregoing, the special servicer (a) may, following the
occurrence of an extraordinary event with respect to the related mortgaged real
property, take any action set forth in such Asset Status Report (and consistent
with the terms of the series 2004-C1 pooling and servicing agreement) before the
expiration of a ten-business day period if the special servicer has reasonably
determined that failure to take such action would materially and adversely
affect the interests of the series 2004-C1 certificateholders, as a collective
whole, and it has made a reasonable effort to contact the series 2004-C1
controlling class representative and (b) in any case, shall determine whether
such affirmative disapproval is not in the best interest of all the series
2004-C1 certificateholders pursuant to the Servicing Standard.
Upon making the determination in clause (b) of the last sentence of the
immediately preceding paragraph, the special servicer shall notify the trustee
of such rejection and deliver to the trustee a proposed notice to series 2004-C1
certificateholders which must include a copy of the Asset Status Report, and the
trustee will be required to send such notice to all series 2004-C1
certificateholders. If the majority of such series 2004-C1 certificateholders,
as determined by series 2004-C1 voting rights, fail, within 30 days of the
trustee's sending such notice, to reject such Asset Status Report, the special
servicer will implement the same. If the Asset Status Report is rejected by a
majority of the series 2004-C1 certificateholders (other than for a reason which
violates the Servicing Standard, which will control), the special servicer must
revise such Asset Status Report as described above and provide a copy of such
revised report to the master servicer. The trustee will be entitled to
reimbursement from the trust fund for the reasonable expenses of providing such
notices.
S-108
The special servicer will have the authority to meet with the borrower
under any specially serviced mortgage loan in the trust fund and take such
actions consistent with the Servicing Standard, the terms of the series 2004-C1
pooling and servicing agreement and the related Asset Status Report. The special
servicer may not take any action inconsistent with the related Asset Status
Report unless that action would be required in order to act in accordance with
the Servicing Standard.
No direction of the series 2004-C1 controlling class representative or the
majority of the series 2004-C1 certificateholders in connection with any Asset
Status Report may (a) require or cause the special servicer to violate the terms
of the subject specially serviced mortgage loan, applicable law or any provision
of the series 2004-C1 pooling and servicing agreement, including the special
servicer's obligation to act in accordance with the Servicing Standard and to
maintain the REMIC status of REMIC I, REMIC II or the Pecanland Mall individual
loan REMIC, (b) result in the imposition of a "prohibited transaction" or
"prohibited contribution" tax under the REMIC provisions of the Internal Revenue
Code or (c) expose the master servicer, the special servicer, us, any of the
mortgage loan sellers, the trust fund or the trustee or the officers and the
directors of each party to claim, suit or liability or (d) expand the scope of
the master servicer's, trustee's, fiscal agent's or special servicer's
responsibilities under the series 2004-C1 pooling and servicing agreement.
In addition, series 2004-C1 controlling class representative will generally
be entitled to advise the special servicer with respect to the following actions
of the special servicer, and the special servicer will not be permitted to take
any of the following actions as to which the series 2004-C1 controlling class
representative has objected in writing within ten business days of having been
notified in writing of the particular action:
1. any foreclosure upon or comparable conversion, which may include
acquisitions of an REO Property, of the ownership of any mortgaged
real properties securing those specially serviced mortgage loans in
the trust fund as come into and continue in default;
2. any modification of a monetary term (other than late payment charge
and Default Interest provisions) of an underlying mortgage loan, but
excluding a modification consisting of the extension of the maturity
date of the subject mortgage loan for one year or less;
3. any proposed sale of an REO Property out of the trust fund (other than
in connection with the termination of the trust fund) for less than
the related Purchase Price;
4. any determination to bring an REO Property held by the trust into
compliance with applicable environmental laws or to otherwise address
hazardous materials located at such REO Property;
5. any release of collateral, or acceptance of substitute or additional
collateral, for an underlying mortgage loan unless required by the
related mortgage loan documents and/or applicable law;
6. any waiver of a "due-on-sale" clause or "due-on-encumbrance" clause;
7. any acceptance of an assumption agreement releasing a borrower from
liability under an underlying mortgage loan (other than in connection
with a defeasance permitted under the terms of the applicable mortgage
loan documents);
8. with respect to the Pecanland Mall Mortgage Loan, any acceptance of a
discounted payoff;
9. with respect to the Pecanland Mall Mortgage Loan, any renewal or
replacement of the then existing insurance policies to the extent that
such renewal or replacement policy does not comply with the terms of
the mortgage loan documents or any waiver, modification or amendment
of any insurance requirements under the related mortgage loan
documents;
S-109
10. with respect to the Pecanland Mall Mortgage Loan, any approval of a
material capital expenditure;
11. with respect to the Pecanland Mall Mortgage Loan, any replacement of
the property manager; and
12. with respect to the Pecanland Mall Mortgage Loan, any adoption or
approval of a plan in bankruptcy of the related Mortgagor.
Furthermore, the series 2004-C1 controlling class representative may direct
the special servicer to take, or to refrain from taking, such other actions as
the series 2004-C1 controlling class representative may deem advisable or as to
which provision is otherwise made in the series 2004-C1 pooling and servicing
agreement; provided that, notwithstanding anything herein to the contrary no
such direction, and no objection contemplated by the preceding paragraph, may
require or cause the special servicer to violate any applicable law, any
provision of the series 2004-C1 pooling and servicing agreement or any
underlying mortgage loan or the REMIC provisions of the Internal Revenue Code
(and the special servicer must disregard any such direction or objection),
including the special servicer's obligation to act in accordance with the
Servicing Standard, or expose the master servicer, the special servicer, the
trust fund or the trustee or any of their respective affiliates, officers,
directors, employees or agents to any claim, suit or liability, or materially
expand the scope of the special servicer's or the master servicer's
responsibilities under the series 2004-C1 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
series 2004-C1 certificateholders.
Notwithstanding anything to the contrary described in this "--Rights and
Powers of the Series 2004-C1 Controlling Class Representative and the Class PM
Representative" subsection, with respect to actions to be taken related to the
Pecanland Mall Mortgage Loan or any related REO Property, if a Pecanland Mall
Change-of-Control Event has not occurred or is not continuing, then the class PM
representative will have all of the rights, powers and responsibilities of the
series 2004-C1 controlling class representative and be subject to the same
limitations on the exercise of those rights and powers. In addition, the holder
of the subordinate companion loan related to the Ocean Key Resort Mortgage Loan
will have certain approval rights relating to modifications of the Ocean Key
Resort Mortgage Loan or the related subordinate companion loan, as described
above under "Description of the Mortgage Pool--The Ocean Key Resort Loan
Pair--Modifications".
When reviewing the rest of this "Servicing of the Underlying Mortgage
Loans" section, it is important that you consider the effects that the rights
and powers of the series 2004-C1 controlling class representative and the class
PM representative discussed above could have on the actions of the special
servicer.
Liability to Borrowers. In general, any and all expenses of the series
2004-C1 controlling class representative and the class PM representative are to
be borne by the holders of the series 2004-C1 controlling class and the holders
of the class PM certificates, respectively, in each such case in proportion to
their respective percentage interests in the subject class, and not by the
trust. However, if a claim is made against the series 2004-C1 controlling class
representative or the class PM representative by a borrower with respect to the
series 2004-C1 pooling and servicing agreement or any particular underlying
mortgage loan, then (subject to the discussion under "Description of the
Governing Documents--Matters Regarding the Master Servicer, the Special
Servicer, the Manager and Us" in the accompanying prospectus) the special
servicer on behalf of, and at the expense of, the trust, will assume the defense
of the claim against the series 2004-C1 controlling class representative or the
class PM representative, as applicable, but only if:
o the special servicer or the trust are also named parties to the same
action; and
S-110
o in the sole judgment of the special servicer--
1. the series 2004-C1 controlling class representative or the class
PM representative, as applicable, acted in good faith, without
negligence or willful misfeasance, with regard to the particular
matter at issue, and
2. there is no potential for the special servicer or the trust to be
an adverse party in the action as regards the series 2004-C1
controlling class representative or the class PM representative,
as applicable.
Liability to the Trust and Certificateholders. The series 2004-C1
controlling class representative and the class PM representative may each have
special relationships and interests that conflict with those of the holders of
one or more classes of the offered certificates.
In addition, the series 2004-C1 controlling class representative does not
have any duties or liability to the holders of any class of series 2004-C1
certificates other than the series 2004-C1 controlling class. It may act solely
in the interests of the certificateholders of the series 2004-C1 controlling
class and will have no liability to any other series 2004-C1 certificateholders
for having done so. No series 2004-C1 certificateholder may take any action
against the series 2004-C1 controlling class representative for its having acted
solely in the interests of the certificateholders of the series 2004-C1
controlling class.
Likewise, the class PM representative does not have any duties or liability
to the holders of any class of series 2004-C1 certificates other than the PM
class. It may act solely in the interests of the certificateholders of the PM
class and will have no liability to any other series 2004-C1 certificateholders
for having done so. No series 2004-C1 certificateholder may take any action
against the class PM representative for its having acted solely in the interests
of the class PM certificateholders.
Cure Rights of Class PM Representative. The master servicer or special
servicer, depending on whether the Pecanland Mall Mortgage Loan is being
specially serviced, will be required to deliver to the class PM representative
notice of any monetary or non-monetary event of default with respect to the
Pecanland Mall Mortgage Loan known to the master servicer or special servicer,
as applicable. Upon receipt of that notice, the class PM representative will
have the right to cure any monetary default, or any non-monetary default
susceptible to cure by the payment of money, with respect to the Pecanland Mall
Mortgage Loan during the Pecanland Mall Cure Period; provided that the class PM
representative's right to cure a monetary default or non-monetary default
susceptible to cure by the payment of money shall be limited to (A) six
Pecanland Mall Cure Events over the life of the Pecanland Mall Mortgage Loan and
(B) no more than three consecutive Pecanland Mall Cure Events. As used herein,
"Pecanland Mall Cure Event" means the class PM representative's exercise of cure
rights for one month. The right of the class PM representative to reimbursement
for any Pecanland Mall Cure Payments will be subordinate to the payment of all
other amounts due with respect to the Pecanland Mall Mortgage Loan, as described
below under "Description of the Offered Certificates--Payments--Allocation of
Payments on the Pecanland Mall Mortgage Loan; Payments on the Class PM
Certificates".
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REPLACEMENT OF THE SPECIAL SERVICER
Series 2004-C1 certificateholders entitled to a majority of the voting
rights allocated to the series 2004-C1 controlling class may terminate an
existing special servicer and appoint a successor. However, any such termination
of an existing special servicer and/or appointment of a successor special
servicer will be subject to, among other things, receipt by the trustee of:
1. written confirmation from each of S&P and Moody's that the appointment
will not result in a qualification, downgrade or withdrawal of any of
the ratings then assigned by the rating agency to any class of the
series 2004-C1 certificates; and
2. the written agreement of the proposed special servicer to be bound by
the terms and conditions of the series 2004-C1 pooling and servicing
agreement, together with an opinion of counsel regarding, among other
things, the enforceability of the series 2004-C1 pooling and servicing
agreement against the proposed special servicer.
Subject to the foregoing, any series 2004-C1 certificateholder or any
affiliate of a series 2004-C1 certificateholder may be appointed as special
servicer.
If the series 2004-C1 certificateholders entitled to a majority of the
voting rights allocated to the series 2004-C1 controlling class terminate an
existing special servicer, then the reasonable out-of-pocket costs and expenses
of any related transfer of special servicing duties are to be paid by the party
or parties that removed the terminated special servicer. Furthermore, the
terminated special servicer will be entitled to all amounts due and payable to
it under the series 2004-C1 pooling and servicing agreement at the time of the
termination (including workout fees as described under "--Servicing and Other
Compensation and Payment of Expenses--Principal Special Servicing
Compensation--The Workout Fee" above).
BENEFICIAL OWNERS OF THE CONTROLLING CLASS OF SERIES 2004-C1 CERTIFICATES
AND THE CLASS PM CERTIFICATES
If the certificates of the series 2004-C1 controlling class or the PM class
are held in book-entry form, then any beneficial owner of those certificates
whose identity and beneficial ownership interest has been proven to the
satisfaction of the trustee, will be entitled to:
o receive all notices described under "--The Series 2004-C1 Controlling
Class Representative and the Class PM Representative" and/or
"--Replacement of the Special Servicer" above; and
o exercise directly all rights described under "--The Series 2004-C1
Controlling Class Representative and the Class PM Representative"
and/or "--Replacement of the Special Servicer" above,
that it otherwise would if it were the registered holder of certificates of the
series 2004-C1 controlling class or the PM class, as the case may be.
ENFORCEMENT OF DUE-ON-SALE AND DUE-ON-ENCUMBRANCE PROVISIONS
Upon receipt of any request of a waiver in respect of a due-on-sale
(including, without limitation, a sale of a mortgaged real property (in full or
in part) or a sale, transfer, pledge or hypothecation of direct or indirect
interests in a borrower or its owners) or due-on-encumbrance (including, without
limitation, any mezzanine financing of a borrower or a mortgaged real property
or a sale or transfer of preferred equity in a borrower or its owners) provision
with respect to any of the underlying mortgage loans or a request by a borrower
for a determination with respect to an underlying mortgage loan which by its
terms permits transfer, assumption or
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further encumbrance without lender consent upon the satisfaction of certain
conditions, that such conditions have been satisfied, the master servicer must
promptly forward that request to the special servicer, who, if otherwise
permitted pursuant to the series 2004-C1 pooling and servicing agreement, is to
analyze that waiver or request, including the preparation of written materials
in connection with such analysis, and to close the related transaction, subject
to the consent rights of the series 2004-C1 controlling class representative or
the class PM representative, as applicable. With respect to all mortgage loans
in the trust fund, the special servicer, on behalf of the trustee as the
mortgagee of record, must, to the extent permitted by applicable law, enforce
the restrictions contained in the related mortgage instrument on transfers or
further encumbrances of the related mortgaged real property and on transfers of
interests in the related borrower, unless the special servicer has determined,
consistent with the Servicing Standard, that waiver of those restrictions would
be in accordance with the Servicing Standard. The special servicer may not
exercise any such waiver in respect of a due-on-encumbrance provision of any of
the underlying mortgage loans (1) with respect to which (a) the aggregate of the
Stated Principal Balance of that mortgage loan and the Stated Principal Balance
of all other underlying mortgage loans that are cross-collateralized,
cross-defaulted or have been made to borrowers affiliated with the borrower on
the subject mortgage loan, is equal to or in excess of $20,000,000, (b) the
aggregate of the Stated Principal Balance of the subject mortgage loan and the
Stated Principal Balance of all other underlying mortgage loans that are
cross-collateralized, cross-defaulted or have been made to borrowers affiliated
with the borrower on the subject mortgage loan, are greater than 2% of the
aggregate Stated Principal Balance of all the underlying mortgage loans or (c)
the subject mortgage loan is one of the ten largest mortgage loans in the trust
fund as of the date of the waiver (by Stated Principal Balance), without
receiving prior written confirmation from Moody's that such action would not
result in a downgrading, qualification or withdrawal of the ratings then
assigned to the series 2004-C1 certificates and (2) with respect to which (a)
the criteria set forth in clause (1)(a), (1)(b) and (1)(c) have been met or (b)
the subject mortgage loan has a loan-to-value ratio (calculated to include the
additional indebtedness secured by any encumbrance) that is equal to or greater
than 85% and a debt service coverage ratio (calculated to include the additional
debt from any encumbrance) of 1.2x or less, without receiving a prior written
confirmation from S&P that such action would not result in a downgrading,
qualification or withdrawal of the ratings then assigned to the series 2004-C1
certificates. With respect to a waiver of a due-on-sale provision of any of the
underlying mortgage loans, the special servicer may not waive any such
restriction with respect to which (a) the aggregate of the Stated Principal
Balance of the subject mortgage loan and the Stated Principal Balance of all
other underlying mortgage loans that are cross-collateralized, cross-defaulted
or have been made to borrowers affiliated with the borrower on the subject
mortgage loan, is equal to or in excess of $35,000,000 (or $25,000,000 with
respect to Moody's), (b) the aggregate of the Stated Principal Balance of the
subject mortgage loan and the Stated Principal Balance of all other underlying
mortgage loans in the trust fund that are cross-collateralized, cross-defaulted
or have been made to borrowers affiliated with the borrower on the subject
mortgage loan, are greater than 5% of the aggregate Stated Principal Balance of
all the underlying mortgage loans or (c) the subject mortgage loan is one of the
ten largest mortgage loans in the trust fund as of the date of the waiver (by
Stated Principal Balance), without receiving prior written confirmation from S&P
and Moody's that such action would not result in a downgrading, qualification or
withdrawal of the ratings then assigned to the series 2004-C1 certificates;
provided, further, that, if the subject mortgage loan does not meet the criteria
set forth in clauses (a), (b) and (c) of this sentence, the special servicer may
waive such requirement without approval by S&P or Moody's in accordance with the
Servicing Standard. Any fees charged by the rating agencies in connection with
obtaining any written confirmation contemplated in the two preceding sentences
will be charged to the borrower unless prohibited by the related mortgage loan
documents, in which case such fees will be Additional Trust Fund Expenses. If
the special servicer, in accordance with the Servicing Standard, determines with
respect to any underlying mortgage loan that by its terms permits transfer,
assumption or further encumbrance of an underlying mortgage loan or the related
mortgaged real property, as applicable, without lender consent upon the
satisfaction of certain conditions, that such conditions have not been
satisfied, then the master servicer may not permit such transfer, assumption or
further encumbrance. As used in this paragraph, the terms "sale", "transfer" and
"encumbrance" include the matters contemplated by the parentheticals in the
first sentence of this paragraph.
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In addition, the master servicer (with respect to underlying mortgage loans
that are not specially serviced mortgage loans) (without the special servicer's
consent) or the special servicer (with respect to specially serviced mortgage
loans in the trust fund), may grant, without any rating agency confirmation as
provided in the prior paragraph, a borrower's request for consent to subject the
related mortgaged real property to an easement or right-of-way for utilities,
access, parking, public improvements or another purpose, and may consent to
subordination of the related underlying mortgage loan to such easement or
right-of-way, provided that the master servicer or the special servicer, as
applicable, has determined in accordance with the Servicing Standard that such
easement or right-of-way will not materially interfere with the then-current use
of the related mortgaged real property, or the security intended to be provided
by the related mortgage instrument, the related borrower's ability to repay the
related underlying mortgage loan, or materially or adversely affect the value of
such mortgaged real property or cause certain adverse tax consequences with
respect to the trust fund.
MODIFICATIONS, WAIVERS, AMENDMENTS AND CONSENTS
Subject to the following discussion in this "--Modifications, Waivers,
Amendments and Consents" section and to the rights of the series 2004-C1
controlling class representative or the class PM representative, as applicable,
and further subject to any applicable intercreditor, co-lender or similar
agreement, the master servicer (to the extent provided in the penultimate
paragraph of this "--Modifications, Waivers, Amendments and Consents" section
and except for waivers of Default Interest and late payment charges) and the
special servicer may, on behalf of the trustee, agree to any modification,
waiver or amendment of any term of any underlying mortgage loan (including,
subject to the penultimate paragraph of this "--Modifications, Waivers,
Amendments and Consents" section, the lease reviews and lease consents related
thereto) without the consent of the trustee or any series 2004-C1
certificateholder.
All modifications, waivers or amendments of any underlying mortgage loan
must be in writing and must be considered and effected in accordance with the
Servicing Standard; provided, however, that neither the master servicer nor the
special servicer, as applicable, may make or permit or consent to, as
applicable, any modification, waiver or amendment of any term of any mortgage
loan in the trust fund not otherwise permitted as described in this
"--Modifications; Waivers, Amendments and Consents" section that would
constitute a "significant modification" of the subject mortgage loan within the
meaning of Treasury regulations section 1.860G-2(b).
Except as discussed in the next paragraph and except for waivers of Default
Interest and late payment charges, neither the master servicer nor the special
servicer, on behalf of the trustee, may agree or consent to any modification,
waiver or amendment of any term of any mortgage loan in the trust fund that
would:
(a) affect the amount or timing of any related payment of principal,
interest or other amount (including prepayment premiums or yield
maintenance charges, but excluding Default Interest, late payment
charges and amounts payable as additional servicing compensation)
payable thereunder;
(b) affect the obligation of the related borrower to pay a prepayment
premium or yield maintenance charge or permit a principal prepayment
during any period in which the related mortgage note prohibits
principal prepayments;
(c) except as expressly contemplated by the related mortgage instrument or
in circumstances involving environmental issues, result in a release
of the lien of the related mortgage instrument on any material portion
of the related mortgaged real property without a corresponding
principal prepayment in an amount not less than the fair market value
of the property to be released other than in connection with a taking
of all or part of the related mortgaged real property or REO Property
for not less than fair market value by exercise of the power of
eminent domain or
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condemnation or casualty or hazard losses with respect to such
mortgaged real property or REO Property; or
(d) if the subject mortgage loan is equal to or in excess of 5% of the
then aggregate current principal balances of all mortgage loans in the
trust fund or $35,000,000 (or with respect to Moody's $25,000,000), or
is one of the ten largest mortgage loans in the trust fund by Stated
Principal Balance as of such date, permit the transfer or transfers of
(A) the related mortgaged real property or any interest therein or (B)
equity interests in the borrower or any equity owner of the borrower
that would result, in the aggregate during the term of the subject
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 applicable rating
agency that such changes will not result in the qualification,
downgrade or withdrawal to the ratings then assigned to the series
2004-C1 certificates;
(e) allow any additional lien on the related mortgaged real property if
the subject mortgage loan is equal to or in excess of 2% of the then
aggregate current principal balances of all the mortgage loans in the
trust fund or $20,000,000, is one of the ten largest mortgage loans in
the trust fund by Stated Principal Balance as of such date, or, with
respect to S&P only, has an aggregate loan-to-value ratio that is
equal to or greater than 85% or has an aggregate debt service coverage
ratio that is less than 1.2x without the prior written confirmation
from each applicable rating agency that such change will not result in
the qualification, downgrade or withdrawal of the ratings then
assigned to the series 2004-C1 certificates; or
(f) in the reasonable, good faith judgment of the special servicer,
otherwise materially impair the security for the subject mortgage loan
or reduce the likelihood of timely payment of amounts due thereon.
Notwithstanding the foregoing but subject to the second following
paragraph, and further subject to the rights of the series 2004-C1 controlling
class representative or the class PM representative, as applicable, the special
servicer may (1) reduce the amounts owing under any specially serviced mortgage
loan in the trust fund by forgiving principal, accrued interest or any
prepayment premium or yield maintenance charge, (2) reduce the amount of the
scheduled 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 instrument relating to a
specially serviced mortgage loan in the trust fund, (iv) extend the maturity
date of any specially serviced mortgage loan in the trust fund, or (v) accept a
principal prepayment on any specially serviced mortgage loan in the trust fund
during any prepayment lockout period; provided that (A) the related borrower is
in default with respect to the subject specially serviced mortgage loan or, in
the judgment of the special servicer, such default is reasonably foreseeable,
and (B) in the judgment of the special servicer, such modification would
increase the recovery on the subject mortgage loan to the series 2004-C1
certificateholders on a net present value basis. In the case of every other
modification, waiver or consent, the special servicer must determine and may
rely on an opinion of counsel to the effect that such modification, waiver or
amendment would not both (1) effect an exchange or reissuance of the subject
mortgage loan under Treasury regulations section 1.860G-2(b) of the Internal
Revenue Code and (2) cause REMIC I, REMIC II or the Pecanland Mall individual
loan REMIC to fail to qualify as a REMIC under the Internal Revenue Code or
result in the imposition of any tax on "prohibited transactions" or
"contributions" after the startup day under the REMIC provisions of the Internal
Revenue Code.
In addition, notwithstanding the second preceding paragraph, but subject to
the next paragraph, and further subject to the rights of the series 2004-C1
controlling class representative or the class PM representative, as applicable,
the special servicer may extend the date on which any balloon payment is
scheduled to be due in respect of a specially serviced mortgage loan in the
trust fund if the conditions set forth in the proviso to the first
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sentence of the prior paragraph are satisfied and the special servicer has
obtained an appraisal of the related mortgaged real property, in connection with
such extension, which appraisal supports the determination of the special
servicer contemplated by clause (B) of the proviso to the first sentence of the
immediately preceding paragraph.
In no event may the special servicer: (1) extend the maturity date of a
mortgage loan in the trust fund beyond a date that is two years prior to the
rated final payment date; (2) reduce the mortgage rate of a mortgage loan in the
trust fund to less than the lesser of (a) the original mortgage rate of the
subject mortgage loan, (b) the highest fixed pass-through rate of any class of
series 2004-C1 principal balance certificates then outstanding and (c) a rate
below the then prevailing interest rate for comparable loans, as determined by
the special servicer; (3) if the subject mortgage loan is secured by a ground
lease (and not by the corresponding fee simple interest), extend the maturity
date of the subject mortgage loan beyond a date which is less than 20 years
prior to the expiration of the term of such ground lease; or (4) defer interest
due on the subject mortgage loan in excess of 10% of the stated principal
balance of such mortgage loan or defer the collection of interest on the subject
mortgage loan without accruing interest on such deferred interest at a rate at
least equal to the mortgage rate of the subject mortgage loan.
The special servicer or the master servicer, as applicable, may, as a
condition to granting any request by a borrower for consent, modification,
waiver or indulgence or any other matter or thing, the granting of which is
within its discretion pursuant to the terms of the instruments evidencing or
securing the subject underlying mortgage loan and is permitted by the terms of
the series 2004-C1 pooling and servicing agreement, require that the borrower
pay to it (a) as additional servicing compensation, a reasonable or customary
fee for the additional services performed in connection with such request,
provided that such fee would not itself be a "significant modification" pursuant
to Treasury regulations section 1.1001-3(e)(2); and (b) any related costs and
expenses incurred by it. In no event will the special servicer or the master
servicer be entitled to payment for such fees or expenses unless such payment is
collected from the related borrower.
The special servicer must notify the master servicer, any related
sub-servicers, the trustee, the series 2004-C1 controlling class representative
(and, with respect to the Pecanland Mall underlying mortgage loan, the class PM
representative) and the rating agencies, in writing, of any material
modification, waiver or amendment of any term of any underlying mortgage loan
(including fees charged the related borrower) and the date thereof, and must
deliver to the custodian (with a copy to the master servicer) for deposit in the
related Mortgage File, an original counterpart of the agreement relating 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 underlying
mortgage loan is effected will be made available for review upon prior request
during normal business hours at the offices of the special servicer as described
under "Description of the Offered Certificates--Reports to Certificateholders;
Available Information".
For any mortgage loan in the trust fund, other than a specially serviced
mortgage loan, and subject to the rights of the special servicer described above
and the rights of the series 2004-C1 controlling class representative or the
class PM representative, as applicable, the master servicer, without the consent
of the special servicer, the series 2004-C1 controlling class representative or
the class PM representative, as applicable, shall be responsible for any request
by a borrower for the consent of the lender for a modification, waiver or
amendment of any term with respect to:
1. approving routine leasing activity with respect to any lease for less
than the amount or percentage of the square footage of the related
mortgaged real property specified in the series 2004-C1 pooling and
servicing agreement;
2. approving any waiver affecting the timing of receipt of financial
statements from any borrower; provided that such financial statements
are delivered no less than quarterly and within 60 days of the end of
the calendar quarter;
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3. approving annual budgets for the related mortgaged real property;
provided that no such budget (a) provides for the payment of operating
expenses in an amount equal to more than 110% of the amounts budgeted
therefor for the prior year or (b) provides for the payment of any
material expenses to any affiliate of the related borrower (other than
the payment of a management fee to any property manager if such
management fee is no more than the management fee in effect on the
cut-off date);
4. subject to other restrictions herein regarding principal prepayments,
waiving any provision of a mortgage loan in the trust fund requiring a
specified number of days notice prior to a principal prepayment;
5. approving modifications, consents or waivers (other than those
described in the second paragraph of this "--Modifications, Waivers,
Amendments and Consents" section) in connection with a defeasance
permitted by the terms at the related underlying mortgage loan if the
master servicer receives an opinion of counsel to the effect that such
modification, waiver or consent would not cause any REMIC created
under the series 2004-C1 pooling and servicing agreement to fail to
qualify as a REMIC or result in a "prohibited transaction" under the
REMIC provisions of the Internal Revenue Code; and
6. approving certain consents with respect to right-of-ways and easements
and consent to subordination of the related underlying mortgage loan
to such easements or right-of-ways.
Notwithstanding anything to the contrary described in this prospectus
supplement, neither the master servicer nor the special servicer, as applicable,
may take the following action unless it has received prior written confirmation
from the applicable rating agencies that such action will not result in a
qualification, downgrade or withdrawal of any of the ratings assigned by such
rating agency to the series 2004-C1 certificates:
(a) with respect to any mortgaged real property that secures a mortgage
loan in the trust fund with an unpaid principal balance that is at
least equal to 5% of the then aggregate principal balance of all
mortgage loans in the trust fund or $20,000,000, the giving of any
consent, approval or direction regarding the termination of the
related property manager or the designation of any replacement
property manager; and
(b) with respect to each mortgage loan in the trust fund with an unpaid
principal balance that is equal to or greater than (i) 5% of the then
aggregate principal balance of all the mortgage loans in the trust
fund or (ii) $20,000,000 and which is secured by a mortgaged real
property which is a hospitality property, the giving of any consent to
any change in the franchise affiliation of such mortgaged real
property.
REQUIRED APPRAISALS
Within 60 days following the occurrence of any Appraisal Trigger Event with
respect to any of the mortgage loans in the trust fund, the special servicer
must obtain, and deliver to the trustee and the master servicer, among others, a
copy of, an appraisal of the related mortgaged real property from an independent
appraiser meeting the qualifications imposed in the series 2004-C1 pooling and
servicing agreement, unless an appraisal had previously been obtained within the
prior 12 months and the special servicer is not aware of any subsequent material
change in the condition of that property (in which case a letter update will be
permitted).
Notwithstanding the foregoing, if the unpaid principal balance of the
subject mortgage loan is less than $2,000,000, the special servicer may, at its
option, cause a narrative limited appraisal with a summary report or an internal
valuation of the mortgaged real property to be performed.
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As a result of any appraisal or other valuation, it may be determined that
an Appraisal Reduction Amount exists with respect to the subject underlying
mortgage loan. An Appraisal Reduction Amount is relevant to the determination of
the amount of any advances of delinquent interest required to be made with
respect to the affected underlying mortgage loan and, in the case of the
Pecanland Mall Mortgage Loan, to certain control issues. See "Description of the
Offered Certificates--Advances of Delinquent Monthly Debt Service Payments" in
this prospectus supplement.
If an Appraisal Trigger Event occurs with respect to any specially serviced
mortgage loan in the trust fund, then the special servicer will have an ongoing
obligation to obtain or perform, as the case may be, on or about each
anniversary of the occurrence of that Appraisal Trigger Event, an update of the
prior required appraisal or other valuation. Based upon that update, the
appropriate party under the series 2004-C1 pooling and servicing agreement is to
redetermine and report to the trustee and the master servicer, the new Appraisal
Reduction Amount, if any, with respect to the mortgage loan. This ongoing
obligation will cease if and when:
o as applicable, either the subject mortgage loan has remained current
for at least three consecutive monthly debt service payments or the
related Servicing Transfer Events have ceased to exist; and
o no other Appraisal Trigger Event has occurred with respect to the
subject mortgage loan during the preceding three months.
The cost of each required appraisal, and any update of that appraisal, will
be advanced by the master servicer, at the direction of the special servicer,
and will be reimbursable to the master servicer as a servicing advance.
COLLECTION ACCOUNT
General. The master servicer will be required to establish and maintain a
collection account for purposes of holding payments and other collections that
it receives with respect to the underlying mortgage loans. That collection
account must be maintained in a manner and with a depository institution that
satisfies rating agency standards for securitizations similar to the one
involving the offered certificates.
The funds held in the master servicer's collection account may be held as
cash or invested in Permitted Investments. Any interest or other income earned
on funds in the master servicer's collection account will be paid to the master
servicer as additional compensation, subject to the limitations set forth in the
series 2004-C1 pooling and servicing agreement.
Deposits. Under the series 2004-C1 pooling and servicing agreement, the
master servicer must deposit or cause to be deposited in its collection account
within one business day following receipt of available funds, in the case of
payments and other collections on the underlying mortgage loans, or as otherwise
required under the series 2004-C1 pooling and servicing agreement, the following
payments and collections received or made by or on behalf of the master servicer
with respect to the mortgage pool subsequent to the date of initial issuance of
the offered certificates, other than monthly debt service payments due on or
before the cut-off date, which monthly debt service payments belong to the
related mortgage loan seller:
o all payments on account of principal on the underlying mortgage loans,
including principal prepayments;
o all payments on account of interest on the underlying mortgage loans,
including Default Interest and Post-ARD Additional Interest;
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o all prepayment premiums, yield maintenance charges and late payment
charges collected with respect to the underlying mortgage loans;
o all proceeds received under any hazard, flood, title or other
insurance policy that provides coverage with respect to an underlying
mortgage loan or the related mortgaged real property, and all proceeds
received in connection with the condemnation or the taking by right of
eminent domain of a mortgaged real property securing an underlying
mortgage loan, in each case to the extent not otherwise required to be
applied to the restoration of the real property or released to the
related borrower;
o any amounts required to be deposited by the master servicer in
connection with losses incurred with respect to Permitted Investments
of funds held in the collection account;
o any amounts required to be deposited by the master servicer or the
special servicer in connection with losses resulting from a deductible
clause in any blanket insurance policy maintained by it as described
under "--Maintenance of Insurance" below;
o any amount required to be transferred to the master servicer's
collection account from any REO account maintained by the special
servicer;
o all amounts received and retained in connection with the liquidation
of defaulted mortgage loans in the trust fund by foreclosure or
similar proceeding or as otherwise contemplated under "--Fair Value
Purchase Option" below;
o any amounts paid by a mortgage loan seller in connection with the
repurchase or replacement of an underlying mortgage loan 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;
o any amounts paid to purchase or otherwise acquire all the mortgage
loans and any REO Properties in the trust fund in connection with the
termination of the trust as contemplated under "Description of the
Offered Certificates--Termination" in this prospectus supplement;
o any amounts paid by the master servicer to cover Prepayment Interest
Shortfalls;
o any amounts paid by a borrower under an underlying mortgage loan to
cover items for which a servicing advance has been previously made and
for which the master servicer, the special servicer, the trustee or
the fiscal agent, as applicable, has been previously reimbursed out of
the collection account;
o any amount required to be deposited by the master servicer or the
special servicer as described in the tenth paragraph under "--Advances
of Delinquent Monthly Debt Service Payments", respectively, to pay
unpaid interest on advances and/or in connection with reimbursing the
trust fund for Additional Trust Fund Expenses, including, without
limitation, interest on advances and the cost of inspections performed
by the special servicer as described under "--Inspections; Collection
of Operating Information"; and
o any Pecanland Mall Cure Payments;
provided that Default Interest and late payment charges will be deposited in the
master servicer's collection account only to the extent necessary to reimburse
parties to the series 2004-C1 pooling and servicing agreement
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for, or to offset, certain expenses of the trust (including interest on
advances), each as provided in the series 2004-C1 pooling and servicing
agreement.
Upon its receipt of any of the amounts described in the prior paragraph
with respect to any specially serviced mortgage loan in the trust fund, the
special servicer is required to promptly remit those amounts to the master
servicer for deposit in the master servicer's collection account.
Withdrawals. The master servicer may make withdrawals from its collection
account for any of the following purposes, which are not listed in any order of
priority:
1. to remit to the trustee for deposit in the trustee's payment account,
as described under "Description of the Offered Certificates--Payment
Account" in this prospectus supplement, on the business day preceding
each payment date, all payments and other collections on the mortgage
loans and any REO Properties in the trust fund that are then on
deposit in the collection account, exclusive of any portion of those
payments and other collections that represents one or more of the
following:
(a) monthly debt service payments due on a due date subsequent to the
end of the related collection period;
(b) payments and other collections received after the end of the
related collection period; and
(c) amounts that are payable or reimbursable from the collection
account to any person other than the series 2004-C1
certificateholders in accordance with any of clauses 3. through
20. below;
2. to apply amounts held for future distribution on the series 2004-C1
certificates to make advances to cover delinquent scheduled debt
service payments, other than balloon payments;
3. to reimburse itself, the special servicer, the trustee or the fiscal
agent, as applicable, for any unreimbursed advances made by that party
under the series 2004-C1 pooling and servicing agreement, which
reimbursement is to be made out of collections on or proceeds from the
mortgage loan or REO Property in the trust fund as to which the
advance was made;
4. to pay itself earned and unpaid master servicing fees with respect to
each mortgage loan in the trust fund, which payment is first to be
made out of amounts received on or with respect to that mortgage loan
that are allocable as a recovery of interest and then, if the subject
underlying mortgage loan and any related REO Property has been
liquidated, out of general collections on deposit in the collection
account;
5. to pay the special servicer, out of general collections on the
mortgage loans and any REO Properties in the trust fund, earned and
unpaid special servicing fees with respect to each mortgage loan in
the trust fund that is either:
(a) a specially serviced mortgage loan; or
(b) a mortgage loan as to which the related mortgaged real property
has become an REO Property;
6. to pay the special servicer or, if applicable, its predecessor earned
and unpaid workout fees and liquidation fees to which it is entitled,
which payment is to be made from the sources described under
"--Servicing and Other Compensation and Payment of Expenses" above;
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7. to reimburse itself, the special servicer, the trustee or the fiscal
agent, as applicable, out of general collections on or proceeds from
the mortgage loans and any REO Properties in the trust fund, for any
unreimbursed advance made by that party under the series 2004-C1
pooling and servicing agreement that has been determined to be a
Nonrecoverable Advance;
8. in connection with the reimbursement of any advance as described in
clause 3. or 7. above, to pay itself, the special servicer, the
trustee or the fiscal agent, as applicable, unpaid interest accrued on
that advance, with that payment to be made out of Default Interest and
late payment charges received (during the collection period in which
that advance was reimbursed) with respect to the particular underlying
mortgage loan as to which, or that relates to the mortgaged real
property as to which, that advance was made;
9. to pay the cost of inspections by the special servicer of any
mortgaged real property that secures a specially serviced mortgage
loan or of any REO Property;
10. in connection with the reimbursement of advances as described in
clause 3. or 7. above, to pay itself, the special servicer, the
trustee or the fiscal agent, as the case may be, out of general
collections on or proceeds from the mortgage loans and any REO
Properties in the trust fund, any interest accrued and payable on that
advance and not otherwise paid or payable, as the case may be, under
clause 8. above;
11. to pay itself or the special servicer, as applicable, any items of
additional servicing compensation on deposit in the collection account
as discussed under "--Servicing and Other Compensation and Payment of
Expenses--Additional Servicing Compensation" above;
12. subject to the determinations described under "--Servicing and Other
Compensation and Payment of Expenses" above, to pay, out of general
collections on the mortgage loans and any REO Properties in the trust
fund, any servicing expenses that would, if advanced, be a
Nonrecoverable Advance;
13. to pay, out of general collections on the mortgage loans and any REO
Properties in the trust fund, for costs and expenses incurred by the
trust in connection with environmental assessments of, and/or the
remediation of adverse environmental conditions at, any mortgaged real
property that secures a defaulted mortgage loan in the trust fund;
14. to pay itself, the special servicer, the trustee, us or any of their
or our respective directors, officers, managers, members, employees
and agents, as the case may be, out of general collections on or
proceeds from the mortgage loans and any REO Properties in the trust
fund, any of the fees, expenses, reimbursements or indemnities to
which we or any of those other persons or entities are entitled as
described under "Description of the Governing Documents--Matters
Regarding the Master Servicer, the Special Servicer, the Manager and
Us" and "Description of the Governing Documents--Matters Regarding the
Trustee" in the accompanying prospectus;
15. to pay, out of general collections on or proceeds from the mortgage
loans and any REO Properties in the trust fund, for the costs of
various opinions of counsel, the costs of appraisals and other
valuations of mortgaged real properties, the cost of recording the
series 2004-C1 pooling and servicing agreement and expenses properly
incurred and fees earned by the trustee in connection with providing
tax advice to the special servicer;
16. to pay any other items provided in the series 2004-C1 pooling and
servicing agreement as being payable from the collection account;
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17. to pay to the person entitled thereto any amounts received on any
mortgage loan or REO Property that has been purchased or otherwise
removed from the trust;
18. with respect to each mortgage loan purchased out of the trust, to pay
to the purchaser all amounts received on that mortgage loan following
the purchase that have been deposited in the collection account;
19. to transfer amounts to the master servicer's interest reserve account,
as described under "Description of the Offered Certificates--Interest
Reserve Account" in this prospectus supplement;
20. to withdraw amounts deposited in the collection account in error; and
21. to clear and terminate the collection account upon the termination of
the series 2004-C1 pooling and servicing agreement.
In no event may the master servicer apply amounts otherwise distributable
on the class PM certificates to pay and/or reimburse Additional Trust Fund
Expenses and/or advances attributable to underlying mortgage loans other than
the Pecanland Mall Mortgage Loan.
MAINTENANCE OF INSURANCE
The master servicer (with respect to mortgage loans in the trust fund) and
the special servicer (with respect to REO properties) must, consistent with the
Servicing Standard and to the extent that the trust has an insurable interest,
cause to be maintained for each mortgaged real property all insurance coverage
as is required under the related mortgage instrument; provided that, if and to
the extent that any such mortgage instrument permits the holder thereof any
discretion (by way of consent, approval or otherwise) as to the insurance
coverage that the related borrower is required to maintain, the master servicer
must exercise such discretion in a manner consistent with the Servicing
Standard. The cost of any such insurance coverage obtained by either the master
servicer or the special servicer shall be a servicing advance to be paid by the
master servicer.
The special servicer must also cause to be maintained for each REO Property
in the trust fund no less insurance coverage than was previously required of the
borrower under the related underlying mortgage loan.
Notwithstanding the foregoing, the master servicer or special servicer, as
applicable, will not be required to maintain and shall not cause a borrower to
be in default with respect to the failure of the related borrower to obtain,
all-risk casualty insurance which does not contain any carve-out for terrorist
or similar acts, if and only if, the special servicer, in consultation with the
series 2004-C1 controlling class representative, and, with respect to the
Pecanland Mall Mortgage Loan if no Pecanland Mall Change-of-Control Event has
occurred and is continuing, in consultation with class PM representative, has
determined in accordance with the Servicing Standard that either (a) such
insurance is not available at any rate or (b) such insurance is not available at
commercially reasonably rates and that such hazards are not at the time commonly
insured against for properties similar to the subject mortgaged real property
and located in or around the region in which the subject mortgaged real property
is located; provided, however, neither the series 2004-C1 controlling class
representative nor the class PM representative will have more than three
business days to respond to the special servicer's request for consultation;
provided, further, that upon the special servicer's determination consistent
with the Servicing Standard, that exigent circumstances do not allow the special
servicer to consult with the series 2004-C1 controlling class representative
and/or the class PM representative, as applicable, the special servicer will not
be required to do so; and provided, further that, during the period that the
special servicer is evaluating such insurance under the series 2004-C1 pooling
and servicing agreement, the master servicer will not be liable for any
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loss related to its failure to require the borrower to maintain terrorism
insurance and will not be in default of its obligations hereunder as a result of
such failure.
If the master servicer or the special servicer obtains and maintains, or
causes to be obtained and maintained, a blanket policy insuring against hazard
losses on all of the underlying mortgage loans and/or REO Properties that it is
required to service and administer, then, to the extent such policy (i) is
obtained from an insurer meeting the criteria specified in the series 2004-C1
pooling and servicing agreement and (ii) provides protection equivalent to the
individual policies otherwise required, the master servicer or the special
servicer, as the case may be, will conclusively be deemed to have satisfied its
obligation to cause hazard insurance to be maintained on the related mortgaged
real properties and/or REO Properties. Such blanket policy may contain a
deductible clause (not in excess of a customary amount), in which case the
master servicer or the special servicer, as appropriate, must, if there shall
not have been maintained on the related mortgaged real property or REO Property
a hazard insurance policy complying with the requirements of the series 2004-C1
pooling and servicing agreement, and there has been one or more losses that
would have been covered by such policy, promptly deposit into the collection
account from its own funds the amount not otherwise payable under the blanket
policy because of such deductible clause.
FAIR VALUE PURCHASE OPTION
Within 60 days after any of the underlying mortgage loans becomes a
Defaulted Mortgage Loan, the special servicer shall determine the fair value of
the subject mortgage loan in accordance with the Servicing Standard. The special
servicer will be required to make that determination without taking into account
any effect the restrictions on the sale of the subject mortgage loan contained
herein may have on the value thereof. In addition, the special servicer will be
required to use reasonable efforts promptly to obtain an appraisal with respect
to the related mortgaged real property unless it has an appraisal that is less
than 12 months old and has no actual knowledge of, or notice of, any event that
in the special servicer's judgment would materially affect the validity of such
appraisal. The special servicer must make its fair value determination as soon
as reasonably practicable (but in any event within 30 days) after its receipt of
such new appraisal, if applicable. The special servicer is 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; and, in any event, the special servicer
must update its determination of the fair value at least once every 90 days. The
special servicer must notify the trustee, the master servicer, each rating
agency and the Majority Controlling Class Certificateholder promptly upon its
fair value determination and any adjustment thereto. In determining the fair
value of any Defaulted Mortgage Loan, the special servicer will be required to
take into account, among other factors, the period and amount of the delinquency
on the subject mortgage loan, the occupancy level and physical condition of the
related mortgaged real property, the state of the local economy in the area
where the related mortgaged real property is located, and the time and expense
associated with a purchaser's foreclosing on the related mortgaged real
property. In addition, the special servicer will be required to refer to all
other relevant information obtained by it or otherwise contained in the mortgage
loan file; and, in any event, the special servicer must take account of any
change in circumstances regarding the related mortgaged real property known to
the special servicer that has occurred subsequent to, and that would, in the
special servicer's judgment, materially affect the value of the related
mortgaged real property reflected in the most recent related appraisal.
Furthermore, the special servicer will be required to consider all available
objective third-party information obtained from generally available sources, as
well as information obtained from vendors providing real estate services to the
special servicer, concerning the market for distressed real estate loans and the
real estate market for the subject property type in the area where the related
mortgaged real property is located. The special servicer may conclusively rely
on the opinion and reports of independent third parties in making such
determination.
In the event any of the underlying mortgage loans becomes a Defaulted
Mortgage Loan, each of the Majority Controlling Class Certificateholder and the
special servicer will have an assignable option (a "Purchase
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Option") to purchase such Defaulted Mortgage Loan from the trust at a price (the
"Option Price") equal to (a) a par purchase price that includes such additional
items as are provided for in the series 2004-C1 pooling and servicing agreement,
if the special servicer has not yet determined the fair value of the Defaulted
Mortgage Loan, or (b) the fair value of the Defaulted Mortgage Loan as
determined by the special servicer in the manner described in the preceding
paragraph and in accordance with the Servicing Standard, if the special servicer
has made such fair value determination. Any holder of a Purchase Option may
sell, transfer, assign or otherwise convey its Purchase Option with respect to
any Defaulted Mortgage Loan to any party other than the related borrower or an
affiliate of the related borrower at any time after the subject mortgage loan
becomes a Defaulted Mortgage Loan. The transferor of any Purchase Option must
notify the trustee and the master servicer of such transfer, which notice should
include the transferee's name, address, telephone number, facsimile number and
appropriate contact person(s) and shall be acknowledged in writing by the
transferee. In general, the Majority Controlling Class Certificateholder shall
have the right to exercise its Purchase Option prior to any exercise of the
Purchase Option by any other holder of a Purchase Option, except that, if the
Purchase Option is not exercised by the Majority Controlling Class
Certificateholder or any assignee thereof within 60 days of an underlying
mortgage loan becoming a Defaulted Mortgage Loan, then the special servicer will
have the right to exercise its Purchase Option prior to any exercise by the
Majority Controlling Class Certificateholder and the special servicer or its
assignee may exercise such Purchase Option at any time during the 15-day period
immediately following the expiration of such 60-day period. Following the
expiration of that 15-day period, the Majority Controlling Class
Certificateholder shall again have the right to exercise its Purchase Option
prior to any exercise of the Purchase Option by the special servicer. If not
exercised earlier, the Purchase Option with respect to any Defaulted Mortgage
Loan will automatically terminate (a) once the subject mortgage loan is no
longer a Defaulted Mortgage Loan, although, if such mortgage loan subsequently
becomes a Defaulted Mortgage Loan, the related Purchase Option will again be
exercisable, (b) upon the acquisition, by or on behalf of the trust, of title to
the related mortgaged real property through foreclosure or deed in lieu of
foreclosure or (c) the modification or pay-off, in full or at a discount, of
such Defaulted Mortgage Loan in connection with a workout.
The series 2004-C1 pooling and servicing agreement will specify the
procedure for exercising a Purchase Option.
Notwithstanding the foregoing, the holder of the subordinate companion loan
related to the Ocean Key Resort Mortgage Loan will have the right to purchase
the Ocean Key Resort Mortgage Loan from the trust in certain default situations,
as described above under "Description of the Mortgage Pool--The Ocean Key Resort
Loan Pair--Purchase of the Ocean Key Resort Mortgage Loan by the Holder of the
Related Subordinate Companion Loan".
Also notwithstanding the foregoing, if the Pecanland Mall Mortgage Loan
becomes a Defaulted Mortgage Loan, then (for 90 days thereafter or, if sooner,
until the end of the corresponding Purchase Option described above) the holder
- -- or, if applicable, the beneficial owner -- of the largest percentage interest
in the class PM certificates will be entitled to purchase that mortgage loan at
the applicable Purchase Price (as defined under "Description of the Mortgage
Pool--Assignment of the Mortgage Loans; Repurchases and Substitutions in this
prospectus supplement, but including the liquidation fee if purchased more than
60 days after such option is first exercisable) (and such right will be superior
to the corresponding Purchase Option described above).
If the special servicer or the Majority Controlling Class
Certificateholder, or any of their respective affiliates, is the person expected
to acquire any Defaulted Mortgage Loan, then the trustee will be required to
determine as soon as reasonably practicable (and, in any event, within 30 days)
after the trustee has received the applicable written notice, whether the Option
Price represents fair value for the Defaulted Mortgage Loan; except that, if the
special servicer is then in the process of obtaining a new appraisal with
respect to the related mortgaged real property, then the trustee will make its
fair value determination with respect to the subject mortgage loan as soon as
reasonably practicable (but in any event within 30 days) after the trustee's
receipt of such new appraisal. Such fair value determination shall be made in
accordance with the trustee's good faith
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reasonable judgment. In determining the fair value of any Defaulted Mortgage
Loan, the trustee will be required to take into account, among other factors,
the period and amount of the delinquency on the subject mortgage loan, the
occupancy level and physical condition of the related mortgaged real property,
the state of the local economy in the area where the related mortgaged real
property is located, and the time and expense associated with a purchaser's
foreclosing on the related mortgaged real property. In addition, the trustee
will be required to refer to the Servicing Standard, the trustee's good faith
reasonable judgment and all other relevant information delivered to it by the
special servicer or otherwise contained in the mortgage loan file; and, in any
event, the trustee must take account of any change in circumstances regarding
the related mortgaged real property known to the trustee that has occurred
subsequent to, and that would, in the trustee's judgment, materially affect the
value of the related mortgaged real property. Furthermore, the trustee must
consider all available objective third-party information obtained from generally
available sources, concerning the market for distressed real estate loans and
the real estate market for the subject property type in the area where the
related mortgaged property is located. The trustee may rely on the opinion and
reports of independent third parties in making such determination and, further,
may rely on the most current appraisal obtained for the related mortgaged real
property pursuant to this Agreement. The reasonable costs of all appraisals,
inspection reports and broker opinions of value, reasonably incurred by the
trustee or any such third party pursuant to this subsection are to be advanced
by the master servicer and shall constitute, and be reimbursable as, servicing
advances.
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 series 2004-C1 pooling and servicing
agreement with respect to such Defaulted Mortgage Loan, including, without
limitation, workout and foreclosure, as the special servicer may deem
appropriate consistent with the Servicing Standard. The special servicer will
not be permitted to sell the Defaulted Mortgage Loan other than in connection
with the exercise of the related Purchase Option or in connection with a
repurchase by the applicable mortgage loan seller as described under
"Description of the Mortgage Pool--Assignment of the Mortgage Loans;
Repurchases" and "--Representations and Warranties; Repurchases and
Substitutions" in this prospectus supplement.
REALIZATION UPON DEFAULTED MORTGAGE LOANS
If a default on an underlying mortgage loan, has occurred, then, subject to
the discussion under "--The Series 2004-C1 Controlling Class Representative and
the Class PM Representative" above, the special servicer may, on behalf of the
trust, take any of the following actions:
o work out the mortgage loan;
o institute foreclosure proceedings;
o exercise any power of sale contained in the related mortgage
instrument;
o obtain a deed in lieu of foreclosure; and/or
o otherwise acquire title to the corresponding mortgaged real property,
by operation of law or otherwise.
The special servicer may not, however, initiate foreclosure proceedings,
acquire title to any mortgaged real property or take any other action with
respect to any mortgaged real property that would cause the trustee, for the
benefit of the series 2004-C1 certificateholders, or any other specified person
to be considered to hold title to, to be a "mortgagee-in-possession" of, or to
be an "owner" or an "operator" of the particular real property within the
meaning of various federal environmental laws, unless:
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o the special servicer has, within the prior six months, received an
environmental assessment report prepared by a person who regularly
conducts environmental audits, which report will be an expense of the
trust; and
o either--
1. the report indicates that--
(a) the particular real property is in compliance with
applicable environmental laws and regulations, and
(b) there are no circumstances or conditions present at the
particular real property that have resulted in any
contamination for which investigation, testing, monitoring,
containment, clean-up or remediation could be required under
any applicable environmental laws and regulations; or
2. the special servicer, based on the information set forth in the
report, determines that taking the actions necessary to bring the
particular real property into compliance with applicable
environmental laws and regulations and/or taking any of the other
actions contemplated by clause 1. above, would maximize the
recovery for the series 2004-C1 certificateholders, as a
collective whole, on a present value basis, than not taking those
actions.
See, however, "--The Series 2004-C1 Controlling Class Representative and
the Class PM Representative--Rights and Powers of the Series 2004-C1 Controlling
Class Representative and the Class PM Representative" above.
The cost of any environmental testing, as well as the cost of any remedial,
corrective or other further action contemplated by the second bullet of the
second paragraph of this "--Realization Upon Defaulted Mortgage Loans" section,
will generally be payable directly out of the master servicer's collection
account.
If neither of the conditions in clauses 1. and 2. of the second bullet of
the second paragraph of this "--Realization Upon Defaulted Mortgage Loans"
section has been satisfied with respect to any mortgaged real property securing
an underlying mortgage loan, then the special servicer may, subject to the
discussion under "--The Series 2004-C1 Controlling Class Representative and the
Class PM Representative" above, take those actions as are in accordance with the
Servicing Standard, other than proceeding against the contaminated mortgaged
real property. In connection with the foregoing, when the special servicer
determines it to be appropriate, it may, subject to the discussion under "--The
Series 2004-C1 Controlling Class Representative and the Class PM Representative"
above, on behalf of the trust, release all or a portion of the related mortgaged
real property from the lien of the related mortgage instrument.
If liquidation proceeds collected with respect to a defaulted mortgage loan
in the trust fund are less than the outstanding principal balance of the
defaulted mortgage loan, together with accrued interest on and reimbursable
expenses incurred by the special servicer, the master servicer and/or any other
applicable party in connection with the defaulted mortgage loan, then the trust
will realize a loss in the amount of the shortfall. The special servicer, the
master servicer, the trustee and/or the fiscal agent will be entitled to
reimbursement out of the liquidation proceeds, insurance proceeds and
condemnation proceeds recovered on any defaulted mortgage loan, prior to the
payment of those proceeds to the series 2004-C1 certificateholders, for:
o any and all amounts that represent unpaid servicing compensation with
respect to the mortgage loan;
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o any unreimbursed servicing expenses incurred with respect to the
mortgage loan; and
o any unreimbursed advances of delinquent payments made with respect to
the mortgage loan.
In addition, amounts otherwise payable on the series 2004-C1 certificates
may be further reduced by interest payable to the master servicer, the special
servicer, the trustee and/or the fiscal agent on the servicing expenses and
advances.
REO PROPERTIES
If title to any mortgaged real property is acquired by the special servicer
on behalf of the trust, the special servicer will be required to sell that
property not later than the end of the third taxable year following the year of
acquisition, unless:
o the IRS grants an extension of time to sell the property; or
o the special servicer obtains an opinion of independent counsel
generally to the effect that the holding of the property subsequent to
the end of the third year following the year in which the acquisition
occurred will not result in the imposition of a tax on the trust
assets or cause any REMIC created under the series 2004-C1 pooling and
servicing agreement to fail to qualify as such under the Internal
Revenue Code.
Subject to the foregoing, the special servicer will generally be required
to solicit cash offers for any REO Property held by the trust in a commercially
reasonable manner. Neither the trustee nor any of its affiliates may bid for or
purchase from the trust any REO Property.
Regardless of whether the special servicer applies for or is granted an
extension of time to sell any REO Property, the special servicer must act in
accordance with the Servicing Standard to liquidate the property on a timely
basis. If an extension is granted or opinion given, the special servicer must
sell the subject REO Property within the period specified in the extension or
opinion, as the case may be.
Sales of REO Properties will be subject to the approval of the series
2004-C1 controlling class representative or the class PM representative, as
applicable, as and to the extent described under "--The Series 2004-C1
Controlling Class Representative and the Class PM Representative" above.
The special servicer may retain an independent contractor to operate and
manage any REO Property held by the trust. The special servicer will comply with
the Servicing Standard in monitoring the independent contractor.
In general, the special servicer or an independent contractor employed by
the special servicer at the expense of the trust will be obligated to operate
and manage any REO Property held by the trust in a manner that:
o maintains its status as foreclosure property under the REMIC
provisions of the Internal Revenue Code; and
o would, to the extent commercially feasible and consistent with the
preceding bullet, maximize net after-tax revenues received from that
property.
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The special servicer must review the operation of each REO Property held by
the trust and consult with the trustee, or any person appointed by the trustee
to act as tax administrator, to determine the trust's federal income tax
reporting position with respect to the income it is anticipated that the trust
would derive from the property. The special servicer's determination as to how
each REO Property is to be managed is to be based on the Servicing Standard. The
special servicer could determine that it would not be consistent with the
Servicing Standard to manage and operate the property in a manner that would
avoid the imposition of:
o a tax on net income from foreclosure property, within the meaning of
section 860G(c) of the Internal Revenue Code; or
o a tax on prohibited transactions under section 860F of the Internal
Revenue Code.
To the extent that income the trust receives from an REO Property is
subject to:
o a tax on net income from foreclosure property, that income would be
subject to federal tax at the highest marginal corporate tax rate,
which is currently 35%; or
o a tax on prohibited transactions, that income would be subject to
federal tax at a 100% rate.
The determination as to whether income from an REO Property held by the
trust would be subject to a tax will depend on the specific facts and
circumstances relating to the management and operation of each REO Property.
Generally, income from an REO Property that is directly operated by the special
servicer would be apportioned and classified as service or non-service income.
The service portion of the income could be subject to federal tax either at the
highest marginal corporate tax rate or at the 100% rate. The non-service portion
of the income could be subject to federal tax at the highest marginal corporate
tax rate or, although it appears unlikely, at the 100% rate. Any tax imposed on
the trust's income from an REO Property would reduce the amount available for
payment to the series 2004-C1 certificateholders. See "Federal Income Tax
Consequences" in this prospectus supplement and in the accompanying prospectus.
The reasonable out-of-pocket costs and expenses of obtaining professional tax
advice in connection with the foregoing will be payable out of the master
servicer's collection account.
With respect to one (1) of the mortgage loans that we intend to include in
the trust fund (loan number 27), representing 2.3% of the initial mortgage pool
balance, the related mortgaged real property is situated in the Territory of
Guam. If the trust were to acquire such property through foreclosure or similar
action, withholding or income taxes imposed by the Territory of Guam could
reduce any rental income derived from such property. In addition, taxes imposed
by the Territory of Guam could reduce or delay the receipt of proceeds from the
sale or other disposition of such property. Any such reduction or delay could
adversely affect the cash proceeds from the rental or liquidation of such
property available to make payments to the series 2004-C1 certificateholders.
The special servicer will be required to segregate and hold all funds
collected and received in connection with any REO Property held by the trust
separate and apart from its own funds and general assets. If an REO Property is
acquired by the trust, the special servicer will be required to establish and
maintain an account for the retention of revenues and other proceeds derived
from that property. That REO account must be maintained in a manner and with a
depository institution that satisfies rating agency standards for
securitizations similar to the one involving the offered certificates. The
special servicer will be required to deposit, or cause to be deposited, in its
REO account, within two business days after receipt, all net income, insurance
proceeds, condemnation proceeds and liquidation proceeds received with respect
to each REO Property held by the trust. The funds held in this REO account may
be held as cash or invested in Permitted Investments. Any interest or other
income earned on funds in the special servicer's REO account will be payable to
the special servicer, subject to the limitations described in the series 2004-C1
pooling and servicing agreement.
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The special servicer will be required to withdraw from its REO account
funds necessary for the proper operation, management, leasing, maintenance and
disposition of any REO Property held by the trust, but only to the extent of
amounts on deposit in the account relating to that particular REO Property.
Promptly following the end of each collection period, the special servicer will
be required to withdraw from the REO account and deposit, or deliver to the
master servicer for deposit, into the master servicer's collection account the
total of all amounts received with respect to each REO Property held by the
trust during that collection period, net of:
o any withdrawals made out of those amounts as described in the
preceding sentence; and
o any portion of those amounts that may be retained as reserves as
described in the next sentence.
The special servicer may, subject to the limitations described in the series
2004-C1 pooling and servicing agreement, retain in its REO account the portion
of the proceeds and collections on any REO Property held by the trust as may be
necessary to maintain a reserve of sufficient funds for the proper operation,
management, leasing, maintenance and disposition of that property, including the
creation of a reasonable reserve for repairs, replacements, necessary capital
improvements and other related expenses.
The special servicer will be required to keep and maintain separate
records, on a property-by-property basis, for the purpose of accounting for all
deposits to, and withdrawals from, its REO account.
INSPECTIONS; COLLECTION OF OPERATING INFORMATION
The special servicer is required to perform or cause to be performed a
physical inspection of the related mortgaged real property as soon as
practicable after any of the underlying mortgage loans become specially serviced
or the related debt service coverage ratio is below 1.0x; and the expense of
that inspection will be payable first, out of Default Interest and late payment
charges received with respect to the related underlying mortgage loan in the
collection period during which such inspection related expenses were incurred,
then as an Additional Trust Fund Expense.
In addition, beginning in 2005, with respect to each mortgaged real
property securing an underlying mortgage loan with a principal balance (or
allocated loan amount) at the time of such inspection of at least $2,000,000,
the master servicer (with respect to each such mortgaged real property securing
an underlying mortgage loan other than a specially serviced mortgage loan) and
the special servicer (with respect to each mortgaged real property securing a
specially serviced mortgage loan in the trust fund) is required at its expense
to inspect or cause to be inspected the related mortgaged real property every
calendar year, and with respect to each mortgaged real property securing an
underlying 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 real property that has been inspected by the special servicer in the
previous six 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 real property and that specifies
the existence with respect thereto of any sale, transfer or abandonment, any
material change in its condition or value or any visible waste committed on the
mortgaged real property.
The special servicer or the master servicer, as applicable, is also
required to endeavor to collect from the related borrower and review the
quarterly and annual operating statements of each mortgaged real property and to
cause annual operating statements to be prepared for each REO Property.
Generally, the mortgage loans that we intend to include in the trust fund
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.
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Copies of the inspection reports and operating statements referred to above
are required to be available for review by series 2004-C1 certificateholders
during normal business hours at the offices of the special servicer or the
master servicer, as applicable. See "Description of the Offered
Certificates--Reports to Certificateholders, Available Information" in this
prospectus supplement.
EVIDENCE AS TO COMPLIANCE
On or before May 1 (or such earlier date as may be provided for under the
series 2004-C1 pooling and servicing agreement) of each year, beginning in 2005,
each of the master servicer and the special servicer must:
o at its expense, cause a firm of independent public accountants, that
is a member of the American Institute of Certified Public Accountants
to furnish a statement to the trustee, among others, to the effect
that:
1. the firm has examined the servicing operations of the master
servicer or the special servicer, as the case may be, for the
previous year or the portion of that year during which the series
2004-C1 certificates were outstanding; and
2. on the basis of that examination, conducted substantially in
compliance with USAP, the firm confirms that the master servicer
or the special servicer, as the case may be, has complied with
the minimum servicing standards identified in USAP, in all
material respects, except for the significant exceptions or
errors in records that, in the opinion of the firm, USAP requires
it to report; and
o deliver to the trustee, among others, a statement signed by an officer
of the master servicer or the special servicer, as the case may be, to
the effect that, to the knowledge of that officer, the master servicer
or the special servicer, as the case may be, has fulfilled its
obligations under the series 2004-C1 pooling and servicing agreement
in all material respects throughout the preceding calendar year or the
portion of that year during which the series 2004-C1 certificates were
outstanding.
In rendering its report, the accounting firm referred to in the first
bullet of the prior sentence may, as to matters relating to the direct servicing
of commercial and multifamily mortgage loans by sub-servicers, rely upon
comparable reports of firms of independent certified public accountants rendered
on the basis of examinations conducted in accordance with the same standards,
within one year of the report, with respect to those sub-servicers.
EVENTS OF DEFAULT
Each of the following events, circumstances and conditions will be
considered events of default under the series 2004-C1 pooling and servicing
agreement:
o the master servicer fails to deposit into its collection account any
amount required to be so deposited, and that failure continues
unremedied for one business day following the date on which the
deposit or remittance was required to be made;
o the master servicer fails to remit to the trustee for deposit in the
trustee's payment account any amount (other than P&I advances)
required to be so remitted, and that failure continues unremedied
until 10:00 a.m., New York City time, on the applicable payment date;
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o any failure by the special servicer to timely deposit into its REO
account or to timely deposit into, or to timely remit to the master
servicer for deposit into, the master servicer's collection account,
any amount required to be so deposited or remitted;
o the master servicer fails to timely make any servicing advance
required to be made by it under the series 2004-C1 pooling and
servicing agreement, and that failure continues unremedied for five
business days following the date on which notice of such failure has
been given to the master servicer by the trustee;
o any failure on the part of the master servicer or the special servicer
duly to observe or perform in any material respect any of its other
covenants or agreements under the series 2004-C1 pooling and servicing
agreement, which failure continues unremedied for 30 days after the
date on which written notice of that failure, requiring the same to be
remedied, has been given to the master servicer or the special
servicer, as the case may be, by any other party to the series 2004-C1
pooling and servicing agreement or to the master servicer or the
special servicer, as the case may be (with a copy to each other party
to the series 2004-C1 pooling and servicing agreement), by the series
2004-C1 certificateholders entitled to at least 25% of the series
2004-C1 voting rights; provided, however, that with respect to any
such failure which is not curable within such 30-day period, the
master servicer or the special servicer, as the case may be, will have
an additional cure period of 30 days to effect the cure thereof so
long as the master servicer or the special servicer, as the case may
be, has commenced to cure that failure within the initial 30-day
period and has provided the trustee with an officer's certificate
certifying that it has diligently pursued, and is diligently
continuing to pursue, a full cure;
o any breach on the part of the master servicer or the special servicer
of any representation or warranty contained in the series 2004-C1
pooling and servicing agreement that materially and adversely affects
the interests of any class of series 2004-C1 certificateholders, which
breach continues unremedied for a period of 30 days after the date on
which notice of that breach, requiring the same to be remedied, has
been given to the master servicer or the special servicer, as the case
may be, by any other party to the series 2004-C1 pooling and servicing
agreement or to the master servicer or the special servicer, as the
case may be (with a copy to each other party to the series 2004-C1
pooling and servicing agreement), by the series 2004-C1
certificateholders entitled to at least 25% of the series 2004-C1
voting rights; provided, however, that with respect to any such breach
which is not curable within such 30-day period, the master servicer or
the special servicer, as the case may be, will have an additional cure
period of 30 days so long as the master servicer or the special
servicer, as the case may be, has commenced to cure within the initial
30-day period and has provided the trustee with an officer's
certificate certifying that it has diligently pursued, and is
diligently continuing to pursue, a full cure;
o a decree or order of a court, agency or supervisory authority having
jurisdiction in an involuntary case under any present or future
bankruptcy, insolvency or similar law for the appointment of a
conservator, receiver, liquidator, trustee or similar official in any
bankruptcy, insolvency, readjustment of debt, marshalling of assets
and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, is entered against the master servicer or
the special servicer and the decree or order remains in force
undischarged or unstayed for a period of 60 days;
o the master servicer or special servicer consents to the appointment of
a conservator, receiver, liquidator, trustee or similar official in
any bankruptcy, insolvency, readjustment of debt, marshalling of
assets and liabilities or similar proceedings of or relating to it or
of or relating to all or substantially all of its property;
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o the master servicer or special servicer admits in writing its
inability to pay its debts as they become due or takes various other
actions indicating its insolvency or inability to pay its obligations;
o the consolidated net worth of the master servicer and of its direct or
indirect parent, determined in accordance with generally accepted
accounting principles, declines below $15,000,000;
o the master servicer or the special servicer, as the case may be,
receives actual knowledge that Moody's has (a) qualified, downgraded
or withdrawn its rating or ratings of one or more classes of series
2004-C1 certificates or (b) placed one or more classes of series
2004-C1 certificates on "watch status" in contemplation of possible
rating downgrade or withdrawal (and such "watch status" placement
shall not have been withdrawn by Moody's within 60 days of the date
that the master servicer or the special servicer obtained such actual
knowledge), and, in the case of either clause (a) or (b), has cited
servicing concerns with the master servicer or the special servicer,
as the case may be, as the sole or material factor in such rating
action;
o the master servicer is removed from S&P's approved master servicer
list, or the special servicer is removed from S&P's approved special
servicer list, and that master servicer or special servicer, as the
case may be, is not reinstated to that list within 60 days after its
removal therefrom;
o the master servicer fails to remit to the trustee for deposit into the
trustee's payment account, on the applicable date in any calendar
month, the full amount of monthly debt service advances required to be
made on that date, which failure continues unremedied until 10:00 a.m.
New York City time on the next business day; or
o the special servicer fails to be rated at least "CSS2" by Fitch, Inc.
RIGHTS UPON EVENT OF DEFAULT
If an event of default described above under "--Events of Default" occurs
with respect to the master servicer or the special servicer and remains
unremedied, the trustee will be authorized, and at the direction of the series
2004-C1 certificateholders entitled to not less than 25% of the series 2004-C1
voting rights, the trustee will be required, to terminate all of the rights and
obligations of the defaulting party under the series 2004-C1 pooling and
servicing agreement and in and to the trust assets other than any rights the
defaulting party may have as a series 2004-C1 certificateholder. Upon any
termination, the trustee must either:
o succeed to all of the responsibilities, duties and liabilities of the
master servicer or special servicer, as the case may be, under the
series 2004-C1 pooling and servicing agreement; or
o appoint an established mortgage loan servicing institution to act as
successor master servicer or special servicer, as the case may be,
under the series 2004-C1 pooling and servicing agreement.
The holders of series 2004-C1 certificates entitled to at least 51% of the
series 2004-C1 voting rights may require the trustee to appoint an established
mortgage loan servicing institution to act as successor master servicer or
special servicer, as the case may be, under the series 2004-C1 pooling and
servicing agreement, rather than have the trustee act as that successor.
Notwithstanding the foregoing discussion in this "--Rights Upon Event of
Default" section, if the master servicer is terminated under the circumstances
described above because of the occurrence of any of the events of default
described in the eleventh and twelfth bullets under "--Events of Default" above,
the master servicer will have the right for a period of 45 days, at its expense,
to sell its master servicing rights with respect to the
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mortgage pool to a master servicer whose appointment Moody's and S&P have each
confirmed will not result in a qualification, downgrade or withdrawal of any of
the then-current ratings of the series 2004-C1 certificates.
In general, the series 2004-C1 certificateholders entitled to at least 66
2/3% of the series 2004-C1 voting rights allocated to the classes of series
2004-C1 certificates affected by any event of default may waive the event of
default. However, the events of default described in the first, second, third,
eleventh and penultimate bullets under "--Events of Default" above may only be
waived by all of the holders of the series 2004-C1 certificates. Upon any waiver
of an event of default, the event of default will cease to exist and will be
deemed to have been remedied for every purpose under the series 2004-C1 pooling
and servicing agreement.
No series 2004-C1 certificateholder will have the right under the series
2004-C1 pooling and servicing agreement to institute any suit, action or
proceeding with respect to that agreement or any underlying mortgage loan
unless, with respect to any suit, action or proceeding upon or under the series
2004-C1 pooling and servicing agreement:
o that holder previously has given to the trustee written notice of
default;
o except in the case of a default by the trustee, series 2004-C1
certificateholders entitled to not less than 25% of the series 2004-C1
voting rights have made written request upon the trustee to institute
that suit, action or proceeding in its own name as trustee under the
series 2004-C1 pooling and servicing agreement and have offered to the
trustee such reasonable indemnity as it may require; and
o the trustee for 60 days has 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 the series 2004-C1 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 series 2004-C1 certificateholders, unless in the
trustee's opinion, those series 2004-C1 certificateholders have offered to the
trustee reasonable security or indemnity against the costs, expenses and
liabilities which may be incurred by the trustee as a result.
DESCRIPTION OF THE OFFERED CERTIFICATES
GENERAL
The series 2004-C1 certificates will be issued, on or about June 24, 2004,
under the series 2004-C1 pooling and servicing agreement. They will represent
the entire beneficial ownership interest of the trust. The assets of the trust
will include, among other things:
o the underlying mortgage loans;
o any and all payments under and proceeds of the underlying mortgage
loans received after the cut-off date, exclusive of payments of
principal, interest and other amounts due on or before that date;
o the loan documents for the underlying mortgage loans required to be
delivered to the trustee by the respective mortgage loan sellers;
o our rights under each of the mortgage loan purchase agreements between
us and the respective mortgage loan sellers;
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o any REO Properties acquired by the special servicer on behalf of the
trust with respect to defaulted mortgage loans;
o those funds or assets as from time to time are deposited in the master
servicer's collection account, the special servicer's REO account, the
payment account maintained by the trustee as described under
"--Payment Account" below or the interest reserve account maintained
by the master servicer as described under "--Interest Reserve Account"
below.
The series 2004-C1 certificates will include the following classes:
o the A-1, A-2, A-3, A-4, B, C, D and E classes, which are the classes
of series 2004-C1 certificates that are offered by this prospectus
supplement, and
o the F, G, H, J, K, L, M, N, P, Q, PM, X-1, X-2, R and Y classes, which
are the classes of series 2004-C1 certificates that are not offered by
this prospectus supplement.
The class Y certificates are to be issued as three classes of certificates
with the same aggregate characteristics and entitling holders to the same
aggregate rights described in this prospectus supplement. These three classes
will be referred to in this prospectus supplement collectively as the class Y
certificates.
The class A-1, A-2, A-3, A-4, B, C, D, E, F, G, H, J, K, L, M, N, P, Q and
PM certificates are the series 2004-C1 certificates that will have principal
balances and are sometimes referred to in this prospectus supplement as the
series 2004-C1 principal balance certificates. The principal balance of any of
these certificates will represent the total payments of principal to which the
holder of the certificate is entitled over time out of payments, or advances in
lieu of payments, and other collections on the assets of the trust. Accordingly,
on each payment date, the principal balance of each of these certificates will
be permanently reduced by any payments of principal actually made with respect
to the certificate on that payment date. See "--Payments" below. On any
particular payment date, the principal balance of each of these certificates may
also be reduced, without any corresponding payment, in connection with Realized
Losses on the underlying mortgage loans and Additional Trust Fund Expenses. See
"--Reductions of Certificate Principal Balances in Connection with Realized
Losses and Additional Trust Fund Expenses" below. On any particular payment
date, the total principal balance of a class of series 2004-C1 principal balance
certificates may be increased by an amount equal to any Mortgage Deferred
Interest allocated to that class in reduction of the interest payable thereon on
such payment date.
The class X-1, X-2, R and Y certificates will not have principal balances,
and the holders of the class X-1, X-2, R and Y certificates will not be entitled
to receive payments of principal. However, each class X-1 and X-2 certificate
will have a notional amount for purposes of calculating the accrual of interest
with respect to that certificate. The total notional amount of all the class X-1
certificates will equal the total principal balance of all the class A-1, A-2,
A-3, A-4, B, C, D, E, F, G, H, J, K, L, M, N, P and Q certificates outstanding
from time to time. The total notional amount of the class X-2 certificates will
equal:
o during the period from the date of initial issuance of the series
2004-C1 certificates through and including the payment date in ,
the sum of (a) the lesser of $ and the total principal balance
of the class certificates outstanding from time to time and (b) the
total principal balance of the class , , , , , , , ,
, and , certificates outstanding from time to time;
o during the period following the payment date in through and
including the payment date in , the sum of (a) the lesser of
$ and the total principal balance of the class certificates
outstanding from time to time and (b) the total principal balance of
the class , , , , , , , , , and certificates
outstanding from time to time;
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o during the period following the payment date in through and
including the payment date in , the sum of (a) the lesser of
$ and the total principal balance of the class certificates
outstanding from time to time and (b) the total principal balance of
the class , , , , , , , , and certificates
outstanding from time to time;
o during the period following the payment date in through and
including the payment date in , the sum of (a) the lesser of
$ and the total principal balance of the class certificates
outstanding from time to time, (b) the total principal balance of the
class , , , , , , and certificates outstanding from
time to time and (c) the lesser of $ and the total principal
balance of the class certificates outstanding from time to time;
o during the period following the payment date in through and
including the payment date in , the sum of (a) the lesser of
$ and the total principal balance of the class certificates
outstanding from time to time, (b) the total principal balance of the
class , , , , , and certificates outstanding from time
to time and (c) the lesser of $ and the total principal balance
of the class certificates outstanding from time to time;
o during the period following the payment date in through and
including the payment date in , the sum of (a) the lesser of
$ and the total principal balance of the class certificates
outstanding from time to time, (b) the total principal balance of the
class , , , and certificates outstanding from time to
time and (c) the lesser of $ and the total principal balance of
the class certificates outstanding from time to time;
o during the period following the payment date in through and
including the payment date in , the sum of (a) the lesser of
$ and the total principal balance of the class certificates
outstanding from time to time, (b) the total principal balance of the
class , and certificates outstanding from time to time
and (c) the lesser of $ and the total principal balance of the class
certificates outstanding from time to time; and
o following the payment date in , $0.
In general, principal balances and notional amounts will be reported on a
class-by-class basis. In order to determine the principal balance of any of your
offered certificates from time to time, you may multiply the original principal
balance of that certificate as of the date of initial issuance of the offered
certificates, as specified on the face of that certificate, by the
then-applicable certificate factor for the relevant class. The certificate
factor for any class of offered certificates, as of any date of determination,
will equal a fraction, expressed as a percentage, the numerator of which will be
the then outstanding total principal balance of that class, and the denominator
of which will be the original total principal balance of that class. Certificate
factors will be reported monthly in the trustee's payment date statement.
REGISTRATION AND DENOMINATIONS
General. The offered certificates will be issued in book-entry form in
original denominations of $10,000 initial principal balance and in any whole
dollar denomination in excess of $10,000.
Each class of offered certificates will initially be represented by one or
more certificates registered in the name of Cede & Co., as nominee of The
Depository Trust Company. You will not be entitled to receive an offered
certificate issued in fully registered, certificated form, except under the
limited circumstances described in the accompanying prospectus under
"Description of the Certificates--Book-Entry Registration". For so long as any
class of offered certificates is held in book-entry form--
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o all references in this prospectus supplement to actions by holders of
those certificates will refer to actions taken by DTC upon
instructions received from beneficial owners of those certificates
through its participating organizations, and
o all references in this prospectus supplement to payments, notices,
reports, statements and other information made or sent to holders of
those certificates will refer to payments, notices, reports and
statements made or sent to DTC or Cede & Co., as the registered holder
of those certificates, for payment or transmittal, as applicable, to
the beneficial owners of those certificates through its participating
organizations in accordance with DTC's procedures.
The trustee will initially serve as registrar for purposes of providing for
the registration of the offered certificates and, if and to the extent physical
certificates are issued to the actual beneficial owners of any of the offered
certificates, the registration of transfers and exchanges of those certificates.
DTC, Euroclear and Clearstream. You will hold your certificates through
DTC, in the United States, or Clearstream Banking Luxembourg or Euroclear Bank
S.A./N.V., as operator of The Euroclear System, in Europe, if you are a
participating organization of the applicable system, or indirectly through
organizations that are participants in the applicable system. Clearstream and
Euroclear will hold omnibus positions on behalf of organizations that are
participants in either of these systems, through customers' securities accounts
in Clearstream's or Euroclear's names on the books of their respective
depositaries. Those depositaries will, in turn, hold those positions in
customers' securities accounts in the depositaries' names on the books of DTC.
For a discussion of DTC, Euroclear and Clearstream, see "Description of the
Certificates--Book-Entry Registration--DTC, Euroclear and Clearstream" in the
accompanying prospectus.
Transfers between participants in DTC will occur in accordance with DTC's
rules. Transfers between participants in Clearstream and Euroclear 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 or indirectly through participants in Clearstream or
Euroclear, on the other, will be accomplished through DTC in accordance with DTC
rules on behalf of the relevant European international clearing system by its
depositary. See "Description of the Certificates--Book-Entry
Registration--Holding and Transferring Book-Entry Certificates" in the
accompanying prospectus. For additional information regarding clearance and
settlement procedures for the offered certificates and for information with
respect to tax documentation procedures relating to the offered certificates,
see Annex F hereto.
PAYMENT ACCOUNT
General. The trustee must establish and maintain an account in which it
will hold funds pending their payment on the series 2004-C1 certificates and
from which it will make those payments. That payment account must be maintained
in a manner and with a depository institution that satisfies the criteria set
forth in the series 2004-C1 pooling and servicing agreement. Any funds in the
trustee's payment account may, at the trustee's risk, be invested in Permitted
Investments, and any interest or other income earned on those funds will be paid
to the trustee as additional compensation, subject to the limitations set forth
in the series 2004-C1 pooling and servicing agreement.
Deposits. On the business day prior to each payment date, the master
servicer will be required to remit to the trustee for deposit in the payment
account an amount equal to:
o the sum of:
1. the aggregate of the amounts on deposit in the collection
account as of the close of business at the end of the
related collection period and the amounts collected by or on
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behalf of the master servicer as of the close of business on
the last day of the related collection period and required
to be deposited in the collection account,
2. the aggregate amount of any advances of delinquent monthly
debt service payments required to be made by the master
servicer with respect to the underlying mortgage loans for
that payment date,
3. the aggregate amount transferred from the special servicer's
REO account to the collection account on or prior to such
date but after the end of the related collection period,
4. the aggregate amount deposited by the master servicer in the
collection account for such payment date in connection with
prepayment interest shortfalls, and
5. for each payment date occurring in March, and for the final
payment date if the final payment date occurs in February
or, if such year is not a leap year, in January, the
aggregate of the interest reserve amounts in respect of each
underlying mortgage loan that accrues interest on an
Actual/360 Basis; net of
o the portion of any amount described in clauses 1. through 5. above
that represents one or more of the following:
1. collected monthly debt service payments due on a due date
subsequent to the end of the related collection period,
2. payments and other collections received after the end of the
related collection period,
3. amounts that are payable or reimbursable from the master
servicer's collection account to any person other than the series
2004-C1 certificateholders, including--
(a) amounts payable to the master servicer or the special
servicer as compensation, as described under "Servicing of
the Underlying Mortgage Loans--Servicing and Other
Compensation and Payment of Expenses", and as listed in
clauses 4, 5, 6 and 11 of the first paragraph under
"Servicing of the Underlying Mortgage Loans--Collection
Account--Withdrawals", in this prospectus supplement,
(b) amounts payable in reimbursement of outstanding advances,
together with interest on those advances, as permitted under
the series 2004-C1 pooling and servicing agreement, as
listed in clauses 3, 7, 8 and 10 of the first paragraph
under "Servicing of the Underlying Mortgage
Loans--Collection Account--Withdrawals" in this prospectus
supplement, and
(c) amounts payable with respect to other expenses of the trust,
as listed in clauses 9, 12, 13, 14, 15 and 16 of the first
paragraph under "Servicing of the Underlying Mortgage
Loans--Collection Account--Withdrawals" in this prospectus
supplement,
4. Post-ARD Additional Interest;
5. with respect to each payment date during February of any year or
during January of any year that is not a leap year, commencing in
2005, amounts transferable to the master
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servicer's interest reserve account, as described under
"--Interest Reserve Account" below; and
6. amounts deposited in the master servicer's collection account in
error or otherwise payable to a third party in connection with a
mortgage loan that has been purchased out of, or otherwise
removed from, the trust fund.
See "--Interest Reserve Account" and "--Advances of Delinquent Monthly Debt
Service Payments" below and "Servicing of the Underlying Mortgage
Loans--Collection Account" and "--Servicing and Other Compensation and Payment
of Expenses" in this prospectus supplement.
Withdrawals. The trustee may from time to time make withdrawals from its
payment account for any of the following purposes:
o to pay itself the monthly trustee fee, which is described under "--The
Trustee" below, and investment earnings on Permitted Investments of
funds in the payment account;
o to pay itself or any of various related persons and entities any
reimbursements or indemnities to which they are entitled, as described
under "Description of the Governing Documents--Matters Regarding the
Trustee" in the accompanying prospectus;
o to pay for various opinions of counsel required to be obtained in
connection with any amendments to the series 2004-C1 pooling and
servicing agreement and the administration of the trust;
o to pay any federal, state and local taxes imposed on the trust, its
assets and/or transactions, together with all incidental costs and
expenses, that are required to be borne by the trust as described
under "Federal Income Tax Consequences--REMICs--Prohibited
Transactions Tax and Other Taxes" in the accompanying prospectus and
"Servicing of the Underlying Mortgage Loans--REO Properties" in this
prospectus supplement;
o to pay to the person entitled thereto any amounts deposited in the
payment account in error; and
o to clear and terminate the payment account at the termination of the
series 2004-C1 pooling and servicing agreement.
Amounts otherwise payable with respect to the class PM certificates will
not be available to cover Additional Trust Fund Expenses attributable to any
underlying mortgage loan other than the Pecanland Mall Mortgage Loan.
On each payment date, all amounts on deposit in the payment account,
exclusive of any portion of those amounts that are to be withdrawn for the
purposes contemplated in the foregoing paragraph, will represent the Total
Available Funds for that date. On each payment date, the trustee will apply the
Total Available Funds to make payments on the series 2004-C1 certificates.
For any payment date, the Total Available Funds will consist of the
following separate components:
o the portion of those funds that represent prepayment consideration
collected on the underlying mortgage loans as a result of voluntary or
involuntary prepayments that occurred during the related collection
period, which will be paid to the holders of the class A-1, A-2, A-3,
A-4, B, C,
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D, E, F, G, H and/or X-1 certificates, as described under
"--Payments--Payments of Prepayment Premiums and Yield Maintenance
Charges" below;
o the portion of those funds that represent Post-ARD Additional Interest
collected on the ARD Loans in the trust fund during the related
collection period, which will be paid to the holders of the class Y
certificates as described under "--Payments--Payments of Post-ARD
Additional Interest" below; and
o the remaining portion of those funds, which we refer to as the Total
Available P&I Funds, and which will be paid to the holders of all the
series 2004-C1 certificates, other than the class Y certificates, as
and to the extent described under "--Payments--Priority of Payments"
and "--Payments--Allocation of Payments on the Pecanland Mall Mortgage
Loan; Payments on the Class PM Certificates" below.
INTEREST RESERVE ACCOUNT
The master servicer must maintain an account in which it will hold the
interest reserve amounts described in the next paragraph with respect to those
underlying mortgage loans that accrue interest on an Actual/360 Basis. That
interest reserve account must be maintained in a manner and with a depository
that satisfies rating agency standards for securitizations similar to the one
involving the offered certificates. Any funds in the master servicer's interest
reserve account may, at the master servicer's risk, be invested in Permitted
Investments, and any interest or other income earned on those funds will be paid
to the master servicer as additional compensation, subject to the limitations
set forth in the series 2004-C1 pooling and servicing agreement.
During January, except in a leap year, and February of each calendar year,
beginning in 2005, the master servicer will, no later than the business day
immediately preceding the payment date in that month, withdraw from its
collection account and deposit in its interest reserve account the interest
reserve amounts with respect to those underlying mortgage loans that accrue
interest on an Actual/360 Basis and for which the monthly debt service payment
due in that month was either received or advanced. In general, that interest
reserve amount for each of those mortgage loans will, for each such payment
date, equal one day's interest accrued at the related mortgage rate, on the
Stated Principal Balance of that mortgage loan as of the end of the related
collection period. In the case of an ARD Loan, however, the interest reserve
amount will not include Post-ARD Additional Interest.
During March of each calendar year, beginning in 2005, the master servicer
will, no later than the business day immediately preceding the payment date in
that month, withdraw from its interest reserve account and deposit in the
trustee's payment account any and all interest reserve amounts then on deposit
in the interest reserve account with respect to those underlying mortgage loans
that accrue interest on an Actual/360 Basis. All interest reserve amounts that
are so transferred from the interest reserve account to the payment account will
be included in the Total Available P&I Funds for the payment date during the
month of transfer.
PAYMENTS
General. On each payment date, the trustee will, subject to the available
funds, remit all payments required to be made on the series 2004-C1 certificates
on that date to the holders of record as of the close of business on the last
business day of the calendar month preceding the month in which those payments
are to occur. The final payment of principal and/or interest on any offered
certificate, however, will be made only upon presentation and surrender of that
certificate at the location to be specified in a notice of the pendency of that
final payment.
In order for a series 2004-C1 certificateholder to receive payments by wire
transfer on and after any particular payment date, that certificateholder must
provide the trustee with written wiring instructions no less
S-139
than five business days prior to the record date for that payment date.
Otherwise, that certificateholder will receive its payments by check mailed to
it.
Payments made to a class of series 2004-C1 certificateholders will be
allocated among those certificateholders in proportion to their respective
percentage interests in that class.
Cede & Co. will be the registered holder of your offered certificates, and
you will receive payments on your offered certificates through DTC and its
participating organizations, until physical certificates are issued, if ever, to
the actual beneficial owners. See "--Registration and Denominations" above.
Payments of Interest. All of the classes of the series 2004-C1 certificates
will bear interest, except for the Y and R classes.
With respect to each interest-bearing class of the series 2004-C1
certificates, that interest will accrue during each interest accrual period
based upon--
o the pass-through rate applicable for that class for that interest
accrual period,
o the total principal balance or notional amount, as the case may be, of
that class outstanding immediately prior to the related payment date,
and
o the assumption that each year consists of twelve 30-day months.
On each payment date, subject to available funds and the priorities of
payment described under "--Payments--Priority of Payments" and
"--Payments--Allocation of Payments on the Pecanland Mall Mortgage Loan;
Payments on the Class PM Certificates" below, the holders of each
interest-bearing class of the series 2004-C1 certificates will be entitled to
receive:
o the total amount of interest accrued during the related interest
accrual period with respect to that class of series 2004-C1
certificates; reduced (to not less than zero) by
o except in the case of the class X-1 and class X-2 certificates, such
class's allocable share, if any, of--
1. any Net Aggregate Prepayment Interest Shortfall for that payment
date, and
2. the aggregate amount of any Mortgage Deferred Interest added to
the principal balances of the underlying mortgage loans during
the related collection period.
If the holders of any interest-bearing class of the series 2004-C1
certificates do not receive all of the interest to which they are entitled on
any payment date, then they will continue to be entitled to receive the unpaid
portion of that interest on future payment dates, subject to available funds and
the priorities of payment described under "--Payments--Priority of Payments" and
"--Payments--Allocation of Payments on the Pecanland Mall Mortgage Loan;
Payments on the Class PM Certificates" below. However, no interest will accrue
on any of that unpaid interest.
The portion of any Net Aggregate Prepayment Interest Shortfall for any
payment date that is allocable to any particular interest-bearing class of the
series 2004-C1 certificates (other than the class X-1 and X-2 certificates) will
equal the product of:
o in the case of the PM class, the product of--
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1. the total portion, if any, of that Net Aggregate Prepayment
Interest Shortfall that is attributable to the Pecanland Mall
Mortgage Loan, multiplied by
2. a fraction, the numerator of which is the total amount of
interest accrued during the related interest accrual period with
respect to the class PM certificates (calculated without regard
to any allocation of that Net Aggregate Prepayment Interest
Shortfall and net of any Mortgage Deferred Interest allocated to
the class PM certificates for that payment date), and the
denominator of which is equal to the excess, if any of (a)
one-twelfth of the product of (i) the Net Mortgage Pass-Through
Rate for the Pecanland Mall Mortgage Loan for such payment date,
multiplied by (ii) the Stated Principal Balance of the Pecanland
Mall Mortgage Loan outstanding immediately prior to such payment
date, over (b) any Mortgage Deferred Interest added to the
outstanding principal balance of the Pecanland Mall Mortgage Loan
during the related collection period; and
o in the case of each other interest-bearing class of series 2004-C1
certificates (other than the class X-1 and X-2 certificates), the
product of--
1. the total amount of that Net Aggregate Prepayment Interest
Shortfall (exclusive of any portion thereof allocable to the PM
class in accordance with the preceding bullet), multiplied by
2. a fraction, the numerator of which is the total amount of
interest accrued during the related interest accrual period with
respect to the subject interest-bearing class of series 2004-C1
certificates (calculated without regard to any allocation of that
Net Aggregate Prepayment Interest Shortfall and net of any
Mortgage Deferred Interest allocated to the subject class of
series 2004-C1 certificates for that payment date), and the
denominator of which is the total amount of interest accrued
during the related interest accrual period with respect to all of
the classes of the series 2004-C1 principal balance certificates
except the PM class (calculated without regard to any allocation
of that Net Aggregate Prepayment Interest Shortfall and net of
any Mortgage Deferred Interest allocated to those classes of
series 2004-C1 principal balance certificates for that payment
date).
On each payment date, any Mortgage Deferred Interest added to the unpaid
principal balance of any underlying mortgage loan (other than the Pecanland Mall
Mortgage Loan) during the related collection period will be allocated among the
respective classes of series 2004-C1 principal balance certificates (other than
the class PM certificates) in reverse alphabetical order (except with respect to
the class A-1, A-2, A-3 and A-4 Certificates which amounts shall be applied pro
rata (based on remaining total principal balances of such classes) to such
certificates), in each case up to the respective amounts of interest accrued
during the related interest accrual period with respect to the subject
interest-bearing classes of series 2004-C1 certificates (in each case calculated
without regard to any allocation of that Net Aggregate Prepayment Interest
Shortfall). On each payment date, any Mortgage Deferred Interest added to the
unpaid principal balance of the Pecanland Mall Mortgage Loan during the related
collection period will be allocated first, to the class PM certificates, up to
the amount of the total amount of interest accrued during the related interest
accrual period with respect to the class PM certificates (calculated without
regard to any allocation of that Net Aggregate Prepayment Interest Shortfall);
and then, to the other classes of series 2004-C1 principal balance certificates
as described in the prior sentence.
No portion of any Net Aggregate Prepayment Interest Shortfalls or Mortgage
Deferred Interest will be allocated to the class X-1 and X-2 certificates.
S-141
Calculation of Pass-Through Rates. The initial pass-through rate for each
interest-bearing class of the series 2004-C1 certificates is shown in the table
on page S-5 to this prospectus supplement; provided that, in the case of the
class , , , , , , , and certificates, that initial pass-through rate
is approximate.
The pass-through rates applicable to the class , , , and
certificates for each subsequent interest accrual period will, in the case of
each of those classes, remain fixed at the pass-through rate applicable to the
particular class of series 2004-C1 certificates for the initial interest accrual
period.
The pass-through rates for the class , , and certificates for
each subsequent interest accrual period will, in the case of each of those
classes, equal the Weighted Average Pool Pass-Through Rate for the related
payment date.
The pass-through rate for the class certificates for each subsequent
interest accrual period will equal the Weighted Average Pool Pass-Through Rate
for the related payment date, minus %.
The pass-through rates applicable to the class , , , , and
certificates for each subsequent interest accrual period will, in the case of
each of those classes, equal the lesser of--
o the Weighted Average Pool Pass-Through Rate for the related payment
date; and
o the following specified fixed rate per annum applicable to the
particular class of series 2004-C1 certificates--
1. with respect to the class certificates, %,
2. with respect to the class certificates, %,
3. with respect to the class certificates, %,
4. with respect to the class certificates, %,
5. with respect to the class certificates, %, and
6. with respect to the class certificates, %.
The pass-through rate for the class PM certificates for each subsequent
interest accrual period will equal the Net Mortgage Pass-Through Rate for the
Pecanland Mall Mortgage Loan for the related payment date.
The pass-through rate for the class X-2 certificates, for each interest
accrual period from and including the initial interest accrual period through
and including the interest accrual period, will equal the weighted average of
the respective strip rates, which we refer to as class X-2 strip rates, at which
interest accrues during the subject interest accrual period on the respective
components of the total notional amount of the class X-2 certificates
outstanding immediately prior to the related payment date, with the relevant
weighting to be done based upon the relative sizes of those components. Each of
those components will be comprised of all or a designated portion of the total
principal balance of one of the classes of series 2004-C1 principal balance
certificates. If all or a designated portion of the total principal balance of
any class of series 2004-C1 principal balance certificates is identified under
"--General" above as being part of the total notional amount of the class X-2
certificates immediately prior to any payment date, then that total principal
balance (or designated portion thereof) will represent a separate component of
the total notional amount of the class X-2 certificates for purposes of
calculating the accrual of interest during the related interest accrual period.
For purposes of accruing interest during any interest accrual period, from and
including the initial interest accrual period through and including the
interest accrual period, on any particular component of the total notional
amount of the class X-2
S-142
certificates immediately prior to the related payment date, the applicable class
X-2 strip rate will equal the excess, if any, of:
1. the lesser of (a) the reference rate specified on Annex E to this
prospectus supplement for the subject interest accrual period and (b)
the Weighted Average Pool Pass-Through Rate for the related payment
date; over
2. the pass-through rate in effect during the subject interest accrual
period for the class of series 2004-C1 principal balance certificates
whose total principal balance, or a designated portion thereof,
comprises such component.
Following the interest accrual period, the class X-2 certificates will
cease to accrue interest. In connection therewith, the class X-2 certificates
will have a 0% pass-through rate for the interest accrual period and for
each interest accrual period thereafter.
The pass-through rate for the class X-1 certificates for any interest
accrual period will equal the weighted average of the respective strip rates,
which we refer to as class X-1 strip rates, at which interest accrues during
that interest accrual period on the respective components of the total notional
amount of the class X-1 certificates outstanding immediately prior to the
related payment date, with the relevant weighting to be done based upon the
relative sizes of those components. Each of those components will be comprised
of all or a designated portion of the total principal balance of one of the
classes of series 2004-C1 principal balance certificates.
In general, the total principal balance of each class of series 2004-C1
principal balance certificates (other than the class PM certificates) will
constitute a separate component of the total notional amount of the class X-1
certificates; provided that, if a portion, but not all, of the total principal
balance of any particular class of series 2004-C1 principal balance certificates
is identified under "--General" above as being part of the total notional amount
of the class X-2 certificates immediately prior to any payment date, then that
identified portion of such total principal balance will also represent a
separate component of the total notional amount of the class X-1 certificates
for purposes of calculating the accrual of interest during the related interest
accrual period, and the remaining portion of such total principal balance will
represent another separate component of the class X-1 certificates for purposes
of calculating the accrual of interest during the related interest accrual
period.
For purposes of accruing interest during any interest accrual period, from
and including the initial interest accrual period through and including the
interest accrual period, on any particular component of the total notional
amount of the class X-1 certificates immediately prior to the related payment
date, the applicable class X-1 strip rate will be calculated as follows:
1. if such particular component consists of the entire total principal
balance of any class of series 2004-C1 principal balance certificates,
and if such total principal balance also constitutes, in its entirety,
a component of the total notional amount of the class X-2 certificates
immediately prior to the related payment date, then the applicable
class X-1 strip rate will equal the excess, if any, of (a) the
Weighted Average Pool Pass-Through Rate for the related payment date,
over (b) the greater of (i) the reference rate specified on Annex E to
this prospectus supplement for the subject interest accrual period and
(ii) the pass-through rate in effect during the subject interest
accrual period for such class of series 2004-C1 principal balance
certificates;
2. if such particular component consists of a designated portion (but not
all) of the total principal balance of any class of series 2004-C1
principal balance certificates, and if such designated portion of such
total principal balance also constitutes a component of the total
notional amount of the class X-2 certificates immediately prior to the
related payment date, then the applicable class X-1 strip rate will
equal the excess, if any, of (a) the Weighted Average Pool
Pass-Through
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Rate for the related payment date, over (b) the greater of (i) the
reference rate specified on Annex E to this prospectus supplement for
the subject interest accrual period and (ii) the pass-through rate in
effect during the subject interest accrual period for such class of
series 2004-C1 principal balance certificates;
3. if such particular component consists of the entire total principal
balance of any class of series 2004-C1 principal balance certificates,
and if such total principal balance does not, in whole or in part,
also constitute a component of the total notional amount of the class
X-2 certificates immediately prior to the related payment date, then
the applicable class X-1 strip rate will equal the excess, if any, of
(a) the Weighted Average Pool Pass-Through Rate the related payment
date, over (b) the pass-through rate in effect during the subject
interest accrual period for such class of series 2004-C1 principal
balance certificates; and
4. if such particular component consists of a designated portion (but not
all) of the total principal balance of any class of series 2004-C1
principal balance certificates, and if such designated portion of such
total principal balance does not also constitute a component of the
total notional amount of the class X-2 certificates immediately prior
to the related payment date, then the applicable class X-1 strip rate
will equal the excess, if any, of (a) the Weighted Average Pool
Pass-Through Rate for the related payment date, over (b) the
pass-through rate in effect during the subject interest accrual period
for such class of series 2004-C1 principal balance certificates.
Notwithstanding the foregoing, for purposes of accruing interest on the
class X-1 certificates during each interest accrual period subsequent to the
interest accrual period, the total principal balance of each class of series
2004-C1 principal balance certificates (other than the class PM certificates)
will constitute a single separate component of the total notional amount of the
class X-1 certificates, and the applicable class X-1 strip rate with respect to
each such component for each such interest accrual period will equal the excess,
if any, of (a) the Weighted Average Pool Pass-Through Rate for the related
payment date, over (b) the pass-through rate in effect during the subject
interest accrual period for the class of series 2004-C1 principal balance
certificates whose total principal balance makes up such component.
The calculation of the Weighted Average Pool Pass-Through Rate will be
unaffected by any change in the mortgage rate for any mortgage loan in the trust
fund, including in connection with any bankruptcy or insolvency of the related
borrower or any modification of that mortgage loan agreed to by the master
servicer or the special servicer.
The class Y and R certificates will not be interest-bearing and, therefore,
will not have pass-through rates.
Payments of Principal. Subject to available funds and the priority of
payments described under "--Payments--Priority of Payments" below, the total
amount of principal payable with respect to each class of the series 2004-C1
certificates, other than the class X-1, X-2, PM, Y and R certificates, on each
payment date will equal that class's allocable share of the Net Principal
Payment Amount for that payment date.
In general, the portion of the Net Principal Payment Amount that will be
allocated to the class A-1, A-2, A-3 and A-4 certificates on each payment date
will generally equal:
o in the case of the class A-1 certificates, the lesser of--
1. the entire Net Principal Payment Amount for that payment date,
and
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2. the total principal balance of the class A-1 certificates
outstanding immediately prior to, plus any Mortgage Deferred
Interest allocated to the class A-1 certificates on, that payment
date; and
o in the case of the class A-2 certificates, the lesser of--
1. the entire Net Principal Payment Amount for that payment date,
reduced by any portion of the Net Principal Payment Amount for
that payment date that is allocable to the class A-1 certificates
as described in the preceding bullet, and
2. the total principal balance of the class A-2 certificates
outstanding immediately prior to, plus any Mortgage Deferred
Interest allocated to the class A-2 certificates on, that payment
date; and
o in the case of the class A-3 certificates, the lesser of--
1. the entire Net Principal Payment Amount for that payment date,
reduced by any portion of the Net Principal Payment Amount for
that payment date that is allocable to the class A-1 and/or A-2
certificates as described in the immediately preceding two
bullets, and
2. the total principal balance of the class A-3 certificates
outstanding immediately prior to, plus any Mortgage Deferred
Interest allocated to the class A-3 certificates on, that payment
date; and
o in the case of the Class A-4 certificates, the lesser of--
1. the entire Net Principal Payment Amount for that payment date,
reduced by any portion of the Net Principal Payment Amount for
that payment date that is allocable to the class A-1, A-2 and/or
A-3 certificates as described in the immediately preceding three
bullets, and
2. the total principal balance of the class A-4 certificates
outstanding immediately prior to, plus any Mortgage Deferred
Interest allocated to the class A-4 certificates on, that payment
date.
However, if any two or more of the A-1, A-2, A-3 and A-4 classes are
outstanding as of the Senior Principal Payment Cross-Over Date, then the Net
Principal Payment Amount for each payment date thereafter will be allocable
between the A-1, A-2, A-3 and/or A-4 classes, whichever are outstanding at that
time, on a pro rata basis in accordance with their respective total principal
balances immediately prior to, plus the respective amounts of any Mortgage
Deferred Interest allocated to those classes on, that payment date, in each case
up to that total principal balance and the amount of that Mortgage Deferred
Interest. In addition, if the A-1, A-2, A-3 and A-4 classes, or any two or more
of them, are outstanding on the final payment date for the series 2004-C1
certificates, then the Net Principal Payment Amount will be similarly allocated
between them.
WHILE THE CLASS A-1, A-2, A-3 AND/OR A-4 CERTIFICATES ARE OUTSTANDING, NO
PORTION OF THE NET PRINCIPAL PAYMENT AMOUNT FOR ANY PAYMENT DATE WILL BE
ALLOCATED TO ANY OTHER CLASS OF SERIES 2004-C1 PRINCIPAL BALANCE CERTIFICATES.
Following the retirement of the class A-1, A-2, A-3 and A-4 certificates,
the Net Principal Payment Amount for each payment date will be allocated to the
respective classes of series 2004-C1 principal balance
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certificates identified in the table below and in the order of priority set
forth in that table, in each case up to the lesser of:
o the total principal balance of the subject class outstanding
immediately prior to, plus any Mortgage Deferred Interest allocated to
the subject class on, that payment date; and
o the portion of that Net Principal Payment Amount that remains
unallocated to the A-1, A-2, A-3 and A-4 classes and each other class,
if any, listed above the subject class in the table below.
ORDER OF ALLOCATION CLASS
------------------- -----
1st........................ B
2nd........................ C
3rd........................ D
4th........................ E
5th........................ F
6th........................ G
7th........................ H
8th........................ J
9th........................ K
10th....................... L
11th....................... M
12th....................... N
13th....................... P
14th....................... Q
IN NO EVENT WILL THE HOLDERS OF ANY CLASS OF SERIES 2004-C1 PRINCIPAL
BALANCE CERTIFICATES LISTED IN THE FOREGOING TABLE BE ENTITLED TO RECEIVE ANY
PAYMENTS OF PRINCIPAL UNTIL THE TOTAL PRINCIPAL BALANCE OF THE CLASS A-1, A-2,
A-3 AND A-4 CERTIFICATES IS REDUCED TO ZERO. FURTHERMORE, IN NO EVENT WILL THE
HOLDERS OF ANY CLASS OF SERIES 2004-C1 PRINCIPAL BALANCE CERTIFICATES LISTED IN
THE FOREGOING TABLE BE ENTITLED TO RECEIVE ANY PAYMENTS OF PRINCIPAL UNTIL THE
TOTAL PRINCIPAL BALANCE OF ALL OTHER CLASSES OF SERIES 2004-C1 PRINCIPAL BALANCE
CERTIFICATES, IF ANY, LISTED ABOVE IT IN THE FOREGOING TABLE IS REDUCED TO ZERO.
If the master servicer, the special servicer, the trustee or the fiscal
agent reimburses itself out of general collections on the mortgage pool for any
advance that it has determined is not recoverable out of collections on the
related mortgage loan in the trust fund, then that advance (together with
accrued interest thereon) will be deemed, to the fullest extent permitted, to be
reimbursed first out of payments and other collections of principal on the
underlying mortgage loans otherwise distributable on the A-1, A-2, A-3, A-4, B,
C, D, E, F, G, H, J, K, L, M, N, P and Q certificates (prior to being deemed
reimbursed out of payments and other collections of interest on the underlying
mortgage loans otherwise distributable on the series 2004-C1 certificates,
exclusive of the class PM certificates), thereby reducing the payments of
principal on the A-1, A-2, A-3, A-4, B, C, D, E, F, G, H, J, K, L, M, N, P and Q
certificates. Amounts otherwise distributable on the class PM certificates will
not be available for the reimbursement of advances on any of the underlying
mortgage loans other than the Pecanland Mall Mortgage Loan.
If any advance is considered to be nonrecoverable from collections on the
related underlying mortgage loan and is, therefore, reimbursed out of payments
and other collections of principal with respect to the entire mortgage pool as
described in the preceding paragraph, and if there is a subsequent recovery of
that item, that subsequent recovery would generally be included as part of the
amounts payable as principal with respect to the series 2004-C1 principal
balance certificates, exclusive of the class PM certificates. In addition, if
any advance is determined to be nonrecoverable from collections on the related
underlying mortgage loan and, therefore, interest on that advance is paid out of
general principal collections on the mortgage pool, and if interest on that
advance is subsequently reimbursed to the trust out of Default Interest, late
payment charges or any other amounts collected
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on the underlying mortgage loan as to which that advance was made, then the
portion of such Default Interest, late payment charge or other amount that was
applied to reimburse the trust for interest on that advance would also generally
be included as amounts payable as principal with respect to the series 2004-C1
principal balance certificates, exclusive of the class PM certificates.
Subject to available funds and the priority of payments described under
"--Payments--Allocation of Payments on the Pecanland Mall Mortgage Loan;
Payments on the Class PM Certificates" below, the total amount of principal
payable with respect to the class PM certificates on each payment date will
equal the Class PM Principal Payment Amount for that payment date.
Reimbursement Amounts. As discussed under "--Reductions of Certificate
Principal Balances in Connection with Realized Losses and Additional Trust Fund
Expenses" below, the total principal balance of any class of series 2004-C1
certificates, other than the class X-1, X-2, Y and R certificates, may be
reduced without a corresponding payment of principal. If that occurs with
respect to any class of series 2004-C1 certificates, then, subject to available
funds and the priority of payments described under "--Payments--Priority of
Payments" and "--Payments--Allocation of Payments on the Pecanland Mall Mortgage
Loan; Payments on the Class PM Certificates" below, the holders of that class
will be entitled to be reimbursed for the amount of that reduction, without
interest. References to the "loss reimbursement amount" under
"--Payments--Priority of Payments" and "--Payments--Allocation of Payments on
the Pecanland Mall Mortgage Loan; Payments on the Class PM Certificates" below
mean, in the case of any class of series 2004-C1 principal balance certificates
for any payment date, the total amount to which the holders of that class are
entitled as reimbursement for all previously unreimbursed reductions, if any,
made in the total principal balance of that class on all prior payment dates as
discussed under "--Reductions of Certificate Principal Balances in Connection
with Realized Losses and Additional Trust Fund Expenses" below.
Priority of Payments. On each payment date, the trustee will apply the
Standard Available P&I Funds for that date to make the following payments in the
following order of priority, in each case to the extent of the remaining
Standard Available P&I Funds:
ORDER OF RECIPIENT
PAYMENT CLASS OR CLASSES TYPE AND AMOUNT OF PAYMENT
- -------------------- ------------------------ --------------------------------------------------------------------------------
1st A-1, A-2, A-3, Interest up to the total interest payable on those classes, pro rata based on
A-4, X-1 and X-2 the respective amounts of that interest payable on each such class
2nd A-1, A-2, A-3 and Principal up to the total principal payable on those classes, allocable
A-4 between those classes as described immediately following this table
3rd A-1, A-2, A-3 Reimbursement up to the total loss reimbursement amount for those classes, pro
and A-4 rata based on the loss reimbursement amount for each such class
- ------------------------------------------------------------------------------------------------------------------------------
4th B Interest up to the total interest payable on that class
5th B Principal up to the total principal payable on that class
6th B Reimbursement up to the loss reimbursement amount for that class
- ------------------------------------------------------------------------------------------------------------------------------
7th C Interest up to the total interest payable on that class
8th C Principal up to the total principal payable on that class
9th C Reimbursement up to the loss reimbursement amount for that class
- ------------------------------------------------------------------------------------------------------------------------------
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ORDER OF RECIPIENT
PAYMENT CLASS OR CLASSES TYPE AND AMOUNT OF PAYMENT
- -------------------- ------------------------ --------------------------------------------------------------------------------
10th D Interest up to the total interest payable on that class
11th D Principal up to the total principal payable on that class
12th D Reimbursement up to the loss reimbursement amount for that class
- ------------------------------------------------------------------------------------------------------------------------------
13th E Interest up to the total interest payable on that class
14th E Principal up to the total principal payable on that class
15th E Reimbursement up to the loss reimbursement amount for that class
- ------------------------------------------------------------------------------------------------------------------------------
16th F Interest up to the total interest payable on that class
17th F Principal up to the total principal payable on that class
18th F Reimbursement up to the loss reimbursement amount for that class
- ------------------------------------------------------------------------------------------------------------------------------
19th G Interest up to the total interest payable on that class
20th G Principal up to the total principal payable on that class
21st G Reimbursement up to the loss reimbursement amount for that class
- ------------------------------------------------------------------------------------------------------------------------------
22nd H Interest up to the total interest payable on that class
23rd H Principal up to the total principal payable on that class
24th H Reimbursement up to the loss reimbursement amount for that class
- ------------------------------------------------------------------------------------------------------------------------------
25th J Interest up to the total interest payable on that class
26th J Principal up to the total principal payable on that class
27th J Reimbursement up to the loss reimbursement amount for that class
- ------------------------------------------------------------------------------------------------------------------------------
28th K Interest up to the total interest payable on that class
29th K Principal up to the total principal payable on that class
30th K Reimbursement up to the loss reimbursement amount for that class
- ------------------------------------------------------------------------------------------------------------------------------
31st L Interest up to the total interest payable on that class
32nd L Principal up to the total principal payable on that class
33rd L Reimbursement up to the loss reimbursement amount for that class
- ------------------------------------------------------------------------------------------------------------------------------
34th M Interest up to the total interest payable on that class
35th M Principal up to the total principal payable on that class
36th M Reimbursement up to the loss reimbursement amount for that class
- ------------------------------------------------------------------------------------------------------------------------------
37th N Interest up to the total interest payable on that class
38th N Principal up to the total principal payable on that class
39th N Reimbursement up to the loss reimbursement amount for that class
- ------------------------------------------------------------------------------------------------------------------------------
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ORDER OF RECIPIENT
PAYMENT CLASS OR CLASSES TYPE AND AMOUNT OF PAYMENT
- -------------------- ------------------------ --------------------------------------------------------------------------------
40th P Interest up to the total interest payable on that class
41st P Principal up to the total principal payable on that class
42nd P Reimbursement up to the loss reimbursement amount for that class
- ------------------------------------------------------------------------------------------------------------------------------
43rd Q Interest up to the total interest payable on that class
44th Q Principal up to the total principal payable on that class
45th Q Reimbursement up to the loss reimbursement amount for that class
- ------------------------------------------------------------------------------------------------------------------------------
46th R Any remaining Standard Available P&I Funds
- ------------------------------------------------------------------------------------------------------------------------------
In general, no payments of principal will be made with respect to the class
A-4 until the total principal balance of the class A-1, A-2 and A-3 certificates
is reduced to zero, no payments of principal will be made with respect to the
class A-3 certificates until the total principal balance of the class A-1 and
A-2 certificates is reduced to zero, and no payments of principal will be made
with respect to the class A-2 certificates until the total principal balance of
the class A-1 certificates is reduced to zero. However, if all or any two of
those classes are outstanding as of the Senior Principal Distribution Cross-Over
Date, or if all or any two of those classes are outstanding on the final payment
date for the series 2004-C1 certificates, then payments of principal on the
outstanding class A-1, A-2, A-3 and A-4 certificates will be made on a pro rata
basis in accordance with the respective total principal balances of those
classes then outstanding.
Allocation of Payments on the Pecanland Mall Mortgage Loan; Payments on the
Class PM Certificates. On or prior to each payment date, amounts received during
the related collection period with respect to the Pecanland Mall Mortgage Loan,
together with any amounts advanced with respect to the Pecanland Mall Mortgage
Loan, subject to adjustment for interest reserve amounts with respect to the
Pecanland Mall Mortgage Loan, and exclusive of amounts payable and/or
reimbursable to the master servicer, the special servicer, the trustee and/or
the fiscal agent with respect to the Pecanland Mall Mortgage Loan under the
series 2004-C1 pooling and servicing agreement, will be applied as follows:
o first, for inclusion in Standard Available P&I Funds, as interest
accrued with respect to the Pecanland Mall Pooled Portion, accrued (on
a 30/360 Basis) at the applicable Net Mortgage Pass-Through Rate from
time to time, on the Allocated Principal Balance of the Pecanland Mall
Pooled Portion, through but not including the then-most recent due
date for the Pecanland Mall Mortgage Loan (net of any portion thereof
that constitutes Mortgage Deferred Interest with respect to the
Pecanland Mall Mortgage Loan that is allocable to the Pecanland Mall
Pooled Portion), to the extent not previously received or advanced;
o second, for inclusion in Standard Available P&I Funds, as principal on
the Pecanland Mall Pooled Portion in an amount equal to the lesser of
(1) the Allocated Principal Balance of the Pecanland Mall Pooled
Portion immediately prior to, together with any Mortgage Deferred
Interest with respect to the Pecanland Mall Mortgage Loan that is
allocable to the Pecanland Mall Pooled Portion for, the subject
payment date and (2) either (A) if no Pecanland Mall Payment Trigger
Event exists for such payment date, 50% of the Pecanland Mall
Principal Payment Amount for the subject payment date, or (B) if a
Pecanland Mall Trigger Event exists for such payment date, the entire
Pecanland Mall Principal Payment Amount for the subject payment date;
o third, for inclusion in the Standard Available P&I Funds, as a
reimbursement with respect to the Pecanland Mall Pooled Portion for
any Realized Losses and/or Additional Trust Fund Expenses
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incurred with respect to the Pecanland Mall Mortgage Loan that were
not otherwise borne by the holders of the class PM certificates and
that have not been previously reimbursed;
o fourth, for inclusion in the Class PM Available P&I Funds, as interest
with respect to the Pecanland Mall Non-Pooled Portion, accrued (on a
30/360 Basis) at the applicable Net Mortgage Pass-Through Rate from
time to time, on the Allocated Principal Balance of the Pecanland Mall
Non-Pooled Portion, through but not including the then-most recent due
date for the Pecanland Mall Mortgage Loan (net of any portion thereof
that constitutes Mortgage Deferred Interest with respect to the
Pecanland Mall Mortgage Loan that is allocable to the Pecanland Mall
Non-Pooled Portion), to the extent not previously received or
advanced;
o fifth, for inclusion in the Class PM Available P&I Funds, as principal
of the Pecanland Mall Non-Pooled Portion in an amount equal to the
lesser of (1) the Allocated Principal Balance of the Pecanland Mall
Non-Pooled Portion immediately prior to, together with any Mortgage
Deferred Interest with respect to the Pecanland Mall Mortgage Loan
that is allocable to the Pecanland Mall Non-Pooled Portion for, the
subject payment date and (2) the excess, if any, of (a) the entire
Pecanland Mall Principal Payment Amount for the subject payment date,
over (b) the payments of principal to be made with respect to the
Pecanland Mall Pooled Portion on that payment date in accordance with
clause second above;
o sixth, for inclusion in Standard Available P&I Funds, as principal on
the Pecanland Mall Pooled Portion in an amount equal to the lesser of
(1) the Allocated Principal Balance of the Pecanland Mall Pooled
Portion immediately prior to, together with any Mortgage Deferred
Interest with respect to the Pecanland Mall Mortgage Loan that is
allocable to the Pecanland Mall Pooled Portion for, the subject
payment date (net of the amount of principal included in Standard
Available P&I Funds on such payment date pursuant to clause second
above) and (2) excess, if any, of (a) the entire Pecanland Mall
Principal Payment Amount for the subject payment date, over (b) the
payments of principal to be made with respect to the Pecanland Mall
Pooled Portion and the Pecanland Mall Non-Pooled Portion on that
payment date in accordance with clause second and/or clause fifth
above;
o seventh, for inclusion in the Class PM Available P&I Funds, as a
reimbursement with respect to the Pecanland Mall Non-Pooled Portion
for any Realized Losses and/or Additional Trust Fund Expenses incurred
with respect to the Pecanland Mall Mortgage Loan that were borne by
the holders of the class PM certificates and that have not been
previously reimbursed; and
o eighth, to the class PM representative as a reimbursement of any
outstanding Pecanland Mall Cure Payments.
For purposes of clauses first and fourth of the preceding sentence, any Mortgage
Deferred Interest with respect to the Pecanland Mall Mortgage Loan that is
allocable to the Pecanland Mall Non-Pooled Portion for any payment date will be
equal to the Mortgage Deferred Interest that is allocated to the class PM
certificates for the subject payment date, and the balance of any Mortgage
Deferred Interest with respect to the Pecanland Mall Mortgage Loan for the
subject payment date will be allocated to the Pecanland Mall Pooled Portion.
On each payment date, the trustee will apply the Class PM Available P&I
Funds for that date to make the following distributions in the following order
of priority, in each case to the extent of the remaining portion of the Class PM
Available P&I Funds:
o first, to make distributions of interest to the holders of the class
PM certificates up to the total interest distributable on that class
on that payment date;
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o second, to make distributions of principal to the holders of the class
PM certificates up to an amount (not to exceed the total principal
balance of the class PM certificates outstanding immediately prior to,
together with all Mortgage Deferred Interest allocated to the class PM
certificates for, such payment date) equal to the Class PM Principal
Payment Amount for that payment date; and
o third, to make distributions of principal to the holders of the class
PM certificates, up to an amount equal to, and in reimbursement of,
all previously unreimbursed reductions, if any, made in the total
principal balance of that class on all prior distribution dates as
discussed under "--Reductions of Certificate Principal Balances in
Connection with Realized Losses and Additional Trust Fund Expenses"
below.
Payments of Prepayment Premiums and Yield Maintenance Charges. If any
prepayment consideration is collected during any particular collection period
with respect to any mortgage loan in the trust fund, regardless of whether that
prepayment consideration is calculated as a percentage of the amount prepaid or
in accordance with a yield maintenance formula, then on the payment date
corresponding to that collection period, the trustee will pay a portion of that
prepayment consideration to the holders of each class of series 2004-C1
principal balance certificates, exclusive of the class J, K, L, M, N, P, Q and
PM certificates, that are then entitled to payments of principal, up to an
amount equal to the product of--
o the full amount of that prepayment consideration, multiplied by
o a fraction, which in no event may be greater than 1.0 or less than
0.0, the numerator of which is equal to the excess, if any, of the
pass-through rate for that class of series 2004-C1 principal balance
certificates for the corresponding interest accrual period, over the
relevant discount rate, 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 further multiplied by
o a fraction, which in no event may be greater than 1.0 or less than
0.0, the numerator of which is equal to the amount of principal, if
any, payable to the holders of that class of series 2004-C1 principal
balance certificates on that payment date, and the denominator of
which is the Net Principal Payment Amount for that payment date.
For the purpose of the foregoing, the relevant discount rate will be the
discount rate specified in the mortgage loan documents for the subject
underlying mortgage loan.
On each payment date, immediately following the distributions described
above in this "--Payments of Prepayment Premiums and Yield Maintenance Charges"
subsection, the trustee will thereafter remit any remaining portion of the
subject prepayment consideration distributable on that payment date to the
holders of the class X-1 certificates.
After the payment date on which the total principal balance of all classes
of the offered certificates has been reduced to zero, the trustee will pay any
prepayment consideration collected on the underlying mortgage loans, entirely to
the holders of the class F, G, H and/or X-1 certificates.
Neither we nor any of the underwriters makes any representation as to:
o the enforceability of the provision of any promissory note evidencing
one of the mortgage loans requiring the payment of a prepayment
premium or yield maintenance charge; or
o the collectability of any prepayment premium or yield maintenance
charge.
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See "Description of the Mortgage Pool--Terms and Conditions of the
Underlying Mortgage Loans--Voluntary Prepayment Provisions" in this prospectus
supplement.
Payments of Post-ARD Additional Interest. The class Y certificates will
entitle holders to all amounts, if any, collected on the ARD Loans in the trust
fund and applied as Post-ARD Additional Interest.
TREATMENT OF REO PROPERTIES
Notwithstanding that any mortgaged real property may be acquired as part of
the trust fund through foreclosure, deed in lieu of foreclosure or otherwise,
the related underlying mortgage loan will be treated as having remained
outstanding, until the REO Property is liquidated, for purposes of determining:
o payments on the series 2004-C1 certificates;
o allocations of Realized Losses and Additional Trust Fund Expenses to
the series 2004-C1 certificates; and
o the amount of all fees payable to the master servicer, the special
servicer and the trustee under the series 2004-C1 pooling and
servicing agreement.
In connection with the foregoing, that mortgage loan will be taken into account
when determining the Weighted Average Pool Pass-Through Rate and the Total
Principal Payment Amount for each payment date.
Operating revenues and other proceeds derived from an REO Property held by
the trust will be applied:
o first, to pay, or to reimburse the master servicer, the special
servicer and/or the trustee for the payment of, any costs and expenses
incurred in connection with the operation and disposition of the REO
Property and select other items; and
o thereafter, as collections of principal, interest and other amounts
due on the related mortgage loan.
To the extent described under "--Advances of Delinquent Monthly Debt
Service Payments" below, the master servicer, the trustee and the fiscal agent
will be required to advance delinquent monthly debt service payments with
respect to each mortgage loan in the trust fund as to which the corresponding
mortgaged real property has become an REO Property, in all cases as if the
mortgage loan had remained outstanding.
REDUCTIONS OF CERTIFICATE PRINCIPAL BALANCES IN CONNECTION WITH REALIZED
LOSSES AND ADDITIONAL TRUST FUND EXPENSES
As a result of Realized Losses and Additional Trust Fund Expenses, the
total Stated Principal Balance of the mortgage pool may decline below the total
principal balance of the series 2004-C1 principal balance certificates. If this
occurs following the payments made to the series 2004-C1 certificateholders on
any payment date, then: (a) the total principal balance of the class PM
certificates will be reduced until it equals the Allocated Principal Balance of
the Pecanland Mall Non-Pooled Portion that will be outstanding immediately
following that payment date; and (b) the respective total principal balances of
the following classes of the series 2004-C1 certificates are to be sequentially
reduced in the following order, until the total principal balance of those
classes of series 2004-C1 certificates equals the total Stated Principal Balance
of the mortgage pool (reduced by the Allocated Principal Balance of the
Pecanland Mall Non-Pooled Portion) that will be outstanding immediately
following that payment date.
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ORDER OF ALLOCATION CLASS
------------------- -----
1st.................................. Q
2nd.................................. P
3rd.................................. N
4th.................................. M
5th.................................. L
6th.................................. K
7th.................................. J
8th.................................. H
9th.................................. G
10th................................. F
11th................................. E
12th................................. D
13th................................. C
14th................................. B
15th................................. A-1, A-2, A-3 and
A-4, pro rata based on
total principal balance
The above-described reductions in the total principal balances of the
respective classes of series 2004-C1 principal balance certificates will
represent an allocation of the Realized Losses and/or Additional Trust Fund
Expenses that caused the particular mismatch in principal balances between the
underlying mortgage loans and the respective classes of series 2004-C1 principal
balance certificates.
In no event will the principal balance of any class of series 2004-C1
certificates identified in the foregoing table be reduced until the total
principal balance of all series 2004-C1 certificates listed above it in the
table has been reduced to zero.
The Realized Loss with respect to a liquidated mortgage loan, or related
REO Property, is an amount generally equal to the excess, if any, of:
o the outstanding principal balance of the mortgage loan as of the date
of liquidation, together with--
1. all accrued and unpaid interest on the mortgage loan to but not
including the due date in the collection period in which the
liquidation occurred, exclusive, however, of any portion of that
interest that represents Default Interest or Post-ARD Additional
Interest; and
2. all related unreimbursed servicing advances and unpaid
liquidation expenses; over
o the total amount of liquidation proceeds, if any, recovered in
connection with the subject liquidation.
If any portion of the debt due under any underlying mortgage loan is
forgiven, whether in connection with a modification, waiver or amendment granted
or agreed to by the master servicer or the special servicer or in connection
with the bankruptcy, insolvency or similar proceeding involving the related
borrower, the amount forgiven, other than Default Interest and Post-ARD
Additional Interest, also will be treated as a Realized Loss.
Realized Losses will include advances that are determined to be
nonrecoverable from collections on the related underlying mortgage loan and are
therefore recovered out of general collections on the Mortgage Pool.
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Some examples of Additional Trust Fund Expenses are:
o any special servicing fees, workout fees and liquidation fees paid to
the special servicer;
o any interest paid to the master servicer, the special servicer, the
trustee and/or the fiscal agent with respect to unreimbursed advances,
which interest payment is not covered out of late payment charges and
Default Interest actually collected on the related underlying mortgage
loan as provided in the series 2004-C1 pooling and servicing
agreement;
o the cost of certain property inspections by the special servicer at
the expense of the trust, which cost is not covered out of late
payment charges and Default Interest actually collected on the related
underlying mortgage loan as provided in the series 2004-C1 pooling and
servicing agreement;
o the cost of various opinions of counsel and other legal and tax
accounting advice required or permitted to be obtained in connection
with the servicing of the underlying mortgage loans and the
administration of the other trust assets;
o any unanticipated, non-mortgage loan specific expenses of the trust,
including--
1. any reimbursements and indemnifications to the trustee and
various related persons and entities described under "Description
of the Governing Documents--Matters Regarding the Trustee" in the
accompanying prospectus,
2. any reimbursements and indemnifications to the master servicer,
the special servicer, us and various related persons and entities
described under "Description of the Governing Documents--Matters
Regarding the Master Servicer, the Special Servicer, the Manager
and Us" in the accompanying prospectus, and
3. any federal, state and local taxes, and tax-related expenses,
payable out of the trust assets, as described under "Federal
Income Tax Consequences--REMICs--Prohibited Transactions Tax and
Other Taxes" in the accompanying prospectus;
o rating agency fees, other than on-going surveillance fees, that cannot
be recovered from the related borrower; and
o any amounts expended on behalf of the trust to test for and/or
remediate an adverse environmental condition at any mortgaged real
property securing a defaulted mortgage loan as described under
"Servicing of the Underlying Mortgage Loans--Realization Upon
Defaulted Mortgage Loans" in this prospectus supplement.
In general, any losses and expenses that are associated with the Ocean Key
Resort Mortgage Loan and the related subordinate companion loan will be
allocated in accordance with the terms of the Ocean Key Resort Intercreditor
Agreement, first, to the related subordinate companion loan and, second, to the
Ocean Key Resort Mortgage Loan. The portion of those losses and expenses
allocated to the Ocean Key Resort Mortgage Loan will be allocated among the
series 2004-C1 certificates in the manner described above. See "Description of
the Mortgage Pool--Ocean Key Resort Loan Pair--Allocation of Payments Between
the Ocean Key Resort Mortgage Loan and the Related Subordinate Companion Loan"
in this prospectus supplement.
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ADVANCES OF DELINQUENT MONTHLY DEBT SERVICE PAYMENTS
The master servicer will be required to make, for each payment date, a
total amount of advances of principal and/or interest generally equal to all
monthly debt service payments--other than balloon payments--and assumed monthly
debt service payments, in each case net of related master servicing and special
servicing fees, that:
o were due or deemed due, as the case may be, with respect to the
underlying mortgage loans during the related collection period; and
o were not paid by or on behalf of the respective borrowers or otherwise
collected as of the close of business on the last day of the related
collection period.
Notwithstanding the foregoing, if it is determined that an Appraisal
Reduction Amount exists with respect to any mortgage loan in the trust fund,
then the master servicer will reduce the interest portion, but not the principal
portion, of each monthly debt service advance that it must make with respect to
that mortgage loan during the period that the Appraisal Reduction Amount exists.
The interest portion of any monthly debt service advance required to be made
with respect to any such underlying mortgage loan as to which there exists an
Appraisal Reduction Amount, will equal:
o the amount of the interest portion of that advance of monthly debt
service payments that would otherwise be required to be made for the
subject payment date without regard to this sentence and the prior
sentence; reduced (to not less than zero) by
o with respect to each class of series 2004-C1 principal balance
certificates to which any portion of the subject Appraisal Reduction
Amount is allocated, one month's interest (calculated on a 30/360
Basis) on the portion of the subject Appraisal Reduction Amount
allocated to that class at the applicable pass-through rate.
Appraisal Reduction Amounts will be allocated to the respective classes of
the series 2004-C1 principal balance certificates, in each case up to (but
without any reduction in) the related outstanding total principal balance
thereof, in the following order: first, to the class PM certificates (but only
if the subject Appraisal Reduction Amount relates to the Pecanland Mall Mortgage
Loan); then, to the Q, P, N, M, L, K, J, H, G, F, E, D, C and B classes, in that
order; and last, to the A-1, A-2, A-3 and A-4 classes, on a pro rata basis by
balance.
With respect to any payment date, the master servicer will be required to
make monthly debt service advances either out of its own funds or, subject to
the conditions set forth in the series 2004-C1 pooling and servicing agreement,
funds held in the master servicer's collection account that are not required to
be paid on the series 2004-C1 certificates on that payment date.
If the master servicer fails to make a required advance and the trustee is
aware of that failure, the trustee will be obligated to make that advance. If
the trustee fails to make a required advance and the fiscal agent is aware of
that failure, the fiscal agent will be obligated to make that advance. See
"--The Trustee" and "--The Fiscal Agent" below.
The master servicer, the trustee and the fiscal agent will each be entitled
to recover any monthly debt service advance made by it out of its own funds with
respect to any underlying mortgage loan, together with interest thereon, from
collections on that mortgage loan. None of the master servicer, the trustee or
the fiscal agent will be obligated to make any monthly debt service advance with
respect to any underlying mortgage loan that, in its judgment, or in the
judgment of the special servicer, would not ultimately be recoverable out of
collections on that mortgage loan. The trustee and the fiscal agent will be
entitled to conclusively rely on any
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determination of nonrecoverability made by the master servicer or the special
servicer, and the master servicer will be entitled to conclusively rely on any
determination of nonrecoverability made by the special servicer. If the master
servicer, the trustee or the fiscal agent makes any monthly debt service advance
with respect to any underlying mortgage loan that it subsequently determines
will not be recoverable out of collections on that mortgage loan, it may obtain
reimbursement for that advance, together with interest accrued on the advance as
described in the third succeeding paragraph, out of general collections on the
mortgage loans and any REO Properties in the trust fund on deposit in the master
servicer's collection account from time to time. See "Description of the
Certificates--Advances" in the accompanying prospectus and "Servicing of the
Underlying Mortgage Loans--Collection Account" in this prospectus supplement.
If the master servicer, the trustee or the fiscal agent reimburses itself
out of general collections on the mortgage pool for any P&I advance that it has
determined is not recoverable out of collections on the related mortgage loan,
then that advance (together with accrued interest thereon) will be deemed, to
the fullest extent permitted, to be reimbursed first out of payments and other
collections of principal on the underlying mortgage loans otherwise
distributable on the class A-1, A-2, A-3, A-4, B, C, D, E, F, G, H, J, K, L, M,
N, P and Q certificates (prior to being deemed reimbursed out of payments and
other collections of interest on the underlying mortgage loans otherwise
distributable on the series 2004-C1 certificates, exclusive of the class PM
certificates), thereby reducing the payments of principal on the A-1, A-2, A-3,
A-4, B, C, D, E, F, G, H, J, K, L, M, N, P and Q certificates. Amounts otherwise
payable on the class PM certificates will not be available to reimburse advances
on any underlying mortgage loan other than the Pecanland Mall Mortgage Loan.
Notwithstanding the foregoing, upon a determination that a previously made
monthly debt service advance is not recoverable from expected collections on the
related underlying mortgage loan or REO Property in the trust fund, instead of
obtaining reimbursement out of general collections on the mortgage pool
immediately, any of the master servicer, the trustee or the fiscal agent, as
applicable, may, in its sole discretion, elect to obtain reimbursement for such
nonrecoverable monthly debt service advance over a period of time (not to exceed
six months or such longer period as agreed to by the series 2004-C1 controlling
class representative and the advancing party, each in its sole discretion) and
the unreimbursed portion of such advance will accrue interest at the prime rate
described below. At any time after such a determination to obtain reimbursement
over time in accordance with the preceding sentence, the master servicer, the
trustee or the fiscal agent, as applicable, may, in its sole discretion, decide
to obtain reimbursement from general collections on the mortgage pool
immediately. The fact that a decision to recover a nonrecoverable monthly debt
service advance over time, or not to do so, benefits some classes of series
2004-C1 certificateholders to the detriment of other classes of series 2004-C1
certificateholders will not, with respect to the master servicer, constitute a
violation of the Servicing Standard or, with respect to the trustee or the
fiscal agent, constitute a violation of any fiduciary duty to the series 2004-C1
certificateholders and/or contractual duty under the series 2004-C1 pooling and
servicing agreement. In the event that the master servicer, the trustee or the
fiscal agent, as applicable, elects not to recover such nonrecoverable advances
over time, the master servicer, the trustee or the fiscal agent, 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, the trustee or the fiscal agent,
as applicable, makes a determination not to give such notices in accordance with
the terms of the series 2004-C1 pooling and servicing agreement.
The master servicer, the trustee and the fiscal agent will each be entitled
to receive interest on monthly debt service advances made by it out of its own
funds with respect to the underlying mortgage loans. That interest will accrue
on the amount of each such monthly debt service advance, and compound annually,
for so long as that advance is outstanding -- or, if the advance was made during
the grace period for the subject monthly debt service payment, for so long as
that advance is outstanding from the end of that grace period -- at an annual
rate equal to the prime rate as published in the "Money Rates" section of The
Wall Street Journal, as that prime rate may change from time to time. Interest
accrued with respect to any such monthly debt service advance will be payable:
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o first, out of any Default Interest and/or late payment charge
collected on the related underlying mortgage loan during the
collection period in which that monthly debt service advance is
reimbursed; and
o then, after or at the same time that advance is reimbursed, but only
if and to the extent that the Default Interest and late payment
charges referred to in clause first above are insufficient to cover
the advance interest, out of any other amounts then on deposit in the
master servicer's collection account.
If any payment of interest on advances is paid out of general collections on the
mortgage pool as contemplated by the second bullet of the prior sentence, then
any late payment charges and Default Interest collected during the following 12
months on the underlying mortgage loan as to which those advances were made will
be applied to reimburse the trust for that payment prior to being applied as
additional compensation to the master servicer or the special servicer.
To the extent not offset by Default Interest and/or late payment charges
accrued and actually collected on the related underlying mortgage loan, interest
accrued on outstanding monthly debt service advances with respect to the
underlying mortgage loans will result in a reduction in amounts payable on one
or more classes of the series 2004-C1 certificates.
A monthly debt service payment will be assumed to be due with respect to:
o each underlying mortgage loan that is delinquent with respect to its
balloon payment beyond the end of the collection period in which its
maturity date occurs and as to which no arrangements have been agreed
to for the collection of the delinquent amounts, including an
extension of maturity; and
o each underlying mortgage loan as to which the corresponding mortgaged
real property has become an REO Property.
The assumed monthly debt service payment deemed due on any mortgage loan
described in the prior sentence that is delinquent as to its balloon payment,
will equal, for its maturity date and for each successive due date that it
remains outstanding and part of the trust, the monthly debt service payment that
would have been due on the mortgage loan on the relevant date if the related
balloon payment had not come due and the mortgage loan had, instead, continued
to amortize and accrue interest according to its terms in effect as of the date
of initial issuance of the offered certificates. The assumed monthly debt
service payment deemed due on any mortgage loan described in the second
preceding sentence as to which the related mortgaged real property has become an
REO Property, will equal, for each due date that the REO Property remains part
of the trust fund, the monthly debt service payment or, in the case of a
mortgage loan delinquent with respect to its balloon payment, the assumed
monthly debt service payment that would have been due or deemed due if the
related mortgaged real property had not become an REO Property. Assumed monthly
debt service payments for an ARD Loan will not include Post-ARD Additional
Interest or accelerated amortization payments.
The master servicer will not be required to make any advance of principal
or interest with respect to the Ocean Key Resort subordinate companion loan.
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REPORTS TO CERTIFICATEHOLDERS; AVAILABLE INFORMATION
Certificateholder Reports. Based solely on historical information provided
on a one-time basis by the respective mortgage loan sellers and information
provided in monthly reports prepared by the master servicer and the special
servicer, and in any event delivered to the trustee, the trustee will be
required to provide or otherwise make available as described under
"--Information Available Electronically" below, on each payment date, to each
registered holder of an offered certificate and, upon request, to each
beneficial owner of an offered certificate held in book-entry form that is
identified to the reasonable satisfaction of the trustee, a payment date
statement substantially in the form of Annex D to this prospectus supplement.
Not later than 2:00 p.m. (New York City time) on the second business day
prior to each determination date, the special servicer will deliver or cause to
be delivered to the master servicer the following reports with respect to the
specially serviced mortgage loans and any REO Properties providing the required
information as of the end of the preceding calendar month: (i) a CMSA property
file; (ii) a CMSA comparative financial status report and (iii) a CMSA financial
file. Not later than 5:00 p.m. (New York City time) on the first business day
following each determination date, the special servicer will deliver or cause to
be delivered to the master servicer the following reports with respect to the
mortgage loans (and, if applicable, the related REO Properties) (or, as to
clause (iv) below, only with respect to specially serviced mortgage loans)
providing the required information as of such determination date: (i) a CMSA
historical liquidation report; (ii) a CMSA historical loan modification and
corrected mortgage loan report; (iii) a CMSA REO status report and (iv) a CMSA
delinquent loan status report.
Not later than 4:00 p.m. (New York City time) on the third business day
after each determination date, the master servicer shall deliver or cause to be
delivered to the trustee (in electronic format acceptable to the master servicer
and the trustee) (A) the most recent CMSA historical loan modification and
corrected mortgage loan report, CMSA historical liquidation report and CMSA REO
status report received from the special servicer; (B) a CMSA property file, a
CMSA comparative financial status report and a CMSA financial file, each with
the required information as of the end of the preceding calendar month (in each
case combining the reports prepared by the special servicer and the master
servicer); (C) a CMSA loan level reserve/LOC report and a CMSA delinquent loan
status report, each with the required information as of such determination date
(in each case combining the reports prepared by the special servicer and the
master servicer); (D) a CMSA servicer watchlist with the required information as
of such determination date and (E) an updated collection report.
The master servicer will be entitled, absent manifest error, to
conclusively rely on the reports to be provided by the special servicer pursuant
to the second preceding paragraph. The trustee will be entitled, absent manifest
error, to conclusively rely on the CMSA loan periodic update file to be provided
by the master servicer. In the case of information or reports to be furnished by
the master servicer to the trustee, to the extent that such information is based
on reports to be provided by the special servicer and, to the extent that such
reports are to be prepared and delivered by the special servicer, the master
servicer will have no obligation to provide such information or reports until it
has received such information or reports from the special servicer and the
master servicer will not be in default due to a delay in providing the reports
to the extent caused by the special servicer's failure to timely provide any
report.
In addition, the special servicer with respect to each specially serviced
mortgage loan and REO Property, and the master servicer with respect to each
non-specially serviced mortgage loan, will each prepare or, if previously
prepared, update an operating statement analysis report for the related
mortgaged real property or REO Property, as the case may be. Subject to the
conditions set forth in the last paragraph under "--Other Information" below,
the master servicer and the special servicer will make available to the trustee,
the series 2004-C1 controlling class representative, any certificateholder,
certificate owner or prospective certificateholder or certificate owner, in each
case upon request, all of the operating statement analysis reports so prepared
or updated; provided, that if the requesting party is a certificateholder,
certificate owner or prospective certificateholder or certificate owner, the
master servicer or the special servicer, as the case may be, will be
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permitted to require payment of a sum sufficient to cover the reasonable costs
and expenses of providing any copies. See "Servicing of the Underlying Mortgage
Loans--Inspections; Collection of Operating Information" in this prospectus
supplement.
Each CMSA file or report will be substantially in the form of, and contain
the information called for in, the downloadable form of that file or report
available as of the date of the initial issuance of the series 2004-C1
certificates on the CMSA website, currently located at www.cmbs.org, or in such
other form for the presentation of that information and containing such
additional information as may from time to time be approved by the CMSA for
commercial mortgage-backed securities transactions generally.
Book-Entry Certificates. If you hold your offered certificates in
book-entry form through DTC, you may obtain direct access to the monthly reports
of the trustee as if you were a registered certificateholder, provided that you
deliver a written certification to the trustee confirming your beneficial
ownership in the offered certificates. Otherwise, until definitive certificates
are issued with respect to your offered certificates, the information contained
in those monthly reports will be available to you only to the extent that it is
made available through DTC and the DTC participants or is available on the
trustee's internet website. Conveyance of notices and other communications by
DTC to the DTC participants, and by the DTC participants to beneficial owners of
the offered certificates, will be governed by arrangements among them, subject
to any statutory or regulatory requirements as may be in effect from time to
time. We, the master servicer, the special servicer, the trustee and the series
2004-C1 certificate registrar are required to recognize as certificateholders
only those persons in whose names the series 2004-C1 certificates are registered
on the books and records of the certificate registrar.
Information Available Electronically. On or prior to each payment date, the
trustee will make available to the general public via its internet website,
which is currently located at "www.etrustee.net", (i) the monthly payment 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 interested parties (and not in furtherance of
the distribution thereof under the securities laws), this prospectus supplement
the prospectus and the series 2004-C1 pooling and servicing agreement, and (v)
any other items at the request of the Depositor. In addition, on or prior to
each payment date, the trustee will make available via its internet website, on
a restricted basis, (i) the Restricted Servicer Reports, (ii) the CMSA property
file and (iii) any other items at the request of the Depositor. The trustee will
provide access to such restricted reports, upon request, to each Privileged
Person.
The trustee will not be obligated to make any representation or warranty as
to the accuracy or completeness of any report, document or other information
made available on its internet website and will assume no responsibility
therefor. In addition, the trustee may disclaim responsibility for any
information distributed by the trustee for which it is not the original source.
In connection with providing access to its internet website, the trustee
may require registration and the acceptance of a disclaimer. The trustee will
not be liable for the dissemination of information in accordance with, and in
compliance with the terms of, the series 2004-C1 pooling and servicing
agreement.
The master servicer may, but is not required to, make available on or prior
to the payment date in each month to any interested party via its internet
website (i) the monthly payment date statement, (ii) as a convenience for
interested parties (and not in furtherance of the distribution thereof under the
securities laws), the series 2004-C1 pooling and servicing agreement, the
prospectus and this prospectus supplement and (iii) any other items at the
request of the Depositor. In addition, the master servicer may, but is not
required to, make available each month via its internet website (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, the Restricted Servicer
Reports, the CMSA financial file and the CMSA property file. Any (y) Restricted
Servicer Report or Unrestricted Servicer Report (other than the interim
delinquent loan
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status report) that is not available on the master servicer's internet website
as described in the immediately preceding sentence by 5:00 p.m. (New York City
time) on the related payment date, and (z) interim delinquent loan status report
that is not available on the master servicer's internet website as described in
the immediately preceding sentence by 5:00 p.m. (New York City time) on the
third business day of each calendar month shall be provided (in electronic
format, or if electronic mail is unavailable, by facsimile) by the master
servicer, upon request, to any person otherwise entitled to access such report
on the master servicer's internet website.
In connection with providing access to the master servicer's internet
website, the master servicer may require registration and the acceptance of a
disclaimer.
Other Information. The series 2004-C1 pooling and servicing agreement will
obligate the master servicer (with respect to the items listed in clauses 1, 2
(other than monthly payment date statements), 3, 5, 6, 8, 9 and 10), the special
servicer (with respect to the items in clauses 3, 7, 8 (with respect to
specially serviced mortgage loans), 9 and 10) and the trustee (with respect to
the items in clauses 2, 3, 4 and 9 below and to the extent any other items are
in its possession) to make available at their respective offices, upon ten days'
prior written request and during normal business hours, for review by any holder
or beneficial owner of an offered certificate or any person identified to the
master servicer, the special servicer or the trustee, as the case may be, as a
prospective transferee of an offered certificate or any interest in an offered
certificate, originals or copies of, among other things, the following items:
1. the series 2004-C1 pooling and servicing agreement, including
exhibits, and any amendments to the series 2004-C1 pooling and
servicing agreement;
2. all monthly payment date statements delivered, or otherwise
electronically made available, to series 2004-C1 certificateholders
since the date of initial issuance of the offered certificates, and
all reports, statements and analyses delivered, as described in the
third paragraph under the heading "--Certificateholder Reports" above,
by the master servicer since the date of initial issuance of the
offered certificates;
3. all officer's certificates delivered to the trustee by the master
servicer and/or the special servicer since the date of initial
issuance of the certificates, as described under "Servicing of the
Underlying Mortgage Loans--Evidence as to Compliance" in this
prospectus supplement;
4. all accountant's reports delivered to the trustee with respect to the
master servicer and/or the special servicer since the date of initial
issuance of the offered certificates, as described under "Servicing of
the Underlying Mortgage Loans--Evidence as to Compliance" in this
prospectus supplement;
5. the most recent inspection report with respect to each mortgaged real
property for an underlying mortgage loan prepared by the master
servicer or received by the master servicer from the special servicer
and any environmental assessments prepared, in each case as described
under "Servicing of the Underlying Mortgage Loans--Inspections;
Collection of Operating Information" in this prospectus supplement;
6. the most recent annual operating statement and rent roll for each
mortgaged real property for an underlying mortgage loan collected or
otherwise received by the master servicer as described under
"Servicing of the Underlying Mortgage Loans--Inspections; Collection
of Operating Information" in this prospectus supplement;
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7. any and all modifications, waivers and amendments of the terms of an
underlying mortgage loan entered into by the special servicer and the
asset status report prepared pursuant the series 2004-C1 pooling and
servicing agreement; and
8. all of the servicing files with respect to the underlying mortgage
loans (exclusive of any items therein that may not be disclosed by
reason of contract or applicable law).
9. any and all officers' certificates and other evidence delivered by the
master servicer or the special servicer, as the case may be, to
support its determination that any advance was, or if made, would be,
a Nonrecoverable Advance, including appraisals affixed thereto and any
required appraisal; and
10. all CMSA operating statement analyses and CMSA NOI adjustment
worksheets maintained by the master servicer or the special servicer.
Copies of any and all of the foregoing items will be available from the master
servicer, the special servicer or the trustee, as the case may be, upon request.
However, the master servicer, the special servicer or the trustee, as the case
may be, will be permitted to require payment of a sum sufficient to cover the
reasonable costs and expenses of providing the copies, unless the party
requesting such copies is any of the rating agencies.
In connection with providing access to or copies of the items described
above, the trustee, the master servicer or the special servicer, as applicable,
may require:
o in the case of a holder of an offered certificate or a beneficial
owner of an offered certificate held in book-entry form, a written
confirmation executed by the requesting person or entity, in the form
attached to the series 2004-C1 pooling and servicing agreement or
otherwise reasonably acceptable to the trustee, the master servicer or
the special servicer, as applicable, generally to the effect that the
person or entity is a holder or beneficial owner of offered
certificates and will keep the information confidential; and
o in the case of a prospective purchaser of an offered certificate or
any interest in that offered certificate, confirmation executed by the
requesting person or entity, in the form attached to the series
2004-C1 pooling and servicing agreement or otherwise reasonably
acceptable to the trustee, the master servicer or the special
servicer, as applicable, generally to the effect that the person or
entity is a prospective purchaser of offered certificates or an
interest in offered certificates, is requesting the information for
use in evaluating a possible investment in the offered certificates
and will otherwise keep the information confidential.
VOTING RIGHTS
The voting rights for the series 2004-C1 certificates will be allocated as
follows:
o 96.0% of the voting rights will be allocated to the class A-1, A-2,
A-3, A-4, B, C, D, E, F, G, H, J, K, L, M, N, P, Q and PM certificates
in proportion to the respective total principal balances of those
classes;
o 4.0% of the voting rights will be allocated to the class X-1 and X-2
certificates in proportion to the respective total notional amounts of
those classes; and
o 0.0% of the voting rights will be allocated to the class R and Y
certificates;
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provided that, solely for the purpose of determining the voting rights of the
classes of certificates specified in the first bullet, the aggregate Appraisal
Reduction Amount (determined as set forth herein) shall be treated as Realized
Losses with respect to the calculation of the total principal balances of such
certificates; and provided, further, that the aggregate Appraisal Reduction
Amount shall not reduce the total principal balance of any class for purposes of
determining the series 2004-C1 controlling class, the series 2004-C1 controlling
class representative, the class PM representative, the Majority Controlling
Class Certificateholder or the Majority Class PM Certificateholder;
Voting rights allocated to a class of series 2004-C1 certificateholders
will be allocated among those certificateholders in proportion to their
respective percentage interests in that class.
TERMINATION
The obligations created by the series 2004-C1 pooling and servicing
agreement will terminate following the earliest of:
1. the final payment or advance on, or other liquidation of, the last
mortgage loan or related REO Property remaining in the trust fund; and
2. the purchase of all of the mortgage loans and REO Properties remaining
in the trust fund by the special servicer, the Majority Controlling
Class Certificateholder or the master servicer, in that order of
preference.
Written notice of termination of the series 2004-C1 pooling and servicing
agreement will be given to each series 2004-C1 certificateholder. The final
payment with respect to each series 2004-C1 certificate will be made only upon
surrender and cancellation of that certificate at the office of the series
2004-C1 certificate registrar or at any other location specified in the notice
of termination.
Any purchase by the special servicer, the Majority Controlling Class
Certificateholder or the master servicer of all the mortgage loans and REO
Properties remaining in the trust fund is required to be made at a price equal
to:
o the sum of--
1. the total Stated Principal Balance of all the mortgage loans then
included in the trust fund, other than any mortgage loans as to
which the mortgaged real properties have become REO Properties,
together with--
(a) all unpaid and unadvanced interest, other than Default
Interest and Post-ARD Additional Interest, on those mortgage
loans up to, but not including their respective due dates in
the related collection period, and
(b) all unreimbursed advances for those mortgage loans, together
with any interest on those advances owing to the parties
that made them, and
2. the appraised value of all REO Properties then included in the
trust fund, as determined by an appraiser selected by the master
servicer and approved by the trustee; minus
o if the purchaser is the master servicer, the aggregate amount of
unreimbursed advances made by the master servicer, together with any
interest accrued and payable to the master servicer in respect of
unreimbursed advances in accordance with the series 2004-C1 pooling
and servicing
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agreement and any unpaid master servicing fees remaining outstanding
(which items shall be deemed to have been paid or reimbursed to the
master servicer in connection with such purchase).
That purchase will result in early retirement of the then outstanding series
2004-C1 certificates. However, the right of the special servicer, the Majority
Controlling Class Certificateholder or the master servicer to make the purchase
is subject to the requirement that the total Stated Principal Balance of the
mortgage pool, including the non-pooled portion of the Pecanland Mall underlying
mortgage loan, be less than 1.0% of the initial total principal balance of the
series 2004-C1 principal balance certificates. The termination price, exclusive
of any portion of the termination price payable or reimbursable to any person
other than the series 2004-C1 certificateholders, will constitute part of the
Total Available P&I Funds for the final payment date.
THE TRUSTEE
LaSalle Bank National Association, a national banking association with its
principal offices located in Chicago, will act as trustee on behalf of the
Certificateholders. The corporate trust office of the trustee is located at 135
S. LaSalle Street, Suite 1625, Chicago, Illinois 60603, Attention: Asset-Backed
Securities Trust Services Group--Citigroup Commercial Mortgage Trust, Series
2004-C1.
The trustee is at all times required to be a corporation, bank, trust
company or association organized and doing business under the laws of the U.S.
or any State of the U.S. or the District of Columbia. In addition, the trustee
must at all times:
o be authorized under those laws to exercise trust powers;
o have a combined capital and surplus of at least $100,000,000; and
o be subject to supervision or examination by federal or state banking
authority.
If the subject corporation, bank, trust company or association publishes reports
of condition at least annually, in accordance with law or the requirements of
the supervising or examining authority, then the combined capital and surplus of
that corporation, bank, trust company or association will be deemed to be its
combined capital and surplus as described in its most recent published report of
condition.
We, the master servicer, the special servicer and our and their respective
affiliates, may from time to time enter into normal banking and trustee
relationships with the trustee and its affiliates. The trustee and any of its
respective affiliates may hold series 2004-C1 certificates in its own name. In
addition, for purposes of meeting the legal requirements of some local
jurisdictions, the master servicer and the trustee acting jointly will have the
power to appoint a co-trustee or separate trustee of all or any part of the
trust assets. All rights, powers, duties and obligations conferred or imposed
upon the trustee will be conferred or imposed upon the trustee and the separate
trustee or co-trustee jointly, or in any jurisdiction in which the trustee shall
be incompetent or unqualified to perform various acts, singly upon the separate
trustee or co-trustee who shall exercise and perform its rights, powers, duties
and obligations solely at the direction of the trustee.
The trustee will be entitled to a monthly fee for its services. With
respect to each and every underlying mortgage loan, including each specially
serviced mortgage loan, each mortgage loan as to which the related mortgaged
real property has become an REO Property and each mortgage loan that has been
defeased, that fee will accrue at a specified rate per annum on the Stated
Principal Balance of the related mortgage loan outstanding from time to time and
be calculated on a 30/360 Basis. The trustee fee is payable out of general
collections on the mortgage loans and any REO Properties in the trust fund. The
trustee will also be permitted to retain investment income earned on amounts on
deposit in the payment account.
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See also "Description of the Governing Documents--The Trustee", "--Duties
of the Trustee", "--Matters Regarding the Trustee" and "--Resignation and
Removal of the Trustee" in the accompanying prospectus.
THE FISCAL AGENT
ABN AMRO Bank N.V., a banking corporation organized under the laws of The
Netherlands, will act as fiscal agent pursuant to the series 2004-C1 pooling and
servicing agreement. The fiscal agent's office is located at 135 South LaSalle
Street, Suite 1625, Chicago, Illinois 60603, Attention: Asset-Backed Securities
Trust Services Group - Citigroup Commercial Mortgage Trust, Series 2004-C1. The
fiscal agent will be deemed to have been removed in the event of the resignation
or removal of the trustee.
The fiscal agent will make no representation as to the validity or
sufficiency of the series 2004-C1 pooling and servicing agreement, the series
2004-C1 certificates, the underlying mortgage loans, this prospectus supplement
(except for the information in the immediately preceding paragraph) or related
documents. The duties and obligations of the fiscal agent consist only of making
advances as described in this prospectus supplement; and the fiscal agent will
not be liable except for the performance of such duties and obligations.
In the event that the master servicer and the trustee fail to make a
required advance, the fiscal agent will be required to make such advance,
provided that the fiscal agent will not be obligated to make any advance that it
deems to be a Nonrecoverable Advance. The fiscal agent will be entitled to rely
conclusively on any determination by the master servicer or the trustee, as
applicable, that an advance, if made, would be a Nonrecoverable Advance. The
fiscal agent will be entitled to reimbursement for each advance made by it in
the same manner and to the same extent as the trustee and the master servicer.
YIELD AND MATURITY CONSIDERATIONS
YIELD CONSIDERATIONS
General. The yield on any offered certificate will depend on:
o the price at which the certificate is purchased by an investor, and
o the rate, timing and amount of payments on the certificate.
The rate, timing and amount of payments on any offered certificate will in
turn depend on, among other things,
o the pass-through rate for the certificate,
o the rate and timing of principal payments, including principal
prepayments, and other principal collections on the underlying
mortgage loans and the extent to which those amounts are to be applied
in reduction of the principal balance of the certificate,
o the rate, timing and severity of Realized Losses and Additional Trust
Fund Expenses and the extent to which those losses and expenses result
in the reduction of the principal balance of the certificate, and
o the timing and severity of any Net Aggregate Prepayment Interest
Shortfalls and the extent to which those shortfalls result in the
reduction of the interest payments on the certificate.
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Pass-Through Rates. The pass-through rates for the class , , and
certificates are, in each case, fixed. The pass-through rates applicable to the
class , , , , and certificates are, in each case, equal to, based
upon or limited by the Weighted Average Pool Pass-Through Rate from time to
time. Accordingly, the yield on the class , , , and certificates could
be sensitive to changes in the relative composition of the mortgage pool as a
result of scheduled amortization, voluntary prepayments and liquidations of the
underlying mortgage loans following default.
See "Description of the Offered Certificates--Payments--Calculation of
Pass-Through Rates" and "Description of the Mortgage Pool" in this prospectus
supplement and "--Rate and Timing of Principal Payments" below.
Rate and Timing of Principal Payments. The yield to maturity on offered
certificates purchased at a discount or a premium will be affected by the rate
and timing of principal payments made in reduction of the principal balances of
those certificates. In turn, the rate and timing of principal payments that are
paid in reduction of the principal balance of any offered certificate will be
directly related to the rate and timing of principal payments on or with respect
to the underlying mortgage loans. Finally, the rate and timing of principal
payments on or with respect to the underlying mortgage loans will be affected by
their amortization schedules, the dates on which balloon payments are due and
the rate and timing of principal prepayments and other unscheduled collections
on them, including for this purpose, collections made in connection with
liquidations of mortgage loans due to defaults, casualties or condemnations
affecting the mortgaged real properties, or purchases or other removals of
mortgage loans from the trust fund.
Prepayments and other early liquidations of the underlying mortgage loans,
including as a result of the purchase of any mortgage loan out of the trust as
described under "Description of the Mortgage Pool--Assignment of the Mortgage
Loans; Repurchases and Substitutions", "Description of the Mortgage
Pool--Representations and Warranties; Repurchases and Substitutions" and
"Description of the Offered Certificates--Termination" in this prospectus
supplement, will result in payments on the offered certificates of amounts that
would otherwise be paid over the remaining terms of the underlying mortgage
loans. This will tend to shorten the weighted average lives of the offered
certificates. Defaults on the underlying mortgage loans, particularly at or near
their maturity dates, may result in significant delays in payments of principal
on those mortgage loans and, accordingly, on the offered certificates, while
work-outs are negotiated or foreclosures are completed. These delays will tend
to lengthen the weighted average lives of the offered certificates. See
"Servicing of the Underlying Mortgage Loans--Modifications, Waivers, Amendments
and Consents" in this prospectus supplement. In addition, the ability of a
borrower under an ARD Loan, to repay that loan on the related anticipated
repayment date will generally depend on its ability to either refinance the
mortgage loan or sell the corresponding mortgaged real property. Also, a
borrower under an ARD Loan may have little incentive to repay its mortgage loan
on the related anticipated repayment date if then prevailing interest rates are
relatively high. Accordingly, there can be no assurance that any ARD Loan in the
trust fund will be paid in full on its anticipated repayment date.
The extent to which the yield to maturity on any offered certificate may
vary from the anticipated yield will depend upon the degree to which the
certificate is purchased at a discount or premium and when, and to what degree,
payments of principal on the underlying mortgage loans are in turn paid in a
reduction of the principal balance of the certificate. If you purchase your
offered certificates at a discount, you should consider the risk that a slower
than anticipated rate of principal payments on the underlying mortgage loans
could result in an actual yield to you that is lower than your anticipated
yield. Conversely, if you purchase your offered certificates at a premium, you
should consider the risk that a faster than anticipated rate of principal
payments on the underlying mortgage loans could result in an actual yield to you
that is lower than your anticipated yield.
In the event that prepayments and other early liquidations occur with
respect to underlying mortgage loans that have relatively high net mortgage
rates, the Weighted Average Pool Pass-Through Rate would decline,
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which could, in turn, adversely affect the yield on any offered certificate with
a variable or capped pass-through rate.
Because the rate of principal payments on or with respect to the underlying
mortgage loans will depend on future events and a variety of factors, no
assurance can be given as to that rate or the rate of principal prepayments in
particular. We are not aware of any relevant publicly available or authoritative
statistics with respect to the historical prepayment experience of a large group
of real estate loans comparable to those in the mortgage pool.
Even if they are collected and payable on your offered certificates,
prepayment premiums and yield maintenance charges may not be sufficient to
offset fully any loss in yield on your offered certificates attributable to the
related prepayments of the underlying mortgage loans.
Delinquencies and Defaults on the Mortgage Loans. The rate and timing of
delinquencies and defaults on the underlying mortgage loans will affect:
o the amount of payments on your offered certificates;
o the yield to maturity of your offered certificates;
o the rate of principal payments on your offered certificates; and
o the weighted average life of your offered certificates.
Delinquencies on the underlying mortgage loans, unless covered by monthly
debt service advances, may result in shortfalls in payments of interest and/or
principal on your offered certificates for the current month.
If--
o you calculate the anticipated yield to maturity for your offered
certificates based on an assumed rate of default and amount of losses
on the underlying mortgage loans that is lower than the default rate
and amount of losses actually experienced, and
o the additional losses result in a reduction of the total payments on
or the total principal balance of your offered certificates,
then your actual yield to maturity will be lower than you calculated and could,
under some scenarios, be negative.
The timing of any loss on a liquidated mortgage loan that results in a
reduction of the total payments on or the total principal balance of your
offered certificates will also affect your actual yield to maturity, even if the
rate of defaults and severity of losses are consistent with your expectations.
In general, the earlier your loss occurs, the greater the effect on your yield
to maturity.
Even if losses on the underlying mortgage loans do not result in a
reduction of the total payments on or the total principal balance of your
offered certificates, the losses may still affect the timing of payments on, and
the weighted average life and yield to maturity of, your offered certificates.
In addition, if the master servicer, the special servicer, the trustee or
the fiscal agent reimburses itself out of general collections on the mortgage
pool for any advance that it has determined is not recoverable out of
collections on the related mortgage loan, then that advance (together with
accrued interest thereon) will be deemed, to the fullest extent permitted, to be
reimbursed out of payments and other collections of principal on the
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underlying mortgage loans otherwise distributable on the series 2004-C1
principal balance certificates (other than the class PM certificates), prior to
being deemed reimbursed out of payments and other collections of interest on the
underlying mortgage loans otherwise distributable on the series 2004-C1
certificates (other than the class PM certificates). As a result, the Net
Principal Payment Amount for the corresponding payment date would be reduced, to
not less than zero, by the amount of any such reimbursement. Accordingly, any
such reimbursement would have the effect of reducing current payments of
principal on the offered certificates.
Relevant Factors. The following factors, among others, will affect the rate
and timing of principal payments and defaults and the severity of losses on or
with respect to the mortgage loans in the trust fund:
o prevailing interest rates;
o the terms of the mortgage loans, including--
1. provisions that require the payment of prepayment premiums and
yield maintenance charges,
2. provisions that impose prepayment lock-out periods, and
3. amortization terms that result in balloon payments;
o the demographics and relative economic vitality of the areas in which
the mortgaged real properties are located;
o the general supply and demand for commercial and multifamily rental
space of the type available at the mortgaged real properties in the
areas in which those properties are located;
o the quality of management of the mortgaged real properties;
o the servicing of the mortgage loans;
o possible changes in tax laws; and
o other opportunities for investment.
See "Risk Factors--Risks Related to the Underlying Mortgage Loans",
"Description of the Mortgage Pool" and "Servicing of the Underlying Mortgage
Loans" in this prospectus supplement and "Description of the Governing
Documents" and "Yield and Maturity Considerations--Yield and Prepayment
Considerations" in the accompanying prospectus.
The rate of prepayment on the mortgage loans in the trust fund 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 the annual rate at which a mortgage loan accrues interest, the related
borrower may have an increased incentive to refinance the mortgage loan.
Conversely, to the extent prevailing market interest rates exceed the annual
rate at which a mortgage loan accrues interest, the related borrower may be less
likely to voluntarily prepay the mortgage loan. Assuming prevailing market
interest rates exceed the revised mortgage rate at which an ARD Loan accrues
interest following its anticipated repayment date, the primary incentive for the
related borrower to prepay the mortgage loan on or before its anticipated
repayment date is to give the borrower access to excess cash flow, all of which,
net of the minimum required debt service, approved property expenses and any
required reserves, must be applied to pay down principal of the mortgage loan.
Accordingly, there can be
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no assurance that any ARD Loan in the trust fund will be prepaid on or before
its anticipated repayment date or on any other date prior to maturity.
Depending on prevailing market interest rates, the outlook for market
interest rates and economic conditions generally, some underlying borrowers may
sell their mortgaged real properties in order to realize their equity in those
properties, to meet cash flow needs or to make other investments. In addition,
some underlying borrowers may be motivated by federal and state tax laws, which
are subject to change, to sell their mortgaged real properties prior to the
exhaustion of tax depreciation benefits.
A number of the underlying borrowers are partnerships. The bankruptcy of
the general partner in a partnership may result in the dissolution of the
partnership. The dissolution of a borrower partnership, the winding-up of its
affairs and the distribution of its assets could result in an acceleration of
its payment obligations under the related mortgage loan.
We make no representation or warranty regarding:
o the particular factors that will affect the rate and timing of
prepayments and defaults on the underlying mortgage loans;
o the relative importance of those factors;
o the percentage of the total principal balance of the underlying
mortgage loans that will be prepaid or as to which a default will have
occurred as of any particular date; or
o the overall rate of prepayment or default on the underlying mortgage
loans.
Unpaid Interest. If the portion of the Standard Available P&I Funds payable
with respect to interest on any class of offered certificates on any payment
date is less than the total amount of interest then payable for the class, the
shortfall will be payable to the holders of those certificates on subsequent
payment dates, subject to the Standard Available P&I Funds on those subsequent
payment dates and the priority of payments described under "Description of the
Offered Certificates--Payments--Priority of Payments" in this prospectus
supplement. That shortfall will not bear interest, however, and will therefore
negatively affect the yield to maturity of that class of offered certificates
for so long as it is outstanding.
Delay in Payments. Because monthly payments will not be made on the offered
certificates until several days after the due dates for the underlying mortgage
loans during the related collection period, your effective yield will be lower
than the yield that would otherwise be produced by your pass-through rate and
purchase price, assuming that purchase price did not account for a delay.
CPR MODEL
Prepayments on loans are commonly measured relative to a prepayment
standard or model. The prepayment model used in this prospectus supplement is
the constant prepayment rate, or "CPR", model, which represents an assumed
constant 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 for the
life of those loans. The CPR model does not purport to be either a historical
description of the prepayment experience of any pool of loans or a prediction of
the anticipated rate of prepayment of any pool of loans, including the mortgage
pool. We do not make any representations about the appropriateness of the CPR
model.
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WEIGHTED AVERAGE LIVES OF THE OFFERED CERTIFICATES
The tables set forth on Annex C to this prospectus supplement:
o indicate the respective weighted average lives of the various classes
of the offered certificates; and
o set forth the percentages of the respective initial total principal
balances of the various classes of the offered certificates that would
be outstanding after the payment dates in each of the calendar months
shown.
Those tables were prepared based on the Maturity Assumptions and the
indicated prepayment scenarios.
For purposes of this prospectus supplement, weighted average life refers to
the average amount of time that will elapse from the date of issuance of a
security until each dollar of principal of the security will be repaid to the
investor, assuming no losses. For purposes of this "Yield and Maturity
Considerations" section and Annex C, the weighted average life of any offered
certificate is determined by:
1. multiplying the amount of each principal payment on the certificate by
the number of years from the assumed settlement date, which is part of
the Maturity Assumptions, to the related payment date;
2. summing the results; and
3. dividing the result by the sum of the scheduled principal payments for
the certificate.
The weighted average life of any offered certificate will be influenced by,
among other things, the rate at which the principal of the underlying mortgage
loans is paid, which may be in the form of scheduled amortization, balloon
payments, prepayments, liquidation proceeds, condemnation proceeds or insurance
proceeds. The weighted average life of any offered certificate may also be
affected to the extent that additional payments, collections and/or advances of
principal are in turn applied in reduction of the principal balance of that
certificate occur as a result of the purchase of a mortgage loan from the trust
or the optional termination of the trust. The purchase of a mortgage loan from
the trust will have the same effect on payments to the offered
certificateholders as if the subject mortgage loan had prepaid in full, except
that no prepayment fee is collectable on the subject mortgage loans.
The actual characteristics and performance of the underlying mortgage loans
will differ from the assumptions used in calculating the tables on Annex C.
Those tables are hypothetical in nature and are provided only to give a general
sense of how the principal cash flows might behave under the assumed prepayment
scenarios. Any difference between the assumptions used in calculating the tables
on Annex C and the actual characteristics and performance of the underlying
mortgage loans, or actual prepayment or loss experience, will affect the
percentages of initial total principal balances outstanding over time and the
weighted average lives of the respective classes of the offered certificates. It
is highly unlikely that the underlying mortgage loans will prepay in accordance
with the Maturity Assumptions at any of the specified CPRs until maturity or
that all the underlying mortgage loans will so prepay at the same rate. In
addition, variations in the actual prepayment experience and the balance of the
underlying mortgage loans that prepay may increase or decrease the percentages
of initial principal balances and weighted average lives shown in the tables.
Variations may occur even if the average prepayment experience of the underlying
mortgage loans were to conform to the assumptions and be equal to any of the
specified CPRs. You must make your own decisions as to the appropriate
prepayment, liquidation and loss assumptions to be used in deciding whether to
purchase any offered certificate.
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We make no representation that:
o the mortgage loans in the trust fund will prepay in accordance with
the assumptions set forth in this prospectus supplement at any of the
CPRs shown or at any other particular prepayment rate;
o all the mortgage loans in the trust fund will prepay in accordance
with the assumptions set forth in this prospectus supplement at the
same rate;
o mortgage loans in the trust fund that are in a lockout period, a yield
maintenance period or declining premium period will not prepay as a
result of involuntary liquidations upon default or otherwise; or
o mortgage loans in the trust fund will not experience defaults and
losses.
USE OF PROCEEDS
Substantially all of the proceeds from the sale of the offered certificates
will be used by us to purchase the mortgage loans that we will include in the
trust fund and to pay those expenses incurred in connection with the issuance of
the series 2004-C1 certificates.
FEDERAL INCOME TAX CONSEQUENCES
GENERAL
Upon the initial issuance of the offered certificates, our counsel, Sidley
Austin Brown & Wood LLP, will deliver its opinion generally to the effect that,
assuming compliance with the series 2004-C1 pooling and servicing agreement, and
subject to any other assumptions set forth in the opinion, REMIC I, REMIC II and
the Pecanland Mall individual loan REMIC, respectively, will each qualify as a
REMIC under the Internal Revenue Code.
The assets of REMIC I will generally include:
o the underlying mortgage loans;
o any REO Properties acquired on behalf of the trust fund;
o the master servicer's collection account;
o the special servicer's REO account; and
o the trustee's payment account and interest reserve account.
However, the Pecanland Mall underlying mortgage loan constitutes the sole asset
of a separate REMIC and the regular interest in that loan REMIC will be an asset
of REMIC I instead of that mortgage loan or any related REO Property. In
addition, neither REMIC I nor the Pecanland Mall individual loan REMIC will
include any collections of Post-ARD Additional Interest on any ARD Loan.
For federal income tax purposes,
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o the separate non-certificated regular interests in REMIC I will be the
regular interests in REMIC I and will be the assets of REMIC II;
o the class A-1, A-2, A-3, A-4, X-1, X-2, B, C, D, E, F, G, H, J, K, L,
M, N, P, Q and PM certificates will evidence the regular interests in,
and will generally be treated as debt obligations of, REMIC II;
o the class R certificates will evidence the sole class of residual
interests in each of REMIC I, REMIC II and the Pecanland Mall
individual loan REMIC; and
o the class Y certificates will evidence 100% of the beneficial
ownership of the grantor trust consisting of any Post-ARD Additional
Interest collected on any ARD Loan.
DISCOUNT AND PREMIUM; PREPAYMENT CONSIDERATION
For federal income tax reporting purposes, one or more classes of the
offered certificates may be issued with more than a de minimis amount of
original issue discount. If you own an offered certificate issued with original
issue discount, you may have to report original issue discount income and be
subject to a tax on this income before you receive a corresponding cash payment.
The IRS has issued regulations under sections 1271 to 1275 of the Internal
Revenue Code generally addressing the treatment of debt instruments issued with
original issue discount. You should be aware, however, that those regulations
and section 1272(a)(6) of the Internal Revenue Code do not adequately address
all issues relevant to, or are not applicable to, prepayable securities such as
the offered certificates. We recommend that you consult with your own tax
advisor concerning the tax treatment of your offered certificates.
If the method for computing original issue discount described in the
accompanying prospectus results in a negative amount for any period with respect
to any holder of offered certificates, the amount of original issue discount
allocable to such period would be zero.
Some classes of the offered certificates may be treated for federal income
tax purposes as having been issued at a premium. Whether any holder of these
classes of offered certificates will be treated as holding a certificate with
amortizable bond premium will depend on the certificateholder's purchase price
and the payments remaining to be made on the certificate at the time of its
acquisition by the certificateholder. If you acquire an interest in any class of
offered certificates issued at a premium, you should consider consulting your
own tax advisor regarding the possibility of making an election to amortize the
premium. See "Federal Income Tax Consequences--REMICs--Taxation of Owners of
REMIC Regular Certificates--Premium" in the accompanying prospectus.
When determining the rate of accrual of original issue discount, market
discount and premium, if any, with respect to the series 2004-C1 certificates
for federal income tax reporting purposes, the prepayment assumption used will
be that, subsequent to the date of any determination:
o any ARD Loan in the trust fund will be paid in full on its anticipated
repayment date,
o no mortgage loan in the trust fund will otherwise be prepaid prior to
maturity,
o there will be no extension of maturity for any mortgage loan in the
trust fund, and
o no mortgage loan is purchased out of or otherwise removed from the
trust for any reason.
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However, no representation is made as to the actual rate at which the underlying
mortgage loans will prepay, if at all. See "Federal Income Tax
Consequences--REMICs--Taxation of Owners of REMIC Regular Certificates" in the
accompanying prospectus.
Prepayment premiums and yield maintenance charges actually collected on the
underlying mortgage loans will be paid on the offered certificates as and to the
extent described in this prospectus supplement. It is not entirely clear under
the Internal Revenue Code when the amount of a prepayment premium or yield
maintenance charge should be taxed to the holder of a class of offered
certificates entitled to that amount. For federal income tax reporting purposes,
the trustee will report prepayment premiums or yield maintenance charges as
income to the holders of a class of offered certificates entitled thereto only
after the master servicer's actual receipt of those amounts. The IRS may
nevertheless seek to require that an assumed amount of prepayment premiums and
yield maintenance charges be included in payments projected to be made on the
offered certificates and that taxable income be reported based on the projected
constant yield to maturity of the offered certificates. Therefore, the projected
prepayment premiums and yield maintenance charges would be included prior to
their actual receipt by holders of the offered certificates. If the projected
prepayment premiums and yield maintenance charges were not actually received,
presumably the holder of an offered certificate would be allowed to claim a
deduction or reduction in gross income at the time the unpaid prepayment
premiums and yield maintenance charges had been projected to be received.
Moreover, it appears that prepayment premiums and yield maintenance charges are
to be treated as ordinary income rather than capital gain. However, the correct
characterization of the income is not entirely clear. We recommend you consult
your own tax advisors concerning the treatment of prepayment premiums and yield
maintenance charges.
CHARACTERIZATION OF INVESTMENTS IN OFFERED CERTIFICATES
Except to the extent noted below, the offered certificates will generally
be "real estate assets" within the meaning of Section 856(c)(5)(B) of the
Internal Revenue Code in the same proportion that the assets of the trust would
be so treated. In addition, interest, including original issue discount, if any,
on the offered certificates will be interest described in Section 856(c)(3)(B)
of the Internal Revenue Code to the extent that those certificates are treated
as "real estate assets" within the meaning of Section 856(c)(5)(B) of the
Internal Revenue Code.
Most of the mortgage loans to be included in the trust fund are not secured
by real estate used for residential or other purposes prescribed in Section
7701(a)(19)(C) of the Internal Revenue Code. Consequently, it appears that the
offered certificates will be treated as assets qualifying under that section to
only a limited extent. Accordingly, investment in the offered certificates may
not be suitable for a thrift institution seeking to be treated as a "domestic
building and loan association" under Section 7701(a)(19)(C) of the Internal
Revenue Code. The offered certificates will be treated as:
o "qualified mortgages" for another REMIC under Section 860G(a)(3)(C) of
the Internal Revenue Code; and
o "permitted assets" for a "financial asset securitization investment
trust" under Section 860L(c) of the Internal Revenue Code.
To the extent an offered certificate represents ownership of an interest in
a mortgage loan that is secured in part by the related borrower's interest in a
bank account or reserve fund, that mortgage loan is not secured solely by real
estate. Therefore:
o a portion of that certificate may not represent ownership of "loans
secured by an interest in real property" or other assets described in
Section 7701(a)(19)(C) of the Internal Revenue Code;
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o a portion of that certificate may not represent ownership of "real
estate assets" under Section 856(c)(5)(B) of the Internal Revenue
Code; and
o the interest on that certificate may not constitute "interest on
obligations secured by mortgages on real property" within the meaning
of Section 856(c)(3)(B) of the Internal Revenue Code.
In addition, most of the mortgage loans that we intend to include in the
trust fund contain defeasance provisions under which the lender may release its
lien on the collateral securing the mortgage loan in return for the borrower's
pledge of substitute collateral in the form of U.S. government securities.
Generally, under the Treasury regulations, if a REMIC releases its lien on real
property that secures a qualified mortgage, that mortgage ceases to be a
qualified mortgage on the date the lien is released unless certain conditions
are satisfied. In order for the mortgage loan to remain a qualified mortgage,
the Treasury regulations require that--
o the borrower pledges substitute collateral that consist solely of
certain U.S. government securities;
o the mortgage loan documents allow that substitution;
o the lien is released to facilitate the disposition of the property or
any other customary commercial transaction, and not as part of an
arrangement to collateralize a REMIC offering with obligations that
are not real estate mortgages; and
o the release is not within two years of the startup day of the REMIC.
Following the defeasance of a mortgage loan, regardless of whether the
foregoing conditions were satisfied, that mortgage loan would not be treated as
a "loan secured by an interest in real property" or a "real estate asset" and
interest on that loan would not constitute "interest on obligations secured by
real property" for purposes of Sections 7701(a)(19)(C), 856(c)(5)(B) and
856(c)(3)(B), respectively of the Internal Revenue Code.
See "Description of the Mortgage Pool" in this prospectus supplement and
"Federal Income Tax Consequences--REMICs--Characterization of Investments in
REMIC Certificates" in the accompanying prospectus.
PROHIBITED TRANSACTIONS TAX AND OTHER TAXES
In the case of REO Properties directly operated by the special servicer, a
tax may be imposed on any of the REMICs should the REO Properties consist
primarily of hotels and income from the REO Property would be apportioned and
classified as "service" or "non-service" income. The "service" portion of the
income could be treated as net income from foreclosure property or net income
from a prohibited transaction subject to federal tax either at the highest
marginal corporate tax rate or at the 100% rate, respectively. Any tax imposed
on the trust's income from an REO Property would reduce the amount available for
payment to the series 2004-C1 certificateholders.
For further information regarding the federal income tax consequences of
investing in the offered certificates, see "Federal Income Tax
Consequences--REMICs" in the accompanying prospectus.
S-173
ERISA CONSIDERATIONS
GENERAL
If you are--
(1) a fiduciary of a Plan, or
(2) any other person investing "plan assets" of any Plan,
you should carefully review with your legal advisors whether the purchase or
holding of an offered certificate would be a "prohibited transaction" or would
otherwise be impermissible under ERISA or Section 4975 of the Internal Revenue
Code. See "ERISA Considerations" in the accompanying prospectus.
If a Plan acquires an offered certificate, the assets of the trust will be
deemed for purposes of ERISA to be assets of the investing Plan, unless certain
exceptions apply.
See "ERISA Considerations--Plan Asset Regulations" in the accompanying
prospectus. However, we cannot predict in advance, nor can there be any
continuing assurance, whether those exceptions may be applicable because of the
factual nature of the rules set forth in the Plan Asset Regulations. For
example, one of the exceptions in the Plan Asset Regulations states that the
underlying assets of an entity will not be considered "plan assets" if less than
25% of the value of each class of equity interests is held by "benefit plan
investors", which include Plans, as well as employee benefit plans not subject
to ERISA, such as governmental plans, but this exception is tested immediately
after each acquisition of a series 2004-C1 certificate, whether upon initial
issuance or in the secondary market. Because there are no relevant restrictions
on the purchase and transfer of the series 2004-C1 certificates by Plans, it
cannot be assured that benefit plan investors will own less than 25% of each
class of the series 2004-C1 certificates.
If one of the exceptions in the Plan Asset Regulations applies, the
prohibited transaction provisions of ERISA and the Internal Revenue Code will
not apply to transactions involving the trust's underlying assets. However, if
the trust or any of the Exemption-Favored Parties is a Party in Interest with
respect to the Plan, the acquisition or holding of the offered certificates by
that Plan could result in a prohibited transaction, unless the Underwriter
Exemption, as discussed below, or some other exemption is available.
THE UNDERWRITER EXEMPTION
The U.S. Department of Labor issued an individual prohibited transaction
exemption to a predecessor of Citigroup Global Markets Inc., which exemption is
identified as Prohibited Transaction Exemption 91-23, as amended by Prohibited
Transaction Exemptions 2000-58 and 2002-41. Subject to the satisfaction of
certain conditions set forth in the Underwriter Exemption, it 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 these prohibited
transactions under Sections 4975(a) and (b) of the Internal Revenue Code,
specified transactions relating to, among other things:
o the servicing and operation of pools of real estate loans, such as the
mortgage pool; and
o the purchase, sale and holding of mortgage pass-through certificates,
such as the offered certificates, that are underwritten by an
Exemption-Favored Party.
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The Underwriter Exemption sets forth five general conditions which must be
satisfied for a transaction involving the purchase, sale and holding of an
offered certificate to be eligible for exemptive relief under that exemption.
The conditions are as follows:
o first, the acquisition of the offered certificate 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;
o second, at the time of its acquisition by the Plan, the offered
certificate must be rated in one of the four highest generic rating
categories by Moody's, S&P or Fitch;
o third, the trustee cannot be an affiliate of any other member of the
Restricted Group (other than an underwriter);
o fourth, the following must be true--
1. the sum of all payments made to and retained by Exemption-Favored
Parties must represent not more than reasonable compensation for
underwriting the relevant class of offered certificates,
2. the sum of all payments made to and retained by us in connection
with the assignment of the underlying mortgage loans to the trust
must represent not more than the fair market value of the
obligations, and
3. the sum of all payments made to and retained by the master
servicer, the special servicer and any sub-servicer must
represent not more than reasonable compensation for that person's
services under the series 2004-C1 pooling and servicing agreement
and reimbursement of that person's reasonable expenses in
connection therewith; and
o fifth, the investing Plan must be an accredited investor as defined in
Rule 501(a)(1) of Regulation D under the Securities Act of 1933, as
amended.
It is a condition of their issuance that each class of the offered
certificates be rated at least investment grade by S&P and Moody's. In addition,
the initial trustee is not an affiliate of any other member of the Restricted
Group. Accordingly, as of the date of initial issuance of the offered
certificates, the second and third general conditions set forth above will be
satisfied with respect to the offered certificates. A fiduciary of a Plan
contemplating the purchase of an offered certificate in the secondary market
must make its own determination that, at the time of the purchase, the
certificate continues to satisfy the second and third general conditions set
forth above. A fiduciary of a Plan contemplating the purchase of an offered
certificate, whether in the initial issuance of the certificate or in the
secondary market, must make its own determination that the first and fourth
general conditions set forth above will be satisfied with respect to the offered
certificate as of the date of the purchase. A Plan's authorizing fiduciary will
be deemed to make a representation regarding satisfaction of the fifth general
condition set forth above in connection with the purchase of an offered
certificate.
The Underwriter Exemption also requires that the trust meet the following
requirements:
o the trust assets must consist solely of assets of the type that have
been included in other investment pools;
o certificates evidencing interests in those other investment pools must
have been rated in one of the four highest generic categories of
Moody's, S&P or Fitch for at least one year prior to the Plan's
acquisition of an offered certificate; and
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o certificates evidencing interests in those other investment pools must
have been purchased by investors other than Plans for at least one
year prior to any Plan's acquisition of an offered certificate.
We believe that these requirements have been satisfied as of the date of
this prospectus supplement.
If the general conditions of the Underwriter Exemption are satisfied, the
Underwriter 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 Internal Revenue Code by reason of Sections
4975(c)(1)(A) through (D) of the Internal Revenue Code, in connection with:
o the direct or indirect sale, exchange or transfer of an offered
certificate acquired by a Plan upon initial issuance from us or an
Exemption-Favored Party when we are, or a mortgage loan seller, the
trustee, the fiscal agent, the master servicer, the special servicer,
any party with servicing responsibilities with respect to the
Pecanland Mall Mortgage Loan or any sub-servicer, provider of credit
support, Exemption-Favored Party or borrower is, a Party in Interest
with respect to the investing Plan;
o the direct or indirect acquisition or disposition in the secondary
market of an offered certificate by a Plan; and
o the continued holding of an offered certificate 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 an
offered certificate on behalf of a Plan sponsored by any member of the
Restricted Group, if such acquisition or holding is by any person who has
discretionary authority or renders investment advice with respect to the assets
of that Plan.
Moreover, if the general conditions of the Underwriter Exemption, as well
as other conditions set forth in that exemption, are satisfied, the Underwriter
Exemption may also provide an exemption from the restrictions imposed by
Sections 406(b)(1) and (b)(2) of ERISA and the taxes imposed by Section
4975(c)(1)(E) of the Internal Revenue Code in connection with:
o the direct or indirect sale, exchange or transfer of offered
certificates in the initial issuance of those certificates between us
or an Exemption-Favored Party and a Plan when the person who has
discretionary authority or renders investment advice with respect to
the investment of the assets of the Plan in those certificates is:
1. a borrower with respect to 5.0% or less of the fair market value
of the underlying mortgage loans; or
2. an affiliate of that borrower;
o the direct or indirect acquisition or disposition in the secondary
market of offered certificates by a Plan; and
o the continued holding of offered certificates by a Plan.
Further, if the general conditions of the Underwriter Exemption, as well as
other conditions set forth in that exemption, are satisfied, the Underwriter
Exemption may provide an exemption from the restrictions imposed by Sections
406(a), 406(b) and 407(a) of ERISA, and the taxes imposed by Sections 4975(a)
and (b) of the
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Internal Revenue Code by reason of Section 4975(c) of the Internal Revenue Code,
for transactions in connection with the servicing, management and operation of
the trust assets.
Lastly, if the general conditions of the Underwriter Exemption are
satisfied, the Underwriter Exemption also may provide an exemption from the
restrictions imposed by Sections 406(a) and 407(a) of ERISA, and the taxes
imposed by Section 4975(a) and (b) of the Internal Revenue Code, by reason of
Sections 4975(c)(1)(A) through (D) of the Internal Revenue Code, if the
restrictions are deemed to otherwise apply merely because a person is deemed to
be a Party in Interest with respect to an investing Plan by virtue of:
o providing services to the Plan; or
o having a specified relationship to this person;
solely as a result of the Plan's ownership of offered certificates.
Before purchasing an offered certificate, a fiduciary of a Plan should
itself confirm that the general and other conditions set forth in the
Underwriter Exemption and the other requirements set forth in the Underwriter
Exemption would be satisfied at the time of the purchase.
EXEMPT PLANS
A governmental plan as defined in Section 3(32) of ERISA is not subject to
ERISA or Section 4975 of the Internal Revenue Code. However, a governmental plan
may be subject to a federal, state or local law which is, to a material extent,
similar to the foregoing provisions of ERISA or the Internal Revenue Code. A
fiduciary of a governmental plan should make its own determination as to the
need for and the availability of any exemptive relief under any similar law.
FURTHER WARNINGS
Any fiduciary of a Plan considering whether to purchase an offered
certificate on behalf of that Plan should consult with its counsel regarding the
applicability of the fiduciary responsibility and prohibited transaction
provisions of ERISA and the Internal Revenue Code to the investment.
The sale of offered certificates to a Plan is in no way a representation or
warranty by us or any of the underwriters that:
o the investment meets all relevant legal requirements with respect to
investments by Plans generally or by any particular Plan; or
o the investment is appropriate for Plans generally or for any
particular Plan.
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LEGAL INVESTMENT
The offered certificates will not be mortgage related securities for
purposes of SMMEA. As a result, the appropriate characterization of the offered
certificates under various legal investment restrictions, and thus the ability
of investors subject to these restrictions to purchase those certificates, is
subject to significant interpretive uncertainties.
Neither we nor any of the underwriters makes any representation as to the
ability of particular investors to purchase the offered certificates under
applicable legal investment or other restrictions. All institutions whose
investment activities are subject to legal investment laws and regulations,
regulatory capital requirements or review by regulatory authorities should
consult with their own legal advisors in determining whether and to what extent
the offered certificates:
o are legal investments for them; or
o are subject to investment, capital or other restrictions.
In addition, you should 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:
o prudent investor provisions;
o percentage-of-assets limits; and
o provisions which may restrict or prohibit investment in securities
which are not interest bearing or income paying.
There may be other restrictions on the ability of investors, including
depository institutions, either to purchase offered certificates or to purchase
offered certificates representing more than a specified percentage of the
investor's assets. Investors should consult their own legal advisors in
determining whether and to what extent the offered certificates are legal
investments for the investors.
See "Legal Investment" in the accompanying prospectus.
METHOD OF DISTRIBUTION
Subject to the terms and conditions of an underwriting agreement dated ,
2004, between us and the underwriters, the underwriters will purchase from us,
upon initial issuance, their respective allotments, as specified below, of the
offered certificates (in each case expressed as an approximate percentage of the
total principal balance of the respective classes of the offered certificates).
It is expected that delivery of the offered certificates will be made to the
underwriters in book-entry form through the same day funds settlement system of
DTC on or about June 24, 2004, against payment therefor in immediately available
funds. Proceeds to us from the sale of the offered certificates, before
deducting expenses payable by us, will be approximately % of the initial total
principal balance of the offered certificates, plus accrued interest on all the
offered certificates from June 1, 2004.
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UNDERWRITER CLASS A-1 CLASS A-2 CLASS A-3 CLASS A-4
----------- --------- --------- --------- ---------
Citigroup Global Markets Inc........ % % % %
Wachovia Capital Markets, LLC.......
CDC Securities......................
Deutsche Bank Securities Inc........
------- ------- ------- -------
Total............................... 100.00% 100.00% 100.00% 100.00%
====== ======= ======= =======
UNDERWRITER CLASS B CLASS C CLASS D CLASS E
----------- ------- ------- ------- -------
Citigroup Global Markets Inc........ % % % %
Wachovia Capital Markets, LLC.......
CDC Securities......................
Deutsche Bank Securities Inc........
------- ------- ------- -------
Total............................... 100.00% 100.00% 100.00% 100.00%
======= ======= ======= =======
With respect to this offering--
o Citigroup Global Markets Inc. and Wachovia Capital Markets, LLC are
acting as joint bookrunning managers in the following manner: Wachovia
Capital Markets, LLC is acting as sole bookrunning manager with
respect to 60.89% of the class A-4 certificates, and Citigroup Global
Markets Inc. is acting as sole bookrunning manager with respect to the
remainder of the class A-4 certificates and all other classes of
offered certificates, and
o Caisse Des Depots Securities Inc. (doing business as CDC Securities)
and Deutsche Bank Securities Inc. will act as co-managers.
Distribution of the offered certificates will be made by the underwriters
from time to time in negotiated transactions or otherwise at varying prices to
be determined at the time of sale. In the case of each underwriter, any profit
on the resale of the offered certificates positioned by it may be deemed to be
underwriting discounts and commissions under the Securities Act.
The underwriters may sell the offered certificates to or through dealers,
and those dealers may receive compensation in the form of underwriting
discounts, concessions or commissions from the underwriters. Depending on the
facts and circumstances of the purchases, purchasers of the offered
certificates, including dealers, may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with reoffers and sales by them of
offered certificates. Accordingly, 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. Holders of offered certificates should
consult with their legal advisors in this regard prior to any reoffer or sale of
those certificates.
The underwriters have advised us that some of the underwriters presently
intend to make a market in the offered certificates, but they have no obligation
to do so. Any market making may be discontinued at any time, and there can be no
assurance that an active public market for the offered certificates will
develop.
We have agreed to indemnify each underwriter and each person, if any, who
controls that underwriter within the meaning of Section 15 of the Securities Act
against, or make contributions to the underwriters and each of those controlling
persons with respect to, various liabilities, including specific liabilities
under the Securities Act. Each of the mortgage loan sellers has agreed to
indemnify us, our officers and directors, the underwriters, and each person, if
any, who controls us or any underwriter within the meaning of Section 15 of the
Securities Act, with respect to liabilities, including specific liabilities
under the Securities Act, relating to the mortgage loans being sold by the
particular mortgage loan seller for inclusion in the trust fund.
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The underwriters may engage in transactions that maintain or otherwise
affect the price of the offered certificates, including short-covering
transactions in such offered certificates, and the imposition of a penalty bid,
in connection with the offering. These activities may cause the price of the
offered certificates to be higher than the price that would exist in the open
market absent these activities, and these activities may be discontinued at any
time.
We expect that delivery of the offered certificates will be made against
payment therefor on or about June 24, 2004, which is more than three business
days following the date of pricing of the offered certificates. Under Rule
15c6-1 of the SEC under the Securities Exchange Act of 1934, trades in the
secondary market generally are required to settle in three business days, unless
the parties to any such trade expressly agree otherwise. Accordingly, purchasers
of the offered certificates should take this into account on re-trade.
LEGAL MATTERS
Particular legal matters relating to the offered certificates will be
passed upon for us and for the underwriters by Sidley Austin Brown & Wood LLP,
New York, New York.
RATINGS
It is a condition to their issuance that the respective classes of offered
certificates be rated as follows by S&P and Moody's:
CLASS S&P MOODY'S
----- --- -------
Class A-1.......... AAA Aaa
Class A-2.......... AAA Aaa
Class A-3.......... AAA Aaa
Class A-4.......... AAA Aaa
Class B............ AA Aa2
Class C............ AA- Aa3
Class D............ A A2
Class E............ A- A3
The ratings on the offered certificates address the likelihood of:
o the timely receipt by their holders of all payments of interest to
which they are entitled on each payment date; and
o the ultimate receipt by their holders of all payments of principal to
which they are entitled on or before the rated final payment date.
The ratings on respective classes of offered certificates take into
consideration:
o the credit quality of the mortgage pool;
o structural and legal aspects associated with the offered certificates;
and
o the extent to which the payment stream from the mortgage pool is
adequate to make payments of interest and principal required under the
offered certificates.
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The ratings on the respective classes of offered certificates do not
represent any assessment of:
o the tax attributes of the offered certificates or of the trust;
o whether or to what extent prepayments of principal may be received on
the underlying mortgage loans;
o the likelihood or frequency of prepayments of principal on the
underlying mortgage loans;
o the yield to maturity that investors may experience;
o the degree to which the amount or frequency of prepayments of
principal on the underlying mortgage loans might differ from those
originally anticipated;
o whether or to what extent the interest payable on any class of offered
certificates may be reduced in connection with Net Aggregate
Prepayment Interest Shortfalls; and
o whether and to what extent prepayment premiums, yield maintenance
charges, Default Interest or Post-ARD Additional Interest (including
any Post-ARD Additional Interest added to the principal balance of the
related underlying mortgage loan) will be received.
There can be no assurance as to whether any rating agency not requested to
rate the offered certificates will nonetheless issue a rating to any class of
offered certificates and, if so, what the rating would be. A rating assigned to
any class of offered certificates by a rating agency that has not been requested
by us to do so may be lower than the rating assigned to that class by S&P or
Moody's.
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 organization. Each security
rating should be evaluated independently of any other security rating. See
"Rating" in the accompanying prospectus.
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GLOSSARY
The following capitalized terms will have the respective meanings assigned
to them in this "Glossary" section whenever they are used in this prospectus
supplement, including in any of the annexes to this prospectus supplement or on
the accompanying diskette.
"30/360 BASIS" means the accrual of interest based on a 360-day year
consisting of twelve 30-day months.
"ACTUAL/360 BASIS" means the accrual of interest based on the actual number
of days elapsed during each one-month accrual period in a year assumed to
consist of 360 days.
"ADDITIONAL TRUST FUND EXPENSE" means, in general, an expense of the trust
that:
o arises out of a default on a mortgage loan or an otherwise
unanticipated event;
o is not included in the calculation of a Realized Loss; and
o is not covered by a servicing advance or a corresponding collection
from either the related borrower or a party to the series 2004-C1
pooling and servicing agreement that has no recourse to the trust for
reimbursement.
We provide some examples of Additional Trust Fund Expenses under
"Description of the Offered Certificates--Reductions of Certificate Principal
Balances in Connection with Realized Losses and Additional Trust Expenses" in
this prospectus supplement.
"ADMINISTRATIVE FEE RATE" means, for any mortgage loan in the trust fund,
the sum of the master servicing fee rate, plus the per annum rate applicable to
the calculation of the trustee fee. The master servicing fee rate will include
any primary servicing fee rate.
"ALLOCATED CUT-OFF DATE BALANCE" means, with respect to any mortgaged real
property, the cut-off date principal balance of the related underlying mortgage
loan, multiplied by the Appraised Value of the particular mortgaged real
property, with the resulting product to be divided by the sum of the Appraised
Values of all mortgaged real properties securing the same underlying mortgage
loan.
"ALLOCATED PRINCIPAL BALANCE" means the portion of the Stated Principal
Balance of the Pecanland Mall Mortgage Loan allocated to the Pecanland Mall
Pooled Portion or the Pecanland Mall Non-Pooled Portion, as the case may be,
which portion, at any given time, will equal:
o in the case of the Pecanland Mall Pooled Portion, the lesser of--
1. the excess, if any, of (a) the portion of the cut-off date
principal balance of the Pecanland Mall Mortgage Loan that is
allocable to the Pecanland Mall Pooled Portion (which is
$62,322,215), over (b) all collections and/or advances of
principal with respect to the Pecanland Mall Mortgage Loan that
have previously been allocated to the Pecanland Mall Pooled
Portion, and included in the Standard Available P&I Funds, as
described under "Description of the Offered
Certificates--Payments--Allocation of Payments on the Pecanland
Mall Mortgage Loan; Payments on the Class PM Certificates" in
this prospectus supplement, and
2. the then Stated Principal Balance of the Pecanland Mall Mortgage
Loan; and
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o in the case of the Pecanland Mall Non-Pooled Portion, the lesser of--
1. the excess, if any, of (a) the portion of the cut-off date
principal balance of the Pecanland Mall Mortgage Loan that is
allocable to the Pecanland Mall Non-Pooled Portion (which is
$3,322,215), over (b) all collections and/or advances of
principal with respect to the Pecanland Mall Mortgage Loan that
have previously been allocated to the Pecanland Mall Non-Pooled
Portion, and included in the Class PM Available P&I Funds, as
described under "Description of the Offered
Certificates--Payments--Allocation of Payments on the Pecanland
Mall Mortgage Loan; Payments on the Class PM Certificates" in
this prospectus supplement, and
2. the excess, if any, of (a) the then Stated Principal Balance of
the Pecanland Mall Mortgage Loan, over (b) the then Allocated
Principal Balance of the Pecanland Mall Pooled Portion.
"ANNUAL DEBT SERVICE" means, for any underlying mortgage loan, 12 times the
amount of the monthly debt service due under that mortgage loan as of the
cut-off date (or, in the case of an underlying mortgage loan with an initial
interest-only period, as of the related due date on which amortization is
scheduled to begin or, in the case of the underlying mortgage loan secured by
the mortgaged real property identified on Annex A-1 to this prospectus
supplement as 305 Madison, as of the related due date occurring in February
2008, which is the first due date on which the monthly debt service payment is
scheduled to increase, which increase will remain in effect for the remainder of
the loan term, as described in footnote (b) to Annex A-1 to this prospectus
supplement).
"APPRAISAL REDUCTION AMOUNT" means, for any mortgage loan in the trust fund
as to which an Appraisal Trigger Event has occurred, an amount that:
o will be determined shortly following either--
A. the date on which the relevant appraisal or other valuation is
obtained or performed, as described under "Servicing of the
Underlying Mortgage Loans--Required Appraisals" in this
prospectus supplement, or
B. if no such appraisal or other valuation is required, the date on
which the master servicer obtained knowledge of the relevant
Appraisal Trigger Event, and
monthly thereafter for so long as an Appraisal Trigger Event exists with
respect to the mortgage loan; and
o will generally equal the excess, if any, of "x" over "y" where--
X. "x" is equal to the sum of:
1. the Stated Principal Balance of the mortgage loan;
2. to the extent not previously advanced by or on behalf of the
master servicer, the special servicer, the trustee or the
fiscal agent, all unpaid interest accrued on the mortgage
loan through the most recent due date prior to the date of
determination at a per annum rate equal to the related Net
Mortgage Rate (exclusive of any portion thereof that
constitutes Post-ARD Additional Interest);
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3. all accrued but unpaid master servicing fees and special
servicing fees and all accrued but unpaid Additional Trust
Fund Expenses with respect to the mortgage loan;
4. all related unreimbursed advances made by or on behalf of
the master servicer, the special servicer, the trustee or
the fiscal agent with respect to the mortgage loan, together
with interest on those advances; and
5. all currently due and unpaid real estate taxes and unfunded
improvement reserves and assessments, insurance premiums
and, if applicable, ground rents with respect to the related
mortgaged real property, and
Y. "y" is equal to the sum of:
1. 90% of the resulting appraised value (net of any prior liens
and estimated liquidation expenses) of the related mortgaged
real property or REO Property; and
2. 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 the mortgage loan.
If, however:
o the appraisal or other valuation referred to above in clause A. of the
first bullet of this definition is required, but it is not obtained or
performed by the 60th day after the Appraisal Trigger Event referred
to in the first bullet of this definition; and
o either:
1. no comparable appraisal or other valuation, or update of a
comparable appraisal or other valuation, had been obtained or
performed during the 12-month period prior to that Appraisal
Trigger Event; or
2. there has been a material adverse change in the condition of the
related mortgaged real property or REO Property subsequent to any
earlier appraisal or other valuation;
then until the required appraisal or other valuation is obtained or performed,
the Appraisal Reduction Amount for the subject mortgage loan will equal 25% of
the outstanding principal balance of that mortgage loan. After receipt of the
required appraisal or other valuation, the special servicer will determine the
Appraisal Reduction Amount, if any, for the subject mortgage loan as described
in the first sentence of this definition.
"APPRAISAL TRIGGER EVENT" means, with respect to any mortgage loan in the
trust fund, any of the following events:
o the mortgage loan is 60 days or more delinquent in respect of any
monthly payment of principal and interest;
o the mortgaged real property securing the mortgage loan becomes an REO
Property;
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o the mortgage loan has been modified by the special servicer to reduce
the amount of any monthly payment of principal and interest (other
than a balloon payment);
o a receiver is appointed and continues in that capacity with respect to
the related mortgaged real property;
o the related borrower declares bankruptcy or becomes the subject of a
bankruptcy proceeding; or
o the related borrower fails to make any balloon payment on such
mortgage loan by its scheduled maturity date unless the master
servicer has on or prior to the due date of such balloon payment,
received written evidence from an institutional lender of such
lender's binding commitment to refinance such mortgage loan within 60
days after the due date of such balloon payment (provided that if such
refinancing does not occur during such time specified in the
commitment, an Appraisal Trigger Event will occur immediately).
However, an Appraisal Trigger Event will cease to exist with respect to a
mortgage loan in the trust fund:
o with respect to the circumstances described in the first and third
bullets of the prior sentence, when the related borrower has made
three consecutive full and timely monthly payments of principal and
interest 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), and
o with respect to the circumstances described in the fourth, fifth and
sixth bullets of the prior sentence, when those circumstances cease to
exist in the good faith reasonable judgment of the special servicer
and in accordance with the Servicing Standard, but, with respect to
any bankruptcy or insolvency proceedings described in the fourth and
fifth bullets of the prior sentence, no later than the entry of an
order or decree dismissing such proceeding, and with respect to the
circumstances described in the sixth bullet of the prior sentence, no
later than the date that the special servicer agrees to an extension,
so long as at that time no circumstance identified in the first through sixth
bullets of the prior sentence exists that would cause an Appraisal Trigger Event
to continue to exist with respect to such mortgage loan.
"APPRAISAL VALUE" or "APPRAISED VALUE" means, for any mortgaged real
property securing an underlying mortgage loan, the independent appraiser's
estimate of value of the fee simple estate or, where applicable, the leasehold
estate, as stated in the appraisal with a valuation date as specified on Annex
A-1.
"ARD" means anticipated repayment date.
"ARD LOAN" means any mortgage loan in the trust fund having the
characteristics described in the first paragraph under "Description of the
Mortgage Pool--Terms and Conditions of the Underlying Mortgage Loans--ARD Loans"
in this prospectus supplement.
"ASSET STATUS REPORT" means the report designated as such, and described
under, "Servicing of the Underlying Mortgage Loans--The Series 2004-C1
Controlling Class Representative and the Class PM Representative--Rights and
Powers of the Series 2004-C1 Controlling Class Representative and the Class PM
Representative" in this prospectus supplement.
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"CDC MORTGAGE LOAN" means any of the underlying mortgage loans transferred
by CDC to us for inclusion in the trust fund and any Qualified Substitute
Mortgage Loan delivered by CDC in replacement thereof.
"CDCMC" means CDC Mortgage Capital Inc. or its successor in interest.
"CGM" means Citigroup Global Markets Realty Corp. or its successor in
interest.
"CITIGROUP MORTGAGE LOAN" means any of the underlying mortgage loans
transferred by CGM to us for inclusion in the trust fund and any Qualified
Substitute Mortgage Loan delivered by CGM in replacement thereof.
"CLASS PM AVAILABLE P&I FUNDS" means, in general, that portion of the Total
Available P&I Funds that is allocable to interest on, principal of, and
loss/expense reimbursements with respect to the Pecanland Mall Non-Pooled
Portion in accordance with "Description of the Offered
Certificates--Payments--Allocation of Payments on the Pecanland Mall Mortgage
Loan; Payments on the Class PM Certificates" in this prospectus supplement.
"CLASS PM PRINCIPAL PAYMENT AMOUNT" means, with respect to any payment
date, the amount of principal allocable to the Pecanland Mall Non-Pooled
Portion, without regard to available funds, in accordance with clause fifth of
the first paragraph under "Description of the Offered
Certificates--Payments--Allocation of Payments on the Pecanland Mall Mortgage
Loan; Payments on the Class PM Certificates" in this prospectus supplement.
"CLEARSTREAM" means Clearstream Banking Luxembourg.
"CMSA" means the Commercial Mortgage Securities Association, or any
association or organization that is a successor thereto.
"CPR" means an assumed constant rate of prepayment each month, which is
expressed on a per annum basis, relative to the then-outstanding principal
balance of a pool of mortgage loans for the life of those loans. The CPR model
is the prepayment model that we use in this prospectus supplement.
"CROSSED LOAN" means any mortgage loan in the trust fund that is
cross-collateralized with another mortgage loan in the trust fund.
"CROSSED GROUP" means any group of mortgage loans in the trust fund that
are cross-collateralized with each other.
"CUT-OFF DATE LOAN-TO-VALUE RATIO" and "CUT-OFF DATE LTV RATIO" each
generally means, subject to the discussion under "Risk Factors--Risks Related to
the Underlying Mortgage Loans--The Underwritten Net Cash Flow Debt Service
Coverage Ratios and/or Loan-to-Value Ratios for Certain of the Underlying
Mortgage Loans Have Been Adjusted in Consideration of a Cash Holdback or a
Letter of Credit" in this prospectus supplement:
o with respect to any underlying mortgage loan (other than a Crossed
Loan), the ratio of--
1. the cut-off date principal balance of the mortgage loan (or, in
the case of the Pecanland Mall Mortgage Loan, the portion of that
cut-off date principal balance allocable to the Pecanland Mall
Pooled Portion, which is $62,322,215), to
2. the Appraised Value of the related mortgaged real property or
properties; and
o with respect to any Crossed Loan, the ratio of--
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1. the total cut-off date principal balance for all of the
underlying mortgage loans in the applicable Crossed Group, to
2. the total Appraised Value for all of the mortgaged real
properties related to the applicable Crossed Group.
"CY ENDED" means calendar year ended.
"DEFAULT INTEREST" means, for any underlying mortgage loan, any interest,
other than late payment charges, prepayment premiums or yield maintenance
charges, that:
o accrues on a defaulted mortgage loan solely by reason of the subject
default; and
o is in excess of all interest at the related mortgage rate set forth on
Annex A-1 and any Post-ARD Additional Interest accrued on the mortgage
loan.
"DEFAULTED MORTGAGE LOAN" means an underlying mortgage loan (i) that (A) is
delinquent 60 days or more in respect to a monthly debt service payment (not
including the balloon payment) or (B) is delinquent in respect of its balloon
payment unless the master servicer has, on or prior to the due date of that
balloon payment, received written evidence from an institutional lender of such
lender's binding commitment to refinance such underlying 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
subject underlying 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 instrument or mortgage note
and without regard to any acceleration of payments under the related mortgage
instrument and mortgage note, or (ii) as to which the master servicer or special
servicer has, by written notice to the related borrower, accelerated the
maturity of the indebtedness evidenced by the related mortgage note.
"DEFICIENT VALUATION" means, with respect to any underlying mortgage loan,
a valuation by a court of competent jurisdiction of the related mortgaged real
property in an amount less than the then outstanding principal balance of the
underlying mortgage loan, which valuation results from a proceeding initiated
under the U.S. Bankruptcy Code.
"DETAILED PROPERTY TYPE" means, with respect to any mortgaged real
property, the general purpose or use for which it is operated, along with, when
applicable, certain ancillary distinctions or characteristics. In the case of a
mixed use property, the percentages included in the parenthesis next to each
detailed property type are meant to be the estimated percentage of that purpose
or use at the mortgaged real property, as measured by its relative contribution
to the mortgaged real property's Underwritten Revenues. Each tenant space at the
mortgaged real property may be comprised of only one of the uses, or may be some
mixture of the two.
"ENVIRONMENTAL REPORT" means a Phase I environmental assessment, a limited
scope environmental assessment, a transaction screen, or an update of any of the
foregoing, prepared by a third-party consultant.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA PLAN" means any employee benefit plan, or other retirement plan,
arrangement or account, that is subject to the fiduciary responsibility
provisions of ERISA.
"ESCROWED REPLACEMENT RESERVES CURRENT ANNUAL DEPOSIT" means, with respect
to any underlying mortgage loan, the monthly dollar amount actually deposited
into a replacement reserves escrow account in conjunction with the May 2004
monthly debt service payment, multiplied by 12.
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"ESCROWED REPLACEMENT RESERVES INITIAL DEPOSIT" means, with respect to any
underlying mortgage loan, the dollar amount deposited into an escrow account at
the time of origination, to be used for future ongoing repairs and replacements
for the related mortgaged real property or properties.
"ESCROWED TI/LC RESERVES CURRENT ANNUAL DEPOSIT" means, with respect to any
underlying mortgage loan, the monthly dollar amount actually deposited into a
tenant improvements and leasing commissions escrow account in conjunction with
the May 2004 monthly debt service payment, multiplied by 12.
"ESCROWED TI/LC RESERVES INITIAL DEPOSIT" means, with respect to any
underlying mortgage loan, the dollar amount deposited into an escrow account at
the time of origination, to be used for future tenant improvements and leasing
commissions for the related mortgaged real property or properties.
"EUROCLEAR" means Euroclear Bank S.A./N.V., as operator of The Euroclear
System.
"EXEMPTION-FAVORED PARTY" means any of the following--
o Citigroup Global Markets Inc.,
o any person directly or indirectly, through one or more intermediaries,
controlling, controlled by or under common control with Citigroup
Global Markets Inc., and
o any member of the underwriting syndicate or selling group of which a
person described in either of the prior two bullets is a manager or
co-manager with respect to the offered certificates.
"EXPENSES" are the operating expenses incurred for a mortgaged real
property for the specified historical operating period, as reflected in the
operating statements and other information furnished by the related borrower.
Those expenses generally include:
o salaries, wages and benefits;
o the costs of utilities;
o repairs and maintenance;
o marketing;
o insurance;
o management;
o landscaping;
o security, if provided at the mortgaged real property;
o real estate taxes;
o general and administrative expenses;
o ground lease payments; and
o other similar costs;
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but without any deductions for debt service, depreciation, amortization, capital
expenditures or reserves for any of these deductions.
In the case of certain properties used for retail, office and/or industrial
purposes, Expenses may have included leasing commissions and tenant
improvements.
"FITCH" means Fitch Ratings, Inc.
"GAAP" means generally accepted accounting principles in the United States.
"INITIAL MORTGAGE POOL BALANCE" means the aggregate principal balance, as
of the cut-off date, of the mortgage loans that are included in the trust fund,
excluding the Pecanland Mall Non-Pooled Portion, after application of all
scheduled payments of principal due on or before the cut-off date.
"INTEREST DIFFERENTIAL" means the present value of a stream of payments
each equal to the product of:
1. one-twelfth of the excess, if any, of the mortgage rate over the Yield
Maintenance Interest Rate; multiplied by
2. the principal balance outstanding after application of the constant
monthly payment on the date of such prepayment;
provided that the Interest Differential will in no event be less than zero.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
amended.
"IRS" means the Internal Revenue Service.
"LENNAR" means Lennar Partners, Inc.
"LNR" means LNR Property Corporation.
"LOAN BALANCE AT MATURITY/ARD" means, with respect to any underlying
mortgage loan, the principal balance remaining after giving affect to the
principal component of the monthly debt service payment made on the maturity
date of the mortgage loan or, in the case of an ARD Loan, the anticipated
repayment date, assuming no prior prepayments or defaults.
"LOC" means letter of credit.
"LUST" means leaking underground storage tank.
"MAJOR TENANT" means either the largest, second largest or, if at least
10%, third largest tenant in occupancy at a commercial mortgaged real property,
as measured by its rentable area as a percentage of the total net rentable area.
"MAJORITY CLASS PM CERTIFICATEHOLDER" means, as of any date of
determination, any single holder -- or, if applicable, beneficial owner -- of
class PM certificates (other than any holder (or, if applicable, beneficial
owner) that is an affiliate of us or a mortgage loan seller) entitled to greater
than 50% of the voting rights allocated to the class PM certificates; provided,
however, that, if there is no single holder (or, if applicable, beneficial
owner) of class PM certificates entitled to greater than 50% of the voting
rights allocated to such class, then the Majority Class PM Certificateholder
shall be the single holder (or, if applicable, beneficial owner) of class PM
certificates with the largest percentage of voting rights allocated to such
class.
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"MAJORITY CONTROLLING CLASS CERTIFICATEHOLDER" means, as of any date of
determination, any single holder -- or, if applicable, beneficial owner -- of
series 2004-C1 certificates (other than any holder (or, if applicable,
beneficial owner) that is an affiliate of us or a mortgage loan seller) entitled
to greater than 50% of the voting rights allocated to the series 2004-C1
controlling class; provided, however, that, if there is no single holder (or, if
applicable, beneficial owner) of series 2004-C1 certificates entitled to greater
than 50% of the voting rights allocated to such class, then the Majority
Controlling Class Certificateholder will be the single holder (or, if
applicable, beneficial owner) of series 2004-C1 certificates with the largest
percentage of voting rights allocated to the series 2004-C1 controlling class.
With respect to determining the Majority Controlling Class Certificateholder,
the class A-1, A-2, A-3 and A-4 certificates will be treated as a single class
of series 2004-C1 certificates, with the subject voting rights allocated among
the holders (or, if applicable, beneficial owners) of those series 2004-C1
certificates in proportion to the respective total principal balances thereof as
of such date of determination.
"MATURITY ASSUMPTIONS" means, collectively, the following assumptions
regarding the series 2004-C1 certificates and the underlying mortgage loans:
o the mortgage loans have the characteristics set forth on Annex A-1 to
this prospectus supplement and the Initial Mortgage Pool Balance is
approximately $1,182,418,797;
o the initial total principal balance or notional amount, as the case
may be, of each class of series 2004-C1 certificates, other than the
class R and Y certificates, is as described in this prospectus
supplement;
o the pass-through rate for each interest-bearing class of series
2004-C1 certificates is as described in this prospectus supplement;
o there are no delinquencies or losses with respect to the underlying
mortgage loans;
o there are no modifications, extensions, waivers or amendments
affecting the monthly debt service payments by borrowers on the
underlying mortgage loans;
o there are no Appraisal Reduction Amounts with respect to the
underlying mortgage loans;
o there are no casualties or condemnations affecting the corresponding
mortgaged real properties;
o each of the underlying mortgage loans provides for monthly debt
service payments to be due on the first, ninth or eleventh day of each
month and accrues interest on the respective basis described in this
prospectus supplement, which is a 30/360 Basis or an Actual/360 Basis;
o there are no breaches of any mortgage loan seller's representations
and warranties regarding the underlying mortgage loans that are being
sold by it;
o monthly debt service payments on the mortgage loans are timely
received on the respective payment day of each month, and
amortization, if applicable, is assumed to occur prior to prepayment;
o no voluntary or involuntary prepayments are received as to any of the
underlying mortgage loans during that mortgage loan's prepayment
lock-out period, defeasance period or prepayment consideration period,
in each case if any;
o each ARD Loan is paid in full on its anticipated repayment date;
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o except as otherwise assumed in the immediately preceding two bullets,
prepayments are made on each of the underlying mortgage loans at the
indicated CPRs set forth in the subject tables or other relevant part
of this prospectus supplement, without regard to any limitations in
those mortgage loans on partial voluntary principal prepayment;
o all prepayments on the underlying mortgage loans are assumed to be
accompanied by a full month's interest;
o no person or entity entitled thereto exercises its right of optional
termination described in this prospectus supplement under "Description
of the Offered Certificates--Termination";
o no underlying mortgage loan is required to be repurchased by any
mortgage loan seller;
o there are no Additional Trust Fund Expenses;
o payments on the offered certificates are made on the 15th day of each
month, commencing in July 2004; and
o the offered certificates are settled on June 24, 2004.
"MATURITY DATE/ARD LOAN-TO-VALUE RATIO" and "MATURITY DATE/ARD LTV RATIO"
each generally means, subject to the discussion under "Risk Factors--Risks
Related to the Underlying Mortgage Loans--The Underwritten Net Cash Flow Debt
Service Coverage Ratios and/or Loan-to-Value Ratios for Certain of the
Underlying Mortgage Loans Have Been Adjusted in Consideration of a Cash Holdback
or a Letter of Credit" in this prospectus supplement:
o with respect to any underlying mortgage loan (other than a Crossed
Loan), the ratio of--
1. the related Loan Balance at Maturity/ARD for the particular
mortgage loan, to
2. the Appraised Value of the related mortgaged real property or
properties; and
o with respect to any Crossed Loan, the ratio of--
1. the total Loan Balance at Maturity/ARD for all of the underlying
mortgage loans in the applicable Crossed Group, to
2. the total Appraised Value for all of the mortgaged real
properties related to the applicable Crossed Group.
"MOODY'S" means Moody's Investors Service, Inc.
"MORTGAGE DEFERRED INTEREST" means, with respect to any underlying mortgage
loan, the amount of any interest accrued thereon at the related mortgage rate
(other than Post-ARD Additional Interest) that, by virtue of a modification, is
added to the outstanding principal balance of such underlying mortgage loan
instead of being payable on the related due date on which it would otherwise
have been due.
"MORTGAGE FILE" has the meaning assigned to that term under "Description of
the Mortgage Pool--Assignment of the Mortgage Loans; Repurchases and
Substitutions" in this prospectus supplement.
"N/A" and "NAP" each means not applicable.
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"NET AGGREGATE PREPAYMENT INTEREST SHORTFALL" means, with respect to any
payment date, the excess, if any, of:
o the Prepayment Interest Shortfalls incurred with respect to the
mortgage pool during the related collection period; over
o the total payments made by the master servicer to cover those
Prepayment Interest Shortfalls.
"NET MORTGAGE PASS-THROUGH RATE" means:
o in the case of each underlying mortgage loan that accrues on a 30/360
Basis, for any payment date, an annual rate equal to--
1. the mortgage rate in effect for that mortgage loan as of the date
of initial issuance of the offered certificates, minus
2. the related Administrative Fee Rate; and
o in the case of each underlying mortgage loan that accrues interest on
an Actual/360 Basis, an annual rate generally equal to--
1. the product of (a) 12, times (b) a fraction, expressed as a
percentage, the numerator of which, subject to adjustment as
described below in this definition, is the total amount of
interest that accrued or would have accrued, as applicable, with
respect to that mortgage loan on an Actual/360 Basis during that
interest accrual period, based on its Stated Principal Balance
immediately preceding the subject payment date and its mortgage
rate in effect as of the date of initial issuance of the offered
certificates, and the denominator of which is the Stated
Principal Balance of that mortgage loan immediately prior to the
subject payment date, minus
2. the related Administrative Fee Rate.
Notwithstanding the foregoing, if the subject payment date occurs during
January, except during a leap year, or February, then the amount of interest
that comprises the numerator of the fraction described in clause 1(b) of the
second bullet of this definition will be decreased to reflect any interest
reserve amount with respect to the subject mortgage loan that is transferred
from the master servicer's collection account to the master servicer's interest
reserve account during that month. Furthermore, if the subject payment date
occurs during March, then the amount of interest that comprises the numerator of
the fraction described in clause 1(b) of the second bullet of this definition
will be increased to reflect any interest reserve amounts with respect to the
subject mortgage loan that are transferred from the master servicer's interest
reserve account to the trustee's payment account during that month.
"NET MORTGAGE RATE" means, for any underlying mortgage loan, the mortgage
rate, minus the Administrative Fee Rate.
"NET OPERATING INCOME" or "NOI" means, for any mortgaged real property
securing an underlying mortgage loan, the net property income derived from the
property, which is equal to Revenues less Expenses, for the applicable time
period, that was available for debt service, as established by information
provided by the related borrower, except that in some cases the net operating
income has been adjusted by removing various non-recurring expenses and revenues
or by other normalizations. NOI does not reflect accrual of costs such as
reserves, capital expenditures, tenant improvements and leasing commissions and
does not reflect non-cash items
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such as depreciation or amortization. In some cases, capital expenditures,
tenant improvements and leasing commissions and non-recurring items may have
been treated by a borrower as an expense but were excluded from Expenses to
reflect normalized NOI. We have not made any attempt to verify the accuracy of
any information provided by a particular borrower or to reflect changes in net
operating income that may have occurred since the date of the information
provided by any borrower for the related mortgaged real property. NOI was not
necessarily determined in accordance with GAAP. Moreover, NOI is not a
substitute for net income determined in accordance with GAAP as a measure of the
results of a mortgaged real property's operations or a substitute for cash flows
from operating activities determined in accordance with GAAP as a measure of
liquidity. In certain cases, NOI may reflect partial-year annualizations.
"NET PRINCIPAL PAYMENT AMOUNT" means, for any payment date, an amount (not
less than zero) equal to (a) the Total Principal Payment Amount for that date,
less (b) the Class PM Principal Payment Amount for that date.
"NONRECOVERABLE ADVANCE" means any advance made or proposed to be made, as
applicable, with respect to any underlying mortgage loan or related REO Property
that is determined in accordance with the series 2004-C1 pooling and servicing
agreement, not to be ultimately recoverable out of payments or other collections
on that mortgage loan or related REO Property.
"NRSF", "NRS" or "SF" generally means the square footage of the net
rentable area of a mortgaged real property.
"OCEAN KEY RESORT INTERCREDITOR AGREEMENT" means, with respect to the Ocean
Key Resort Loan Pair, the related intercreditor and servicing agreement among
noteholders.
"OCEAN KEY RESORT LOAN PAIR" means, collectively, the Ocean Key Resort
Mortgage Loan and the related subordinate companion loan.
"OCEAN KEY RESORT MATERIAL DEFAULT" means, with respect to the Ocean Key
Resort Loan Pair, any of the following events: (a) the acceleration of the Ocean
Key Resort Mortgage Loan or the related subordinate companion loan; (b) the
existence of a continuing monetary default; and/or (c) the filing of a
bankruptcy action by, or against, the related borrower or the related borrower
otherwise being the subject of a bankruptcy proceeding.
"OCEAN KEY RESORT MORTGAGE LOAN" means the underlying mortgage loan secured
by the Ocean Key Resort Property.
"OCEAN KEY RESORT PROPERTY" means the mortgaged real property identified on
Annex A-1 to this prospectus supplement as Ocean Key Resort.
"OCCUPANCY %" or "OCCUPANCY PERCENTAGE" means, (a) for any mortgaged real
property (other than a hospitality property), the percentage of leasable square
footage, total Units or total Pads, as the case may be, at the particular
property that was physically occupied as of the "Occupancy as of Date" specified
in the Annex A-1 to this prospectus supplement, and (b) for any mortgaged real
property that is a hospitality property, the average percentage of rooms that
were occupied in the 12-month period ending on the "Occupancy as of Date"
specified in the Annex A-1 to this prospectus supplement.
"OPTION PRICE" has the meaning assigned to that term under "Servicing of
the Underlying Mortgage Loans--Fair Value Purchase Option" in this prospectus
supplement.
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"ORIGINAL AMORTIZATION TERM" means, with respect to any underlying mortgage
loan (other than an underlying mortgage loan that provides for interest only
payments until the scheduled maturity date), the number of months that would be
required to fully amortize the mortgage loan's original principal balance
assuming:
o the actual mortgage loan rate; and
o the actual monthly debt service payment;
provided that, with respect to any underlying mortgage loan that provides for
interest only payments for a period of months following the cut-off date
followed by payments of interest and principal for the remaining term of the
mortgage loan, the "actual monthly debt service payment" referenced in the
second bullet of this definition means the monthly payment of principal and
interest scheduled to be due following the interest-only period; and
provided further, that, with respect to the underlying mortgage loan secured by
the mortgaged real property identified on Annex A-1 to this prospectus
supplement as 305 Madison, the "actual monthly debt service payment" referenced
in the second bullet of this definition means the monthly debt service payment
scheduled to be due as of the due date occurring in February 2008, which is the
first due date on which the monthly debt service payment is scheduled to
increase, which increase will remain in effect for the remainder of the loan
term, as described in footnote (b) to Annex A-1 to this prospectus supplement.
With respect to any underlying mortgage loan that provides for interest
only payments until the scheduled maturity date, the term "Original Amortization
Term" is not applicable and Annexes to this prospectus supplement will indicate
"Interest Only".
"ORIGINAL TERM TO MATURITY/ARD" means, with respect to any underlying
mortgage loan, the total number of scheduled monthly debt service payments
specified in the related promissory note, beginning with and including the first
payment date of the mortgage loan through and including the stated maturity date
or, in the case of an ARD Loan, the anticipated repayment date.
"PADS" means, in the case of a mortgaged real property operated as a mobile
home park, the number of pads, which are referred to in Annex A-1 to this
prospectus supplement as "Pads".
"PARTY IN INTEREST" means any person that is a "party in interest" within
the meaning of ERISA or a "disqualified person" as defined in Section 4975 of
the Internal Revenue Code.
"PECANLAND MALL BORROWER" means the borrower under the Pecanland Mall
Mortgage Loan.
"PECANLAND MALL CHANGE-OF-CONTROL EVENT" means the event that exists when
the total principal balance of the class PM certificates, net of any Appraisal
Reduction Amount allocable to the Pecanland Mall Mortgage Loan, is less than 25%
of the initial total principal balance of the class PM certificates.
"PECANLAND MALL CURE EVENT" has the meaning assigned to that term under
"Servicing of the Underlying Mortgage Loans--The Series 2004-C1 Controlling
Class Representative and the Class PM Representative--Cure Rights of Class PM
Representative" in this prospectus supplement.
"PECANLAND MALL CURE PAYMENT" means any payment made by the class PM
representative to cure a default on the part of the related borrower under the
Pecanland Mall Mortgage Loan.
"PECANLAND MALL CURE PERIOD" means, as regards the Pecanland Mall Mortgage
Loan, the period within five business days of receipt of notice with respect to
a monetary default and within 30 days of notice of a non-monetary default.
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"PECANLAND MALL MORTGAGE LOAN" means the underlying mortgage loan secured
by the Pecanland Mall Property.
"PECANLAND MALL NON-POOLED PORTION" means the junior portion of the
Pecanland Mall Mortgage Loan that consists of $3,322,215 of the entire cut-off
date principal balance of the Pecanland Mall Mortgage Loan.
"PECANLAND MALL PAYMENT TRIGGER EVENT" means, with respect to any payment
date, the event that exists if (i) the Pecanland Mall Mortgage Loan (A) is
delinquent 60 days or more with respect to a monthly debt service payment (not
including the balloon payment), or (B) is delinquent with respect to its balloon
payment unless the master servicer has, on or prior to the due date of that
balloon payment, received written evidence from an institutional lender of such
lender's binding commitment to refinance such underlying 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, a
Pecanland Mall Payment Trigger Event will immediately exist), in either case
such delinquency to be determined without giving effect to any grace period
permitted by the related mortgage instrument or mortgage note and without regard
to any acceleration of payments under the related mortgage instrument and
mortgage note, but taking into account any cure by the class PM representative;
(ii) a material non-monetary event of default has occurred and is continuing
with respect to the Pecanland Mall Mortgage Loan and is not cured by the class
PM representative; (iii) the Pecanland Mall Property had, as of the related
determination date, become an REO Property; or (iv) various events of
bankruptcy, insolvency, readjustment of debt, marshalling of assets and
liabilities, or similar proceedings occur with respect to the related borrower
or the corresponding mortgaged real property.
"PECANLAND MALL POOLED PORTION" means the senior portion of the Pecanland
Mall Mortgage Loan that consists of $62,322,215 of the entire cut-off date
principal balance of the Pecanland Mall Mortgage Loan.
"PECANLAND MALL PRINCIPAL PAYMENT AMOUNT" means, for any payment date, an
amount generally equal to that portion of the Total Principal Payment Amount for
the subject payment date described in clauses 1. through 4. of the definition of
"Total Principal Payment Amount" that are allocable to the Pecanland Mall
Mortgage Loan.
"PECANLAND MALL PROPERTY" means the mortgaged real property identified on
Annex A-1 to this prospectus supplement as Pecanland Mall.
"PERMITTED ENCUMBRANCES" means, with respect to any mortgaged real property
securing a mortgage loan in the trust fund, any and all of the following:
o the lien of current real property taxes, water charges, sewer rents
and assessments not yet due and payable;
o covenants, conditions and restrictions, rights of way, easements and
other matters that are of public record;
o exceptions and exclusions specifically referred to in the related
lender's title insurance policy or, if that policy has not yet been
issued, referred to in a pro forma title policy or marked-up
commitment;
o other matters to which like properties are commonly subject;
o the rights of tenants (whether under ground leases, space leases or
operating leases) at the mortgaged real property to remain following a
foreclosure or similar proceeding (provided that such tenants are
performing under such leases); and
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o if the mortgage loan is cross-collateralized with any other mortgage
loan in the trust fund, the lien of the mortgage instrument for that
other mortgage loan.
"PERMITTED INVESTMENTS" means the U.S. government-related securities and
other investment grade obligations specified in the series 2004-C1 pooling and
servicing agreement.
"PLAN" means any ERISA Plan or any other employee benefit or retirement
plan, arrangement or account, including any individual retirement account or
Keogh plan, that is subject to Section 4975 of the Internal Revenue Code.
"PLAN ASSET REGULATIONS" means the regulations issued by the United States
Department of Labor concerning whether a Plan's assets will be considered to
include an undivided interest in each of the underlying assets of an entity for
purposes of the general fiduciary provisions of ERISA and the prohibited
transaction provisions of ERISA and the Internal Revenue Code, if the Plan
acquires an "equity interest" in that entity.
"POST-ARD ADDITIONAL INTEREST" means, with respect to any ARD Loan, the
additional interest accrued with respect to that mortgage loan as a result of
the marginal increase in the related mortgage rate upon passage of the related
anticipated repayment date, as that additional interest may compound in
accordance with the terms of that mortgage loan.
"PREPAYMENT INTEREST EXCESS" means, with respect to any underlying mortgage
loan that was subject to a principal prepayment in full or in part during any
collection period, which principal prepayment was applied to such underlying
mortgage loan following such underlying mortgage loan's due date in such
collection period, the amount of any interest (net of related master servicing
fees and, if applicable, Default Interest and Post-ARD Additional Interest)
accrued on the amount of such principal prepayment during the period from and
after such due date and ending on the date such principal prepayment was applied
to such underlying mortgage loan, to the extent collected (exclusive of any
related prepayment premium or yield maintenance charge actually collected).
"PREPAYMENT INTEREST SHORTFALL" means, with respect to any underlying
mortgage loan that was subject to a principal prepayment in full or in part
during any collection period, which principal prepayment was applied to such
underlying mortgage loan prior to such underlying mortgage loan's due date in
such collection period, the amount of interest, to the extent not collected from
the related borrower (without regard to any prepayment premium or yield
maintenance charge actually collected), that would have accrued at a rate per
annum equal to the sum of (x) the related Net Mortgage Rate for such underlying
mortgage loan and (y) the trustee fee rate, on the amount of such principal
prepayment during the period commencing on the date as of which such principal
prepayment was applied to such underlying mortgage loan and ending on the day
immediately preceding such due date, inclusive.
"PREPAYMENT PROVISIONS" for each underlying mortgage loan are as follows:
o "LO(y)" means that the original duration of the lock-out period is y
payments;
o "DEFEASANCE(y)" means that the original duration of the defeasance
period is y payments;
o "GRTRX%UPBORYM(y)" means that, for an original period of y payments,
the relevant prepayment premium will equal the greater of the
applicable yield maintenance charge and x% of the principal amount
prepaid;
o "FREE(y)" means that the underlying mortgage loan is freely prepayable
for a period of y payments;
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o "YM(y)" means that, for an original period of y payments, the relevant
prepayment premium will equal the applicable yield maintenance charge;
and
o "YM1%ORDEFEASANCE(y)" means, for the mortgage loan identified on Annex
A-1 to this prospectus supplement as Lake Shore Place, for an original
period of y payments, the relevant prepayment premium will equal the
applicable yield maintenance charge; however, the borrower also has
the right, but not the obligation, to defease the loan during this
period in lieu of prepaying the loan and paying the applicable yield
maintenance charge.
"PRESENT VALUE" means a yield maintenance charge that is equal to the
excess, if any, of:
1. the present value, as of the prepayment date, of the remaining
scheduled payments of principal and interest from the prepayment date
through, as applicable, the maturity date or anticipated repayment
date, including any balloon payment or assumed prepayment on the
anticipated repayment date, as applicable, determined by discounting
those payments at the Yield Maintenance Interest Rate;
over
2. the amount of principal being prepaid.
"PRIMARY COLLATERAL" means the mortgaged real 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 the related
Crossed Group.
"PRIVILEGED PERSON" means any certificateholder, certificate owner, any
party to the series 2004-C1 pooling and servicing agreement, any person
identified to the trustee or the master servicer, as applicable, as a
prospective transferee of a certificate or interest therein, any rating agency,
any mortgage loan seller, any underwriter, any of our designees or any party to
the series 2004-C1 pooling and servicing agreement; provided that no certificate
owner or prospective transferee of a certificate or interest therein shall be
considered a "Privileged Person" or be entitled to a password or restricted
access to any reports delivered on a restricted basis unless such person has
delivered to the trustee or the master servicer, as applicable, a certification
in the form required by the series 2004-C1 pooling and servicing agreement.
"PROPERTY TYPE" means, with respect to any mortgaged real property, the
general purpose or use for which it is operated.
"PURCHASE OPTION" has the meaning assigned to that term under "Servicing of
the Underlying Mortgage Loans--Fair Value Purchase Option" in this prospectus
supplement.
"PURCHASE PRICE" has the meaning assigned to that term under "Description
of the Mortgage Pool--Assignment of the Mortgage Loans; Repurchases and
Substitutions" in this prospectus supplement.
"QUALIFIED SUBSTITUTE MORTGAGE LOAN" means a replacement mortgage loan
which must, on the date of substitution, among other things:
o 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;
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o have a mortgage rate not less than the mortgage rate of the deleted
mortgage loan;
o have the same due date as the deleted mortgage loan;
o 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);
o 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;
o 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;
o comply as of the date of substitution with all of the representations
and warranties set forth in the applicable mortgage loan purchase
agreement;
o have an environmental report with respect to the related mortgaged
real property which will be delivered as a part of the related
servicing file;
o have an original debt service coverage ratio (calculated to include
the additional debt from any encumbrance) of not less than the
original debt service coverage ratio (calculated to include the
additional debt from any encumbrance) of the deleted mortgage loan and
a current debt service coverage ratio (calculated to include the
additional debt from any encumbrance) of not less than the current
debt service coverage ratio (calculated to include the additional debt
from any encumbrance) of the deleted mortgage loan;
o be determined by an opinion of counsel to be a "qualified replacement
mortgage" within the meaning of Section 860G(a)(4) of the Internal
Revenue Code;
o not have a maturity date after the date two years prior to the rated
final payment date;
o not be substituted for a deleted mortgage loan unless the trustee has
received prior confirmation in writing by each applicable 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 series 2004-C1 certificates then rated by the
rating agency (the cost, if any, of obtaining such confirmation to be
paid by the applicable mortgage loan seller);
o have a date of origination that is not more than 12 months prior to
the date of substitution;
o have been approved by the series 2004-C1 controlling class
representative (or, if there is no series 2004-C1 controlling class
representative then serving, by the series 2004-C1 certificateholders
representing a majority of the series 2004-C1 voting rights allocated
to the controlling class); and
o not be substituted for a deleted mortgage loan if it would result in
the termination of the REMIC status of any of the REMICs created under
the series 2004-C1 pooling and servicing agreement or the imposition
of tax on any of the REMICs created under the series 2004-C1 pooling
and servicing agreement other than a tax on income expressly permitted
or contemplated to be received by the terms of the series 2004-C1
pooling and servicing agreement.
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In the event that one or more mortgage loans are substituted for one or
more deleted underlying mortgage loans, then the amounts described in the first
bullet of this definition will be determined on the basis of aggregate principal
balances and the rates described in the second bullet of this definition and the
remaining term to stated maturity referred to in the fifth bullet of this
definition will be determined on a weighted average basis; provided that no
underlying mortgage loan may have a Net Mortgage Rate that is less than the
highest pass-through rate of any class of series 2004-C1 principal balance
certificates (exclusive of the class PM certificates) bearing a fixed rate. When
a Qualified Substitute Mortgage Loan is substituted for a deleted underlying
mortgage loan, the applicable mortgage loan seller will be required to certify
that the replacement mortgage loan meets all of the requirements of the above
definition and must send such certification to the trustee. A Qualified
Substitute Mortgage Loan may not be substituted for the Pecanland Mall
underlying mortgage loan.
"REALIZED LOSSES" means losses on or with respect to the underlying
mortgage loans arising from the inability of the master servicer and/or the
special servicer to collect all amounts due and owing under the mortgage loans,
including by reason of the fraud or bankruptcy of a borrower or, to the extent
not covered by insurance, a casualty of any nature at a mortgaged real property.
We discuss the calculation of Realized Losses under "Description of the Offered
Certificates--Reductions of Certificate Principal Balances in Connection with
Realized Losses and Additional Trust Fund Expenses" in this prospectus
supplement.
"RECOMMENDED ANNUAL REPLACEMENT RESERVES" means, for any mortgaged real
property securing an underlying mortgage loan, the expected average annual
amount for future ongoing repairs and replacements, without any adjustment for
inflation, over a time horizon not less than the original loan term of the
respective mortgage loan, as estimated in the property condition assessment.
"RELATED UNDERLYING MORTGAGE LOANS" means any two or more underlying
mortgage loans for which the related mortgaged real properties are either owned
by the same entity or owned by two or more entities controlled by the same key
principals.
"REMAINING AMORTIZATION TERM" or "STATED REMAINING AMORTIZATION TERM"
means: (a) with respect to any underlying mortgage loan that does not provide
for an interest only payment as of the cut-off date, the Original Amortization
Term less the Seasoning of the loan, calculated as of the cut-off date; and (b)
with respect to any underlying mortgage loan that provides for an interest only
payment as of the cut-off date, the Original Amortization Term. With respect to
any underlying mortgage loan that provides for interest only payments until the
scheduled maturity date, the terms "Remaining Amortization Term and "Stated
Remaining Amortization Term" are not applicable, and the Annexes to this
prospectus supplement will indicate "Interest Only".
"REMAINING TERM TO MATURITY/ARD" means, with respect to any underlying
mortgage loan, the Original Term to Maturity/ARD less the Seasoning of the loan,
calculated as of the cut-off date.
"REMIC" means a "real estate mortgage investment conduit" as defined in
Section 860D of the Internal Revenue Code.
"REO PROPERTY" means any mortgaged real property that is acquired by the
trust through foreclosure, deed-in-lieu of foreclosure or otherwise following a
default on the corresponding underlying mortgage loan.
"RESTRICTED GROUP" means, collectively, the following persons and entities:
o the trustee;
o the fiscal agent;
o the Exemption-Favored Parties;
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o us;
o the master servicer;
o the special servicer;
o any sub-servicers;
o the mortgage loan sellers;
o each borrower, if any, with respect to underlying mortgage loans
constituting more than 5.0% of the total unamortized principal balance
of the mortgage pool as of the date of initial issuance of the series
2004-C1 certificates; and
o any and all affiliates of any of the aforementioned persons.
"RESTRICTED SERVICER REPORTS" means, collectively, the following reports:
o CMSA servicer watchlist;
o CMSA operating statement analysis report;
o CMSA NOI adjustment worksheet; and
o CMSA comparative financial status report;
provided that, if a Restricted Servicer Report is filed with the SEC, it will
thereafter become an Unrestricted Servicer Report.
"REVENUES" means the gross revenues received with respect to a mortgaged
real property securing any underlying mortgage loan, for the specified
historical operating period, as reflected in the operating statements and other
information furnished by the related borrower. Those revenues generally include:
o for the multifamily rental properties, gross rental and other
revenues; and
o for the retail, office and industrial properties, base rent,
percentage rent, expense reimbursements and other revenues.
"S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc.
"SEASONING" means, with respect to any underlying mortgage loan, the number
of scheduled monthly debt service payments between and including the first
payment date of the mortgage loan through and including the cut-off date.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
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"SENIOR PRINCIPAL PAYMENT CROSS-OVER DATE" means the first payment date as
of the commencement of business on which:
o the class A-1, A-2, A-3 and A-4 certificates, or any two or more of
those classes, remain outstanding; and
o the total principal balance of the class B, C, D, E, F, G, H, J, K, L,
M, N, P and Q certificates has previously been reduced to zero as
described under "Description of the Offered Certificates--Reductions
of Certificate Principal Balances in Connection with Realized Losses
and Additional Trust Fund Expenses" in this prospectus supplement
"SERVICING STANDARD" means, in general, with respect to each of the master
servicer and the special servicer, to service and administer the underlying
mortgage loans and any REO Properties for which that party is responsible under
the series 2004-C1 pooling and servicing agreement:
o 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 and similar foreclosure
properties (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 and foreclosure
properties or (ii) held in its own portfolio, whichever standard is
higher;
o with a view to the timely collection of all scheduled payments of
principal and interest due on each such underlying mortgage loan or,
if any such underlying mortgage loan shall come into and continue in
default, the maximization of the recovery on such mortgage loan or REO
Property on a net present value basis and the best interests of the
series 2004-C1 certificateholders and the trust fund; and
o without regard to:
1. any relationship that the master servicer or the special
servicer, as the case may be, or any of its affiliates may have
with any related borrower, us, any mortgage loan seller or any
other party to the transaction pursuant to which the series
2004-C1 certificates will be issued or any affiliate thereof;
2. the ownership of any series 2004-C1 certificate (or other
interest in any underlying mortgage loan) by the master servicer
or the special servicer, as the case may be, or by any of its
affiliates;
3. 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 series 2004-C1 pooling and
servicing agreement;
4. the obligation of the master servicer to make advances;
5. the ownership, servicing or management by the master servicer or
the special servicer or any of its affiliates for others of any
other mortgage loans or mortgaged real property;
6. any obligation of the master servicer or any of its affiliates to
repurchase or substitute an underlying mortgage loan as a
mortgage loan seller;
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7. any obligation of the master servicer or any of its affiliates to
cure a breach of a representation or warranty with respect to an
underlying mortgage loan; and
8. any debt the master servicer or the special servicer or any of
its affiliates has extended to any related borrower or any
affiliate of that borrower.
However, see "Description of the Mortgage Pool--The Ocean Key Resort Loan
Pair--Servicing of the Ocean Key Resort Loan Pair" in this prospectus
supplement.
"SERVICING TRANSFER EVENT" means, with respect to any underlying mortgage
loan, any of the following events:
1. the related borrower--
A. fails to make when due any balloon payment unless the master
servicer has, on or prior to the due date of that balloon
payment, received written evidence from an institutional lender
of such lender's binding commitment to refinance the subject
underlying 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, a "Servicing
Transfer Event" will occur immediately), or
B. fails to make when due any scheduled payment of principal and
interest (other than a balloon payment), and such failure
continues unremedied for 60 days, unless, with respect to the
Pecanland Mall Mortgage Loan only, the class PM representative
has cured such delinquency as described under "Servicing of the
Underlying Mortgage Loans--The Series 2004-C1 Controlling Class
Representative and the Class PM Representative--Cure Rights of
Class PM Representative" in this prospectus supplement;
2. the master servicer or the special servicer (in the case of the
special servicer, with the consent of the series 2004-C1 controlling
class representative (or, in the case of the Pecanland Mall underlying
mortgage loan, so long as no Pecanland Mall Change-of-Control Event
has occurred and is continuing, the class PM representative)),
determines in its good faith reasonable judgment and in accordance
with the Servicing Standard, based on communications with the related
borrower, that a default in the making of a scheduled payment of
principal and interest (including a balloon payment) or any other
default under the related mortgage loan documents that would (with
respect to such other default) materially impair the value of the
mortgaged real property as security for the subject underlying
mortgage loan or otherwise would materially adversely affect the
interest of the series 2004-C1 certificateholders and would continue
unremedied (including, without limitation, in the case of the
Pecanland Mall Mortgage Loan, by the Class PM Representative as
described under "Servicing of the Underlying Mortgage Loans--The
Series 2004-C1 Controlling Class Representative and the Class PM
Representative--Cure Rights of Class PM Representative" in this
prospectus supplement) beyond the applicable grace period under the
terms of the subject underlying mortgage loan (or, if no grace period
is specified, for 60 days; provided that a default that would give
rise to an acceleration right without any grace period will 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;
3. there occurs a default (other than as described in clause 1. above)
that the master servicer or special servicer determines, in its good
faith and reasonable judgment and in accordance with the Servicing
Standard, materially impairs the value of the related mortgaged real
property as security for the subject underlying mortgage loan or
otherwise materially adversely affects the
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interests of the series 2004-C1 certificateholders and that continues
unremedied (including, without limitation, in the case of the
Pecanland Mall Mortgage Loan, by the Class PM Representative as
described under "Servicing of the Underlying Mortgage Loans--The
Series 2004-C1 Controlling Class Representative and the Class PM
Representative--Cure Rights of Class PM Representative" in this
prospectus supplement) beyond the applicable grace period under the
terms of the subject underlying mortgage loan (or, if no grace period
is specified, for 60 days; 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); provided, however, that, in the event
the special servicer determines that the related borrower does not
need to maintain terrorism insurance as provided in the series 2004-C1
pooling and servicing agreement, no default related to the failure to
obtain such insurance will be considered outstanding for purposes of
this clause 3.;
4. various events of bankruptcy, insolvency, readjustment of debt,
marshalling of assets and liabilities, or similar proceedings occur
with respect to the related borrower or the corresponding mortgaged
real property, or the related borrower takes various actions
indicating its bankruptcy, insolvency or inability to pay its
obligations; or
5. the master servicer receives notice of the commencement of foreclosure
or similar proceedings with respect to the corresponding mortgaged
real property.
A Servicing Transfer Event will generally cease to exist:
o with respect to the circumstances described in clause 1. of this
definition, if and when the related borrower makes three consecutive
full and timely scheduled payments of principal and interest under the
terms of the mortgage loan, as those 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 master servicer or the special servicer;
o with respect to the circumstances described in clauses 2. and 4. of
this definition, if and when those circumstances cease to exist in the
good faith reasonable judgment of the special servicer and in
accordance with the Servicing Standard, but, with respect to any
bankruptcy or insolvency proceedings described in clause 4. of this
definition, no later than the entry of an order or decree dismissing
such proceeding;
o with respect to the circumstances described in clause 3. of this
definition, if and when the default is cured; and
o with respect to the circumstances described in clause 5. of this
definition, if and when the proceedings are terminated;
so long as at that time no circumstance identified in clauses 1. through 5. of
this definition exists that would cause a Servicing Transfer Event to continue
to exist with respect to the underlying mortgage loan.
"SMMEA" means the Secondary Mortgage Market Enhancement Act of 1984.
"STANDARD AVAILABLE P&I FUNDS" means, with respect to any payment date, the
Total Available P&I Funds, net of the Class PM Available P&I Funds, for that
date.
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"STATED PRINCIPAL BALANCE" means, for each mortgage loan in the trust fund
as of any date of determination, an amount (which amount will not be less than
zero) equal to "x" plus "y" minus "z" where:
X. "x" is equal to the cut-off date balance of the subject mortgage loan
(or, in the case of a Qualified Substitute Mortgage Loan, the unpaid principal
balance after application of all principal payments due on or before the related
date of substitution, whether or not received);
Y. "y" is equal to any Mortgage Deferred Interest added to the principal
balance of the mortgage loan prior to the end of the collection period for the
then-most recent payment date coinciding with or preceding such date of
determination; and
Z. "z" is equal to the sum of--
1. the principal portion of each scheduled payment of principal and
interest due on the subject mortgage loan after the cut-off date
or the related date of substitution, as the case may be, to the
extent received from the related borrower or advanced by the
master servicer and distributed to series 2004-C1
certificateholders on or before such date of determination,
2. all principal prepayments received with respect to the subject
mortgage loan after the cut-off date or the related date of
substitution, as the case may be, to the extent distributed to
series 2004-C1 certificateholders on or before such date of
determination,
3. the principal portion of all insurance proceeds, condemnation
proceeds and liquidation proceeds received with respect to the
subject mortgage loan after the cut-off date or the related date
of substitution, as the case may be, to the extent distributed to
series 2004-C1 certificateholders on or before such date of
determination,
4. the principal portion of any Realized Loss incurred in respect of
the subject mortgage loan prior to the end of the collection
period for the then-most recent payment date coinciding with or
preceding such date of determination, and
5. to the extent not otherwise included as part of the amount
described in the immediately preceding clause 4., any amount of
reduction in the outstanding principal balance of the subject
mortgage loan resulting from a Deficient Valuation that occurred
prior to the end of the collection period for the then-most
recent payment date coinciding with or preceding such date of
determination.
With respect to any mortgage loan in the trust fund as to which the related
mortgaged real property has become an REO Property, the "Stated Principal
Balance" of that mortgage loan will be, as of any date of determination, an
amount equal to (x) the Stated Principal Balance of that mortgage loan as of the
date of the related REO acquisition, minus (y) the sum of:
1. the principal portion of any P&I advance made with respect to the
subject mortgage loan on or after the date of the related REO
acquisition, to the extent distributed to series 2004-C1
certificateholders on or before such date of determination;
2. the principal portion of all insurance proceeds, condemnation
proceeds, liquidation proceeds and REO revenues received with respect
to the subject mortgage loan deemed to be outstanding, to the extent
distributed to series 2004-C1 certificateholders on or before such
date of determination; and
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3. the principal portion of any Realized Loss incurred in respect of the
subject mortgage loan prior to the end of the collection period for
the then-most recent payment date coinciding with or preceding such
date of determination.
A mortgage loan (including a mortgage loan deemed to be outstanding with
respect to an REO Property) shall be deemed to be part of the mortgage pool and
to have an outstanding Stated Principal Balance until the payment date on which
the payments or other proceeds, if any, received in connection with a
liquidation event in respect thereof are to be (or, if no such payments or other
proceeds are received in connection with such liquidation event, would have
been) distributed to series 2004-C1 certificateholders. For purposes of this
definition, payments or other collections of principal on or with respect to any
underlying mortgage loan (including any mortgage loan as to which the related
mortgaged real property has become an REO Property) will be considered
distributed to series 2004-C1 certificateholders as of the first payment date
that those payments are included in the Total Principal Payment Amount. However,
to the extent that principal from general collections on the mortgage pool is
used to reimburse advances deemed to be nonrecoverable pursuant to the series
2004-C1 pooling and servicing agreement with respect to a mortgage loan which is
not the mortgage loan in respect of which such nonrecoverable advance was made,
and such amount has not been included as part of the Total Principal Payment
Amount, such amount shall continue to be deemed to be distributed 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 payment date following the collection
period during which such event occurred, the Stated Principal Balance of such
mortgage loan will be zero.
"SUB-SERVICING FEE RATE" means, for any underlying mortgage loan, the per
annum rate at which the monthly sub-servicing fee is payable to any
sub-servicer.
"SUBSTITUTION SHORTFALL AMOUNT" has the meaning assigned to that term under
"Description of the Mortgage Pool--Assignment of the Mortgage Loans; Repurchases
and Substitutions" in this prospectus supplement.
"TOTAL AVAILABLE FUNDS" means, with respect to any payment date, the total
amount of funds available to make payments on the series 2004-C1 certificates on
that date as described under "Description of the Offered Certificates--Payment
Account--Withdrawals" in this prospectus supplement.
"TOTAL AVAILABLE P&I FUNDS" means, with respect to any payment date, all
funds in the trustee's payment account that are available to make payments of
interest and principal on the series 2004-C1 certificates on that payment date.
The Total Available P&I Funds do not include Post-ARD Additional Interest, yield
maintenance charges or prepayment premiums. The trustee will apply the Total
Available P&I Funds as described under "Description of the Offered
Certificates--Payments" in this prospectus supplement to pay principal and
accrued interest on the series 2004-C1 certificates (exclusive of the class R
and Y certificates) on that date.
"TOTAL PRINCIPAL PAYMENT AMOUNT" means, for any payment date prior to the
final payment date, an amount generally equal to:
1. the aggregate of the principal portions of all scheduled monthly debt
service payments (other than balloon payments) due or deemed due in
respect of the underlying mortgage loans (including mortgage loans as
to which the related mortgaged real properties have become REO
Properties) for their respective due dates occurring during the
related collection period, to the extent paid by the related borrower
during or prior to, or otherwise received during, the related
collection period or advanced by the master servicer, the trustee or
the fiscal agent, as applicable, for such payment date; plus
S-205
2. the aggregate of all principal prepayments received on the underlying
mortgage loans during the related collection period; plus
3. with respect to any underlying mortgage loan as to which the related
stated maturity date occurred during or prior to the related
collection period, any payment of principal (other than a principal
prepayment) 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 monthly debt service payment (other than a
balloon payment) due or deemed due in respect of the subject
underlying mortgage loan on a due date during or prior to the related
collection period and included as part of the Total Principal Payment
Amount for such payment date or any prior payment date pursuant to
clause (1) above; plus
4. the aggregate of the principal portion of all liquidation proceeds,
sale proceeds, insurance proceeds, condemnation proceeds and, to the
extent not otherwise included in clause (1), (2) or (3) above,
payments and revenues that were received on or in respect of the
underlying mortgage loans and REO Properties during the related
collection period and that were identified and applied by the master
servicer and/or the special servicer as recoveries of principal of the
underlying mortgage loans, in each case net of any portion of such
amounts that represents a recovery of the principal portion of any
scheduled monthly debt service payment due (other than a balloon
payment) or deemed due in respect of the related underlying mortgage
loan on a due date during or prior to the related collection period
and included as part of the Total Principal Payment Amount for such
payment date or any prior payment date pursuant to clause (1) above;
plus
5. if the subject payment date is subsequent to the initial payment date,
the excess, if any, of (a) the Total Principal Payment Amount for the
immediately preceding payment date, over (b) the total payments of
principal made with respect to the series 2004-C1 principal balance
certificates (exclusive of the class PM certificates) on the
immediately preceding payment date; plus
6. any amounts that were used to reimburse Nonrecoverable Advances
(including interest on such Nonrecoverable Advances) from principal
collections on the mortgage pool and that are, in any such case,
recovered during the related collection period on the related
underlying mortgage loan as to which any such reimbursed advance was
made; minus
7. the amount of any reimbursements of Nonrecoverable Advances (including
interest on such Nonrecoverable Advances) that are paid or reimbursed
from general principal collections on the mortgage pool with respect
to such payment date where such principal collections would have
otherwise been included in the Total Principal Payment Amount for such
payment date pursuant to any of clauses 1. through 4. above.
"UAV" means unavailable.
"UNDERWRITER EXEMPTION" means Prohibited Transaction Exemption 91-23, as
amended by Prohibited Transaction Exemptions 2000-58 and 2002-41.
"UNDERWRITTEN ANNUAL REPLACEMENT RESERVES" or "U/W ANNUAL REPLACEMENT
RESERVES" means the average annual ongoing repairs and replacements estimated
for a mortgaged real property, generally consistent with the greater of (a) the
Recommended Annual Replacement Reserves and (b) the lender's minimum
underwriting standard for that property type.
S-206
"UNDERWRITTEN ANNUAL TI/LC RESERVES" or "U/W ANNUAL TI/LC RESERVES" means
the average annual tenant improvement and leasing commissions estimated for a
mortgaged real property, generally consistent with the lender's minimum
underwriting standard for that property type.
"UNDERWRITTEN EXPENSES" or "U/W EXPENSES" means, with respect to any
mortgaged real property securing an underlying mortgage loan, the annual
operating expenses estimated for that property, generally derived from the
historical annual expenses reflected in the operating statements and other
information furnished by the related borrower, except that those expenses were
often modified as follows:
o operating expenses were generally adjusted by various factors such as
inflation, appraisers' estimates and historical trends;
o if there was no management fee or a management fee which varies from
the market, it was assumed that a management fee is payable with
respect to the mortgaged real property in an amount that is the
greater of the market rate as determined by an appraiser or the
lender's minimum management fee underwriting criteria for the
applicable property type; and
o those expenses were adjusted so as to eliminate any capital
expenditures, loan closing costs, tenant improvements or leasing
commissions and similar nonrecurring expenses.
Underwritten Expenses generally include:
o salaries, wages and benefits;
o the costs of utilities;
o repairs and maintenance;
o marketing;
o insurance;
o management;
o landscaping;
o security, if provided at the mortgaged real property;
o real estate taxes;
o general and administrative expenses; and
o ground lease payments, and other costs;
but without any deductions for debt service, depreciation and amortization or
capital expenditures, tenant improvements or leasing commissions.
S-207
"UNDERWRITTEN NET CASH FLOW", "UNDERWRITTEN NCF" or "U/W NCF" means, for
any mortgaged real property, the Underwritten NOI for that property reduced by
the following items, if and to the extent that the items have not already been
netted-out in calculating Underwritten NOI:
o underwritten capital expenditure reserves; and
o underwritten tenant improvements and leasing commission reserves.
Underwritten Net Cash Flow is subject to the same limitations and qualifications
as Underwritten NOI.
"UNDERWRITTEN NCF DEBT SERVICE COVERAGE RATIO" and "U/W NCF DSCR" means,
subject to the discussion under "Risk Factors--Risks Related to the Underlying
Mortgage Loans--The Underwritten Net Cash Flow Debt Service Coverage Ratios
and/or Loan-to-Value Ratios for Certain of the Underlying Mortgage Loans Have
Been Adjusted in Consideration of a Cash Holdback or a Letter of Credit" in this
prospectus supplement:
o with respect to any underlying mortgage loan (other than a Crossed
Loan), the ratio of--
1. the U/W NCF for the corresponding mortgaged real property or
properties, to
2. the Annual Debt Service for the underlying mortgage loan; and
o with respect to any Crossed Loan, the ratio of--
1. the total U/W NCF for all of the mortgaged real properties
related to the applicable Crossed Group, to
2. the total Annual Debt Service for all of the underlying mortgage
loans in the applicable Crossed Group.
"UNDERWRITTEN NOI" or "U/W NOI" means, for any mortgaged real property
securing any underlying mortgage loan, an estimate, made at or about the time of
origination of that mortgage loan or, in some cases, more recently derived from
current financial information, of the total cash flow anticipated to be
available for Annual Debt Service on the underlying mortgage loan, calculated as
the excess of Underwritten Revenues over Underwritten Expenses before
considering any reserves or capital expenditures.
Underwritten NOI describes the cash flow available before deductions for
capital expenditures such as tenant improvements, leasing commissions and
structural reserves. In general, Underwritten NOI has been calculated without
including underwritten reserves or any other underwritten capital expenditures
among Underwritten Expenses. Had those reserves been so included, Underwritten
NOI would have been lower. Even in those cases where such underwritten reserves
or any other underwritten capital expenditures were so included, no cash may
have been actually escrowed. No representation is made as to the future
operating income of the properties, nor is the Underwritten NOI set forth in
this prospectus supplement with respect to any mortgaged real property intended
to represent such future net operating income.
Actual conditions at any mortgaged real property may differ substantially
from the assumed conditions used in calculating Underwritten NOI. In particular,
the assumptions regarding future revenues, tenant vacancies, future expenses and
various other relevant factors, may differ substantially from actual conditions
and circumstances with respect to any mortgaged real property. There can be no
assurance that the actual financial performance of any of the mortgaged real
properties will meet the underwritten results assumed in connection with the
origination or purchase of the underlying mortgage loans.
S-208
Underwritten NOI and the Underwritten Revenues and Underwritten Expenses
used to determine Underwritten NOI for each mortgaged real property are derived
from information furnished by the respective borrowers. Net income for a
mortgaged real property as determined under GAAP would not be the same as the
Underwritten NOI for the mortgaged real property set forth in this prospectus
supplement. In addition, Underwritten NOI is not a substitute for or comparable
to operating income as determined in accordance with GAAP as a measure of the
results of a property's operations or a substitute for cash flows from operating
activities determined in accordance with GAAP as a measure of liquidity.
"UNDERWRITTEN REVENUES" or "U/W REVENUES" means the annual operating
revenues estimated for a mortgaged real property, and generally equals, subject
to the assumptions and adjustments specified below:
o in the case of the multifamily rental properties, the amount of gross
rents expected to be received during a 12-month period, as estimated
by annualizing a current rent roll provided by the borrower in
connection with the origination of the underlying mortgage loan or,
more recently, under its periodic operating statements reporting
requirements; and
o in the case of the commercial properties, the amount of gross rents
expected to be received during a 12-month period, as estimated by
annualizing a current rent roll provided by the borrower in connection
with the origination of the underlying mortgage loan or, more
recently, under its periodic operating statement reporting
requirements, plus--
1. for some commercial properties, percentage rents or other
revenues based on normalized actual amounts collected during
previous operating periods, and/or
2. in the case of some commercial properties with modified gross or
net leases, the amount of expense reimbursements expected to be
received over a 12-month period, as estimated based upon actual
lease terms currently in effect or actual amounts collected
during previous operating periods.
For multifamily rental and commercial properties, Underwritten Revenues
also may include some other revenue items such as parking fees, laundry income
and late fees.
However, Underwritten Revenues were decreased to take into account:
o the market vacancy rate, if that rate was more than the vacancy rate
reflected in the most recent rent roll or operating statements, as the
case may be, furnished by the related borrower;
o lender's minimum vacancy underwriting criteria for the applicable
property type; and
o for some commercial properties, applicable market rental rates,
resulting, in some cases, in base rents being marked downward to
market rents.
In addition, in the case of some commercial properties, the Underwritten
Revenues were adjusted upward to account for all or a portion of the rents
provided for under any rent step-ups or new leases scheduled to take effect,
generally within six months of the date of the rent roll used to underwrite the
subject mortgaged real property.
"UNITS" means, in the case of a mortgaged real property operated as
multifamily housing, the number of apartments, regardless of the size of or
number of rooms in such apartment, which are referred to in Annex A-1 to this
prospectus supplement as "Units".
S-209
"UNRESTRICTED SERVICER REPORTS" means, collectively, the following reports:
o updated collection report;
o CMSA delinquent loan status report;
o CMSA historical loan modification and corrected mortgage loan report;
o CMSA loan level reserve/LOC report;
o CMSA historical liquidation report;
o interim delinquent loan status report;
o CMSA REO status report; and
o from and after its filing with the SEC, any item deemed to be an
Unrestricted Servicer Report in accordance with the definition of
"Restricted Servicer Reports" in this glossary.
"USAP" means the Uniform Single Attestation Program for Mortgage Bankers
established by the Mortgage Bankers Association of America.
"WACHOVIA" means Wachovia Bank, National Association or its successor in
interest.
"WACHOVIA MORTGAGE LOAN" means any of the underlying mortgage loans
transferred to us by Wachovia for inclusion in the trust fund and any Qualified
Substitute Mortgage Loan delivered by Wachovia in replacement thereof.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, with respect to any underlying
mortgage loan, the number of years obtained by dividing:
(1) the then outstanding principal amount of the mortgage loan
into
(2) the total of the products obtained by multiplying:
(a) the amount of each then remaining required principal payment,
including the principal payment at the maturity date, in respect
thereof,
by
(b) the number of years (calculated to the nearest one-twelfth) that
will elapse between such date and the date on which such payment
is to be made.
"WEIGHTED AVERAGE POOL PASS-THROUGH RATE" means, for any payment date, the
weighted average of the Net Mortgage Pass-Through Rates with respect to all of
the mortgage loans in the trust fund for that payment date, weighted on the
basis of the mortgage loans' respective Stated Principal Balances (or, in the
case of the Pecanland Mall Mortgage Loan, the Allocated Principal Balance of the
Pecanland Mall Pooled Portion) immediately prior to that payment date.
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"YEAR BUILT" means, with respect to any mortgaged real property, the year
during which construction of the mortgaged real property was completed. In the
event of multiple years of construction, only the most recent of those years is
shown.
"YEAR RENOVATED" means, with respect to any mortgaged real property, the
year during which the most recent renovation, if any, of the mortgaged real
property was completed. That renovation would generally include significant
capital improvements to either the interior or exterior of the mortgaged
property. In the event of multiple years of renovation, only the most recent of
those years is shown.
"YIELD MAINTENANCE INTEREST RATE" means, with respect to any mortgage loan
in the trust fund, either:
o an annualized yield (the "Yield Rate") equal to the lesser of (i) the
yield on securities issued by the United States Treasury having a
maturity closest to the Yield Maintenance Discounting Horizon of the
mortgage loan or (ii) the yield on securities issued by the United
States Treasury with a term equal to the remaining average life of the
Yield Maintenance Discounting Horizon of the mortgage loan, in each
case as the Yield Rate is quoted using the method specified in the
related mortgage loan documents; or
o the annualized yield rate on securities issued by the United States
Treasury having a maturity specified in the related mortgage loan
documents.
The Yield Maintenance Interest Rate should be increased by zero (0) basis
points if the value is "Treasury Flat" or "T-Flat".
The Yield Maintenance Interest Rate, as adjusted in the preceding
paragraph, shall be converted to a monthly equivalent yield if the value for
this mortgage loan specified in the column labeled "Yield Maintenance Interest
Rate Converted to Monthly Mortgage Rate" on Annex A-1 to this prospectus
supplement is "Yes".
"YIELD MAINTENANCE DISCOUNTING HORIZON" means, with respect to any mortgage
loan in the trust fund, the time horizon used when calculating a yield
maintenance charge.
If the value specified in the column labeled "Yield Maintenance Discounting
Horizon" on Annex A-1 to this prospectus supplement is "Maturity", the Yield
Maintenance Discounting Horizon is the scheduled maturity date or anticipated
repayment date, as applicable, of the mortgage loan.
If the value specified in the column labeled "Yield Maintenance Discounting
Horizon" on Annex A-1 to this prospectus supplement is "Open Period", the Yield
Maintenance Discounting Horizon is the due date that is y months prior to the
scheduled maturity date of the mortgage loan, where y is the number of payments
specified in "Free(y)" in the column labeled "Prepayment Provisions" on Annex
A-1 to this prospectus supplement.
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ANNEX A-1
CHARACTERISTICS OF THE UNDERLYING
MORTGAGE LOANS AND THE MORTGAGED REAL PROPERTIES
Note: For purposes of presenting information regarding the original and
remaining terms to maturity of the respective underlying mortgage loans in this
Annex A-1, each ARD Loan is assumed to mature on its anticipated repayment date.
[THIS PAGE INTENTIONALLY LEFT BLANK.]
CHARACTERISTICS OF THE UNDERLYING MORTGAGE LOANS AND THE MORTGAGED REAL PROPERTIES (E)
MORTGAGE
CONTROL LOAN
NUMBER SELLER LOAN / PROPERTY NAME PROPERTY ADDRESS
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
1 CGM ARC Portfolio 10-6 Various
1a Sunshine City 201 North West 133rd Road
1b Country Club Mobile Estates 5100 South 1300 East
1c Windsor Mobile Estates 2800 South Hampton Park Drive
1d Big Country Estates 3400 South Greeley Highway
1e Harper Woods MHP 2200 Harper Street
1f The Vineyards 3268 E Road
1g Rockview Heights 201 Rockview Lane
- ------------------------------------------------------------------------------------------------------------------------------------
2 CGM ARC Portfolio 10-4 Various
2a The Meadows 14470 East 13th Avenue
2b Foxhall Village 5909 Foxhall Village Road
2c New Twin Lakes 31 Regina Drive
2d Sundown 1000 West 450 North Street
2e Meadowood 1900 Northwest Lyman Road
2f Blue Valley 730 Allen Road
2g Connie Jean 5570 Connie Jean Road
- ------------------------------------------------------------------------------------------------------------------------------------
3 CGM ARC Portfolio 5-1 Various
3a Countryside Village Jacksonville 10960 Beach Boulevard
3b Parkview Estates 913 South Grand Avenue
3c Falcon Farms 2507 214th Street North
3d Forest Park 183 Pitcher Road
3e Green Valley Village 2760 South Robertson Road
3f Pleasant Grove 5000 Hilltop Needmore Road
3g Rose Country Estates 3400 North Northeast Loop 323
- ------------------------------------------------------------------------------------------------------------------------------------
4 Wachovia Yorktown Center Butterfield Road at I-355
- ------------------------------------------------------------------------------------------------------------------------------------
Wachovia StorageMart Portfolio
5 Wachovia StorageMart - Lombard, IL 100 West North Avenue
6 Wachovia StorageMart - Kansas City, MO (North Main) 11510 North Main Street
7 Wachovia StorageMart - Olathe, KS 1310 South Enterprise Drive
8 Wachovia StorageMart - Lenexa, KS 16101 West 95th Street
9 Wachovia StorageMart - Dania Beach, FL 2021 Griffin Road
10 Wachovia StorageMart - Secaucus, NJ 250 Flanagan Way
11 Wachovia StorageMart - Kansas City, KS 2816 Eaton Street
12 Wachovia StorageMart - Pompano Beach, FL 301 South Federal Highway
13 Wachovia StorageMart - Miami, FL (NW 7th Street) 4920 Northwest 7th Street
14 Wachovia StorageMart - Miami, FL (SW 2nd Avenue) 640 Southwest 2nd Avenue
15 Wachovia StorageMart - Brooklyn, NY 718 Atlantic Avenue
16 Wachovia StorageMart - Merriam, KS 7460 Frontage Road
17 Wachovia StorageMart - Kansas City, MO (Wornall Road) 7536 Wornall Road
18 Wachovia StorageMart - Kansas City, MO (Prairie View) 9012 Northwest Prairie View Road
19 Wachovia StorageMart - Overland Park, KS 9220 West 135th Street
- ------------------------------------------------------------------------------------------------------------------------------------
20 CGM Pecanland Mall 4700 Milhaven Road
21 Wachovia Lake Shore Place (f) 680 North Lake Shore Drive
22 CGM Nashua Mall 10 Coliseum Avenue
- ------------------------------------------------------------------------------------------------------------------------------------
CGM Crossroads Center Portfolio
23 CGM Crossroads Center 9616-9879 Fremont Pike
24 CGM Auburn Mile Shopping Center 280-720 Brown Road
- ------------------------------------------------------------------------------------------------------------------------------------
25 CGM Waterfront Clematis 1 North Clematis and 101 North Clematis
26 CDCMC 305 Madison 305 Madison Ave.
27 CDCMC DFS-Guam 1296 Pale San Vitores Road
- ------------------------------------------------------------------------------------------------------------------------------------
CGM Walgreens Portfolio
28 CGM Walgreens - 4285 West Powell, Gresham, OR 4285 West Powell Boulevard
29 CGM Walgreens - 16200 Northeast Glisan Gresham, OR 16200 Northeast Glisan Street
- ------------------------------------------------------------------------------------------------------------------------------------
30 CGM Fred Meyer- Kent 10201 Southeast 240th Street
31 CGM Fred Meyer- Grants Pass 1101 Grants Pass Parkway
- ------------------------------------------------------------------------------------------------------------------------------------
CGM Wildcat Self Storage Portfolio
32 CGM Wildcat Self Storage - Kettering, OH 4125 Hempstead Station Drive
33 CGM Wildcat Self Storage - Norwood, OH 4900 and 4950 Franklin Avenue
34 CGM Wildcat Self Storage - South Fairmount, OH 2201 Moellering Street
35 CGM Wildcat Self Storage - Deerfield, OH 5318 Fields Ertel Road
36 CGM Wildcat Self Storage - Forest Park, OH 2140 Stapleton Court
37 CGM Wildcat Self Storage - Huber Heights, OH 7888 Wildcat Road
38 CGM Wildcat Self Storage - Blue Ash, OH 8900 Rossash Road
- ------------------------------------------------------------------------------------------------------------------------------------
39 Wachovia Ocean Key Resort Zero Duval Street
40 CDCMC Hall Office Park 2611 and 2811 Internet Boulevard
41 CGM Sheraton Suites 2400 West Loop South
42 CGM 400 Atlantic Avenue 400 Atlantic Avenue
43 CGM Continental Office Building 1012 14th Street Northwest
44 CGM Dupont Medical Building 1234 19th Street Northwest
45 CDCMC Victoria Mall 7800 North Navarro Street
46 CDCMC Promenade Office Park 4165 and 4195 East Thousand Oaks Blvd
47 CDCMC Briarwood 299 West Hillcrest Drive
48 Wachovia Delray Bay Apartments 3360 Delray Bay Drive
49 Wachovia The Yards Plaza 4500-4650 South Damen Avenue
50 CGM Carmel Rancho Shopping Center 26135 and 26200 Carmel Rancho Boulevard
51 Wachovia Cumberland Office Park 2500 Cumberland Parkway
52 CGM Amboy Plaza Shopping Center 6400 Amboy Road
53 CGM Lakeside Technology Center 5301-5570 West Idlewild Avenue & 5730 North Hoover Boulevard
54 CGM Airport Executive Towers I & II 1150 Northwest 72nd Avenue & 7270 Northwest 12th Street
55 CGM Norwalk Self Storage 25 New Canaan Avenue
56 CDCMC The Berkeley Center 2200-2240 Shattuck Avenue, 2070 Allston Way & 2065 Kittredge Street
57 CDCMC North Tech Business Center 4616 Howard Lane
58 CGM Melville Corporate Center II 330 South Service Road
- ------------------------------------------------------------------------------------------------------------------------------------
CGM Oklahoma City Apartments Portfolio
59 CGM Newport Grenada Apartments 3407 Northwest 39th Street
60 CGM Emerald Court Apartments 4746 Northwest 23rd Street
61 CGM Casa Linda Apartments 5400-5620 North Meridian Avenue
- ------------------------------------------------------------------------------------------------------------------------------------
CGM Edmond Apartments Portfolio
62 CGM Christopher Place Apartments 101 North Boulevard Street
63 CGM University Park Apartments 300 South Rankin Street
64 CGM 909 North Place Apartments 909 North Kennedy Avenue
- ------------------------------------------------------------------------------------------------------------------------------------
65 CDCMC Sanford Farms Shopping Center 299 Miami Avenue
66 Wachovia Rancho Vista MHP 17324 Sonoma Highway
67 CDCMC West Covina Parkway Plaza 1000-1200 West Covina Parkway
68 CGM Greentree Plaza 305-505 South East Everett Mall Way
69 Wachovia Breckenridge Apartments 14502 Valor Circle
70 Wachovia Hilton Garden Inn 189 Midway Avenue
71 CGM Lynwood Shopping Center 10821 Long Beach Boulevard
72 CGM Fallbrook Mercantile 845-855 South Main Avenue
73 CGM Lowe's Home Improvement 5400 Fairmont Parkway
74 CGM 1845 North Clybourn Avenue 1845 North Clybourn Avenue
75 CGM Indian Tree Shopping Center 7705-7739 Wadsworth Boulevard
76 CGM Canyon Plaza-Phase I 3421-3433 Broadway
77 CGM Foxcroft Apartments 1010 Foxcroft Lane
78 CGM JetPort Plaza 443 Western Avenue
79 CGM Las Palmas Apartments 4200 Las Palmas Circle
80 CDCMC Village Knoll Apartments 100 Joya Circle
81 CGM 104 Windsor Center Drive 104 Windsor Center Drive
82 CGM Riverside Corners 5-23 Post Road West
83 CGM 65-69 East Avenue 65-69 East Avenue
84 CGM Glisan Center 519-535 Northwest 16th Avenue
85 CGM Orchards Marketplace 5821, 5831, 5841 and 5891 East Charleston Boulevard
86 CGM Northbridge Plaza 5700-5800 Frantz Road
87 CGM Northland Mall 451 and 415 South Schmale Road
88 CGM Med-Plex Office Building 5458 Town Center Road
89 CGM Atriums at Somerset III 2780 and 2790 Somerset Drive
- ------------------------------------------------------------------------------------------------------------------------------------
CGM Eckerds Portfolio
90 CGM Eckerd - Baton Rouge, LA 9608 Jefferson Highway
91 CGM Eckerd - Gulfport, MS 2424 25th Avenue
- ------------------------------------------------------------------------------------------------------------------------------------
92 CGM Satyr Hill Shopping Center 2033-2053 East Joppa Road
93 CGM Barrington Place Apartments 201 Betz Road
94 CGM Fielder Crossing Condominiums 1727 Westview Terrace
95 CGM 17 Christopher Way 17 Christopher Way
96 CGM Stop & Shop-Beverly, MA 29-35 Enon Street
97 CGM 191 Waukegan Road 191 Waukegan Road
98 CGM Chester & Columbus Shopping Center 4128 Chester Avenue
99 CDCMC Longhaven West MHP 5201 West Camelback Road
100 CGM Kent-Kangley Center Shops 13003 Southeast Kent-Kangley Road
101 CGM 120 New Canaan Avenue 120 New Canaan Avenue
102 CGM Glastonbury Wellness Center 628A Hebron Avenue
103 CGM Foodsco Plaza 3061-3089 East Shields Avenue
104 CGM Long Beach Plaza 2005 Long Beach Boulevard
105 CGM 2150 Coliseum Drive 2160 and 2106 Coliseum Drive
106 CGM Harper Crossing 2116 Morganton Boulevard Southwest
107 CGM Waterford Apartments 3829 Gannon Lane
108 CGM Gappie Plaza SWC 35th Street & Martin Luther King Drive
109 CGM Three Flags Center 1360 South Fifth Street
110 Wachovia Flamingo Swenson Plaza 670 East Flamingo Road
111 CGM Calumet City Retail 1351 River Oaks Drive
112 CGM Value City Furniture Building 2500 Prince William Parkway
113 CGM 27th and Bridgeport 2602 Bridgeport Way West
114 Wachovia Heritage Plaza Shopping Center 1450 North Brindlee Mountain Parkway
115 CGM The Oaks Mobile Home Park 1500 Richmond Road
PRESENTED BELOW, SEPARATE FROM THE REST OF THE POOLED MORTGAGED LOANS, IS THE ANNEX A-1 INFORMATION FOR THE
PECANLAND MALL NON-POOLED PORTION, WHICH IS ASSOCIATED WITH THE CLASS PM CERTIFICATES. THE PECANLAND MALL
NON-POOLED PORTION IS NOT INCLUDED IN THE INITIAL MORTGAGE POOL BALANCE.
20b CGM Pecanland Mall (non-pooled portion)
CONTROL ZIP
NUMBER CITY STATE CODE COUNTY PROPERTY TYPE DETAILED PROPERTY TYPE
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
1 Various Various Various Various Mobile Home Park Mobile Home Park
1a Plantation FL 33325 Broward Mobile Home Park Mobile Home Park
1b Salt Lake City UT 84117 Salt Lake Mobile Home Park Mobile Home Park
1c West Valley City UT 84119 Salt Lake Mobile Home Park Mobile Home Park
1d Cheyenne WY 82007 Laramie Mobile Home Park Mobile Home Park
1e Lawrence KS 66046 Douglas Mobile Home Park Mobile Home Park
1f Clifton CO 81520 Mesa Mobile Home Park Mobile Home Park
1g Arnold MO 63010 Jefferson Mobile Home Park Mobile Home Park
- -----------------------------------------------------------------------------------------------------------------------
2 Various Various Various Various Mobile Home Park Mobile Home Park
2a Aurora CO 80011 Arapahoe Mobile Home Park Mobile Home Park
2b Raleigh NC 27616 Wake Mobile Home Park Mobile Home Park
2c Bloomingburg NY 12721 Sullivan Mobile Home Park Mobile Home Park
2d Clearfield UT 84015 Davis Mobile Home Park Mobile Home Park
2e Topeka KS 66608 Shawnee Mobile Home Park Mobile Home Park
2f Manhattan KS 66502 Riley Mobile Home Park Mobile Home Park
2g Jacksonville FL 32222 Duval Mobile Home Park Mobile Home Park
- -----------------------------------------------------------------------------------------------------------------------
3 Various Various Various Various Mobile Home Park Mobile Home Park
3a Jacksonville FL 32246 Duval Mobile Home Park Mobile Home Park
3b San Jacinto CA 92582 Riverside Mobile Home Park Mobile Home Park
3c Port Byron IL 61275 Rock Island Mobile Home Park Mobile Home Park
3d Queensbury NY 12804 Warren Mobile Home Park Mobile Home Park
3e Casper WY 82604 Natrona Mobile Home Park Mobile Home Park
3f Fuquay Varina NC 27526 Wake Mobile Home Park Mobile Home Park
3g Tyler TX 75708 Smith Mobile Home Park Mobile Home Park
- -----------------------------------------------------------------------------------------------------------------------
4 Lombard IL 60148 Du Page Retail Regional Mall
- -----------------------------------------------------------------------------------------------------------------------
5 Lombard IL 60148 Du Page Self Storage Self Storage
6 Kansas City MO 64155 Clay Self Storage Self Storage
7 Olathe KS 66061 Johnson Self Storage Self Storage
8 Lenexa KS 66219 Johnson Self Storage Self Storage
9 Dania Beach FL 33312 Broward Self Storage Self Storage
10 Secaucus NJ 07094 Hudson Self Storage Self Storage
11 Kansas City KS 66103 Wyandotte Self Storage Self Storage
12 Pompano Beach FL 33062 Broward Self Storage Self Storage
13 Miami FL 33126 Miami-Dade Self Storage Self Storage
14 Miami FL 33130 Miami-Dade Self Storage Self Storage
15 Brooklyn NY 11217 Kings Self Storage Self Storage
16 Merriam KS 66203 Johnson Self Storage Self Storage
17 Kansas City MO 64114 Jackson Self Storage Self Storage
18 Kansas City MO 64153 Platte Self Storage Self Storage
19 Overland Park KS 66221 Johnson Self Storage Self Storage
- -----------------------------------------------------------------------------------------------------------------------
20 Monroe LA 71203 Ouachita Parish Retail Regional Mall
21 Chicago IL 60611 Cook Office CBD
22 Nashua NH 03063 Hillsborough Retail Anchored
- -----------------------------------------------------------------------------------------------------------------------
23 Rossford OH 43460 Wood Retail Anchored
24 Auburn Hills MI 48326 Oakland Retail Anchored
- -----------------------------------------------------------------------------------------------------------------------
25 West Palm Beach FL 33401 Palm Beach Mixed Use Office(76%)/Retail(24%)
26 Morristown NJ 07960 Morris Office Suburban
27 Tumon Bay Guam 96911 Land Fee Interest
- -----------------------------------------------------------------------------------------------------------------------
28 Gresham OR 97030 Multnomah Retail Single Tenant, Anchor
29 Gresham OR 97030 Multnomah Retail Single Tenant, Anchor
- -----------------------------------------------------------------------------------------------------------------------
30 Kent WA 98031 King Retail Single Tenant, Anchor
31 Grants Pass OR 97526 Josephine Retail Single Tenant, Anchor
- -----------------------------------------------------------------------------------------------------------------------
32 Kettering OH 45429 Montgomery Self Storage Self Storage
33 Norwood OH 45212 Hamilton Self Storage Self Storage
34 Cincinnati OH 45214 Hamilton Self Storage Self Storage
35 Cincinnati OH 45249 Warren Self Storage Self Storage
36 Forest Park OH 45240 Hamilton Self Storage Self Storage
37 Huber Heights OH 45424 Montgomery Self Storage Self Storage
38 Blue Ash OH 45236 Hamilton Self Storage Self Storage
- -----------------------------------------------------------------------------------------------------------------------
39 Key West FL 33040 Monroe Hospitality Full Service
40 Frisco TX 75034 Collin Office Suburban
41 Houston TX 77027 Harris Hospitality Full Service
42 Boston MA 02110 Suffolk Office CBD
43 Washington DC 20005 District of Columbia Office CBD
44 Washington DC 20036 District of Columbia Office Medical Office
45 Victoria TX 77904 Victoria Retail Regional Mall
46 Westlake Village CA 91362 Ventura Office Suburban
47 Thousand Oaks CA 91360 Ventura Office Suburban
48 Delray Beach FL 33483 Palm Beach Multifamily Conventional
49 Chicago IL 60609 Cook Retail Anchored
50 Carmel CA 93923 Monterey Retail Anchored
51 Atlanta GA 30339 Cobb Office Suburban
52 Staten Island NY 10309 Richmond Retail Anchored
53 Tampa FL 33634 Hillsborough Office Suburban
54 Miami FL 33126 Miami-Dade Office Suburban
55 Norwalk CT 06851 Fairfield Self Storage Self Storage
56 Berkeley CA 94704 Alameda Mixed Use Retail(64%)/Office(36%)
57 Austin TX 78728 Travis Industrial Flex
58 Melville NY 11747 Suffolk Office Suburban
- -----------------------------------------------------------------------------------------------------------------------
59 Oklahoma City OK 73112 Oklahoma Multifamily Conventional
60 Oklahoma City OK 73127 Oklahoma Multifamily Conventional
61 Oklahoma City OK 73112 Oklahoma Multifamily Conventional
- -----------------------------------------------------------------------------------------------------------------------
62 Edmond OK 73034 Oklahoma Multifamily Student Housing
63 Edmond OK 73034 Oklahoma Multifamily Student Housing
64 Edmond OK 73034 Oklahoma Multifamily Student Housing
- -----------------------------------------------------------------------------------------------------------------------
65 Amsterdam NY 12010 Montgomery Retail Anchored
66 Sonoma CA 95476 Sonoma Mobile Home Park Mobile Home Park
67 West Covina CA 91790 Los Angeles Retail Shadow Anchored
68 Everett WA 98208 Snohomish Retail Anchored
69 Tampa FL 33613 Hillsborough Multifamily Student Housing
70 Daytona Beach FL 32114 Volusia Hospitality Full Service
71 Lynwood CA 90262 Los Angeles Retail Anchored
72 Fallbrook CA 92028 San Diego Retail Anchored
73 Pasadena TX 77505 Harris Retail Single Tenant, Anchor
74 Chicago IL 60614 Cook Retail Unanchored
75 Arvada CO 80003 Jefferson Retail Anchored
76 American Canyon CA 94503 Napa Mixed Use Office(61%)/Retail(39%)
77 Statesville NC 28677 Iredell Multifamily Conventional
78 South Portland ME 04106 Cumberland Retail Anchored
79 Brownsville TX 78521 Cameron Multifamily Conventional
80 Harrisburg PA 17112 Dauphin Multifamily Conventional
81 East Windsor NJ 08520 Mercer Office Suburban
82 Westport CT 06880 Fairfield Mixed Use Retail(75%)/Multifamily(25%)
83 Norwalk CT 06851 Fairfield Office Suburban
84 Portland OR 97209 Multnomah Mixed Use Retail(90%)/Office(10%)
85 Las Vegas NV 89142 Clark Retail Shadow Anchored
86 Dublin OH 43016 Franklin Retail Unanchored
87 Carol Stream IL 60188 Du Page Retail Anchored
88 Boca Raton FL 33486 Palm Beach Office Medical Office
89 Lauderdale Lakes FL 33311 Broward Multifamily Conventional
- -----------------------------------------------------------------------------------------------------------------------
90 Baton Rouge LA 70809 East Baton Rouge Retail Single Tenant, Anchor
91 Gulfport MS 39501 Harrison Retail Single Tenant, Anchor
- -----------------------------------------------------------------------------------------------------------------------
92 Baltimore MD 21234 Baltimore Retail Unanchored
93 Cheney WA 99004 Spokane Multifamily Conventional
94 Arlington TX 76013 Tarrant Multifamily Conventional
95 Eatontown NJ 07724 Monmouth Office Suburban
96 Beverly MA 01915 Essex Retail Single Tenant, Anchor
97 Northfield IL 60093 Cook Office Suburban
98 Bakersfield CA 93301 Kern Retail Anchored
99 Phoenix AZ 85031 Maricopa Mobile Home Park Mobile Home Park
100 Kent WA 98030 King Retail Shadow Anchored
101 Norwalk CT 06850 Fairfield Retail Anchored
102 Glastonbury CT 06033 Hartford Mixed Use Health Club (61%)/Medical Office (39%)
103 Fresno CA 93726 Fresno Retail Anchored
104 Long Beach CA 90806 Los Angeles Office Suburban
105 Hampton VA 23666 Hampton City Retail Anchored
106 Lenoir NC 28645 Caldwell Retail Anchored
107 Dallas TX 75237 Dallas Multifamily Conventional
108 Chicago IL 60653 Cook Retail Unanchored
109 St. Charles MO 63301 St. Charles Office Suburban
110 Las Vegas NV 89119 Clark Retail Unanchored
111 Calumet City IL 60409 Cook Retail Unanchored
112 Woodbridge VA 22192 Prince William Retail Anchored
113 University Place WA 98466 Pierce Retail Unanchored
114 Arab AL 35016 Marshall Retail Shadow Anchored
115 Santa Paula CA 93060 Ventura Mobile Home Park Mobile Home Park
20b
% OF ALLOCATED
INITIAL ALLOCATED CUT-OFF DATE
MORTGAGE CUT-OFF DATE % OF INITIAL PRINCIPAL LOAN
CONTROL CUT-OFF DATE POOL PRINCIPAL MORTGAGE BALANCE PER BALANCE AT
NUMBER PRINCIPAL BALANCE BALANCE BALANCE (G) POOL BALANCE SF/UNIT/ROOM/PAD MATURITY / ARD
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
1 $ 37,839,209.68 3.2% $ 31,733,801.36
1a $ 10,129,805.29 0.9% 28,942
1b 9,930,399.67 0.8% 30,744
1c 7,736,937.90 0.7% 31,072
1d 4,546,448.04 0.4% 18,113
1e 2,352,986.27 0.2% 16,570
1f 1,834,531.67 0.2% 18,720
1g 1,308,100.84 0.1% 12,700
- -------------------------------------------------------------------------------------------------------------------------
2 34,152,199.83 2.9% 28,641,694.78
2a 11,665,739.38 1.0% 38,501
2b 7,291,087.11 0.6% 23,146
2c 7,029,355.78 0.6% 27,352
2d 3,552,068.08 0.3% 17,760
2e 3,028,605.41 0.3% 12,114
2f 927,276.72 0.1% 6,265
2g 658,067.35 0.1% 10,614
- -------------------------------------------------------------------------------------------------------------------------
3 24,654,245.70 2.1% 22,830,592.68
3a 12,634,586.87 1.1% 19,649
3b 3,494,672.96 0.3% 17,473
3c 3,477,871.65 0.3% 16,176
3d 2,419,388.97 0.2% 13,221
3e 1,142,489.24 0.1% 10,778
3f 840,065.62 0.1% 11,668
3g 645,170.39 0.1% 6,144
- -------------------------------------------------------------------------------------------------------------------------
4 93,000,000.00 7.9% 93,000,000.00 7.9% 150.17 77,666,377.18
- -------------------------------------------------------------------------------------------------------------------------
75,000,000.00 6.3% 75,000,000.00 6.3% 69,921,186.81
5 3,240,000.00 0.3% 3,240,000.00 0.3% 38.78 3,020,595.38
6 2,552,000.00 0.2% 2,552,000.00 0.2% 33.54 2,379,184.83
7 1,616,000.00 0.1% 1,616,000.00 0.1% 25.53 1,506,568.67
8 3,369,000.00 0.3% 3,369,000.00 0.3% 41.63 3,140,859.86
9 5,920,000.00 0.5% 5,920,000.00 0.5% 68.12 5,519,112.04
10 8,760,000.00 0.7% 8,760,000.00 0.7% 92.27 8,166,794.80
11 3,280,000.00 0.3% 3,280,000.00 0.3% 52.91 3,057,886.64
12 6,960,000.00 0.6% 6,960,000.00 0.6% 74.14 6,488,685.91
13 5,196,000.00 0.4% 5,196,000.00 0.4% 69.05 4,844,139.78
14 3,886,000.00 0.3% 3,886,000.00 0.3% 108.57 3,622,849.89
15 11,840,000.00 1.0% 11,840,000.00 1.0% 207.28 11,038,224.61
16 3,056,000.00 0.3% 3,056,000.00 0.3% 46.15 2,849,055.16
17 6,760,000.00 0.6% 6,760,000.00 0.6% 78.15 6,302,229.60
18 4,512,000.00 0.4% 4,512,000.00 0.4% 49.24 4,206,458.78
19 4,053,000.00 0.3% 4,053,000.00 0.3% 41.07 3,778,540.86
- -------------------------------------------------------------------------------------------------------------------------
20 62,322,214.51 (a) 5.3% 62,322,214.51 (a) 5.3% 178.51 56,159,188.72
21 57,000,000.00 4.8% 57,000,000.00 4.8% 116.55 49,322,771.36
22 35,500,000.00 3.0% 35,500,000.00 3.0% 111.34 29,803,092.98
- -------------------------------------------------------------------------------------------------------------------------
34,700,000.00 2.9% 34,700,000.00 2.9% 29,614,991.52
23 26,960,000.00 2.3% 26,960,000.00 2.3% 113.21 23,009,226.60
24 7,740,000.00 0.7% 7,740,000.00 0.7% 88.74 6,605,764.92
- -------------------------------------------------------------------------------------------------------------------------
25 32,670,000.00 2.8% 32,670,000.00 2.8% 220.77 28,532,134.81
26 28,355,937.71 2.4% 28,355,937.71 2.4% 133.61 24,267,005.42
27 26,864,654.71 2.3% 26,864,654.71 2.3% 365.15 22,687,461.69
- -------------------------------------------------------------------------------------------------------------------------
5,025,372.58 0.4% 5,025,372.58 0.4% 4,260,097.24
28 2,577,369.29 0.2% 2,577,369.29 0.2% 185.36 2,184,881.19
29 2,448,003.29 0.2% 2,448,003.29 0.2% 176.05 2,075,216.05
- -------------------------------------------------------------------------------------------------------------------------
30 11,447,416.87 1.0% 11,447,416.87 1.0% 68.49 9,550,052.64
31 8,262,048.69 0.7% 8,262,048.69 0.7% 49.55 6,892,646.51
- -------------------------------------------------------------------------------------------------------------------------
23,397,502.96 2.0% 23,397,502.96 2.0% 21,812,960.71
32 4,321,831.77 0.4% 4,321,831.77 0.4% 48.11 4,029,145.76
33 4,046,625.44 0.3% 4,046,625.44 0.3% 37.92 3,772,576.82
34 3,977,078.76 0.3% 3,977,078.76 0.3% 41.85 3,707,740.38
35 3,477,335.86 0.3% 3,477,335.86 0.3% 37.66 3,241,840.91
36 3,389,905.73 0.3% 3,389,905.73 0.3% 31.80 3,160,332.06
37 2,295,041.70 0.2% 2,295,041.70 0.2% 31.63 2,139,615.36
38 1,889,683.70 0.2% 1,889,683.70 0.2% 27.05 1,761,709.42
- -------------------------------------------------------------------------------------------------------------------------
39 23,067,932.72 2.0% 23,067,932.72 2.0% 230,679 19,598,531.15
40 21,914,933.88 1.9% 21,914,933.88 1.9% 94.39 18,642,662.51
41 20,941,940.52 1.8% 20,941,940.52 1.8% 74,526 16,217,186.49
42 19,161,640.90 1.6% 19,161,640.90 1.6% 192.10 16,087,342.24
43 13,629,000.00 1.2% 13,629,000.00 1.2% 169.33 12,578,223.38
44 5,171,000.00 0.4% 5,171,000.00 0.4% 159.28 4,772,323.21
45 18,786,387.57 1.6% 18,786,387.57 1.6% 42.13 14,671,313.77
46 11,988,263.55 1.0% 11,988,263.55 1.0% 160.10 9,976,287.02
47 5,594,532.85 0.5% 5,594,532.85 0.5% 133.11 4,656,683.72
48 17,500,000.00 1.5% 17,500,000.00 1.5% 105,422 15,111,964.25
49 17,460,861.22 1.5% 17,460,861.22 1.5% 65.80 14,419,729.12
50 15,689,287.51 1.3% 15,689,287.51 1.3% 136.55 13,352,353.82
51 15,000,000.00 1.3% 15,000,000.00 1.3% 104.50 13,719,587.17
52 14,785,324.91 1.3% 14,785,324.91 1.3% 197.27 11,596,714.13
53 14,578,323.60 1.2% 14,578,323.60 1.2% 65.44 13,530,640.98
54 14,060,183.31 1.2% 14,060,183.31 1.2% 87.29 11,891,315.38
55 12,960,663.16 1.1% 12,960,663.16 1.1% 132.66 10,843,035.38
56 12,935,059.30 1.1% 12,935,059.30 1.1% 139.56 11,173,601.05
57 12,190,376.95 1.0% 12,190,376.95 1.0% 69.50 10,403,031.34
58 11,964,175.66 1.0% 11,964,175.66 1.0% 136.25 10,027,658.39
- -------------------------------------------------------------------------------------------------------------------------
6,925,365.70 0.6% 6,925,365.70 0.6% 5,339,524.42
59 2,477,974.62 0.2% 2,477,974.62 0.2% 19,984 1,910,542.13
60 2,253,610.73 0.2% 2,253,610.73 0.2% 20,303 1,737,556.49
61 2,193,780.35 0.2% 2,193,780.35 0.2% 22,159 1,691,425.80
- -------------------------------------------------------------------------------------------------------------------------
4,332,471.65 0.4% 4,332,471.65 0.4% 3,353,189.16
62 2,099,719.87 0.2% 2,099,719.87 0.2% 26,919 1,625,113.24
63 1,451,437.57 0.1% 1,451,437.57 0.1% 24,191 1,123,364.44
64 781,314.21 0.1% 781,314.21 0.1% 21,117 604,711.48
- -------------------------------------------------------------------------------------------------------------------------
65 11,000,000.00 0.9% 11,000,000.00 0.9% 107.40 9,126,195.44
66 10,480,000.00 0.9% 10,480,000.00 0.9% 62,381 9,346,492.62
67 9,846,801.14 0.8% 9,846,801.14 0.8% 112.36 8,276,341.15
68 9,810,000.00 0.8% 9,810,000.00 0.8% 125.57 8,743,288.73
69 9,700,000.00 0.8% 9,700,000.00 0.8% 80,833 8,483,521.33
70 9,087,738.74 0.8% 9,087,738.74 0.8% 79,024 6,980,175.60
71 8,962,068.31 0.8% 8,962,068.31 0.8% 119.13 7,529,397.12
72 8,000,000.00 0.7% 8,000,000.00 0.7% 114.21 7,003,842.98
73 7,549,580.99 0.6% 7,549,580.99 0.6% 55.58 6,347,606.97
74 7,500,000.00 0.6% 7,500,000.00 0.6% 299.60 7,500,000.00
75 7,470,431.18 0.6% 7,470,431.18 0.6% 65.50 6,337,580.43
76 7,214,718.95 0.6% 7,214,718.95 0.6% 154.53 6,117,817.00
77 7,100,000.00 0.6% 7,100,000.00 0.6% 31,416 6,800,419.77
78 7,000,000.00 0.6% 7,000,000.00 0.6% 70.79 5,920,214.62
79 6,800,000.00 0.6% 6,800,000.00 0.6% 47,222 5,638,618.71
80 6,700,000.00 0.6% 6,700,000.00 0.6% 32,843 4,239,142.62
81 6,457,024.84 0.5% 6,457,024.84 0.5% 97.86 5,507,966.98
82 4,388,511.92 0.4% 4,388,511.92 0.4% 236.67 3,706,167.68
83 2,063,610.47 0.2% 2,063,610.47 0.2% 95.60 1,750,110.25
84 5,827,495.87 0.5% 5,827,495.87 0.5% 172.51 4,960,904.89
85 5,825,786.38 0.5% 5,825,786.38 0.5% 168.38 4,907,647.49
86 5,660,000.00 0.5% 5,660,000.00 0.5% 121.85 4,792,596.99
87 5,611,421.77 0.5% 5,611,421.77 0.5% 51.90 4,766,351.70
88 5,576,255.76 0.5% 5,576,255.76 0.5% 127.48 5,204,558.38
89 5,475,004.07 0.5% 5,475,004.07 0.5% 38,021 4,596,165.87
- -------------------------------------------------------------------------------------------------------------------------
5,336,836.95 0.5% 5,336,836.95 0.5% 4,391,675.91
90 2,741,861.19 0.2% 2,741,861.19 0.2% 251.36 2,256,273.90
91 2,594,975.76 0.2% 2,594,975.76 0.2% 237.90 2,135,402.01
- -------------------------------------------------------------------------------------------------------------------------
92 5,291,803.16 0.4% 5,291,803.16 0.4% 99.43 4,538,844.74
93 5,184,187.41 0.4% 5,184,187.41 0.4% 48,002 4,437,013.39
94 5,100,000.00 0.4% 5,100,000.00 0.4% 42,857 5,100,000.00
95 4,963,026.16 0.4% 4,963,026.16 0.4% 110.26 4,243,607.17
96 4,950,296.68 0.4% 4,950,296.68 0.4% 106.17 72,585.82
97 4,844,549.03 0.4% 4,844,549.03 0.4% 79.10 4,151,481.93
98 4,809,396.77 0.4% 4,809,396.77 0.4% 68.97 4,091,306.16
99 4,644,000.00 0.4% 4,644,000.00 0.4% 14,790 3,963,803.61
100 4,328,194.37 0.4% 4,328,194.37 0.4% 207.98 3,744,203.45
101 4,325,513.35 0.4% 4,325,513.35 0.4% 174.52 3,682,044.75
102 4,091,808.73 0.3% 4,091,808.73 0.3% 81.64 3,435,317.44
103 4,088,988.84 0.3% 4,088,988.84 0.3% 60.72 3,297,271.08
104 4,080,598.93 0.3% 4,080,598.93 0.3% 263.09 3,651,597.76
105 3,992,632.88 0.3% 3,992,632.88 0.3% 87.55 3,389,080.46
106 3,982,104.59 0.3% 3,982,104.59 0.3% 86.90 3,559,920.98
107 3,500,000.00 0.3% 3,500,000.00 0.3% 17,157 3,500,000.00
108 3,465,819.23 0.3% 3,465,819.23 0.3% 165.99 2,709,607.94
109 3,272,285.55 0.3% 3,272,285.55 0.3% 64.01 2,841,980.67
110 3,218,186.61 0.3% 3,218,186.61 0.3% 132.44 2,680,396.38
111 2,990,488.39 0.3% 2,990,488.39 0.3% 331.76 2,485,714.98
112 2,860,042.56 0.2% 2,860,042.56 0.2% 55.91 2,231,816.24
113 2,428,475.79 0.2% 2,428,475.79 0.2% 126.13 2,063,936.16
114 2,397,072.92 0.2% 2,397,072.92 0.2% 95.88 1,872,955.18
115 2,337,510.32 0.2% 2,337,510.32 0.2% 25,408 2,098,603.96
20b 3,322,214.51 NAP 3,322,214.51 NAP 9.52 0.00
RELATED
CROSS MORTGAGE
COLLATERALIZED LOAN GROUP
CROSS MORTGAGE LOAN RELATED AGGREGATE
COLLATERALIZED GROUP AGGREGATE (MORTGAGE CUT-OFF DATE
CONTROL (MORTGAGE CUT-OFF DATE LOAN PRINCIPAL BORROWER'S APPRAISED APPRAISAL
NUMBER LOAN GROUP) PRINCIPAL BALANCE (H) GROUP) BALANCE (H) INTEREST VALUE DATE
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
1 No $ 37,839,210 Yes (R1) $ 96,645,655 $ 47,440,000
1a Fee Simple 12,700,000 01/01/04
1b Fee Simple 12,450,000 12/01/03
1c Fee Simple 9,700,000 12/01/03
1d Fee Simple 5,700,000 01/01/04
1e Fee Simple 2,950,000 01/01/04
1f Fee Simple 2,300,000 01/01/04
1g Fee Simple 1,640,000 01/01/04
- ------------------------------------------------------------------------------------------------------------------------------------
2 No 34,152,200 Yes (R1) 96,645,655 45,670,000
2a Fee Simple 15,600,000 01/01/04
2b Fee Simple 9,750,000 08/01/03
2c Fee Simple 9,400,000 01/01/04
2d Fee Simple 4,750,000 12/01/03
2e Fee Simple 4,050,000 01/01/04
2f Fee Simple 1,240,000 01/01/04
2g Fee Simple 880,000 01/01/04
- ------------------------------------------------------------------------------------------------------------------------------------
3 No 24,654,246 Yes (R1) 96,645,655 36,685,000
3a Fee Simple 18,800,000 08/01/03
3b Fee Simple 5,200,000 12/01/03
3c Fee Simple 5,175,000 08/01/03
3d Fee Simple 3,600,000 01/01/04
3e Fee Simple 1,700,000 01/01/04
3f Fee Simple 1,250,000 01/01/04
3g Fee Simple 960,000 01/01/04
- ------------------------------------------------------------------------------------------------------------------------------------
4 No 93,000,000 No 93,000,000 Fee Simple 160,000,000 02/27/04
- ------------------------------------------------------------------------------------------------------------------------------------
Yes (C1) 75,000,000 Yes (R2) 75,000,000
5 Yes (C1) 75,000,000 Yes (R2) 75,000,000 Fee Simple 4,050,000 03/31/04
6 Yes (C1) 75,000,000 Yes (R2) 75,000,000 Fee Simple 3,190,000 03/24/04
7 Yes (C1) 75,000,000 Yes (R2) 75,000,000 Fee Simple 2,020,000 03/31/04
8 Yes (C1) 75,000,000 Yes (R2) 75,000,000 Fee Simple 4,530,000 03/31/04
9 Yes (C1) 75,000,000 Yes (R2) 75,000,000 Fee Simple 7,400,000 03/22/04
10 Yes (C1) 75,000,000 Yes (R2) 75,000,000 Fee Simple 11,000,000 03/31/04
11 Yes (C1) 75,000,000 Yes (R2) 75,000,000 Fee Simple 4,170,000 03/31/04
12 Yes (C1) 75,000,000 Yes (R2) 75,000,000 Fee Simple 8,700,000 03/22/04
13 Yes (C1) 75,000,000 Yes (R2) 75,000,000 Fee Simple 7,000,000 03/22/04
14 Yes (C1) 75,000,000 Yes (R2) 75,000,000 Fee Simple 5,900,000 03/22/04
15 Yes (C1) 75,000,000 Yes (R2) 75,000,000 Fee Simple 14,800,000 03/18/04
16 Yes (C1) 75,000,000 Yes (R2) 75,000,000 Fee Simple 3,820,000 03/31/04
17 Yes (C1) 75,000,000 Yes (R2) 75,000,000 Fee Simple 8,450,000 03/24/04
18 Yes (C1) 75,000,000 Yes (R2) 75,000,000 Fee Simple 5,640,000 03/31/04
19 Yes (C1) 75,000,000 Yes (R2) 75,000,000 Fee Simple 5,460,000 03/31/04
- ------------------------------------------------------------------------------------------------------------------------------------
20 No 62,322,215 No 62,322,215 Fee Simple 95,000,000 02/04/04
21 No 57,000,000 No 57,000,000 Fee Simple 74,300,000 02/24/04
22 No 35,500,000 No 35,500,000 Fee Simple 42,800,000 04/15/04
- ------------------------------------------------------------------------------------------------------------------------------------
Yes (C2) 34,700,000 Yes (R3) 34,700,000
23 Yes (C2) 34,700,000 Yes (R3) 34,700,000 Fee Simple 33,700,000 02/25/04
24 Yes (C2) 34,700,000 Yes (R3) 34,700,000 Fee Simple 10,100,000 03/01/04
- ------------------------------------------------------------------------------------------------------------------------------------
25 No 32,670,000 No 32,670,000 Fee Simple 45,000,000 02/12/04
26 No 28,355,938 No 28,355,938 Fee Simple 37,500,000 07/22/03
27 No 26,864,655 No 26,864,655 Fee Simple 37,000,000 11/24/03
- ------------------------------------------------------------------------------------------------------------------------------------
Yes (C6) 5,025,373 Yes (R4) 24,734,838
28 Yes (C6) 5,025,373 Yes (R4) 24,734,838 Fee Simple 3,270,000 11/25/03
29 Yes (C6) 5,025,373 Yes (R4) 24,734,838 Fee Simple 3,110,000 11/25/03
- ------------------------------------------------------------------------------------------------------------------------------------
30 No 11,447,417 Yes (R4) 24,734,838 Fee Simple 14,500,000 11/04/03
31 No 8,262,049 Yes (R4) 24,734,838 Fee Simple 10,500,000 11/06/03
- ------------------------------------------------------------------------------------------------------------------------------------
Yes (C3) 23,397,503 Yes (R5) 23,397,503
32 Yes (C3) 23,397,503 Yes (R5) 23,397,503 Fee Simple 5,800,000 08/04/03
33 Yes (C3) 23,397,503 Yes (R5) 23,397,503 Fee Simple 6,350,000 08/05/03
34 Yes (C3) 23,397,503 Yes (R5) 23,397,503 Fee Simple 5,500,000 08/05/03
35 Yes (C3) 23,397,503 Yes (R5) 23,397,503 Fee Simple 4,750,000 08/05/03
36 Yes (C3) 23,397,503 Yes (R5) 23,397,503 Fee Simple 4,550,000 08/05/03
37 Yes (C3) 23,397,503 Yes (R5) 23,397,503 Fee Simple 3,475,000 08/04/03
38 Yes (C3) 23,397,503 Yes (R5) 23,397,503 Fee Simple 3,000,000 08/05/03
- ------------------------------------------------------------------------------------------------------------------------------------
39 No 23,067,933 No 23,067,933 Fee in part and Leasehold in part 38,000,000 04/09/04
40 No 21,914,934 No 21,914,934 Fee Simple 30,000,000 12/15/03
41 No 20,941,941 No 20,941,941 Fee Simple 33,000,000 12/30/03
42 No 19,161,641 No 19,161,641 Fee Simple 26,300,000 01/12/04
43 No 13,629,000 Yes (R6) 18,800,000 Fee Simple 17,100,000 08/27/03
44 No 5,171,000 Yes (R6) 18,800,000 Leasehold 6,500,000 08/27/03
45 No 18,786,388 No 18,786,388 Fee Simple 28,600,000 07/11/03
46 No 11,988,264 Yes (R7) 17,582,796 Fee Simple 16,100,000 02/21/04
47 No 5,594,533 Yes (R7) 17,582,796 Fee Simple 7,600,000 02/21/04
48 No 17,500,000 No 17,500,000 Fee Simple 22,300,000 04/01/05
49 No 17,460,861 No 17,460,861 Fee Simple 22,000,000 03/06/04
50 No 15,689,288 No 15,689,288 Fee Simple 19,900,000 09/11/03
51 No 15,000,000 No 15,000,000 Fee Simple 20,150,000 03/04/04
52 No 14,785,325 No 14,785,325 Fee Simple 19,300,000 04/01/04
53 No 14,578,324 No 14,578,324 Fee Simple 19,500,000 01/08/04
54 No 14,060,183 No 14,060,183 Fee Simple 17,900,000 07/18/03
55 No 12,960,663 No 12,960,663 Fee Simple 20,000,000 01/01/04
56 No 12,935,059 No 12,935,059 Fee Simple 18,500,000 11/05/03
57 No 12,190,377 No 12,190,377 Fee Simple 15,800,000 04/15/04
58 No 11,964,176 No 11,964,176 Leasehold 16,600,000 12/30/03
- ------------------------------------------------------------------------------------------------------------------------------------
Yes (C4) 6,925,366 Yes (R8) 11,257,837
59 Yes (C4) 6,925,366 Yes (R8) 11,257,837 Fee Simple 3,275,000 09/08/03
60 Yes (C4) 6,925,366 Yes (R8) 11,257,837 Fee Simple 2,950,000 09/08/03
61 Yes (C4) 6,925,366 Yes (R8) 11,257,837 Fee Simple 2,975,000 09/08/03
- ------------------------------------------------------------------------------------------------------------------------------------
Yes (C7) 4,332,472 Yes (R8) 11,257,837
62 Yes (C7) 4,332,472 Yes (R8) 11,257,837 Fee Simple 2,820,000 09/08/03
63 Yes (C7) 4,332,472 Yes (R8) 11,257,837 Fee Simple 1,950,000 09/08/03
64 Yes (C7) 4,332,472 Yes (R8) 11,257,837 Fee Simple 1,050,000 09/08/03
- ------------------------------------------------------------------------------------------------------------------------------------
65 No 11,000,000 No 11,000,000 Fee Simple 13,750,000 03/18/04
66 No 10,480,000 No 10,480,000 Fee Simple 13,100,000 02/25/04
67 No 9,846,801 No 9,846,801 Fee in part and Leasehold in part 16,800,000 10/16/03
68 No 9,810,000 No 9,810,000 Fee Simple 14,500,000 01/15/04
69 No 9,700,000 No 9,700,000 Fee Simple 13,700,000 01/06/04
70 No 9,087,739 No 9,087,739 Leasehold 13,400,000 03/01/04
71 No 8,962,068 No 8,962,068 Fee Simple 11,250,000 11/17/03
72 No 8,000,000 No 8,000,000 Fee Simple 13,800,000 12/19/03
73 No 7,549,581 No 7,549,581 Fee Simple 10,450,000 05/08/03
74 No 7,500,000 No 7,500,000 Fee Simple 11,580,000 12/08/03
75 No 7,470,431 No 7,470,431 Fee Simple 10,800,000 10/02/03
76 No 7,214,719 No 7,214,719 Fee Simple 9,660,000 10/23/03
77 No 7,100,000 No 7,100,000 Fee Simple 8,900,000 12/10/03
78 No 7,000,000 No 7,000,000 Fee Simple 9,300,000 03/24/04
79 No 6,800,000 No 6,800,000 Fee Simple 8,600,000 05/21/03
80 No 6,700,000 No 6,700,000 Fee Simple 8,800,000 03/26/04
81 No 6,457,025 No 6,457,025 Fee Simple 8,500,000 09/04/03
82 No 4,388,512 Yes (R9) 6,452,122 Fee Simple 5,650,000 08/01/03
83 No 2,063,610 Yes (R9) 6,452,122 Fee Simple 3,000,000 08/01/03
84 No 5,827,496 No 5,827,496 Fee Simple 7,830,000 12/16/03
85 No 5,825,786 No 5,825,786 Fee Simple 7,700,000 11/19/03
86 No 5,660,000 No 5,660,000 Fee Simple 7,100,000 03/24/04
87 No 5,611,422 No 5,611,422 Fee Simple 7,200,000 08/14/03
88 No 5,576,256 No 5,576,256 Fee Simple 7,100,000 10/01/03
89 No 5,475,004 No 5,475,004 Fee Simple 6,900,000 01/29/04
- ------------------------------------------------------------------------------------------------------------------------------------
Yes (C5) 5,336,837 Yes (R10) 5,336,837
90 Yes (C5) 5,336,837 Yes (R10) 5,336,837 Fee Simple 3,560,000 01/10/03
91 Yes (C5) 5,336,837 Yes (R10) 5,336,837 Fee Simple 3,400,000 01/10/03
- ------------------------------------------------------------------------------------------------------------------------------------
92 No 5,291,803 No 5,291,803 Fee Simple 7,500,000 08/01/03
93 No 5,184,187 No 5,184,187 Fee Simple 6,525,000 02/04/04
94 No 5,100,000 No 5,100,000 Fee Simple 6,450,000 03/05/04
95 No 4,963,026 No 4,963,026 Fee Simple 6,750,000 07/03/03
96 No 4,950,297 No 4,950,297 Fee Simple 8,100,000 11/01/03
97 No 4,844,549 No 4,844,549 Fee Simple 6,250,000 07/18/03
98 No 4,809,397 No 4,809,397 Fee Simple 6,500,000 01/17/04
99 No 4,644,000 No 4,644,000 Fee Simple 9,650,000 04/05/04
100 No 4,328,194 No 4,328,194 Fee Simple 6,000,000 01/01/04
101 No 4,325,513 No 4,325,513 Fee Simple 5,800,000 05/01/03
102 No 4,091,809 No 4,091,809 Fee Simple 5,800,000 11/17/03
103 No 4,088,989 No 4,088,989 Fee in part and Leasehold in part 5,325,000 03/01/04
104 No 4,080,599 No 4,080,599 Fee Simple 6,210,000 01/07/04
105 No 3,992,633 No 3,992,633 Fee Simple 5,200,000 10/30/03
106 No 3,982,105 No 3,982,105 Fee Simple 5,000,000 11/18/03
107 No 3,500,000 No 3,500,000 Fee Simple 4,800,000 01/15/04
108 No 3,465,819 No 3,465,819 Fee Simple 4,600,000 07/25/03
109 No 3,272,286 No 3,272,286 Fee Simple 4,590,000 10/07/03
110 No 3,218,187 No 3,218,187 Leasehold 4,500,000 02/25/04
111 No 2,990,488 No 2,990,488 Fee Simple 4,000,000 01/26/04
112 No 2,860,043 No 2,860,043 Fee Simple 3,650,000 09/20/03
113 No 2,428,476 No 2,428,476 Fee Simple 3,100,000 12/16/03
114 No 2,397,073 No 2,397,073 Fee Simple 3,250,000 12/09/03
115 No 2,337,510 No 2,337,510 Fee Simple 3,010,000 06/19/03
20b No 3,322,215 No 3,322,215 Fee Simple 95,000,000 02/04/04
MATURITY
CUT-OFF DATE / ARD NET INTEREST
CONTROL DATE LTV LTV RATIO ORIGINAL MORTGAGE ADMINISTRATIVE MORTGAGE RATE ACCRUAL
NUMBER RATIO (D) (D) BALANCE RATE FEE RATE RATE TYPE METHOD
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
1 79.76% 66.89% $ 37,952,000 5.5300% 0.0419% 5.4881% Fixed Actual/360
1a
1b
1c
1d
1e
1f
1g
- --------------------------------------------------------------------------------------------------------------------------
2 74.78% 62.71% 34,254,000 5.5300% 0.0419% 5.4881% Fixed Actual/360
2a
2b
2c
2d
2e
2f
2g
- --------------------------------------------------------------------------------------------------------------------------
3 67.21% 62.23% 24,736,000 5.0500% 0.0419% 5.0081% Fixed Actual/360
3a
3b
3c
3d
3e
3f
3g
- --------------------------------------------------------------------------------------------------------------------------
4 58.13% 48.54% 93,000,000 4.6300% 0.0419% 4.5881% Fixed Actual/360
- --------------------------------------------------------------------------------------------------------------------------
75,000,000
5 78.02% 72.74% 3,240,000 4.3820% 0.0519% 4.3301% Fixed Actual/360
6 78.02% 72.74% 2,552,000 4.3820% 0.0519% 4.3301% Fixed Actual/360
7 78.02% 72.74% 1,616,000 4.3820% 0.0519% 4.3301% Fixed Actual/360
8 78.02% 72.74% 3,369,000 4.3820% 0.0519% 4.3301% Fixed Actual/360
9 78.02% 72.74% 5,920,000 4.3820% 0.0519% 4.3301% Fixed Actual/360
10 78.02% 72.74% 8,760,000 4.3820% 0.0519% 4.3301% Fixed Actual/360
11 78.02% 72.74% 3,280,000 4.3820% 0.0519% 4.3301% Fixed Actual/360
12 78.02% 72.74% 6,960,000 4.3820% 0.0519% 4.3301% Fixed Actual/360
13 78.02% 72.74% 5,196,000 4.3820% 0.0519% 4.3301% Fixed Actual/360
14 78.02% 72.74% 3,886,000 4.3820% 0.0519% 4.3301% Fixed Actual/360
15 78.02% 72.74% 11,840,000 4.3820% 0.0519% 4.3301% Fixed Actual/360
16 78.02% 72.74% 3,056,000 4.3820% 0.0519% 4.3301% Fixed Actual/360
17 78.02% 72.74% 6,760,000 4.3820% 0.0519% 4.3301% Fixed Actual/360
18 78.02% 72.74% 4,512,000 4.3820% 0.0519% 4.3301% Fixed Actual/360
19 78.02% 72.74% 4,053,000 4.3820% 0.0519% 4.3301% Fixed Actual/360
- --------------------------------------------------------------------------------------------------------------------------
20 65.60% (a) 59.11% 62,500,000 (a) 4.2765% 0.0419% 4.2346% Fixed Actual/360
21 76.72% 66.38% 57,000,000 5.0000% 0.0419% 4.9581% Fixed Actual/360
22 76.84% 64.51% 35,500,000 6.1200% 0.0419% 6.0781% Fixed 30/360
- --------------------------------------------------------------------------------------------------------------------------
34,700,000
23 79.22% 67.61% 26,960,000 5.3800% 0.0719% 5.3081% Fixed Actual/360
24 79.22% 67.61% 7,740,000 5.3800% 0.0719% 5.3081% Fixed Actual/360
- --------------------------------------------------------------------------------------------------------------------------
25 72.60% 63.40% 32,670,000 5.3700% 0.0419% 5.3281% Fixed Actual/360
26 75.62% 64.71% 28,500,000 5.5500% 0.0419% 5.5081% Fixed Actual/360
27 72.61% 61.32% 27,000,000 5.6900% 0.0419% 5.6481% Fixed Actual/360
- --------------------------------------------------------------------------------------------------------------------------
5,050,000
28 78.77% 66.77% 2,590,000 5.8200% 0.1019% 5.7181% Fixed Actual/360
29 78.77% 66.77% 2,460,000 5.8200% 0.1019% 5.7181% Fixed Actual/360
- --------------------------------------------------------------------------------------------------------------------------
30 78.95% 65.86% 11,500,000 6.1200% 0.1019% 6.0181% Fixed Actual/360
31 78.69% 65.64% 8,300,000 6.1200% 0.1019% 6.0181% Fixed Actual/360
- --------------------------------------------------------------------------------------------------------------------------
23,550,000
32 70.00% 65.26% 4,350,000 5.2800% 0.0419% 5.2381% Fixed Actual/360
33 70.00% 65.26% 4,073,000 5.2800% 0.0419% 5.2381% Fixed Actual/360
34 70.00% 65.26% 4,003,000 5.2800% 0.0419% 5.2381% Fixed Actual/360
35 70.00% 65.26% 3,500,000 5.2800% 0.0419% 5.2381% Fixed Actual/360
36 70.00% 65.26% 3,412,000 5.2800% 0.0419% 5.2381% Fixed Actual/360
37 70.00% 65.26% 2,310,000 5.2800% 0.0419% 5.2381% Fixed Actual/360
38 70.00% 65.26% 1,902,000 5.2800% 0.0419% 5.2381% Fixed Actual/360
- --------------------------------------------------------------------------------------------------------------------------
39 60.71% 51.58% 23,100,000 5.5630% 0.0419% 5.5211% Fixed Actual/360
40 73.05% 62.14% 22,000,000 5.9750% 0.0419% 5.9331% Fixed Actual/360
41 63.46% 49.14% 21,000,000 5.9200% 0.0419% 5.8781% Fixed Actual/360
42 72.86% 61.17% 19,200,000 5.6000% 0.0419% 5.5581% Fixed Actual/360
43 79.70% 73.56% 13,629,000 5.0500% 0.1019% 4.9481% Fixed Actual/360
44 79.55% 73.42% 5,171,000 5.0500% 0.1019% 4.9481% Fixed Actual/360
45 65.69% 51.30% 19,000,000 5.9100% 0.0419% 5.8681% Fixed Actual/360
46 74.46% 61.96% 12,000,000 5.3465% 0.0419% 5.3046% Fixed Actual/360
47 73.61% 61.27% 5,600,000 5.3538% 0.0419% 5.3119% Fixed Actual/360
48 78.48% 67.77% 17,500,000 4.9200% 0.0419% 4.8781% Fixed Actual/360
49 79.37% 65.54% 17,500,000 5.0700% 0.0419% 5.0281% Fixed Actual/360
50 78.84% 67.10% 15,750,000 5.9900% 0.1219% 5.8681% Fixed Actual/360
51 74.44% 68.09% 15,000,000 5.6500% 0.0419% 5.6081% Fixed Actual/360
52 76.61% 60.09% 14,800,000 5.2900% 0.0919% 5.1981% Fixed Actual/360
53 74.76% 69.39% 14,625,000 5.2100% 0.0919% 5.1181% Fixed Actual/360
54 78.55% 66.43% 14,160,000 5.6700% 0.0419% 5.6281% Fixed Actual/360
55 64.80% 54.22% 13,000,000 5.4500% 0.0419% 5.4081% Fixed Actual/360
56 69.92% 60.40% 13,000,000 6.4600% 0.0419% 6.4181% Fixed Actual/360
57 77.15% 65.84% 12,200,000 6.1860% 0.0419% 6.1441% Fixed Actual/360
58 72.07% 60.41% 12,000,000 5.5100% 0.0419% 5.4681% Fixed Actual/360
- --------------------------------------------------------------------------------------------------------------------------
6,945,000
59 75.28% 58.04% 2,485,000 5.7900% 0.1019% 5.6881% Fixed Actual/360
60 75.28% 58.04% 2,260,000 5.7900% 0.1019% 5.6881% Fixed Actual/360
61 75.28% 58.04% 2,200,000 5.7900% 0.1019% 5.6881% Fixed Actual/360
- --------------------------------------------------------------------------------------------------------------------------
4,364,000
62 74.44% 57.61% 2,115,000 5.7700% 0.1019% 5.6681% Fixed Actual/360
63 74.44% 57.61% 1,462,000 5.7700% 0.1019% 5.6681% Fixed Actual/360
64 74.44% 57.61% 787,000 5.7700% 0.1019% 5.6681% Fixed Actual/360
- --------------------------------------------------------------------------------------------------------------------------
65 80.00% 66.37% 11,000,000 6.0950% 0.0419% 6.0531% Fixed Actual/360
66 80.00% 71.35% 10,480,000 5.3400% 0.0419% 5.2981% Fixed Actual/360
67 58.61% 49.26% 10,000,000 5.7650% 0.0419% 5.7231% Fixed Actual/360
68 67.66% 60.30% 9,810,000 5.3100% 0.1019% 5.2081% Fixed Actual/360
69 70.80% 61.92% 9,700,000 5.4400% 0.0419% 5.3981% Fixed Actual/360
70 67.82% 52.09% 9,100,000 5.7200% 0.0419% 5.6781% Fixed Actual/360
71 79.66% 66.93% 9,000,000 5.5500% 0.1019% 5.4481% Fixed Actual/360
72 57.97% 50.75% 8,000,000 5.4000% 0.1019% 5.2981% Fixed Actual/360
73 72.24% 60.74% 7,650,000 5.2800% 0.0419% 5.2381% Fixed Actual/360
74 64.77% 64.77% 7,500,000 5.6800% 0.0819% 5.5981% Fixed Actual/360
75 69.17% 58.68% 7,500,000 5.8800% 0.1019% 5.7781% Fixed Actual/360
76 74.69% 63.33% 7,250,000 5.8300% 0.0419% 5.7881% Fixed Actual/360
77 79.78% 76.41% 7,100,000 5.2500% 0.0419% 5.2081% Fixed Actual/360
78 75.27% 63.66% 7,000,000 5.9100% 0.0419% 5.8681% Fixed Actual/360
79 79.07% 65.57% 6,800,000 5.4400% 0.0419% 5.3981% Fixed Actual/360
80 76.14% 48.17% 6,700,000 5.1000% 0.0419% 5.0581% Fixed Actual/360
81 75.97% 64.80% 6,500,000 5.9700% 0.0419% 5.9281% Fixed Actual/360
82 77.67% 65.60% 4,420,000 5.6200% 0.0419% 5.5781% Fixed Actual/360
83 68.79% 58.34% 2,080,000 5.7300% 0.0419% 5.6881% Fixed Actual/360
84 74.43% 63.36% 5,850,000 6.0000% 0.0819% 5.9181% Fixed Actual/360
85 75.66% 63.74% 5,850,000 5.6400% 0.0419% 5.5981% Fixed Actual/360
86 79.72% 67.50% 5,660,000 5.9500% 0.0419% 5.9081% Fixed Actual/360
87 77.94% 66.20% 5,650,000 5.8200% 0.0419% 5.7781% Fixed Actual/360
88 78.54% 73.30% 5,600,000 5.5200% 0.0419% 5.4781% Fixed Actual/360
89 79.35% 66.61% 5,480,000 5.6300% 0.0819% 5.5481% Fixed Actual/360
- --------------------------------------------------------------------------------------------------------------------------
5,450,000
90 76.68% 63.10% 2,800,000 6.0800% 0.0719% 6.0081% Fixed Actual/360
91 76.68% 63.10% 2,650,000 6.0800% 0.0719% 6.0081% Fixed Actual/360
- --------------------------------------------------------------------------------------------------------------------------
92 70.56% 60.52% 5,320,000 6.2000% 0.0419% 6.1581% Fixed Actual/360
93 79.45% 68.00% 5,195,000 5.4100% 0.0819% 5.3281% Fixed Actual/360
94 79.07% 79.07% 5,100,000 4.3000% 0.0419% 4.2581% Fixed Actual/360
95 73.53% 62.87% 5,000,000 6.0200% 0.0419% 5.9781% Fixed Actual/360
96 61.11% 0.90% 5,000,000 6.1000% 0.0419% 6.0581% Fixed Actual/360
97 77.51% 66.42% 4,880,000 6.1000% 0.0419% 6.0581% Fixed Actual/360
98 73.99% 62.94% 4,825,000 5.1500% 0.0419% 5.1081% Fixed Actual/360
99 48.12% 41.08% 4,644,000 5.3600% 0.0419% 5.3181% Fixed Actual/360
100 72.14% 62.40% 4,350,000 5.6900% 0.1019% 5.5881% Fixed Actual/360
101 74.58% 63.48% 4,350,000 5.9300% 0.0419% 5.8881% Fixed Actual/360
102 70.55% 59.23% 4,100,000 5.6000% 0.0419% 5.5581% Fixed Actual/360
103 76.79% 61.92% 4,100,000 5.9700% 0.1019% 5.8681% Fixed Actual/360
104 65.71% 58.80% 4,100,000 5.0600% 0.0419% 5.0181% Fixed Actual/360
105 76.78% 65.17% 4,000,000 5.9700% 0.0419% 5.9281% Fixed Actual/360
106 79.64% 71.20% 4,000,000 5.2500% 0.0719% 5.1781% Fixed Actual/360
107 72.92% 72.92% 3,500,000 4.7000% 0.0419% 4.6581% Fixed Actual/360
108 75.34% 58.90% 3,500,000 5.9900% 0.0419% 5.9481% Fixed Actual/360
109 71.29% 61.92% 3,275,000 6.0000% 0.0419% 5.9581% Fixed Actual/360
110 71.52% 59.56% 3,225,000 5.3400% 0.0419% 5.2981% Fixed Actual/360
111 74.76% 62.14% 3,000,000 5.2400% 0.0419% 5.1981% Fixed Actual/360
112 78.36% 61.15% 2,880,000 6.0200% 0.0419% 5.9781% Fixed Actual/360
113 78.34% 66.58% 2,435,000 5.9800% 0.0719% 5.9081% Fixed Actual/360
114 73.76% 57.63% 2,400,000 6.2300% 0.0419% 6.1881% Fixed Actual/360
115 77.66% 69.72% 2,350,000 5.4100% 0.0419% 5.3681% Fixed Actual/360
20b 69.47%(k) 0.00% 3,500,000 4.2765% 0.0419% 4.2346% Fixed Actual/360
ORIGINAL
TERM TO INTEREST
FIRST SCHEDULED MONTHLY DEBT MATURITY ONLY
CONTROL NOTE PAYMENT GRACE MATURITY SERVICE / ARD PERIOD
NUMBER LOAN TYPE DATE DATE PERIOD DATE/ ARD PAYMENT (MONTHS) (MONTHS)
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
1 Balloon 02/18/04 04/01/04 0 03/01/14 $ 216,202.17 120 0
1a
1b
1c
1d
1e
1f
1g
- --------------------------------------------------------------------------------------------------------------------------
2 Balloon 02/18/04 04/01/04 0 03/01/14 195,135.68 120 0
2a
2b
2c
2d
2e
2f
2g
- --------------------------------------------------------------------------------------------------------------------------
3 Balloon 02/18/04 04/01/04 0 03/01/09 133,545.10 60 0
3a
3b
3c
3d
3e
3f
3g
- --------------------------------------------------------------------------------------------------------------------------
4 Partial IO/Balloon 04/29/04 06/11/04 0 05/11/14 478,428.09 120 12
- --------------------------------------------------------------------------------------------------------------------------
5 Partial IO/ARD 05/05/04 06/11/04 0 05/11/09 16,190.22 60 12
6 Partial IO/ARD 05/05/04 06/11/04 0 05/11/09 12,752.30 60 12
7 Partial IO/ARD 05/05/04 06/11/04 0 05/11/09 8,075.12 60 12
8 Partial IO/ARD 05/05/04 06/11/04 0 05/11/09 16,834.83 60 12
9 Partial IO/ARD 05/05/04 06/11/04 0 05/11/09 29,582.14 60 12
10 Partial IO/ARD 05/05/04 06/11/04 0 05/11/09 43,773.56 60 12
11 Partial IO/ARD 05/05/04 06/11/04 0 05/11/09 16,390.10 60 12
12 Partial IO/ARD 05/05/04 06/11/04 0 05/11/09 34,779.00 60 12
13 Partial IO/ARD 05/05/04 06/11/04 0 05/11/09 25,964.32 60 12
14 Partial IO/ARD 05/05/04 06/11/04 0 05/11/09 19,418.27 60 12
15 Partial IO/ARD 05/05/04 06/11/04 0 05/11/09 59,164.27 60 12
16 Partial IO/ARD 05/05/04 06/11/04 0 05/11/09 15,270.78 60 12
17 Partial IO/ARD 05/05/04 06/11/04 0 05/11/09 33,779.60 60 12
18 Partial IO/ARD 05/05/04 06/11/04 0 05/11/09 22,546.38 60 12
19 Partial IO/ARD 05/05/04 06/11/04 0 05/11/09 20,252.77 60 12
- --------------------------------------------------------------------------------------------------------------------------
20 Balloon 02/11/04 04/01/04 2 03/01/10 358,527.18 (a) 72 0
21 Partial IO/Balloon 03/24/04 05/11/04 0 04/11/14 305,988.33 120 24
22 Balloon 05/21/04 07/11/04 0 06/11/14 215,586.97 120 0
- --------------------------------------------------------------------------------------------------------------------------
23 Partial IO/Balloon 04/14/04 06/11/04 0 05/11/14 151,052.29 120 12
24 Partial IO/Balloon 04/14/04 06/11/04 0 05/11/14 43,365.90 120 12
- --------------------------------------------------------------------------------------------------------------------------
25 Partial IO/Balloon 04/15/04 06/11/04 0 05/11/14 182,840.78 120 24
26 Balloon 10/29/03 12/01/03 0 11/01/13 165,859.43 (b) 120 0
27 Balloon 12/19/03 02/01/04 5 01/01/14 156,537.06 120 0
- --------------------------------------------------------------------------------------------------------------------------
28 Balloon 12/30/03 02/01/04 5 01/01/14 15,229.91 120 0
29 Balloon 12/30/03 02/01/04 5 01/01/14 14,465.47 120 0
- --------------------------------------------------------------------------------------------------------------------------
30 ARD 12/15/03 02/01/04 5 01/01/15 69,838.03 132 0
31 ARD 12/15/03 02/01/04 5 01/01/15 50,404.84 132 0
- --------------------------------------------------------------------------------------------------------------------------
32 Balloon 11/04/03 01/01/04 5 12/01/08 24,101.75 60 0
33 Balloon 11/04/03 01/01/04 5 12/01/08 22,567.00 60 0
34 Balloon 11/04/03 01/01/04 5 12/01/08 22,179.15 60 0
35 Balloon 11/04/03 01/01/04 5 12/01/08 19,392.22 60 0
36 Balloon 11/04/03 01/01/04 5 12/01/08 18,904.64 60 0
37 Balloon 11/04/03 01/01/04 5 12/01/08 12,798.86 60 0
38 Balloon 11/04/03 01/01/04 5 12/01/08 10,538.28 60 0
- --------------------------------------------------------------------------------------------------------------------------
39 Balloon 04/20/04 06/11/04 0 05/11/11 142,724.62 84 0
40 Balloon 01/07/04 03/01/04 5 02/01/14 131,547.72 120 0
41 Balloon 03/30/04 05/11/04 0 04/11/14 134,278.21 120 0
42 Balloon 03/22/04 05/11/04 0 04/11/14 110,223.16 120 0
43 Partial IO/Balloon 10/31/03 12/01/03 5 11/01/10 73,580.46 84 24
44 Partial IO/Balloon 10/31/03 12/01/03 5 11/01/10 27,917.28 84 24
45 Balloon 09/18/03 11/09/03 0 10/09/13 121,374.11 120 0
46 Balloon 04/29/04 06/01/04 5 05/01/14 66,983.20 120 0
47 Balloon 04/29/04 06/01/04 5 05/01/14 31,284.56 120 0
48 Partial IO/ARD 05/17/04 07/11/04 0 06/11/14 93,090.03 120 24
49 ARD 04/08/04 05/11/04 0 04/11/14 94,693.87 120 0
50 Balloon 01/06/04 03/01/04 5 02/01/14 94,327.97 120 0
51 Partial IO/ARD 04/07/04 05/11/04 0 04/11/14 86,585.37 120 48
52 Balloon 04/30/04 06/11/04 0 05/11/16 82,093.20 144 0
53 Balloon 02/06/04 04/01/04 5 03/01/09 80,397.84 60 0
54 Balloon 10/15/03 12/01/03 5 11/01/13 81,915.70 120 0
55 Balloon 02/18/04 04/01/04 5 03/01/14 73,405.27 120 0
56 Balloon 11/26/03 01/01/04 5 12/01/13 81,827.16 120 0
57 Balloon 04/30/04 06/01/04 5 05/01/14 74,610.42 120 0
58 Balloon 03/11/04 04/11/04 0 03/11/14 68,209.99 120 0
- --------------------------------------------------------------------------------------------------------------------------
59 Balloon 04/08/04 05/11/04 0 04/11/14 15,693.42 120 0
60 Balloon 04/08/04 05/11/04 0 04/11/14 14,272.48 120 0
61 Balloon 04/08/04 05/11/04 0 04/11/14 13,893.57 120 0
- --------------------------------------------------------------------------------------------------------------------------
62 Balloon 12/29/03 02/01/04 5 01/01/14 13,331.17 120 0
63 Balloon 12/29/03 02/01/04 5 01/01/14 9,215.21 120 0
64 Balloon 12/29/03 02/01/04 5 01/01/14 4,960.58 120 0
- --------------------------------------------------------------------------------------------------------------------------
65 Balloon 05/10/04 07/01/04 5 06/01/15 66,623.90 132 0
66 Partial IO/ARD 04/19/04 06/11/04 0 05/11/14 58,456.52 120 36
67 Balloon 11/04/03 12/09/03 0 11/09/13 58,452.61 (c) 120 0
68 Partial IO/Balloon 02/12/04 04/01/04 5 03/01/13 54,536.32 108 24
69 Partial IO/ARD 02/05/04 03/11/04 0 02/11/14 54,710.93 120 24
70 ARD 05/10/04 06/11/04 0 05/11/14 57,083.82 120 0
71 Balloon 01/22/04 03/01/04 5 02/01/14 51,383.70 120 0
72 Partial IO/Balloon 02/03/04 04/01/04 5 03/01/14 44,922.46 120 25
73 ARD 05/29/03 07/01/03 5 06/01/13 42,385.84 120 0
74 Interest Only 02/19/04 04/01/04 5 03/01/13 36,683.33 108 108
75 Balloon 01/07/04 03/01/04 5 02/01/14 44,389.30 120 0
76 Balloon 12/24/03 02/01/04 5 01/01/14 42,678.20 120 0
77 Partial IO/Balloon 01/15/04 03/01/04 5 02/01/09 39,206.46 60 24
78 Balloon 05/12/04 07/11/04 0 06/11/14 41,564.36 120 0
79 Partial IO/Balloon 08/13/03 10/01/03 5 09/01/13 40,922.76 120 24
80 Balloon TBD 07/01/04 5 06/01/14 44,587.99 120 0
81 Balloon 10/15/03 12/01/03 5 11/01/13 38,845.50 120 0
82 Balloon 10/08/03 12/01/03 5 11/01/13 25,430.06 120 0
83 Balloon 09/17/03 11/01/03 5 10/01/13 12,111.90 120 0
84 Balloon 01/14/04 03/01/04 5 02/01/14 35,073.71 120 0
85 Balloon 01/20/04 03/01/04 5 02/01/14 33,731.32 120 0
86 Balloon 05/14/04 07/11/04 0 06/11/14 33,752.83 120 0
87 Balloon 10/31/03 12/01/03 5 11/01/13 33,223.54 120 0
88 Balloon 01/07/04 03/01/04 5 02/01/09 31,866.49 60 0
89 Balloon 04/12/04 06/11/04 0 05/11/14 31,563.27 120 0
- --------------------------------------------------------------------------------------------------------------------------
90 Balloon 02/10/03 04/01/03 5 03/01/12 18,177.61 108 0
91 Balloon 02/10/03 04/01/03 5 03/01/12 17,203.81 108 0
- --------------------------------------------------------------------------------------------------------------------------
92 Balloon 11/10/03 01/01/04 5 12/01/13 32,583.35 120 0
93 Balloon 03/31/04 05/11/04 0 04/11/13 29,203.96 108 0
94 Interest Only 03/31/04 05/11/04 0 04/11/09 18,884.17 60 60
95 Balloon 09/10/03 11/01/03 5 10/01/13 30,041.85 120 0
96 Fully Amortizing 02/20/04 04/01/04 5 03/01/19 42,463.45 180 0
97 Balloon 09/12/03 11/01/03 5 10/01/13 29,572.55 120 0
98 Balloon 03/03/04 04/11/04 0 03/11/13 26,345.77 108 0
99 Partial IO/Balloon 04/20/04 06/01/04 5 05/01/14 26,720.63 120 24
100 Balloon 12/30/03 02/01/04 5 01/01/13 25,219.86 108 0
101 Balloon 11/24/03 01/01/04 5 12/01/13 25,885.00 120 0
102 Balloon 04/06/04 05/11/04 0 04/11/14 23,537.24 120 0
103 Balloon 02/26/04 04/01/04 5 03/01/16 24,502.55 144 0
104 ARD 03/10/04 04/11/04 0 03/11/09 24,111.74 60 0
105 Balloon 04/01/04 05/11/04 0 04/11/14 23,904.93 120 0
106 Balloon 01/16/04 03/01/04 5 02/01/11 22,088.15 84 0
107 Interest Only 02/27/04 04/11/04 0 03/11/09 14,165.28 60 60
108 Balloon 10/24/03 12/01/03 5 11/01/13 22,529.16 120 0
109 Balloon 04/23/04 06/11/04 0 05/11/13 19,635.28 108 0
110 ARD 03/15/04 05/11/04 0 04/11/14 17,988.77 120 0
111 Balloon 03/11/04 04/11/04 0 03/11/14 16,547.53 120 0
112 Balloon 12/08/03 02/01/04 5 01/01/14 18,591.11 120 0
113 Balloon 02/13/04 04/01/04 5 03/01/14 14,567.76 120 0
114 ARD 04/19/04 06/11/04 0 05/11/14 15,802.41 120 0
115 Balloon 12/30/03 02/01/04 5 01/01/11 13,210.65 84 0
20b Balloon 02/11/04 04/01/04 2 03/01/10 358,527.18 (a) 54 0
STATED STATED
ORIGINAL REMAINING REMAINING
AMORTIZATION TERM TO AMORTIZATION LOCKOUT
CONTROL TERM SEASONING MATURITY / ARD TERM PERIOD END
NUMBER (MONTHS) (MONTHS) (MONTHS) (MONTHS) PREPAYMENT PROVISIONS DATE
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
1 360 3 117 357 LO(27)/Defeasance(90)/Free(3) 06/30/06
1a
1b
1c
1d
1e
1f
1g
- ------------------------------------------------------------------------------------------------------------------------------------
2 360 3 117 357 LO(27)/Defeasance(90)/Free(3) 06/30/06
2a
2b
2c
2d
2e
2f
2g
- ------------------------------------------------------------------------------------------------------------------------------------
3 360 3 57 357 LO(27)/Defeasance(30)/Free(3) 06/30/06
3a
3b
3c
3d
3e
3f
3g
- ------------------------------------------------------------------------------------------------------------------------------------
4 360 1 119 360 LO(35)/Defeasance(81)/Free(4) 05/10/07
- ------------------------------------------------------------------------------------------------------------------------------------
5 360 1 59 360 LO(12)/YM(45)/Free(3) 06/10/05
6 360 1 59 360 LO(12)/YM(45)/Free(3) 06/10/05
7 360 1 59 360 LO(12)/YM(45)/Free(3) 06/10/05
8 360 1 59 360 LO(12)/YM(45)/Free(3) 06/10/05
9 360 1 59 360 LO(12)/YM(45)/Free(3) 06/10/05
10 360 1 59 360 LO(12)/YM(45)/Free(3) 06/10/05
11 360 1 59 360 LO(12)/YM(45)/Free(3) 06/10/05
12 360 1 59 360 LO(12)/YM(45)/Free(3) 06/10/05
13 360 1 59 360 LO(12)/YM(45)/Free(3) 06/10/05
14 360 1 59 360 LO(12)/YM(45)/Free(3) 06/10/05
15 360 1 59 360 LO(12)/YM(45)/Free(3) 06/10/05
16 360 1 59 360 LO(12)/YM(45)/Free(3) 06/10/05
17 360 1 59 360 LO(12)/YM(45)/Free(3) 06/10/05
18 360 1 59 360 LO(12)/YM(45)/Free(3) 06/10/05
19 360 1 59 360 LO(12)/YM(45)/Free(3) 06/10/05
- ------------------------------------------------------------------------------------------------------------------------------------
20 300 3 69 297 LO(27)/Defeasance(41)/Free(4) 06/30/06
21 360 2 118 360 LO(26)/YM1%orDefeasance(87)/Free(7) 07/10/06
22 360 0 120 360 LO(24)/Defeasance(93)/Free(3) 07/10/06
- ------------------------------------------------------------------------------------------------------------------------------------
23 360 1 119 360 LO(25)/Defeasance(92)/Free(3) 07/10/06
24 360 1 119 360 LO(25)/Defeasance(92)/Free(3) 07/10/06
- ------------------------------------------------------------------------------------------------------------------------------------
25 360 1 119 360 LO(25)/Defeasance(92)/Free(3) 07/10/06
26 312 (b) 7 113 305 (b) LO(31)/Defeasance(86)/Free(3) 06/30/06
27 360 5 115 355 LO(29)/Defeasance(89)/Free(2) 06/30/06
- ------------------------------------------------------------------------------------------------------------------------------------
28 360 5 115 355 LO(29)/Defeasance(89)/Free(2) 06/30/06
29 360 5 115 355 LO(29)/Defeasance(89)/Free(2) 06/30/06
- ------------------------------------------------------------------------------------------------------------------------------------
30 360 5 127 355 LO(29)/Defeasance(101)/Free(2) 06/30/06
31 360 5 127 355 LO(29)/Defeasance(101)/Free(2) 06/30/06
- ------------------------------------------------------------------------------------------------------------------------------------
32 360 6 54 354 LO(30)/Defeasance(28)/Free(2) 06/30/06
33 360 6 54 354 LO(30)/Defeasance(28)/Free(2) 06/30/06
34 360 6 54 354 LO(30)/Defeasance(28)/Free(2) 06/30/06
35 360 6 54 354 LO(30)/Defeasance(28)/Free(2) 06/30/06
36 360 6 54 354 LO(30)/Defeasance(28)/Free(2) 06/30/06
37 360 6 54 354 LO(30)/Defeasance(28)/Free(2) 06/30/06
38 360 6 54 354 LO(30)/Defeasance(28)/Free(2) 06/30/06
- ------------------------------------------------------------------------------------------------------------------------------------
39 300 1 83 299 LO(25)/Defeasance(56)/Free(3) 07/10/06
40 360 4 116 356 LO(28)/Defeasance(89)/Free(3) 06/30/06
41 300 2 118 298 LO(26)/Defeasance(91)/Free(3) 07/10/06
42 360 2 118 358 LO(26)/Defeasance(90)/Free(4) 07/10/06
43 360 7 77 360 LO(31)/Defeasance(50)/Free(3) 06/30/06
44 360 7 77 360 LO(31)/Defeasance(50)/Free(3) 06/30/06
45 300 8 112 292 LO(32)/Defeasance(85)/Free(3) 07/08/06
46 360 1 119 359 LO(25)/Defeasance(93)/Free(2) 06/30/06
47 360 1 119 359 LO(25)/Defeasance(93)/Free(2) 06/30/06
48 360 0 120 360 LO(48)/Defeasance(69)/Free(3) 07/10/08
49 360 2 118 358 LO(36)/Defeasance(81)/Free(3) 05/10/07
50 360 4 116 356 LO(28)/Defeasance(90)/Free(2) 06/30/06
51 360 2 118 360 LO(26)/Defeasance(91)/Free(3) 07/10/06
52 360 1 143 359 LO(25)/Defeasance(117)/Free(2) 07/10/06
53 360 3 57 357 LO(27)/Defeasance(30)/Free(3) 06/30/06
54 360 7 113 353 LO(31)/Defeasance(87)/Free(2) 06/30/06
55 360 3 117 357 LO(27)/Defeasance(90)/Free(3) 06/30/06
56 360 6 114 354 LO(30)/Defeasance(88)/Free(2) 06/30/06
57 360 1 119 359 LO(25)/Defeasance(93)/Free(2) 06/30/06
58 360 3 117 357 LO(27)/Defeasance(90)/Free(3) 07/10/06
- ------------------------------------------------------------------------------------------------------------------------------------
59 300 2 118 298 LO(26)/Defeasance(91)/Free(3) 07/10/06
60 300 2 118 298 LO(26)/Defeasance(91)/Free(3) 07/10/06
61 300 2 118 298 LO(26)/Defeasance(91)/Free(3) 07/10/06
- ------------------------------------------------------------------------------------------------------------------------------------
62 300 5 115 295 LO(29)/Defeasance(88)/Free(3) 06/30/06
63 300 5 115 295 LO(29)/Defeasance(88)/Free(3) 06/30/06
64 300 5 115 295 LO(29)/Defeasance(88)/Free(3) 06/30/06
- ------------------------------------------------------------------------------------------------------------------------------------
65 360 0 132 360 LO(24)/Defeasance(102)/Free(6) 06/30/06
66 360 1 119 360 LO(48)/Defeasance(69)/Free(3) 06/10/08
67 360 (c) 7 113 353 (c) LO(31)/Defeasance(87)/Free(2) 07/08/06
68 360 3 105 360 LO(27)/Defeasance(78)/Free(3) 06/30/06
69 360 4 116 360 LO(48)/Defeasance(68)/Free(4) 03/10/08
70 300 1 119 299 LO(48)/Defeasance(69)/Free(3) 06/10/08
71 360 4 116 356 LO(28)/Defeasance(88)/Free(4) 06/30/06
72 360 3 117 360 LO(27)/Defeasance(90)/Free(3) 06/30/06
73 360 12 108 348 LO(36)/Defeasance(81)/Free(3) 06/30/06
74 Interest Only 3 105 Interest Only LO(27)/Defeasance(78)/Free(3) 06/30/06
75 360 4 116 356 LO(28)/Defeasance(89)/Free(3) 06/30/06
76 360 5 115 355 LO(29)/Defeasance(88)/Free(3) 06/30/06
77 360 4 56 360 LO(28)/Defeasance(30)/Free(2) 06/30/06
78 360 0 120 360 LO(24)/YM(94)/Free(2) 07/10/06
79 309 9 111 309 LO(33)/Defeasance(84)/Free(3) 06/30/06
80 240 0 120 240 LO(24)/Defeasance(93)/Free(3) 06/30/06
81 360 7 113 353 LO(31)/Defeasance(86)/Free(3) 06/30/06
82 360 7 113 353 LO(31)/Defeasance(86)/Free(3) 06/30/06
83 360 8 112 352 LO(32)/Defeasance(85)/Free(3) 06/30/06
84 360 4 116 356 LO(28)/Defeasance(89)/Free(3) 06/30/06
85 360 4 116 356 LO(28)/Defeasance(88)/Free(4) 06/30/06
86 360 0 120 360 LO(24)/Defeasance(93)/Free(3) 07/10/06
87 360 7 113 353 LO(31)/Defeasance(82)/Free(7) 06/30/06
88 360 4 56 356 LO(28)/Defeasance(29)/Free(3) 06/30/06
89 360 1 119 359 LO(25)/Defeasance(90)/Free(5) 07/10/06
- ------------------------------------------------------------------------------------------------------------------------------------
90 300 15 93 285 LO(39)/Defeasance(66)/Free(3) 06/30/06
91 300 15 93 285 LO(39)/Defeasance(66)/Free(3) 06/30/06
- ------------------------------------------------------------------------------------------------------------------------------------
92 360 6 114 354 LO(30)/Defeasance(88)/Free(2) 06/30/06
93 360 2 106 358 LO(26)/Defeasance(79)/Free(3) 07/10/06
94 Interest Only 2 58 Interest Only LO(26)/Defeasance(31)/Free(3) 07/10/06
95 360 8 112 352 LO(32)/Defeasance(86)/Free(2) 06/30/06
96 180 3 177 177 LO(27)/Defeasance(150)/Free(3) 06/30/06
97 360 8 112 352 LO(32)/Defeasance(84)/Free(4) 06/30/06
98 360 3 105 357 LO(27)/Defeasance(78)/Free(3) 07/10/06
99 336 1 119 336 LO(25)/Defeasance(92)/Free(3) 06/30/06
100 360 5 103 355 LO(29)/Defeasance(76)/Free(3) 06/30/06
101 360 6 114 354 LO(30)/Defeasance(87)/Free(3) 06/30/06
102 360 2 118 358 LO(26)/Defeasance(91)/Free(3) 07/10/06
103 360 3 141 357 LO(27)/Defeasance(113)/Free(4) 06/30/06
104 300 3 57 297 LO(27)/Defeasance(30)/Free(3) 07/10/06
105 360 2 118 358 LO(26)/Defeasance(91)/Free(3) 07/10/06
106 360 4 80 356 LO(28)/Defeasance(54)/Free(2) 06/30/06
107 Interest Only 3 57 Interest Only LO(27)/Defeasance(30)/Free(3) 07/10/06
108 300 7 113 293 LO(31)/Defeasance(86)/Free(3) 06/30/06
109 360 1 107 359 LO(25)/Defeasance(80)/Free(3) 07/10/06
110 360 2 118 358 LO(48)/Defeasance(68)/Free(4) 05/10/08
111 360 3 117 357 LO(27)/Defeasance(90)/Free(3) 07/10/06
112 300 5 115 295 LO(29)/Defeasance(88)/Free(3) 06/30/06
113 360 3 117 357 LO(27)/Defeasance(90)/Free(3) 06/30/06
114 300 1 119 299 LO(48)/Defeasance(69)/Free(3) 06/10/08
115 360 5 79 355 LO(29)/Defeasance(52)/Free(3) 06/30/06
20b 300 3 51 297 LO(27)/Defeasance(41)/Free(4) 06/30/06
YIELD YIELD YIELD YIELD
MAINTENANCE MAINTENANCE PREPAYMENT PREPAYMENT MAINTENANCE MAINTENANCE
CONTROL DEFEASEANCE DEFEASEANCE PERIOD PERIOD PENALTY PENALTY CALCULATION INTEREST
NUMBER START DATE END DATE START DATE END DATE START DATE END DATE METHOD (I) RATE (J)
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
1 07/01/06 12/31/13 NAP NAP NAP NAP NAP NAP
1a
1b
1c
1d
1e
1f
1g
- ------------------------------------------------------------------------------------------------------------------------------------
2 07/01/06 12/31/13 NAP NAP NAP NAP NAP NAP
2a
2b
2c
2d
2e
2f
2g
- ------------------------------------------------------------------------------------------------------------------------------------
3 07/01/06 12/31/08 NAP NAP NAP NAP NAP NAP
3a
3b
3c
3d
3e
3f
3g
- ------------------------------------------------------------------------------------------------------------------------------------
4 05/11/07 02/10/14 NAP NAP NAP NAP NAP NAP
- ------------------------------------------------------------------------------------------------------------------------------------
5 NAP NAP 06/11/05 03/10/09 NAP NAP Interest Differential T-Flat
6 NAP NAP 06/11/05 03/10/09 NAP NAP Interest Differential T-Flat
7 NAP NAP 06/11/05 03/10/09 NAP NAP Interest Differential T-Flat
8 NAP NAP 06/11/05 03/10/09 NAP NAP Interest Differential T-Flat
9 NAP NAP 06/11/05 03/10/09 NAP NAP Interest Differential T-Flat
10 NAP NAP 06/11/05 03/10/09 NAP NAP Interest Differential T-Flat
11 NAP NAP 06/11/05 03/10/09 NAP NAP Interest Differential T-Flat
12 NAP NAP 06/11/05 03/10/09 NAP NAP Interest Differential T-Flat
13 NAP NAP 06/11/05 03/10/09 NAP NAP Interest Differential T-Flat
14 NAP NAP 06/11/05 03/10/09 NAP NAP Interest Differential T-Flat
15 NAP NAP 06/11/05 03/10/09 NAP NAP Interest Differential T-Flat
16 NAP NAP 06/11/05 03/10/09 NAP NAP Interest Differential T-Flat
17 NAP NAP 06/11/05 03/10/09 NAP NAP Interest Differential T-Flat
18 NAP NAP 06/11/05 03/10/09 NAP NAP Interest Differential T-Flat
19 NAP NAP 06/11/05 03/10/09 NAP NAP Interest Differential T-Flat
- ------------------------------------------------------------------------------------------------------------------------------------
20 07/01/06 11/30/09 NAP NAP NAP NAP NAP NAP
21 07/11/06 10/10/13 07/11/06 10/10/13 NAP NAP Interest Differential T+0.50%
22 07/11/06 04/10/14 NAP NAP NAP NAP NAP NAP
- ------------------------------------------------------------------------------------------------------------------------------------
23 07/11/06 03/10/14 NAP NAP NAP NAP NAP NAP
24 07/11/06 03/10/14 NAP NAP NAP NAP NAP NAP
- ------------------------------------------------------------------------------------------------------------------------------------
25 07/11/06 03/10/14 NAP NAP NAP NAP NAP NAP
26 07/01/06 08/31/13 NAP NAP NAP NAP NAP NAP
27 07/01/06 11/30/13 NAP NAP NAP NAP NAP NAP
- ------------------------------------------------------------------------------------------------------------------------------------
28 07/01/06 11/30/13 NAP NAP NAP NAP NAP NAP
29 07/01/06 11/30/13 NAP NAP NAP NAP NAP NAP
- ------------------------------------------------------------------------------------------------------------------------------------
30 07/01/06 11/30/14 NAP NAP NAP NAP NAP NAP
31 07/01/06 11/30/14 NAP NAP NAP NAP NAP NAP
- ------------------------------------------------------------------------------------------------------------------------------------
32 07/01/06 10/31/08 NAP NAP NAP NAP NAP NAP
33 07/01/06 10/31/08 NAP NAP NAP NAP NAP NAP
34 07/01/06 10/31/08 NAP NAP NAP NAP NAP NAP
35 07/01/06 10/31/08 NAP NAP NAP NAP NAP NAP
36 07/01/06 10/31/08 NAP NAP NAP NAP NAP NAP
37 07/01/06 10/31/08 NAP NAP NAP NAP NAP NAP
38 07/01/06 10/31/08 NAP NAP NAP NAP NAP NAP
- ------------------------------------------------------------------------------------------------------------------------------------
39 07/11/06 03/10/11 NAP NAP NAP NAP NAP NAP
40 07/01/06 11/30/13 NAP NAP NAP NAP NAP NAP
41 07/11/06 02/10/14 NAP NAP NAP NAP NAP NAP
42 07/11/06 01/10/14 NAP NAP NAP NAP NAP NAP
43 07/01/06 08/31/10 NAP NAP NAP NAP NAP NAP
44 07/01/06 08/31/10 NAP NAP NAP NAP NAP NAP
45 07/09/06 08/08/13 NAP NAP NAP NAP NAP NAP
46 07/01/06 03/31/14 NAP NAP NAP NAP NAP NAP
47 07/01/06 03/31/14 NAP NAP NAP NAP NAP NAP
48 07/11/08 04/10/14 NAP NAP NAP NAP NAP NAP
49 05/11/07 02/10/14 NAP NAP NAP NAP NAP NAP
50 07/01/06 12/31/13 NAP NAP NAP NAP NAP NAP
51 07/11/06 02/10/14 NAP NAP NAP NAP NAP NAP
52 07/11/06 04/10/16 NAP NAP NAP NAP NAP NAP
53 07/01/06 12/31/08 NAP NAP NAP NAP NAP NAP
54 07/01/06 09/30/13 NAP NAP NAP NAP NAP NAP
55 07/01/06 12/31/13 NAP NAP NAP NAP NAP NAP
56 07/01/06 10/31/13 NAP NAP NAP NAP NAP NAP
57 07/01/06 03/31/14 NAP NAP NAP NAP NAP NAP
58 07/11/06 01/10/14 NAP NAP NAP NAP NAP NAP
- ------------------------------------------------------------------------------------------------------------------------------------
59 07/11/06 02/10/14 NAP NAP NAP NAP NAP NAP
60 07/11/06 02/10/14 NAP NAP NAP NAP NAP NAP
61 07/11/06 02/10/14 NAP NAP NAP NAP NAP NAP
- ------------------------------------------------------------------------------------------------------------------------------------
62 07/01/06 10/31/13 NAP NAP NAP NAP NAP NAP
63 07/01/06 10/31/13 NAP NAP NAP NAP NAP NAP
64 07/01/06 10/31/13 NAP NAP NAP NAP NAP NAP
- ------------------------------------------------------------------------------------------------------------------------------------
65 07/01/06 12/31/14 NAP NAP NAP NAP NAP NAP
66 06/11/08 03/10/14 NAP NAP NAP NAP NAP NAP
67 07/09/06 10/08/13 NAP NAP NAP NAP NAP NAP
68 07/01/06 12/31/12 NAP NAP NAP NAP NAP NAP
69 03/11/08 11/10/13 NAP NAP NAP NAP NAP NAP
70 06/11/08 03/10/14 NAP NAP NAP NAP NAP NAP
71 07/01/06 10/31/13 NAP NAP NAP NAP NAP NAP
72 07/01/06 12/31/13 NAP NAP NAP NAP NAP NAP
73 07/01/06 03/31/13 NAP NAP NAP NAP NAP NAP
74 07/01/06 12/31/12 NAP NAP NAP NAP NAP NAP
75 07/01/06 11/30/13 NAP NAP NAP NAP NAP NAP
76 07/01/06 10/31/13 NAP NAP NAP NAP NAP NAP
77 07/01/06 12/31/08 NAP NAP NAP NAP NAP NAP
78 NAP NAP 07/11/06 05/10/14 NAP NAP Factor Specified
79 07/01/06 06/30/13 NAP NAP NAP NAP NAP NAP
80 07/01/06 03/31/14 NAP NAP NAP NAP NAP NAP
81 07/01/06 08/31/13 NAP NAP NAP NAP NAP NAP
82 07/01/06 08/31/13 NAP NAP NAP NAP NAP NAP
83 07/01/06 07/31/13 NAP NAP NAP NAP NAP NAP
84 07/01/06 11/30/13 NAP NAP NAP NAP NAP NAP
85 07/01/06 10/31/13 NAP NAP NAP NAP NAP NAP
86 07/11/06 04/10/14 NAP NAP NAP NAP NAP NAP
87 07/01/06 04/30/13 NAP NAP NAP NAP NAP NAP
88 07/01/06 11/30/08 NAP NAP NAP NAP NAP NAP
89 07/11/06 01/10/14 NAP NAP NAP NAP NAP NAP
- ------------------------------------------------------------------------------------------------------------------------------------
90 07/01/06 12/31/11 NAP NAP NAP NAP NAP NAP
91 07/01/06 12/31/11 NAP NAP NAP NAP NAP NAP
- ------------------------------------------------------------------------------------------------------------------------------------
92 07/01/06 10/31/13 NAP NAP NAP NAP NAP NAP
93 07/11/06 02/10/13 NAP NAP NAP NAP NAP NAP
94 07/11/06 02/10/09 NAP NAP NAP NAP NAP NAP
95 07/01/06 08/31/13 NAP NAP NAP NAP NAP NAP
96 07/01/06 12/31/18 NAP NAP NAP NAP NAP NAP
97 07/01/06 06/30/13 NAP NAP NAP NAP NAP NAP
98 07/11/06 01/10/13 NAP NAP NAP NAP NAP NAP
99 07/01/06 02/28/14 NAP NAP NAP NAP NAP NAP
100 07/01/06 10/31/12 NAP NAP NAP NAP NAP NAP
101 07/01/06 09/30/13 NAP NAP NAP NAP NAP NAP
102 07/11/06 02/10/14 NAP NAP NAP NAP NAP NAP
103 07/01/06 11/30/15 NAP NAP NAP NAP NAP NAP
104 07/11/06 01/10/09 NAP NAP NAP NAP NAP NAP
105 07/11/06 02/10/14 NAP NAP NAP NAP NAP NAP
106 07/01/06 12/31/10 NAP NAP NAP NAP NAP NAP
107 07/11/06 01/10/09 NAP NAP NAP NAP NAP NAP
108 07/01/06 08/31/13 NAP NAP NAP NAP NAP NAP
109 07/11/06 03/10/13 NAP NAP NAP NAP NAP NAP
110 05/11/08 01/10/14 NAP NAP NAP NAP NAP NAP
111 07/11/06 01/10/14 NAP NAP NAP NAP NAP NAP
112 07/01/06 10/31/13 NAP NAP NAP NAP NAP NAP
113 07/01/06 12/31/13 NAP NAP NAP NAP NAP NAP
114 06/11/08 03/10/14 NAP NAP NAP NAP NAP NAP
115 07/01/06 10/31/10 NAP NAP NAP NAP NAP NAP
20b 07/01/06 11/30/09 NAP NAP NAP NAP NAP NAP
YIELD
MAINTENANCE
INTEREST RATE
CONVERTED TO YIELD
MONTHLY MAINTENANCE
CONTROL MORTGAGE DISCOUNTING PROPERTY PROPERTY YEAR OCCUPANCY
NUMBER RATE HORIZON SIZE SIZE TYPE YEAR BUILT RENOVATED PERCENTAGE
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
1 NAP NAP 1,516
1a 350 Pads 1972 NAP 92%
1b 323 Pads 1966 NAP 100%
1c 249 Pads 1986 1994 96%
1d 251 Pads 1979 NAP 93%
1e 142 Pads 1966 NAP 88%
1f 98 Pads 1966 NAP 88%
1g 103 Pads 1968 NAP 89%
- -----------------------------------------------------------------------------------------------------------------------------
2 NAP NAP 1,535
2a 303 Pads 1965 NAP 96%
2b 315 Pads 1982 NAP 91%
2c 257 Pads 1972 & 1981 NAP 97%
2d 200 Pads 1970 NAP 92%
2e 250 Pads 1977 NAP 90%
2f 148 Pads 1952 & 1969 NAP 94%
2g 62 Pads 1984 NAP 89%
- -----------------------------------------------------------------------------------------------------------------------------
3 NAP NAP 1,524
3a 643 Pads 1973 NAP 86%
3b 200 Pads 1986 NAP 87%
3c 215 Pads 1973 NAP 91%
3d 183 Pads 1971 NAP 88%
3e 106 Pads 1976 NAP 84%
3f 72 Pads 1972 NAP 86%
3g 105 Pads 1970 NAP 79%
- -----------------------------------------------------------------------------------------------------------------------------
4 NAP NAP 619,283 SF 1968 1994 83%
- -----------------------------------------------------------------------------------------------------------------------------
5 Yes Maturity 83,550 SF 1969 2002 55%
6 Yes Maturity 76,085 SF 1997 & 2000 NAP 80%
7 Yes Maturity 63,300 SF 1995 NAP 81%
8 Yes Maturity 80,920 SF 2001 NAP 42%
9 Yes Maturity 86,904 SF 2000 NAP 71%
10 Yes Maturity 94,939 SF 2001 NAP 51%
11 Yes Maturity 61,995 SF 1998 NAP 97%
12 Yes Maturity 93,880 SF 1979 2002 86%
13 Yes Maturity 75,250 SF 2001 NAP 52%
14 Yes Maturity 35,794 SF 2002 NAP 72%
15 Yes Maturity 57,121 SF 1901 2001 96%
16 Yes Maturity 66,215 SF 1997 NAP 86%
17 Yes Maturity 86,503 SF 1950 & 2001 NAP 70%
18 Yes Maturity 91,635 SF 1997 & 2001 NAP 86%
19 Yes Maturity 98,675 SF 2001 NAP 67%
- -----------------------------------------------------------------------------------------------------------------------------
20 NAP NAP 349,133 SF 1985 NAP 97%
21 Yes OpenPeriod 489,066 SF 1923 1992 96%
22 NAP NAP 318,829 SF 1966 2003 91%
- -----------------------------------------------------------------------------------------------------------------------------
23 NAP NAP 238,145 SF 2001 NAP 98%
24 NAP NAP 87,222 SF 2003 NAP 100%
- -----------------------------------------------------------------------------------------------------------------------------
25 NAP NAP 147,980 SF 2001 NAP 90%
26 NAP NAP 212,232 SF 1971 1995 100%
27 NAP NAP 73,572 SF NAP NAP 100%
- -----------------------------------------------------------------------------------------------------------------------------
28 NAP NAP 13,905 SF 1997 NAP 100%
29 NAP NAP 13,905 SF 1996 NAP 100%
- -----------------------------------------------------------------------------------------------------------------------------
30 NAP NAP 167,146 SF 1988 1999 100%
31 NAP NAP 166,740 SF 1988 2002 100%
- -----------------------------------------------------------------------------------------------------------------------------
32 NAP NAP 89,825 SF 1996 NAP 95%
33 NAP NAP 106,725 SF 1997 - 2001 NAP 85%
34 NAP NAP 95,027 SF 1994 - 1999 NAP 83%
35 NAP NAP 92,325 SF 1994 - 1998 NAP 84%
36 NAP NAP 106,590 SF 1989 - 2000 NAP 82%
37 NAP NAP 72,550 SF 1988 - 1999 NAP 94%
38 NAP NAP 69,850 SF 1999 NAP 77%
- -----------------------------------------------------------------------------------------------------------------------------
39 NAP NAP 100 Rooms 1984 2002 81%
40 NAP NAP 232,177 SF 2002 NAP 91%
41 NAP NAP 281 Rooms 2000 NAP 59%
42 NAP NAP 99,749 SF 1899 1984 100%
43 NAP NAP 80,488 SF 1953 1997 & 2000 96%
44 NAP NAP 32,464 SF 1965 2002 100%
45 NAP NAP 445,862 SF 1981 1998 88%
46 NAP NAP 74,880 SF 1986 2002 100%
47 NAP NAP 42,029 SF 1986 NAP 90%
48 NAP NAP 166 Units 2002 NAP 87%
49 NAP NAP 265,359 SF 1990 NAP 100%
50 NAP NAP 114,897 SF 1962 NAP 96%
51 NAP NAP 143,546 SF 1998 NAP 87%
52 NAP NAP 74,950 SF 1996 2002 100%
53 NAP NAP 222,783 SF 1981 & 1985 NAP 90%
54 NAP NAP 161,069 SF 1973 & 1981 2002 93%
55 NAP NAP 97,695 SF 1999 - 2000 NAP 88%
56 NAP NAP 92,686 SF 1910 1990 95%
57 NAP NAP 175,413 SF 2001 NAP 97%
58 NAP NAP 87,808 SF 1964 2003 80%
- -----------------------------------------------------------------------------------------------------------------------------
59 NAP NAP 124 Units 1968 1999 94%
60 NAP NAP 111 Units 1972 2000 91%
61 NAP NAP 99 Units 1975 1995 86%
- -----------------------------------------------------------------------------------------------------------------------------
62 NAP NAP 78 Units 1968 2000 96%
63 NAP NAP 60 Units 1968 2000 98%
64 NAP NAP 37 Units 1969 2002 100%
- -----------------------------------------------------------------------------------------------------------------------------
65 NAP NAP 102,425 SF 1995 NAP 100%
66 NAP NAP 168 Pads 1971 NAP 99%
67 NAP NAP 87,636 SF 1975 1991 81%
68 NAP NAP 78,123 SF 1988 NAP 94%
69 NAP NAP 120 Units 1998 NAP 98%
70 NAP NAP 115 Rooms 2000 NAP 71%
71 NAP NAP 75,232 SF 2003 NAP 100%
72 NAP NAP 70,044 SF 1985 NAP 94%
73 NAP NAP 135,844 SF 1993 2002 100%
74 NAP NAP 25,033 SF 2003 NAP 100%
75 NAP NAP 114,053 SF 1983 NAP 87%
76 NAP NAP 46,688 SF 2000 NAP 100%
77 NAP NAP 226 Units 1974 & 1985 NAP 85%
78 No NAP 98,882 SF 1971, 1978, 1983 NAP 99%
79 NAP NAP 144 Units 2002 NAP 94%
80 NAP NAP 204 Units 1978 1999 100%
81 NAP NAP 65,980 SF 1984 NAP 100%
82 NAP NAP 18,543 SF 1920 1992 97%
83 NAP NAP 21,586 SF 1971 & 1989 NAP 77%
84 NAP NAP 33,781 SF 1947 & 1958 2003 90%
85 NAP NAP 34,599 SF 2000 NAP 94%
86 NAP NAP 46,451 SF 1989 2003 100%
87 NAP NAP 108,110 SF 1971 2003 100%
88 NAP NAP 43,742 SF 1981 NAP 96%
89 NAP NAP 144 Units 1983 NAP 98%
- -----------------------------------------------------------------------------------------------------------------------------
90 NAP NAP 10,908 SF 2001 NAP 100%
91 NAP NAP 10,908 SF 2000 NAP 100%
- -----------------------------------------------------------------------------------------------------------------------------
92 NAP NAP 53,219 SF 1955 NAP 100%
93 NAP NAP 108 Units 2003 NAP 100%
94 NAP NAP 119 Units 1981 NAP 92%
95 NAP NAP 45,014 SF 2000 NAP 87%
96 NAP NAP 46,627 SF 1988 Planned for 2004 100%
97 NAP NAP 61,245 SF 1983 2001 89%
98 NAP NAP 69,736 SF 1986 & 1999 NAP 100%
99 NAP NAP 314 Units 1965 NAP 99%
100 NAP NAP 20,811 SF 2003 NAP 92%
101 NAP NAP 24,785 SF 1991 NAP 100%
102 NAP NAP 50,119 SF 1983 1996 100%
103 NAP NAP 67,341 SF 2003 NAP 100%
104 NAP NAP 15,510 SF 2003 NAP 100%
105 NAP NAP 45,605 SF 1992 NAP 100%
106 NAP NAP 45,825 SF 1999 NAP 100%
107 NAP NAP 204 Units 1986 NAP 97%
108 NAP NAP 20,880 SF 1920 2003 90%
109 NAP NAP 51,118 SF 1972 2000 91%
110 NAP NAP 24,300 SF 2001 NAP 95%
111 NAP NAP 9,014 SF 2003 NAP 100%
112 NAP NAP 51,154 SF 1996 NAP 100%
113 NAP NAP 19,253 SF 1960 2003 100%
114 NAP NAP 25,000 SF 2003 NAP 80%
115 NAP NAP 92 Pads 1968 NAP 99%
20b NAP NAP
LARGEST
MAJOR
CONTROL OCCUPANCY TENANT
NUMBER AS OF DATE LARGEST MAJOR TENANT NRSF
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
1
1a 09/30/03 NAP NAP
1b 09/30/03 NAP NAP
1c 09/30/03 NAP NAP
1d 10/03/03 NAP NAP
1e 09/30/03 NAP NAP
1f 09/30/03 NAP NAP
1g 09/30/03 NAP NAP
- -----------------------------------------------------------------------------------------------------------------------------------
2
2a 09/30/03 NAP NAP
2b 09/30/03 NAP NAP
2c 09/30/03 NAP NAP
2d 09/30/03 NAP NAP
2e 09/30/03 NAP NAP
2f 09/30/03 NAP NAP
2g 09/30/03 NAP NAP
- -----------------------------------------------------------------------------------------------------------------------------------
3
3a 09/30/03 NAP NAP
3b 09/30/03 NAP NAP
3c 09/30/03 NAP NAP
3d 09/30/03 NAP NAP
3e 09/30/03 NAP NAP
3f 09/30/03 NAP NAP
3g 09/30/03 NAP NAP
- -----------------------------------------------------------------------------------------------------------------------------------
4 03/29/04 Yorktown Cinema 18 (Outparcel) 78,485
- -----------------------------------------------------------------------------------------------------------------------------------
5 02/29/04 NAP NAP
6 02/29/04 NAP NAP
7 02/29/04 NAP NAP
8 02/29/04 NAP NAP
9 02/29/04 NAP NAP
10 02/29/04 NAP NAP
11 02/29/04 NAP NAP
12 02/29/04 NAP NAP
13 02/29/04 NAP NAP
14 02/29/04 NAP NAP
15 03/01/04 NAP NAP
16 02/29/04 NAP NAP
17 02/29/04 NAP NAP
18 02/29/04 NAP NAP
19 02/29/04 NAP NAP
- -----------------------------------------------------------------------------------------------------------------------------------
20 02/06/04 Stage 29,914
21 02/29/04 Playboy Enterprises, Inc. 127,663
22 05/10/04 Kohl's 86,584
- -----------------------------------------------------------------------------------------------------------------------------------
23 02/13/04 Giant Eagle 80,021
24 02/13/04 Jo-Ann Stores 43,998
- -----------------------------------------------------------------------------------------------------------------------------------
25 02/11/04 Edwards & Angell, L.L.P. 36,227
26 07/01/03 Crum & Forster - U.S. Fire Insurance 212,232
Company & North River Insurance
Company
27 NAP DFS Guam 73,572
- -----------------------------------------------------------------------------------------------------------------------------------
28 12/24/03 Walgreens 13,905
29 12/24/03 Walgreens 13,905
- -----------------------------------------------------------------------------------------------------------------------------------
30 10/28/03 Fred Meyer Stores, Inc. 167,146
31 10/28/03 Fred Meyer Stores, Inc. 166,740
- -----------------------------------------------------------------------------------------------------------------------------------
32 02/28/04 NAP NAP
33 02/28/04 NAP NAP
34 02/28/04 NAP NAP
35 02/28/04 NAP NAP
36 02/28/04 NAP NAP
37 02/28/04 NAP NAP
38 02/28/04 NAP NAP
- -----------------------------------------------------------------------------------------------------------------------------------
39 3/31/04 TTM NAP NAP
40 01/28/04 EADS Telecom North America Inc. 115,856
41 12/31/03 TTM NAP NAP
42 12/29/03 Goulston & Storrs, P.C. 99,749
43 10/20/03 American Asso of Univ Profs 12,768
44 10/20/03 Dr. Schneiderman & Dr. Barr 2,820
45 01/31/04 Sears 82,743
46 02/01/04 Outsourcing Solutions 10,139
47 02/01/04 Kendle Int'l 13,385
48 04/20/04 NAP NAP
49 03/11/04 Dominick's (Value City) 93,368
50 10/18/03 Brinton's 37,773
51 03/04/04 Unipro Food Service 52,315
52 04/27/04 Great Atlantic & Pacific Tea 42,064
53 12/31/03 Bank of America 125,120
54 09/25/03 ACD of America, Inc 13,273
55 01/05/04 NAP NAP
56 03/26/04 Shattuck Cinemas 18,094
57 02/28/04 Celestica Corporation 51,149
58 02/19/04 Verint 26,350
- -----------------------------------------------------------------------------------------------------------------------------------
59 12/31/03 NAP NAP
60 12/31/03 NAP NAP
61 12/31/03 NAP NAP
- -----------------------------------------------------------------------------------------------------------------------------------
62 11/30/03 NAP NAP
63 11/30/03 NAP NAP
64 11/30/03 NAP NAP
- -----------------------------------------------------------------------------------------------------------------------------------
65 02/01/04 Price Chopper 63,525
66 03/01/04 NAP NAP
67 03/24/04 The Good Guys 16,650
68 02/03/04 Gart Sports 38,930
69 04/14/04 NAP NAP
70 2/29/04 TTM NAP NAP
71 01/07/04 Smart & Final 20,925
72 01/01/04 Major Market 33,650
73 12/05/03 Lowe's Home Improvement 135,844
74 03/31/04 Ann Taylor 5,520
75 02/12/04 Marshalls 28,000
76 01/12/04 City of American Canyon 6,149
77 12/03/03 NAP NAP
78 03/18/04 Burlington Coat Factory Warehouse of Maine, Inc. 54,600
79 03/26/04 NAP NAP
80 05/01/04 NAP NAP
81 09/24/03 I-Stat Corporation 37,474
82 11/01/03 Bridge Cafe 2,500
83 11/30/03 Lovejoy & Rimer, P.C. 7,306
84 03/22/04 Uptown Hardware, Inc. 15,223
85 01/05/04 Putters Bar & Grill 6,000
86 03/31/04 Bonefish Grill 5,641
87 12/01/03 Home Depot, USA, Inc. 102,515
88 12/31/03 Baumel Eisner 4,229
89 02/11/04 NAP NAP
- -----------------------------------------------------------------------------------------------------------------------------------
90 09/30/03 Eckerd Drug 10,908
91 09/30/03 Eckerd Drug 10,908
- -----------------------------------------------------------------------------------------------------------------------------------
92 10/27/03 OCB Restaurant Co. 10,000
93 04/15/04 NAP NAP
94 03/04/04 NAP NAP
95 04/01/04 Hartford Insurance 15,430
96 02/20/04 Stop & Shop 46,627
97 12/31/03 Triad Foods Group 13,490
98 02/27/04 Food Maxx 50,936
99 04/13/04 NAP NAP
100 12/23/03 Emerald City Pizza dba Pizza Hut 2,800
101 02/29/04 Maxi Drug 8,715
102 04/01/04 Glastonbury Fitness & Wellness, Inc. 30,595
103 01/16/04 Ralphs Grocery Company 57,541
104 03/09/04 General Service Administration 15,510
105 03/31/04 The Sports Authority 42,005
106 01/08/04 Food Lion 33,000
107 01/24/04 NAP NAP
108 10/15/03 First Chicago Bldg. Corp. 8,334
109 04/01/04 Dr. Becker 2,640
110 03/08/04 Roy's of Hawaii 7,925
111 03/04/04 The Vitamin Shoppe 3,807
112 11/24/03 Schotenstein Stores dba Value City Furniture 51,154
113 01/21/04 AutoZone 6,610
114 04/19/04 Hibbett 5,040
115 12/01/03 NAP NAP
20b
SECOND SECOND
LARGEST LARGEST LARGEST
MAJOR LARGEST MAJOR MAJOR MAJOR
CONTROL TENANT TENANT LEASE TENANT TENANT
NUMBER NRSF% MATURITY DATE SECOND LARGEST MAJOR TENANT NRSF NRSF%
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
1
1a NAP NAP NAP NAP NAP
1b NAP NAP NAP NAP NAP
1c NAP NAP NAP NAP NAP
1d NAP NAP NAP NAP NAP
1e NAP NAP NAP NAP NAP
1f NAP NAP NAP NAP NAP
1g NAP NAP NAP NAP NAP
- ----------------------------------------------------------------------------------------------------------------------------
2
2a NAP NAP NAP NAP NAP
2b NAP NAP NAP NAP NAP
2c NAP NAP NAP NAP NAP
2d NAP NAP NAP NAP NAP
2e NAP NAP NAP NAP NAP
2f NAP NAP NAP NAP NAP
2g NAP NAP NAP NAP NAP
- ----------------------------------------------------------------------------------------------------------------------------
3
3a NAP NAP NAP NAP NAP
3b NAP NAP NAP NAP NAP
3c NAP NAP NAP NAP NAP
3d NAP NAP NAP NAP NAP
3e NAP NAP NAP NAP NAP
3f NAP NAP NAP NAP NAP
3g NAP NAP NAP NAP NAP
- ----------------------------------------------------------------------------------------------------------------------------
4 12.7% 01/31/18 Carson Pirie Scott Furniture 45,708 7.4%
- ----------------------------------------------------------------------------------------------------------------------------
5 NAP NAP NAP NAP NAP
6 NAP NAP NAP NAP NAP
7 NAP NAP NAP NAP NAP
8 NAP NAP NAP NAP NAP
9 NAP NAP NAP NAP NAP
10 NAP NAP NAP NAP NAP
11 NAP NAP NAP NAP NAP
12 NAP NAP NAP NAP NAP
13 NAP NAP NAP NAP NAP
14 NAP NAP NAP NAP NAP
15 NAP NAP NAP NAP NAP
16 NAP NAP NAP NAP NAP
17 NAP NAP NAP NAP NAP
18 NAP NAP NAP NAP NAP
19 NAP NAP NAP NAP NAP
- ----------------------------------------------------------------------------------------------------------------------------
20 9% 01/01/06 Cinema 10 23,170 7%
21 26% 08/31/07 Northwestern Medical Faculty 57,474 12%
Foundation, Inc.
22 27% 01/31/23 Burlington Coat Factory 70,000 22%
- ----------------------------------------------------------------------------------------------------------------------------
23 34% 08/31/22 Linens 'N Things 35,100 15%
24 50% 01/31/16 Staples 20,300 23%
- ----------------------------------------------------------------------------------------------------------------------------
25 24% 04/24/11 Florida Crystals Corporation 24,606 17%
26 100% 12/31/22 NAP NAP NAP
27 100% 08/24/64 NAP NAP NAP
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
28 100% 04/30/57 NAP NAP NAP
29 100% 02/28/57 NAP NAP NAP
- ----------------------------------------------------------------------------------------------------------------------------
30 100% 01/31/15 NAP NAP NAP
31 100% 01/31/15 NAP NAP NAP
- ----------------------------------------------------------------------------------------------------------------------------
32 NAP NAP NAP NAP NAP
33 NAP NAP NAP NAP NAP
34 NAP NAP NAP NAP NAP
35 NAP NAP NAP NAP NAP
36 NAP NAP NAP NAP NAP
37 NAP NAP NAP NAP NAP
38 NAP NAP NAP NAP NAP
- ----------------------------------------------------------------------------------------------------------------------------
39 NAP NAP NAP NAP NAP
40 50% 10/31/14 G.E. Capital Card Services 36,823 16%
41 NAP NAP NAP NAP NAP
42 100% 05/31/14 NAP NAP NAP
43 16% 12/31/08 First Home Care Corp. 11,121 14%
44 9% 03/31/11 Neil Starr 2,731 8%
45 19% 10/31/30 Cinemark 43,708 10%
46 14% 10/31/06 Mass Mutual 8,413 11%
47 32% 10/31/04 & 2/28/05 Los Robles Pediatric 4,394 10%
48 NAP NAP NAP NAP NAP
49 35% 02/28/12 Food 4 Less 82,620 31%
50 33% 07/31/08 Albertson's 30,000 26%
51 36% 08/31/12 Thomas Concrete of Georgia 20,590 14%
52 56% 03/31/16 Genovese Drug Store 11,337 15%
53 56% 1/31/06 & 7/31/08 Children's Home Inc. 35,200 16%
54 8% 11/30/04 Quality Copy Service 10,480 7%
55 NAP NAP NAP NAP NAP
56 20% 05/24/08 Lyris Technologies 11,293 12%
57 29% 07/31/06 Texas Department of Criminal Justice 23,110 13%
58 30% 05/31/13 Totus II 18,782 21%
- ----------------------------------------------------------------------------------------------------------------------------
59 NAP NAP NAP NAP NAP
60 NAP NAP NAP NAP NAP
61 NAP NAP NAP NAP NAP
- ----------------------------------------------------------------------------------------------------------------------------
62 NAP NAP NAP NAP NAP
63 NAP NAP NAP NAP NAP
64 NAP NAP NAP NAP NAP
- ----------------------------------------------------------------------------------------------------------------------------
65 62% 06/30/15 Fashion Bug 13,500 13%
66 NAP NAP NAP NAP NAP
67 19% 10/31/06 Petco 13,880 16%
68 50% 01/31/14 The Royal Buffet 4,346 6%
69 NAP NAP NAP NAP NAP
70 NAP NAP NAP NAP NAP
71 28% 10/31/18 99 Cents Only Store 18,000 24%
72 48% 05/31/09 Denny's Family Restaurant 5,462 8%
73 100% 05/24/19 NAP NAP NAP
74 22% 01/31/14 Talbots, Inc. 5,500 22%
75 25% 01/31/08 Colorado Ski & Golf 17,667 15%
76 13% 04/30/09 Queen of the Valley 3,150 7%
77 NAP NAP NAP NAP NAP
78 55% 08/31/08 Staples the Office Superstore East, Inc. 24,930 25%
79 NAP NAP NAP NAP NAP
80 NAP NAP NAP NAP NAP
81 57% 12/31/08 Evans East 14,810 22%
82 13% 10/30/08 Audrey Morgan Interiors, Inc. 1,987 11%
83 34% 07/31/08 J.M. Layton & Co., Inc. 3,942 18%
84 45% 12/31/13 Pella Window and Door Company of 3,250 10%
Califonia
85 17% 05/31/11 Blockbuster Video 4,550 13%
86 12% 03/21/13 Kinkos Graphics Corp. 5,156 11%
87 95% 01/31/24 Charter One Bank 3,225 3%
88 10% 05/31/06 Boca Pediatric Group, P.A. 4,160 10%
89 NAP NAP NAP NAP NAP
- ----------------------------------------------------------------------------------------------------------------------------
90 100% 02/21/21 NAP NAP NAP
91 100% 08/22/20 NAP NAP NAP
- ----------------------------------------------------------------------------------------------------------------------------
92 19% 12/31/10 Carney Tire & Car Care Center 8,025 15%
93 NAP NAP NAP NAP NAP
94 NAP NAP NAP NAP NAP
95 34% 02/28/09 Northrop Grumman Information Technology 14,122 31%
96 100% 12/31/19 NAP NAP NAP
97 22% 03/31/08 Katch, Tyson & Co. 5,628 9%
98 73% 11/04/11 Factory-2-U 8,400 12%
99 NAP NAP NAP NAP NAP
100 13% 02/28/13 Pearson Chiropractic, LLPC 2,100 10%
101 35% 04/30/07 Norwalk Music 5,700 23%
102 61% 04/30/19 Haynes Street Property Mgmt. LLC 19,524 39%
103 85% 03/31/24 Subway 1,540 2%
104 100% 12/22/13 NAP NAP NAP
105 92% 03/31/10 BB&T Bank (ground lease) 3,600 8%
106 72% 08/30/19 Dollar General 8,625 19%
107 NAP NAP NAP NAP NAP
108 40% 08/31/13 Voicestream GSM 1 2,638 13%
109 5% 01/31/05 First Capital 2,264 4%
110 33% 06/14/12 AT&T Wireless 3,300 14%
111 42% 01/31/14 Starbucks 2,087 23%
112 100% 05/27/13 NAP NAP NAP
113 34% 06/30/08 Down Right Cozy 3,469 18%
114 20% 09/30/08 Blockbuster 4,800 19%
115 NAP NAP NAP NAP NAP
20b
SECOND THIRD SECOND SECOND
LARGEST LARGEST SECOND MOST MOST
MAJOR THIRD THIRD MAJOR MOST RECENT RECENT
TENANT LARGEST LARGEST TENANT RECENT YEAR YEAR
LEASE MAJOR MAJOR LEASE YEAR STATEMENT STATEMENT
CONTROL MATURITY TENANT TENANT MATURITY STATEMENT NUMBER OF ENDING
NUMBER DATE THIRD LARGEST MAJOR TENANT NRSF NRSF% DATE TYPE MONTHS DATE
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
1
1a NAP NAP NAP NAP NAP CY Ended 12 12/31/02
1b NAP NAP NAP NAP NAP CY Ended 12 12/31/02
1c NAP NAP NAP NAP NAP CY Ended 12 12/31/02
1d NAP NAP NAP NAP NAP CY Ended 12 12/31/02
1e NAP NAP NAP NAP NAP CY Ended 12 12/31/02
1f NAP NAP NAP NAP NAP CY Ended 12 12/31/02
1g NAP NAP NAP NAP NAP CY Ended 12 12/31/02
- -----------------------------------------------------------------------------------------------------------------------------------
2
2a NAP NAP NAP NAP NAP CY Ended 12 12/31/02
2b NAP NAP NAP NAP NAP CY Ended 12 12/31/02
2c NAP NAP NAP NAP NAP CY Ended 12 12/31/02
2d NAP NAP NAP NAP NAP CY Ended 12 12/31/02
2e NAP NAP NAP NAP NAP CY Ended 12 12/31/02
2f NAP NAP NAP NAP NAP CY Ended 12 12/31/02
2g NAP NAP NAP NAP NAP CY Ended 12 12/31/02
- -----------------------------------------------------------------------------------------------------------------------------------
3
3a NAP NAP NAP NAP NAP CY Ended 12 12/31/02
3b NAP NAP NAP NAP NAP CY Ended 12 12/31/02
3c NAP NAP NAP NAP NAP CY Ended 12 12/31/02
3d NAP NAP NAP NAP NAP CY Ended 12 12/31/02
3e NAP NAP NAP NAP NAP CY Ended 12 12/31/02
3f NAP NAP NAP NAP NAP CY Ended 12 12/31/02
3g NAP NAP NAP NAP NAP CY Ended 12 12/31/02
- -----------------------------------------------------------------------------------------------------------------------------------
4 06/30/08 Big Idea Productions 27,217 4.4% MTM CY Ended 12 12/31/02
- -----------------------------------------------------------------------------------------------------------------------------------
5 NAP NAP NAP NAP NAP CY Ended 12 12/31/03
6 NAP NAP NAP NAP NAP CY Ended 12 12/31/03
7 NAP NAP NAP NAP NAP CY Ended 12 12/31/03
8 NAP NAP NAP NAP NAP UAV UAV UAV
9 NAP NAP NAP NAP NAP CY Ended 12 12/31/03
10 NAP NAP NAP NAP NAP CY Ended 12 12/31/03
11 NAP NAP NAP NAP NAP CY Ended 12 12/31/03
12 NAP NAP NAP NAP NAP CY Ended 12 12/31/03
13 NAP NAP NAP NAP NAP CY Ended 12 12/31/03
14 NAP NAP NAP NAP NAP CY Ended 12 12/31/03
15 NAP NAP NAP NAP NAP CY Ended 12 12/31/03
16 NAP NAP NAP NAP NAP CY Ended 12 12/31/03
17 NAP NAP NAP NAP NAP CY Ended 12 12/31/03
18 NAP NAP NAP NAP NAP CY Ended 12 12/31/03
19 NAP NAP NAP NAP NAP CY Ended 12 12/31/03
- -----------------------------------------------------------------------------------------------------------------------------------
20 12/31/08 McRae's 19,962 6% 12/31/07 Trailing-12 12 06/30/02
21 09/30/14 Northwestern Memorial Physicians 27,275 6% 02/28/09 CY Ended 12 12/31/02
Group
22 02/28/09 Christmas Tree Shops, Inc 50,444 16% 12/31/22 UAV UAV UAV
- -----------------------------------------------------------------------------------------------------------------------------------
23 01/31/12 Michaels Stores, Inc 23,970 10% 08/31/11 UAV UAV UAV
24 11/30/17 Olive Garden 8,067 9% 02/28/12 UAV UAV UAV
- -----------------------------------------------------------------------------------------------------------------------------------
25 05/16/11 Broad & Cassel 18,156 12% 05/31/11 CY Ended 12 12/31/02
26 NAP NAP NAP NAP NAP UAV UAV UAV
27 NAP NAP NAP NAP NAP UAV UAV UAV
- -----------------------------------------------------------------------------------------------------------------------------------
28 NAP NAP NAP NAP NAP UAV UAV UAV
29 NAP NAP NAP NAP NAP UAV UAV UAV
- -----------------------------------------------------------------------------------------------------------------------------------
30 NAP NAP NAP NAP NAP UAV UAV UAV
31 NAP NAP NAP NAP NAP UAV UAV UAV
- -----------------------------------------------------------------------------------------------------------------------------------
32 NAP NAP NAP NAP NAP CY Ended 12 12/31/02
33 NAP NAP NAP NAP NAP CY Ended 12 12/31/02
34 NAP NAP NAP NAP NAP CY Ended 12 12/31/02
35 NAP NAP NAP NAP NAP CY Ended 12 12/31/02
36 NAP NAP NAP NAP NAP CY Ended 12 12/31/02
37 NAP NAP NAP NAP NAP CY Ended 12 12/31/02
38 NAP NAP NAP NAP NAP CY Ended 12 12/31/02
- -----------------------------------------------------------------------------------------------------------------------------------
39 NAP NAP NAP NAP NAP CY Ended 12 12/31/02
40 10/31/09 Option One Mortgage 21,835 9% 12/31/09 UAV UAV UAV
41 NAP NAP NAP NAP NAP CY Ended 12 12/31/02
42 NAP NAP NAP NAP NAP CY Ended 12 12/31/02
43 07/31/06 Carl Vogel Center 5,773 7% 08/31/06 CY Ended 12 12/31/02
44 07/31/05 Jeffrey M. Gitelman, DDS 1,685 5% 11/30/04 CY Ended 12 12/31/02
45 05/31/12 Bealls 40,451 9% 12/31/05 CY Ended 12 12/31/02
46 05/31/11 United Title 6,426 9% 06/25/04 CY Ended 12 12/31/02
47 01/31/07 State Farm Insurance 2,930 7% 12/31/05 CY Ended 12 12/31/02
48 NAP NAP NAP NAP NAP UAV UAV UAV
49 10/31/17 Burlington Coat Factory 52,875 20% 07/31/06 CY Ended 12 12/31/02
50 10/31/07 Prudential Securities 9,160 8% 02/28/07 CY Ended 12 12/31/02
51 12/31/09 World Travel Partners I, LLC 13,780 10% 08/31/10 CY Ended 12 12/31/02
52 01/15/19 Washington Mutual 3,425 5% 03/31/13 UAV UAV UAV
53 02/29/08 American International Insurance Company 14,818 7% 08/31/04 CY Ended 12 12/31/02
54 04/30/04 Century Partners Group, Ltd. 10,176 6% 09/30/07 CY Ended 12 12/31/02
55 NAP NAP NAP NAP NAP CY Ended 12 12/31/02
56 12/31/05 The Original Burger 7,414 8% 10/31/12 CY Ended 12 12/31/02
57 10/31/07 Hartford Steam Boiler 20,404 12% 08/31/07 CY Ended 12 12/31/02
58 02/28/13 Country Wide Mortgage 11,859 14% 01/30/09 UAV UAV UAV
- -----------------------------------------------------------------------------------------------------------------------------------
59 NAP NAP NAP NAP NAP CY Ended 12 12/31/02
60 NAP NAP NAP NAP NAP CY Ended 12 12/31/02
61 NAP NAP NAP NAP NAP Trailing-12 12 08/31/02
- -----------------------------------------------------------------------------------------------------------------------------------
62 NAP NAP NAP NAP NAP CY Ended 12 12/31/02
63 NAP NAP NAP NAP NAP Annualized 10 12/31/02
64 NAP NAP NAP NAP NAP Annualized 9 12/31/02
- -----------------------------------------------------------------------------------------------------------------------------------
65 01/31/06 Dollar Tree 7,700 8% 12/31/05 CY Ended 12 12/31/02
66 NAP NAP NAP NAP NAP CY Ended 12 12/31/02
67 01/31/07 Pier One Imports 9,000 10% 02/28/05 CY Ended 12 12/31/02
68 04/30/05 Countrywide Home Loans 3,600 5% 10/31/07 CY Ended 12 12/31/02
69 NAP NAP NAP NAP NAP CY Ended 12 12/31/02
70 NAP NAP NAP NAP NAP CY Ended 12 12/31/03
71 07/31/13 Factory 2-U Stores, Inc. 15,000 20% 09/30/08 UAV UAV UAV
72 05/31/07 Frazee Paint 3,106 4% 11/30/07 CY Ended 12 12/31/02
73 NAP NAP NAP NAP NAP UAV UAV UAV
74 01/31/14 Jos. A. Bank Clothiers 4,515 18% 01/31/14 UAV UAV UAV
75 07/31/13 Armadillo Restaurant 7,980 7% 04/30/08 CY Ended 12 12/31/02
76 12/31/05 AmCan Library 3,128 7% 06/30/09 UAV UAV UAV
77 NAP NAP NAP NAP NAP CY Ended 12 12/31/02
78 09/30/06 New Maine Appliance Warehouse, Inc. 4,400 4% 02/28/05 CY Ended 12 12/31/03
79 NAP NAP NAP NAP NAP CY Ended 12 12/31/03
80 NAP NAP NAP NAP NAP CY Ended 12 12/31/02
81 12/31/05 Greentree Learning Centers 13,696 21% 09/30/07 CY Ended 12 12/31/02
82 11/30/05 The Stuart Collection, Inc. 1,875 10% 03/31/07 CY Ended 12 12/31/02
83 08/16/08 Prudential Realty 3,900 18% 09/30/09 UAV UAV UAV
84 03/19/14 Vitis Restaurant 2,750 8% 03/31/09 UAV UAV UAV
85 10/31/10 Best Mattress 2,500 7% 04/30/06 CY Ended 12 12/31/02
86 12/31/09 Once Upon A Child 4,946 11% 12/31/06 CY Ended 12 12/31/02
87 07/31/08 Burger King 2,370 2% 09/14/07 UAV UAV UAV
88 01/18/08 Visual Health @ Fort Lauderdale, 3,379 8% 12/31/08 Annualized 7 12/31/02
LLC
89 NAP NAP NAP NAP NAP CY Ended 12 12/31/02
- -----------------------------------------------------------------------------------------------------------------------------------
90 NAP NAP NAP NAP NAP UAV UAV UAV
91 NAP NAP NAP NAP NAP UAV UAV UAV
- -----------------------------------------------------------------------------------------------------------------------------------
92 03/31/09 Fisherman's Exchange 5,400 10% 01/31/07 CY Ended 12 12/31/02
93 NAP NAP NAP NAP NAP UAV UAV UAV
94 NAP NAP NAP NAP NAP CY Ended 12 12/31/03
95 04/30/12 Pekoma 9,800 22% 03/31/06 CY Ended 12 12/31/02
96 NAP NAP NAP NAP NAP CY Ended 12 12/31/02
97 11/30/04 McIlvaine Company 5,170 8% 12/31/09 CY Ended 12 12/31/02
98 03/31/09 Renter's Choice 3,500 5% 06/30/08 CY Ended 12 12/31/02
99 NAP NAP NAP NAP NAP CY Ended 12 12/31/02
100 01/31/08 Mike Hsieh DDS & C. Shih-Yin Chen 1,838 9% 12/26/08 UAV UAV UAV
DDS
101 10/31/07 Liz Sue Bagels 2,120 9% 10/31/04 CY Ended 12 12/31/02
102 01/31/12 NAP NAP NAP NAP CY Ended 12 12/31/02
103 12/31/08 Starbucks Corporation 1,400 2% 02/28/14 UAV UAV UAV
104 NAP NAP NAP NAP NAP UAV UAV UAV
105 11/30/09 NAP NAP NAP NAP CY Ended 12 12/31/02
106 10/31/15 Tri-County Wireless 1,400 3% 10/31/06 CY Ended 12 12/31/02
107 NAP NAP NAP NAP NAP CY Ended 12 12/31/02
108 01/31/13 Sportsland, Inc. 2,262 11% 12/31/09 UAV UAV UAV
109 01/30/05 BLI 2,175 4% 04/30/05 CY Ended 12 12/31/02
110 10/31/06 Jack in the Box 2,975 12% 11/30/22 UAV UAV UAV
111 01/31/14 Verizon Wireless 2,010 22% 01/31/09 UAV UAV UAV
112 NAP NAP NAP NAP NAP CY Ended 12 12/31/02
113 10/31/08 Sapporo Teriyaki 2,701 14% 12/31/13 UAV UAV UAV
114 09/30/08 CATO 3,840 15% 10/31/08 UAV UAV UAV
115 NAP NAP NAP NAP NAP CY Ended 12 12/31/02
20b
MOST
SECOND SECOND SECOND CURRENT
MOST MOST MOST YEAR
RECENT RECENT RECENT SECOND MOST STATEMENT
CONTROL YEAR YEAR YEAR RECENT YEAR NOI MOST CURRENT YEAR NUMBER OF
NUMBER REVENUES EXPENSES NOI DSCR STATEMENT TYPE MONTHS
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
1 $ 4,004,268 1.54x
1a $ 1,822,152 $ 586,630 1,235,522 Trailing-12 12
1b 1,487,705 513,698 974,007 Trailing-12 12
1c 978,514 249,391 729,123 Trailing-12 12
1d 699,197 230,021 469,176 Trailing-12 12
1e 385,812 95,834 289,978 Trailing-12 12
1f 290,944 114,619 176,325 Trailing-12 12
1g 280,381 150,244 130,137 Trailing-12 12
- -------------------------------------------------------------------------------------------------------------------------
2 3,570,527 1.52
2a 1,617,409 369,723 1,247,686 Trailing-12 12
2b 1,196,240 321,137 875,103 Trailing-12 12
2c 1,204,895 563,650 641,245 Trailing-12 12
2d 545,892 201,019 344,873 Trailing-12 12
2e 519,359 194,627 324,732 Trailing-12 12
2f 191,304 147,575 43,729 Trailing-12 12
2g 156,901 63,742 93,159 Trailing-12 12
- -------------------------------------------------------------------------------------------------------------------------
3 2,614,869 1.63
3a 2,327,166 926,974 1,400,192 Trailing-12 12
3b 821,480 525,580 295,900 Trailing-12 12
3c 659,306 210,124 449,182 Trailing-12 12
3d 477,943 223,797 254,146 Trailing-12 12
3e 171,504 92,675 78,829 Trailing-12 12
3f 90,374 26,308 64,066 Trailing-12 12
3g 216,950 144,396 72,554 Trailing-12 12
- -------------------------------------------------------------------------------------------------------------------------
4 18,466,063 6,937,866 11,528,197 2.01 CY Ended 12
- -------------------------------------------------------------------------------------------------------------------------
5 421,084 303,666 117,418 1.01 Annualized Revenue / UW Expenses 3
6 405,687 196,163 209,524 1.01 Annualized Revenue / UW Expenses 3
7 386,256 188,738 197,518 1.01 Annualized Revenue / UW Expenses 3
8 UAV UAV UAV UAV Annualized Revenue / UW Expenses 3
9 819,692 441,529 378,163 1.01 Annualized Revenue / UW Expenses 3
10 752,332 509,339 242,993 1.01 Annualized Revenue / UW Expenses 3
11 499,564 210,945 288,619 1.01 Annualized Revenue / UW Expenses 3
12 1,005,847 464,730 541,116 1.01 Annualized Revenue / UW Expenses 3
13 566,181 405,727 160,454 1.01 Annualized Revenue / UW Expenses 3
14 417,440 333,704 83,736 1.01 Annualized Revenue / UW Expenses 3
15 1,415,400 548,732 866,669 1.01 Annualized Revenue / UW Expenses 3
16 539,706 203,943 335,763 1.01 Annualized Revenue / UW Expenses 3
17 680,499 281,191 399,308 1.01 Annualized Revenue / UW Expenses 3
18 607,344 236,427 370,917 1.01 Annualized Revenue / UW Expenses 3
19 535,302 403,293 132,009 1.01 Annualized Revenue / UW Expenses 3
- -------------------------------------------------------------------------------------------------------------------------
20 9,680,928 3,502,457 6,178,471 1.44 CY Ended 12
21 14,734,297 7,805,409 6,928,888 1.89 CY Ended 12
22 UAV UAV UAV UAV UAV UAV
- -------------------------------------------------------------------------------------------------------------------------
23 UAV UAV UAV UAV CY Ended 12
24 UAV UAV UAV UAV UAV UAV
- -------------------------------------------------------------------------------------------------------------------------
25 5,641,074 2,558,557 3,082,517 1.40 CY Ended 12
26 UAV UAV UAV UAV UAV UAV
27 UAV UAV UAV UAV UAV UAV
- -------------------------------------------------------------------------------------------------------------------------
28 UAV UAV UAV UAV UAV UAV
29 UAV UAV UAV UAV UAV UAV
- -------------------------------------------------------------------------------------------------------------------------
30 UAV UAV UAV UAV UAV UAV
31 UAV UAV UAV UAV UAV UAV
- -------------------------------------------------------------------------------------------------------------------------
32 741,458 222,878 518,580 1.70 Trailing-12 12
33 660,447 235,027 425,420 1.70 Trailing-12 12
34 706,233 278,739 427,494 1.70 Trailing-12 12
35 581,855 193,766 388,089 1.70 Trailing-12 12
36 681,084 227,359 453,725 1.70 Trailing-12 12
37 450,858 193,669 257,189 1.70 Trailing-12 12
38 340,121 154,760 185,361 1.70 Trailing-12 12
- -------------------------------------------------------------------------------------------------------------------------
39 11,820,497 8,345,821 3,474,676 2.03 Trailing-12 12
40 UAV UAV UAV UAV UAV UAV
41 9,283,109 6,118,719 3,164,391 1.96 CY Ended 12
42 2,754,282 1,738,650 1,015,632 0.77 CY Ended 12
43 1,903,074 621,903 1,281,172 1.45 Annualized 9
44 1,135,539 523,599 611,940 1.83 Annualized 9
45 4,854,358 2,766,192 2,088,165 1.43 Trailing-12 12
46 1,851,071 659,884 1,191,187 1.48 CY Ended 12
47 929,076 298,086 630,990 1.68 CY Ended 12
48 UAV UAV UAV UAV UAV UAV
49 2,469,291 1,234,200 1,235,090 1.09 CY Ended 12
50 1,952,481 393,814 1,558,667 1.38 Annualized 10
51 3,395,139 1,187,094 2,208,045 2.13 CY Ended 12
52 UAV UAV UAV UAV UAV UAV
53 2,397,622 982,415 1,415,207 1.47 Annualized 11
54 2,822,673 1,337,630 1,485,043 1.51 Annualized 9
55 1,675,491 557,307 1,118,184 1.27 Trailing-12 12
56 2,176,983 639,323 1,537,660 1.57 Trailing-12 12
57 1,520,428 543,568 976,860 1.09 CY Ended 12
58 UAV UAV UAV UAV Annualized 10
- -------------------------------------------------------------------------------------------------------------------------
59 460,030 170,331 289,699 1.61 CY Ended 12
60 488,494 220,894 267,600 1.61 CY Ended 12
61 499,457 211,376 288,081 1.61 Annualized 7
- -------------------------------------------------------------------------------------------------------------------------
62 362,784 101,186 261,598 1.61 Annualized 11
63 268,921 81,984 186,937 1.61 Annualized 11
64 144,590 61,864 82,727 1.61 Annualized 11
- -------------------------------------------------------------------------------------------------------------------------
65 1,468,867 431,244 1,037,623 1.30 CY Ended 12
66 1,542,979 559,355 983,624 1.40 CY Ended 12
67 1,492,777 376,923 1,115,854 1.59 Trailing-12 12
68 1,335,477 331,785 1,003,692 1.53 CY Ended 12
69 2,093,749 1,304,779 788,970 1.20 Trailing-12 12
70 3,860,640 2,439,593 1,421,047 2.07 Trailing-12 12
71 UAV UAV UAV UAV UAV UAV
72 1,234,132 292,298 941,834 1.75 Annualized 11
73 UAV UAV UAV UAV Annualized 7
74 UAV UAV UAV UAV UAV UAV
75 1,340,140 474,510 865,630 1.63 CY Ended 12
76 UAV UAV UAV UAV Annualized 11
77 1,253,829 600,235 653,594 1.39 Trailing-12 12
78 1,025,159 220,297 804,862 1.61 Annualized 4
79 1,084,896 535,444 549,452 1.12 Annualized 3
80 1,284,721 722,320 562,401 1.05 CY Ended 12
81 1,243,066 314,522 928,544 1.99 Annualized 8
82 553,772 149,277 404,495 1.33 Trailing-12 12
83 UAV UAV UAV UAV UAV UAV
84 UAV UAV UAV UAV UAV UAV
85 609,062 221,211 387,851 0.96 Trailing-12 12
86 689,458 157,382 532,076 1.31 CY Ended 12
87 UAV UAV UAV UAV UAV UAV
88 929,576 326,591 602,985 1.58 Trailing-12 12
89 1,117,030 554,534 562,496 1.49 CY Ended 12
- -------------------------------------------------------------------------------------------------------------------------
90 UAV UAV UAV UAV Annualized 9
91 UAV UAV UAV UAV Annualized 9
- -------------------------------------------------------------------------------------------------------------------------
92 964,032 262,699 701,333 1.79 Annualized 9
93 UAV UAV UAV UAV UAV UAV
94 876,069 488,557 387,512 1.71 Trailing-12 12
95 809,090 156,559 652,532 1.81 CY Ended 12
96 845,906 142,656 703,250 1.38 Trailing-12 12
97 889,762 447,969 441,793 1.24 Trailing-12 12
98 722,787 186,115 536,672 1.70 CY Ended 12
99 813,482 421,840 391,643 1.22 CY Ended 12
100 UAV UAV UAV UAV Annualized 9
101 635,965 123,637 512,328 1.65 CY Ended 12
102 582,968 136,858 446,110 1.58 Annualized 11
103 UAV UAV UAV UAV Annualized 10
104 UAV UAV UAV UAV UAV UAV
105 540,207 90,187 450,020 1.57 Trailing-12 12
106 493,363 40,844 452,519 1.71 CY Ended 12
107 965,429 587,103 378,325 2.23 CY Ended 12
108 UAV UAV UAV UAV UAV UAV
109 640,564 253,957 386,607 1.64 CY Ended 12
110 UAV UAV UAV UAV UAV UAV
111 UAV UAV UAV UAV UAV UAV
112 308,211 3,116 305,095 1.37 Annualized 10
113 UAV UAV UAV UAV UAV UAV
114 UAV UAV UAV UAV UAV UAV
115 443,288 189,644 253,644 1.60 CY Ended 12
20b
MOST
CURRENT
YEAR MOST MOST
STATEMENT CURRENT CURRENT MOST MOST U/W
CONTROL ENDING YEAR YEAR CURRENT CURRENT YEAR U/W U/W NCF
NUMBER DATE REVENUES EXPENSES YEAR NOI NOI DSCR REVENUES EXPENSES U/W NOI U/W NCF DSCR (D)
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
1 $ 4,091,473 1.58x $ 3,755,708 $ 3,679,908 1.42x
1a 09/30/03 $ 1,849,622 $ 730,269 1,119,353 $ 1,857,905 $ 856,499 1,001,406 983,906
1b 09/30/03 1,584,621 470,419 1,114,202 1,556,342 552,564 1,003,778 987,628
1c 09/30/03 1,066,367 260,763 805,604 1,066,724 312,285 754,439 741,989
1d 09/30/03 718,653 241,363 477,290 726,495 265,314 461,181 448,631
1e 09/30/03 392,789 110,907 281,882 394,566 148,198 246,368 239,268
1f 09/30/03 293,668 107,283 186,385 292,822 116,028 176,794 171,894
1g 09/30/03 300,533 193,775 106,758 303,561 191,818 111,743 106,593
- ------------------------------------------------------------------------------------------------------------------------------------
2 3,814,838 1.63 3,307,592 3,230,842 1.38
2a 09/30/03 1,636,401 352,958 1,283,443 1,610,827 473,140 1,137,687 1,122,537
2b 09/30/03 1,177,435 386,055 791,380 1,116,469 442,758 673,711 657,961
2c 09/30/03 1,290,447 549,640 740,807 1,312,565 703,900 608,665 595,815
2d 09/30/03 633,334 236,943 396,391 653,513 293,264 360,249 350,249
2e 09/30/03 559,950 169,574 390,376 567,400 246,839 320,561 308,061
2f 09/30/03 291,182 181,212 109,970 319,557 186,599 132,958 125,558
2g 09/30/03 158,188 55,717 102,471 153,144 79,383 73,761 70,661
- ------------------------------------------------------------------------------------------------------------------------------------
3 2,695,901 1.68 2,414,957 2,338,757 1.46
3a 09/30/03 2,328,531 937,255 1,391,276 2,394,377 1,121,302 1,273,075 1,240,925
3b 09/30/03 948,047 641,851 306,196 924,779 691,499 233,280 223,280
3c 09/30/03 688,181 222,020 466,161 690,819 264,328 426,491 415,741
3d 09/30/03 545,432 321,478 223,954 541,740 348,753 192,987 183,837
3e 09/30/03 224,092 120,912 103,180 242,421 133,878 108,543 103,243
3f 09/30/03 181,911 59,536 122,375 175,651 68,088 107,563 103,963
3g 09/30/03 246,333 163,574 82,759 239,850 166,833 73,017 67,767
- ------------------------------------------------------------------------------------------------------------------------------------
4 12/31/03 18,348,774 7,144,406 11,204,368 1.95 18,633,136 6,887,924 11,745,212 11,257,540 1.96
- ------------------------------------------------------------------------------------------------------------------------------------
5 03/31/04 490,993 294,071 196,922 1.01 584,680 298,755 285,925 262,981 1.48
6 03/31/04 389,188 194,900 194,288 1.27 401,708 195,526 206,182 194,771 1.48
7 03/31/04 369,900 187,875 182,025 1.88 369,900 187,875 182,025 172,532 1.48
8 03/31/04 293,128 268,627 24,501 0.12 535,715 280,757 254,958 242,821 1.48
9 03/31/04 972,554 460,125 512,429 1.44 1,090,339 466,014 624,326 611,290 1.48
10 03/31/04 880,750 516,394 364,356 0.69 1,180,462 531,380 649,082 634,842 1.48
11 03/31/04 542,216 212,661 329,555 1.68 542,216 212,661 329,555 320,256 1.48
12 03/31/04 1,223,405 549,187 674,217 1.62 1,249,671 550,501 699,171 674,980 1.48
13 03/31/04 670,492 399,414 271,078 0.87 849,182 408,349 440,833 429,543 1.48
14 03/31/04 526,966 333,274 193,692 0.83 639,101 338,880 300,220 294,850 1.48
15 03/31/04 1,634,639 612,897 1,021,742 1.44 1,736,516 617,991 1,118,525 1,109,959 1.48
16 03/31/04 508,504 204,486 304,018 1.66 508,504 204,486 304,018 294,083 1.48
17 03/31/04 799,827 298,357 501,470 1.24 935,315 305,131 630,184 617,204 1.48
18 03/31/04 613,638 238,564 375,074 1.39 653,259 240,545 412,714 398,969 1.48
19 03/31/04 641,409 402,590 238,819 0.98 810,733 411,056 399,677 384,872 1.48
- ------------------------------------------------------------------------------------------------------------------------------------
20 12/31/03 10,721,334 3,083,099 7,638,235 1.78 11,314,565 3,513,233 7,801,333 7,427,949 1.73
21 12/31/03 14,693,454 7,630,975 7,062,479 1.92 14,693,481 8,071,340 6,622,141 5,900,512 1.61
22 UAV UAV UAV UAV UAV 4,963,904 1,921,164 3,042,740 2,976,124 1.24
- ------------------------------------------------------------------------------------------------------------------------------------
23 12/31/03 3,326,704 715,434 2,611,270 UAV 3,367,351 835,933 2,531,418 2,350,456 1.30
24 UAV UAV UAV UAV UAV 1,135,061 406,110 728,951 687,582 1.30
- ------------------------------------------------------------------------------------------------------------------------------------
25 12/31/03 5,763,516 2,423,164 3,340,352 1.52 5,535,944 2,461,234 3,074,710 2,836,609 1.29
26 UAV UAV UAV UAV UAV 2,709,114 0 2,709,114 2,709,114 1.36
27 UAV UAV UAV UAV UAV 2,916,733 0 2,916,733 2,916,733 1.55
- ------------------------------------------------------------------------------------------------------------------------------------
28 UAV UAV UAV UAV UAV 246,000 7,380 238,620 236,534 1.29
29 UAV UAV UAV UAV UAV 234,000 7,020 226,980 224,894 1.29
- ------------------------------------------------------------------------------------------------------------------------------------
30 UAV UAV UAV UAV UAV 1,102,038 33,061 1,068,977 1,035,548 1.24
31 UAV UAV UAV UAV UAV 798,000 23,940 774,060 739,045 1.22
- ------------------------------------------------------------------------------------------------------------------------------------
32 06/30/03 767,034 218,104 548,930 1.72 799,151 310,460 488,691 479,709 1.64
33 06/30/03 665,593 263,886 401,707 1.72 804,855 341,337 463,518 452,845 1.64
34 06/30/03 719,018 281,333 437,685 1.72 706,615 353,338 353,277 343,774 1.64
35 06/30/03 595,869 215,708 380,161 1.72 681,806 285,546 396,260 387,028 1.64
36 06/30/03 675,436 234,057 441,379 1.72 700,467 301,035 399,432 388,773 1.64
37 06/30/03 456,186 182,583 273,603 1.72 527,854 230,798 297,056 289,801 1.64
38 06/30/03 369,588 164,317 205,271 1.72 448,714 212,578 236,136 229,151 1.64
- ------------------------------------------------------------------------------------------------------------------------------------
39 03/31/04 13,387,685 9,487,423 3,900,261 2.28 13,189,308 9,471,553 3,717,754 3,058,289 1.79
40 UAV UAV UAV UAV UAV 4,148,976 1,759,223 2,389,753 2,048,692 1.30
41 12/31/03 8,045,084 5,560,660 2,484,424 1.54 8,038,887 5,391,406 2,647,481 2,325,926 1.44
42 12/31/03 3,276,979 1,650,182 1,626,797 1.23 3,397,513 1,437,934 1,959,580 1,786,296 1.35
43 09/30/03 2,087,982 664,377 1,423,605 1.61 2,032,915 721,387 1,311,527 1,188,443 1.35
44 09/30/03 1,103,346 581,456 521,890 1.56 1,077,914 599,056 478,858 425,024 1.27
45 07/31/03 5,292,573 2,822,978 2,469,595 1.70 5,225,723 2,856,906 2,368,817 2,092,081 1.44
46 12/31/03 1,919,224 639,169 1,280,055 1.59 1,953,488 714,655 1,238,833 1,107,727 1.38
47 12/31/03 876,751 281,313 595,438 1.59 946,348 322,656 623,693 558,920 1.49
48 UAV UAV UAV UAV UAV 2,321,767 1,037,639 1,284,128 1,242,628 1.56
49 12/31/03 3,956,033 1,497,421 2,458,612 2.16 3,257,974 1,666,583 1,591,391 1,403,834 1.24
50 10/31/03 1,951,077 399,400 1,551,677 1.37 1,795,883 372,607 1,423,276 1,355,119 1.25
51 12/31/03 3,345,378 1,214,245 2,131,133 2.05 2,763,443 1,209,113 1,554,330 1,394,951 1.34
52 UAV UAV UAV UAV UAV 2,181,797 656,099 1,525,697 1,463,284 1.49
53 11/30/03 2,498,346 1,064,264 1,434,082 1.49 2,520,770 936,817 1,583,953 1,307,482 1.36
54 09/30/03 2,912,667 1,409,007 1,503,661 1.53 2,888,935 1,410,020 1,478,915 1,285,632 1.31
55 11/30/03 1,950,346 543,851 1,406,495 1.60 2,085,307 630,654 1,454,652 1,444,883 1.64
56 09/30/03 2,222,639 718,251 1,504,388 1.53 2,366,613 807,738 1,558,875 1,403,553 1.43
57 12/31/03 2,146,676 788,805 1,357,871 1.52 2,297,128 893,069 1,404,059 1,218,645 1.36
58 10/31/03 814,379 394,494 419,885 0.51 2,108,603 767,276 1,341,327 1,207,065 1.47
- ------------------------------------------------------------------------------------------------------------------------------------
59 12/31/03 469,652 179,344 290,308 1.34 470,249 201,643 268,607 231,407 1.22
60 12/31/03 480,657 222,913 257,744 1.34 479,233 235,674 243,559 210,259 1.22
61 12/31/03 350,143 190,738 159,405 1.34 423,278 210,550 212,728 183,028 1.22
- ------------------------------------------------------------------------------------------------------------------------------------
62 11/30/03 358,371 113,101 245,270 1.61 359,810 127,875 231,934 208,534 1.33
63 11/30/03 264,080 88,891 175,189 1.61 269,805 106,730 163,075 145,075 1.33
64 11/30/03 173,580 62,995 110,585 1.61 165,759 68,951 96,809 85,709 1.33
- ------------------------------------------------------------------------------------------------------------------------------------
65 12/31/03 1,461,544 381,341 1,080,204 1.35 1,499,956 483,889 1,016,067 973,093 1.22
66 12/31/03 1,610,926 617,180 993,746 1.42 1,735,013 673,111 1,061,903 1,049,303 1.50
67 08/31/03 1,273,066 391,227 881,839 1.26 1,588,930 477,045 1,111,884 1,042,768 1.49
68 12/31/03 1,431,816 350,621 1,081,195 1.65 1,419,944 308,935 1,111,009 1,027,062 1.57
69 03/31/04 2,188,624 1,233,677 954,947 1.45 2,131,808 1,173,033 958,775 894,335 1.36
70 02/28/04 4,011,561 2,457,512 1,554,049 2.27 3,858,510 2,485,266 1,373,244 1,218,904 1.78
71 UAV UAV UAV UAV UAV 1,172,590 327,128 845,462 789,080 1.28
72 11/30/03 1,250,506 298,252 952,254 1.77 1,423,632 448,616 975,016 927,667 1.72
73 11/30/03 832,284 0 832,284 1.64 832,284 24,969 807,315 786,939 1.55
74 UAV UAV UAV UAV UAV 1,137,061 311,844 825,216 779,198 1.77
75 12/31/03 1,241,655 481,634 760,021 1.43 1,394,105 513,721 880,383 780,417 1.47
76 11/30/03 855,899 218,090 637,809 1.25 1,006,178 206,034 800,144 736,702 1.44
77 10/31/03 1,317,376 585,159 732,217 1.56 1,263,152 581,067 682,085 625,585 1.33
78 03/31/04 1,104,897 240,022 864,875 1.73 1,081,999 295,072 786,927 719,631 1.44
79 03/31/04 1,154,500 502,028 652,472 1.33 1,151,099 496,087 655,012 623,332 1.27
80 12/31/03 1,362,999 730,993 632,005 1.18 1,454,628 731,554 723,074 672,074 1.26
81 08/31/03 1,289,166 381,432 907,734 1.95 1,067,653 345,796 721,857 591,826 1.27
82 09/30/03 576,642 141,819 434,823 1.42 603,835 162,121 441,714 413,197 1.35
83 UAV UAV UAV UAV UAV 335,243 111,117 224,125 196,666 1.35
84 UAV UAV UAV UAV UAV 777,513 173,420 604,094 569,547 1.35
85 10/31/03 703,881 245,209 458,672 1.13 849,193 269,113 580,080 548,399 1.35
86 12/31/03 755,144 181,752 573,392 1.42 792,611 225,294 567,317 529,046 1.31
87 UAV UAV UAV UAV UAV 568,438 71,477 496,961 489,281 1.23
88 09/30/03 967,065 317,981 649,084 1.70 893,050 319,458 573,592 509,805 1.33
89 12/31/03 1,199,997 567,655 632,342 1.67 1,187,087 647,195 539,892 467,892 1.24
- ------------------------------------------------------------------------------------------------------------------------------------
90 09/30/03 320,997 1,500 319,496 1.48 304,947 10,521 294,425 286,545 1.33
91 09/30/03 310,041 1,433 308,608 1.48 294,833 10,218 284,615 276,971 1.33
- ------------------------------------------------------------------------------------------------------------------------------------
92 09/30/03 974,445 259,555 714,891 1.83 900,061 231,019 669,042 621,492 1.59
93 UAV UAV UAV UAV UAV 830,358 330,902 499,456 472,456 1.35
94 02/29/04 881,492 490,964 390,528 1.72 918,952 487,306 431,646 400,706 1.77
95 12/31/03 762,832 209,955 552,876 1.53 852,994 247,546 605,448 508,260 1.41
96 11/30/03 853,346 154,614 698,732 1.37 813,279 169,632 643,646 620,048 1.22
97 05/31/03 909,592 450,450 459,142 1.29 1,083,321 567,257 516,064 426,867 1.20
98 12/30/03 722,530 182,426 540,104 1.71 680,348 190,062 490,286 446,663 1.41
99 12/31/03 817,945 450,913 367,032 1.14 870,281 383,020 487,260 471,240 1.47
100 09/30/03 486,796 98,576 388,220 1.28 637,540 179,590 457,951 434,013 1.43
101 12/31/03 677,991 122,257 555,733 1.79 631,213 150,025 481,188 456,669 1.47
102 11/30/03 591,338 137,487 453,851 1.61 762,297 319,946 442,351 408,386 1.45
103 10/31/03 186,050 11,197 174,853 0.59 592,837 167,454 425,383 412,587 1.40
104 UAV UAV UAV UAV UAV 586,278 171,787 414,491 412,121 1.42
105 08/30/03 553,090 91,092 461,998 1.61 532,268 109,249 423,020 386,907 1.35
106 12/23/03 498,317 41,409 456,908 1.72 467,619 65,248 402,371 382,999 1.44
107 12/31/03 913,857 552,041 361,816 2.13 938,804 584,459 354,345 303,345 1.78
108 UAV UAV UAV UAV UAV 504,763 148,846 355,917 334,548 1.24
109 12/31/03 603,826 272,538 331,288 1.41 659,278 280,915 378,362 310,650 1.32
110 UAV UAV UAV UAV UAV 651,944 304,610 347,334 325,875 1.51
111 UAV UAV UAV UAV UAV 400,460 99,370 301,090 287,158 1.45
112 12/31/03 306,938 3,682 303,257 1.36 301,824 6,036 295,787 269,158 1.21
113 UAV UAV UAV UAV UAV 317,845 87,128 230,717 213,357 1.22
114 UAV UAV UAV UAV UAV 303,155 57,852 245,303 228,178 1.20
115 12/31/03 455,208 193,057 262,151 1.65 464,548 217,076 247,472 242,872 1.53
20b
ESCROWED
RECOMMENDED REPLACEMENT
TAXES INSURANCE ANNUAL U/W ANNUAL RESERVES ESCROWED REPLACEMENT
CONTROL CURRENTLY CURRENTLY REPLACEMENT REPLACEMENT INITIAL RESERVES CURRENT
NUMBER ESCROWED ESCROWED RESERVES RESERVES DEPOSIT ANNUAL DEPOSIT
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
1 Yes Yes $ 47,307 $ 75,800 $ 6,317 $ 75,800
1a Yes Yes 5,253 17,500 1,458 17,500
1b Yes Yes 15,820 16,150 1,346 16,150
1c Yes Yes 9,041 12,450 1,038 12,450
1d Yes Yes 4,000 12,550 1,046 12,550
1e Yes Yes 9,526 7,100 592 7,100
1f Yes Yes 1,558 4,900 408 4,900
1g Yes Yes 2,110 5,150 429 5,150
- ------------------------------------------------------------------------------------------------------------------------------------
2 Yes Yes 39,029 76,750 6,396 76,750
2a Yes Yes 5,479 15,150 1,263 15,150
2b Yes Yes 10,421 15,750 1,313 15,750
2c Yes Yes 6,583 12,850 1,071 12,850
2d Yes Yes 8,358 10,000 833 10,000
2e Yes Yes 5,063 12,500 1,042 12,500
2f Yes Yes 2,083 7,400 617 7,400
2g Yes Yes 1,042 3,100 258 3,100
- ------------------------------------------------------------------------------------------------------------------------------------
3 Yes Yes 27,556 76,200 6,350 76,200
3a Yes Yes 3,732 32,150 2,679 32,150
3b Yes Yes 8,414 10,000 833 10,000
3c Yes Yes 5,589 10,750 896 10,750
3d Yes Yes 2,986 9,150 763 9,150
3e Yes Yes 1,514 5,300 442 5,300
3f Yes Yes 1,586 3,600 300 3,600
3g Yes Yes 3,734 5,250 438 5,250
- ------------------------------------------------------------------------------------------------------------------------------------
4 Yes No 175,603 102,799 0 102,797
- ------------------------------------------------------------------------------------------------------------------------------------
5 Yes No 20,751 22,943 0 0
6 Yes No 1,195 11,411 118 1,416
7 Yes No 1,218 9,493 116 1,392
8 Yes No 541 12,137 1,012 0
9 Yes No 2,980 13,036 1,086 0
10 Yes No 3,863 14,240 1,187 0
11 Yes No 1,683 9,299 0 1,932
12 Yes No 22,322 24,191 2,016 0
13 Yes No 5,174 11,290 941 0
14 Yes No 3,337 5,371 572 0
15 Yes No 5,188 8,566 0 0
16 Yes No 1,701 9,934 167 2,004
17 Yes No 8,873 12,980 1,081 0
18 Yes No 2,005 13,745 0 2,364
19 Yes No 749 14,805 1,233 0
- ------------------------------------------------------------------------------------------------------------------------------------
20 No No 88,317 88,317 0 0
21 Yes No 85,691 97,813 0 97,813
22 Yes No 17,623 21,764 0 21,764
- ------------------------------------------------------------------------------------------------------------------------------------
23 No No 41,935 42,866 0 0
24 No No 10,319 13,083 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
25 No No 30,533 31,076 0 0
26 No No 40,459 0 0 0
27 No No 18,315 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
28 No No 0 2,086 0 2,077
29 No No 0 2,086 0 2,070
- ------------------------------------------------------------------------------------------------------------------------------------
30 No No 32,604 33,429 0 0
31 No No 34,879 35,015 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
32 Yes Yes 1,414 8,983 0 8,973
33 Yes Yes 3,714 10,673 0 10,673
34 Yes Yes 3,049 9,503 0 9,480
35 Yes Yes 3,470 9,233 0 9,233
36 Yes Yes 3,850 10,659 0 10,659
37 Yes Yes 2,036 7,255 0 7,255
38 Yes Yes 1,556 6,985 0 6,995
- ------------------------------------------------------------------------------------------------------------------------------------
39 Yes Yes 107,583 0 0 652,200.00 For first 12 months of loan term
40 Yes Yes 20,330 46,466 0 46,464
41 Yes No 204,546 321,555 29,667 4% of Gross Revenue
42 Yes Yes 9,136 8,977 0 0
43 Yes Yes 23,152 25,756 0 25,756
44 Yes Yes 6,723 7,142 0 7,142
45 Yes Yes 27,289 66,903 0 66,903
46 Yes Yes 11,771 11,771 0 14,976
47 Yes Yes 6,621 6,621 0 8,406
48 Yes No 25,919 41,500 3,458 41,496
49 Yes Yes 46,396 53,652 4,471 53,652
50 Yes Yes 14,367 17,235 0 0
51 Yes No 13,630 15,790 0 15,790
52 Yes No 5,683 11,243 0 11,244
53 Yes No 46,015 46,784 0 44,557
54 Yes Yes 7,417 32,214 0 32,214
55 Yes Yes 6,226 9,770 0 9,770
56 Yes Yes 9,716 13,880 0 13,850
57 Yes Yes 10,709 26,312 0 26,312
58 Yes Yes 11,806 17,562 0 17,479
- ------------------------------------------------------------------------------------------------------------------------------------
59 Yes No 22,160 37,200 0 37,200
60 Yes No 19,890 33,300 0 33,000
61 Yes Yes 20,318 29,700 0 29,700
- ------------------------------------------------------------------------------------------------------------------------------------
62 Yes No 16,064 23,400 0 23,406
63 Yes No 14,694 18,000 0 18,000
64 Yes No 8,856 11,100 0 11,100
- ------------------------------------------------------------------------------------------------------------------------------------
65 Yes Yes 16,228 18,520 0 18,528
66 Yes Yes 6,626 12,600 0 7,645
67 Yes Yes 12,458 13,145 0 13,145
68 Yes Yes 8,645 11,718 0 11,718
69 Yes Yes 53,800 64,440 0 64,440
70 Yes Yes 43,858 154,340 0 154,340
71 Yes No 3,658 7,523 0 7,523
72 Yes Yes 7,941 10,507 0 10,561
73 No No 15,383 20,377 0 16,470
74 Yes No 1,500 3,755 0 3,755
75 Yes Yes 31,923 17,108 0 17,108
76 Yes Yes 3,400 9,338 0 9,258
77 Yes Yes 52,797 56,500 0 56,500
78 Yes Yes 17,364 17,604 0 17,969
79 Yes Yes 31,627 31,680 0 28,800
80 No No 51,096 51,000 TBD 51,000
81 Yes Yes 13,047 13,196 0 13,196
82 Yes Yes 5,308 5,309 0 5,304
83 Yes Yes 3,950 3,950 0 3,948
84 Yes Yes 2,113 5,067 0 5,156
85 Yes No 3,400 5,190 0 0
86 No No 9,475 9,290 0 9,290
87 No No 2,575 2,575 0 0
88 Yes No 18,260 18,372 0 18,359
89 Yes No 37,991 72,000 0 36,000
- ------------------------------------------------------------------------------------------------------------------------------------
90 No No 813 1,636 0 1,636
91 No No 908 1,636 0 1,636
- ------------------------------------------------------------------------------------------------------------------------------------
92 Yes Yes 6,250 10,644 0 10,627
93 Yes Yes 17,798 27,000 0 27,000
94 Yes No 30,688 30,940 0 30,940
95 Yes Yes 1,437 9,003 0 9,003
96 No Yes 6,826 6,994 81,080 6,963
97 Yes Yes 11,013 12,249 0 12,249
98 Yes Yes 9,938 10,460 0 10,460
99 No No 13,954 16,020 0 0
100 Yes Yes 2,426 3,122 0 3,122
101 Yes Yes 5,956 5,927 0 5,927
102 Yes No 6,582 7,518 0 7,518
103 Yes Yes 1,254 1,470 0 1,470
104 Yes Yes 749 2,370 0 2,370
105 Yes Yes 11,306 10,501 0 10,501
106 Yes Yes 5,415 6,874 0 6,874
107 Yes Yes 50,648 51,000 0 51,000
108 Yes Yes 5,389 5,429 0 5,520
109 Yes Yes 12,665 12,268 0 12,228
110 Yes Yes 2,360 2,808 0 2,808
111 Yes Yes 333 901 0 892
112 No No 6,329 6,138 0 6,138
113 Yes No 2,946 2,888 0 2,888
114 Yes Yes 1,308 2,500 208 2,500
115 Yes Yes 3,663 4,600 383 4,600
20b
RECOMMENDED ESCROWED
ANNUAL U/W ANNUAL REPLACEMENT
REPLACEMENT REPLACEMENT RESERVES INITIAL ESCROWED REPLACEMENT
CONTROL RESERVES RESERVES DEPOSIT RESERVES CURRENT ANNUAL
NUMBER PSF/UNIT/ROOM/PAD PSF/UNIT/ROOM/PAD PSF/UNIT/ROOM/PAD DEPOSIT PSF/UNIT/ROOM/PAD
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
1
1a $ 15.01 $ 50.00 $ 4.17 $ 50.00
1b 48.98 50.00 4.17 50.00
1c 36.31 50.00 4.17 50.00
1d 15.94 50.00 4.17 50.00
1e 67.08 50.00 4.17 50.00
1f 15.90 50.00 4.17 50.00
1g 20.49 50.00 4.17 50.00
- -------------------------------------------------------------------------------------------------------------------------
2
2a 18.08 50.00 4.17 50.00
2b 33.08 50.00 4.17 50.00
2c 25.62 50.00 4.17 50.00
2d 41.79 50.00 4.17 50.00
2e 20.25 50.00 4.17 50.00
2f 14.08 50.00 4.17 50.00
2g 16.80 50.00 4.17 50.00
- -------------------------------------------------------------------------------------------------------------------------
3
3a 5.80 50.00 4.17 50.00
3b 42.07 50.00 4.17 50.00
3c 25.99 50.00 4.17 50.00
3d 16.32 50.00 4.17 50.00
3e 14.29 50.00 4.17 50.00
3f 22.03 50.00 4.17 50.00
3g 35.56 50.00 4.17 50.00
- -------------------------------------------------------------------------------------------------------------------------
4 0.28 0.17 0.00 0.17
- -------------------------------------------------------------------------------------------------------------------------
5 0.25 0.27 0.00 0.00
6 0.02 0.15 0.00 0.02
7 0.02 0.15 0.00 0.02
8 0.01 0.15 0.01 0.00
9 0.03 0.15 0.01 0.00
10 0.04 0.15 0.01 0.00
11 0.03 0.15 0.00 0.03
12 0.24 0.26 0.02 0.00
13 0.07 0.15 0.01 0.00
14 0.09 0.15 0.02 0.00
15 0.09 0.15 0.00 0.00
16 0.03 0.15 0.00 0.03
17 0.10 0.15 0.01 0.00
18 0.02 0.15 0.00 0.03
19 0.01 0.15 0.01 0.00
- -------------------------------------------------------------------------------------------------------------------------
20 0.25 0.25 0.00 0.00
21 0.18 0.20 0.00 0.20
22 0.06 0.07 0.00 0.07
- -------------------------------------------------------------------------------------------------------------------------
23 0.18 0.18 0.00 0.00
24 0.12 0.15 0.00 0.00
- -------------------------------------------------------------------------------------------------------------------------
25 0.21 0.21 0.00 0.00
26 0.19 0.00 0.00 0.00
27 0.25 0.00 0.00 0.00
- -------------------------------------------------------------------------------------------------------------------------
28 0.00 0.15 0.00 0.15
29 0.00 0.15 0.00 0.15
- -------------------------------------------------------------------------------------------------------------------------
30 0.20 0.20 0.00 0.00
31 0.21 0.21 0.00 0.00
- -------------------------------------------------------------------------------------------------------------------------
32 0.02 0.10 0.00 0.10
33 0.03 0.10 0.00 0.10
34 0.03 0.10 0.00 0.10
35 0.04 0.10 0.00 0.10
36 0.04 0.10 0.00 0.10
37 0.03 0.10 0.00 0.10
38 0.02 0.10 0.00 0.10
- -------------------------------------------------------------------------------------------------------------------------
39 1,075.83 0.00 0.00 652,200.00 For first 12 months of loan term
40 0.09 0.20 0.00 0.20
41 727.92 1,144.32 105.58 4% of Gross Revenue
42 0.09 0.09 0.00 0.00
43 0.29 0.32 0.00 0.32
44 0.21 0.22 0.00 0.22
45 0.06 0.15 0.00 0.15
46 0.16 0.16 0.00 0.20
47 0.16 0.16 0.00 0.20
48 156.14 250.00 20.83 249.98
49 0.17 0.20 0.02 0.20
50 0.13 0.15 0.00 0.00
51 0.09 0.11 0.00 0.11
52 0.08 0.15 0.00 0.15
53 0.21 0.21 0.00 0.20
54 0.05 0.20 0.00 0.20
55 0.06 0.10 0.00 0.10
56 0.10 0.15 0.00 0.15
57 0.06 0.15 0.00 0.15
58 0.13 0.20 0.00 0.20
- -------------------------------------------------------------------------------------------------------------------------
59 178.71 300.00 0.00 300.00
60 179.19 300.00 0.00 297.30
61 205.24 300.00 0.00 300.00
- -------------------------------------------------------------------------------------------------------------------------
62 205.94 300.00 0.00 300.08
63 244.89 300.00 0.00 300.00
64 239.36 300.00 0.00 300.00
- -------------------------------------------------------------------------------------------------------------------------
65 0.16 0.18 0.00 0.18
66 39.44 75.00 0.00 45.51
67 0.14 0.15 0.00 0.15
68 0.11 0.15 0.00 0.15
69 448.33 537.00 0.00 537.00
70 381.37 1,342.09 0.00 1,342.09
71 0.05 0.10 0.00 0.10
72 0.11 0.15 0.00 0.15
73 0.11 0.15 0.00 0.12
74 0.06 0.15 0.00 0.15
75 0.28 0.15 0.00 0.15
76 0.07 0.20 0.00 0.20
77 233.62 250.00 0.00 250.00
78 0.18 0.18 0.00 0.18
79 219.63 220.00 0.00 200.00
80 250.47 250.00 TBD 250.00
81 0.20 0.20 0.00 0.20
82 0.29 0.29 0.00 0.29
83 0.18 0.18 0.00 0.18
84 0.06 0.15 0.00 0.15
85 0.10 0.15 0.00 0.00
86 0.20 0.20 0.00 0.20
87 0.02 0.02 0.00 0.00
88 0.42 0.42 0.00 0.42
89 263.83 500.00 0.00 250.00
- -------------------------------------------------------------------------------------------------------------------------
90 0.07 0.15 0.00 0.15
91 0.08 0.15 0.00 0.15
- -------------------------------------------------------------------------------------------------------------------------
92 0.12 0.20 0.00 0.20
93 164.79 250.00 0.00 250.00
94 257.88 260.00 0.00 260.00
95 0.03 0.20 0.00 0.20
96 0.15 0.15 1.74 0.15
97 0.18 0.20 0.00 0.20
98 0.14 0.15 0.00 0.15
99 44.44 51.02 0.00 0.00
100 0.12 0.15 0.00 0.15
101 0.24 0.24 0.00 0.24
102 0.13 0.15 0.00 0.15
103 0.02 0.02 0.00 0.02
104 0.05 0.15 0.00 0.15
105 0.25 0.23 0.00 0.23
106 0.12 0.15 0.00 0.15
107 248.27 250.00 0.00 250.00
108 0.26 0.26 0.00 0.26
109 0.25 0.24 0.00 0.24
110 0.10 0.12 0.00 0.12
111 0.04 0.10 0.00 0.10
112 0.12 0.12 0.00 0.12
113 0.15 0.15 0.00 0.15
114 0.05 0.10 0.01 0.10
115 39.81 50.00 4.17 50.00
20b
ESCROWED
ESCROWED U/W TI/LC
TI/LC ANNUAL RESERVES
U/W ANNUAL RESERVES ESCROWED TI/LC TI/LC INITIAL ESCROWED TI/LC
CONTROL TI/LC INITIAL RESERVES CURRENT RESERVES DEPOSIT RESERVES CURRENT
NUMBER RESERVES DEPOSIT ANNUAL DEPOSIT PSF PSF ANNUAL DEPOSIT PSF
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
1 NAP NAP NAP
1a NAP NAP NAP NAP NAP NAP
1b NAP NAP NAP NAP NAP NAP
1c NAP NAP NAP NAP NAP NAP
1d NAP NAP NAP NAP NAP NAP
1e NAP NAP NAP NAP NAP NAP
1f NAP NAP NAP NAP NAP NAP
1g NAP NAP NAP NAP NAP NAP
- ------------------------------------------------------------------------------------------------------------------------------------
2 NAP NAP NAP
2a NAP NAP NAP NAP NAP NAP
2b NAP NAP NAP NAP NAP NAP
2c NAP NAP NAP NAP NAP NAP
2d NAP NAP NAP NAP NAP NAP
2e NAP NAP NAP NAP NAP NAP
2f NAP NAP NAP NAP NAP NAP
2g NAP NAP NAP NAP NAP NAP
- ------------------------------------------------------------------------------------------------------------------------------------
3 NAP NAP NAP
3a NAP NAP NAP NAP NAP NAP
3b NAP NAP NAP NAP NAP NAP
3c NAP NAP NAP NAP NAP NAP
3d NAP NAP NAP NAP NAP NAP
3e NAP NAP NAP NAP NAP NAP
3f NAP NAP NAP NAP NAP NAP
3g NAP NAP NAP NAP NAP NAP
- ------------------------------------------------------------------------------------------------------------------------------------
4 384,872 0 0 0.62 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
5 0 0 0 0.00 0.00 0.00
6 0 0 0 0.00 0.00 0.00
7 0 0 0 0.00 0.00 0.00
8 0 0 0 0.00 0.00 0.00
9 0 0 0 0.00 0.00 0.00
10 0 0 0 0.00 0.00 0.00
11 0 0 0 0.00 0.00 0.00
12 0 0 0 0.00 0.00 0.00
13 0 0 0 0.00 0.00 0.00
14 0 0 0 0.00 0.00 0.00
15 0 0 0 0.00 0.00 0.00
16 0 0 0 0.00 0.00 0.00
17 0 0 0 0.00 0.00 0.00
18 0 0 0 0.00 0.00 0.00
19 0 0 0 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
20 285,066 0 0 0.82 0.00 0.00
21 623,816 0 367,788 1.28 0.00 0.75
22 44,852 427,860 70,000 0.14 1.34 0.22
- ------------------------------------------------------------------------------------------------------------------------------------
23 138,096 0 0 0.58 0.00 0.00
24 28,285 0 0 0.32 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
25 207,026 0 0 1.40 0.00 0.00
26 0 0 0 0.00 0.00 0.00
27 0 0 0 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
28 0 0 0 0.00 0.00 0.00
29 0 0 0 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
30 0 0 0 0.00 0.00 0.00
31 0 0 0 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
32 0 0 0 0.00 0.00 0.00
33 0 0 0 0.00 0.00 0.00
34 0 0 0 0.00 0.00 0.00
35 0 0 0 0.00 0.00 0.00
36 0 0 0 0.00 0.00 0.00
37 0 0 0 0.00 0.00 0.00
38 0 0 0 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
39 NAP NAP NAP NAP NAP NAP
40 294,596 0 $10,416.67 / mo. thru 1/1/09; 1.27 0.00 $10,416.67 / mo. thru 1/1/09;
$31,250 / mo. thereafter $31,250 / mo. Thereafter
41 NAP NAP NAP NAP NAP NAP
42 164,307 1,271,988 0 1.65 12.75 0.00
43 97,328 0 90,231 1.21 0.00 1.12
44 46,691 0 32,464 1.44 0.00 1.00
45 209,832 0 $33,334 / mo. thru 12/9/03; $27,084 /mo. 0.47 0.00 $33,334 / mo. thru 12/9/03; $27,084
thru 12/9/06; & $18,750 / mo. thereafter /mo. thru 12/9/06; & $18,750 / mo.
thereafter
46 119,335 250,000 112,320 1.59 3.34 1.50
47 58,152 250,000 63,060 1.38 5.95 1.50
48 0 0 0 0.00 0.00 0.00
49 133,905 0 0 0.50 0.00 0.00
50 50,923 0 0 0.44 0.00 0.00
51 143,589 250,000 0 1.00 1.74 0.00
52 51,171 0 0 0.68 0.00 0.00
53 229,687 0 270,000 1.03 0.00 1.21
54 161,069 0 160,892 1.00 0.00 1.00
55 0 0 0 0.00 0.00 0.00
56 141,443 660,000 130,962 1.53 7.12 1.41
57 159,101 0 200,413 0.91 0.00 1.14
58 116,701 0 145,536 1.33 0.00 1.66
- ------------------------------------------------------------------------------------------------------------------------------------
59 NAP NAP NAP NAP NAP NAP
60 NAP NAP NAP NAP NAP NAP
61 NAP NAP NAP NAP NAP NAP
- ------------------------------------------------------------------------------------------------------------------------------------
62 NAP NAP NAP NAP NAP NAP
63 NAP NAP NAP NAP NAP NAP
64 NAP NAP NAP NAP NAP NAP
- ------------------------------------------------------------------------------------------------------------------------------------
65 24,455 0 26,640 0.24 0.00 0.26
66 NAP NAP NAP NAP NAP NAP
67 55,971 350,000 $5,416.67 / mo. thru 11/9/09; $3,333.33 / 0.64 3.99 $5,416.67 / mo. thru 11/9/09;
mo. thereafter. Plus $4,166.67 / mo. day $3,333.33 / mo. thereafter. Plus
one until $500,000 (inclusive of upfront $4,166.67 / mo. day one until $500,000
amount) is deposited for Good Guys lease (inclusive of upfront amount) is
is renewed or new tenant. deposited for Good Guys lease is
renewed or new tenant.
68 72,228 0 0 0.92 0.00 0.00
69 0 0 0 0.00 0.00 0.00
70 NAP NAP NAP NAP NAP NAP
71 48,859 0 0 0.65 0.00 0.00
72 36,842 0 35,640 0.53 0.00 0.51
73 0 0 54,900 0.00 0.00 0.40
74 42,264 594,505 42,314 1.69 23.75 1.69
75 82,858 0 82,600 0.73 0.00 0.72
76 54,104 0 50,317 1.16 0.00 1.08
77 NAP NAP NAP NAP NAP NAP
78 49,692 0 39,447 0.50 0.00 0.40
79 NAP NAP NAP NAP NAP NAP
80 NAP NAP NAP NAP NAP NAP
81 116,836 0 65,980 1.77 0.00 1.00
82 23,208 0 5,568 1.25 0.00 0.30
83 23,509 0 24,504 1.09 0.00 1.14
84 29,480 0 17,186 0.87 0.00 0.51
85 26,491 0 0 0.77 0.00 0.00
86 28,981 0 23,220 0.62 0.00 0.50
87 5,105 0 0 0.05 0.00 0.00
88 45,415 0 43,712 1.04 0.00 1.00
89 NAP NAP NAP NAP NAP NAP
- ------------------------------------------------------------------------------------------------------------------------------------
90 6,244 0 5,454 0.57 0.00 0.50
91 6,008 0 5,454 0.55 0.00 0.50
- ------------------------------------------------------------------------------------------------------------------------------------
92 36,906 0 53,219 0.69 0.00 1.00
93 NAP NAP NAP NAP NAP NAP
94 NAP NAP NAP NAP NAP NAP
95 88,186 0 67,385 1.96 0.00 1.50
96 16,605 0 16,247 0.36 0.00 0.35
97 76,948 0 60,196 1.26 0.00 0.98
98 33,162 0 0 0.48 0.00 0.00
99 NAP NAP NAP NAP NAP NAP
100 20,816 60,975 0 1.00 2.93 0.00
101 18,592 0 18,643 0.75 0.00 0.75
102 26,447 0 0 0.53 0.00 0.00
103 11,326 0 10,200 0.17 0.00 0.15
104 0 0 0 0.00 0.00 0.00
105 25,612 0 25,722 0.56 0.00 0.56
106 12,498 0 6,874 0.27 0.00 0.15
107 NAP NAP NAP NAP NAP NAP
108 15,941 25,300 13,800 0.76 1.21 0.66
109 55,444 0 55,116 1.08 0.00 1.08
110 18,651 0 0 0.77 0.00 0.00
111 13,031 0 6,687 1.45 0.00 0.74
112 20,491 0 20,462 0.40 0.00 0.40
113 14,472 0 14,420 0.75 0.00 0.75
114 14,625 0 0 0.59 0.00 0.00
115 NAP NAP NAP NAP NAP NAP
20b
- --------------------------------
Footnotes:
(a) Original Balance, Cut-off Date Principal Balance and Allocated Cut-off
Date Principal Balance represent mortgage loan balance of pooled portion
only. Monthly Debt Service Payment is presented on the whole loan. Whole
loan original balance is $66,000,000. Cut-off Date LTV Ratio is
calculated on the pooled portion only.
(b) Represents highest debt service payment based on a 312 month
amortization schedule which will start with the February 2008 payment.
Monthly debt service is currently based on a 420 month amortization
schedule through the January 2008 payment.
(c) Prior to July 2004, monthly debt service payment was $70,294.01, based
on a 240 month amortization schedule.
(d) For loan numbers 22, 48, 50, 59, 60, and 61, debt service payments were
adjusted to take into account cash holdbacks and/or letter of credit
subject to release at such times as the related mortgaged real property
satisfies certain performance-related criteria. For loan number 22, the
Cut-off Date LTV Ratio and Maturity Date/ARD LTV Ratio were presented on
a stabilized basis that makes various assumptions regarding the
financial performance of the related mortgaged real property that are
consistent with the release of the cash holdback and/or Letter of
Credit.
(e) Presented in descending cut-off date principal balance order by related
mortgage loan group.
(f) Borrower has the option of defeasance or prepayment at greater of YM or
1% penalty after lockout date.
(g) For each single underlying mortgage loan secured by multiple mortgaged
real properties, reflects the portion of the related cut-off date
principal balance allocated to each of those properties. In all other
cases, reflects the related cut-off date principal balance of subject
underlying mortgage loan.
(h) For each crosss-collateralized loan group or related loan group,
reflects the aggregate cut-off date principal balance of the entire
subject Crossed Group or related loan group. In all other cases,
reflects related cut-off date principal balance of subject underlying
mortgage loan.
(i) With respect to the Jetport Plaza Loan, the yield maintenance charges
are calculated as the product of (a) the difference between the mortgage
rate and the Yield Maintenance Interest Rate, (b) the unpaid principal
balance and (c) the present value factor.
(j) All mortgage loans originated by Wachovia determine Yield Maintenance
Interest Rate based on the lesser of (i) the yield on the related U.S.
Treasury with a maturity date closest to the Yield Maintenance
Discounting Horizon of the loan or (ii) the yield on the U.S. Treasury
with the term equal to the Yield Maintenance Discounting Horizon of the
loan.
(k) Cut-off Date LTV Ratio is calculated on the Pecanland Mall whole loan
balance.
ANNEX A-2
SUMMARY CHARACTERISTICS OF THE UNDERLYING
MORTGAGE LOANS AND THE MORTGAGED REAL PROPERTIES
Note: For purposes of presenting information regarding the original
and remaining terms to maturity of the respective underlying
mortgage loans in the following exhibits, each ARD Loan is assumed
to mature on its anticipated repayment date.
[THIS PAGE INTENTIONALLY LEFT BLANK.]
CUT-OFF DATE PRINCIPAL BALANCES
WEIGHTED AVERAGES
AGGREGATE MAXIMUM ------------------------------------------------
NUMBER OF CUT-OFF DATE % OF INITIAL CUT-OFF DATE STATED CUT-OFF DATE
RANGE OF MORTGAGE PRINCIPAL MORTGAGE PRINCIPAL MORTGAGE REMAINING U/W NCF LOAN-TO-VALUE
CUT-OFF DATE BALANCES LOANS BALANCE POOL BALANCE BALANCE RATE TERM (MO.) DSCR RATIO
- ------------------------------------------------------------------------------------------------------------------------------------
(less than) $2,000,000 4 $ 5,738,435 0.5% $ 1,889,684 5.2178% 79 1.48x 73.99%
$2,000,000 to $2,999,999 16 39,311,537 3.3 2,990,488 5.6987 104 1.33 75.82
$3,000,000 to $3,999,999 14 49,106,349 4.2 3,992,633 5.0866 75 1.50 74.85
$4,000,000 to $4,999,999 15 66,448,342 5.6 4,963,026 5.4767 101 1.43 71.07
$5,000,000 to $5,999,999 13 71,433,487 6.0 5,920,000 5.3662 95 1.40 77.20
$6,000,000 to $6,999,999 5 33,677,025 2.8 6,960,000 5.0429 92 1.35 77.46
$7,000,000 to $7,999,999 7 51,574,731 4.4 7,740,000 5.5984 106 1.47 73.55
$8,000,000 to $8,999,999 4 33,984,117 2.9 8,962,068 5.3522 104 1.42 73.90
$9,000,000 to $9,999,999 4 38,444,540 3.3 9,846,801 5.5563 113 1.55 66.17
$10,000,000 to $14,999,999 13 163,858,787 13.9 14,785,325 5.5370 108 1.40 75.67
$15,000,000 to $19,999,999 6 103,598,177 8.8 19,161,641 5.5183 117 1.37 74.74
$20,000,000 to $24,999,999 4 90,579,053 7.7 24,654,246 5.6056 92 1.50 66.10
$25,000,000 to $29,999,999 3 82,180,592 7.0 28,355,938 5.5400 116 1.40 75.82
$30,000,000 to $34,999,999 2 66,822,200 5.7 34,152,200 5.4518 118 1.34 73.71
$35,000,000 to $44,999,999 2 73,339,210 6.2 37,839,210 5.8156 118 1.33 78.35
$45,000,000 to $93,000,000 3 212,322,215 18.0 93,000,000 4.6256 104 1.80 65.31
- ------------------------------------------------------------------------------------------------------------------------------------
Totals/Wtd. Avg. 115 $1,182,418,798 100.0% 5.3450% 105 1.48x 72.46%
====================================================================================================================================
MORTGAGE LOAN TYPE
WEIGHTED AVERAGES
--------------------------------------------------
AGGREGATE MAXIMUM
CUT-OFF DATE % OF INITIAL CUT-OFF DATE STATED CUT-OFF
NUMBER OF PRINCIPAL MORTGAGE PRINCIPAL MORTGAGE REMAINING U/W NCF DATE-TO-VALUE
LOAN TYPE MORTGAGES BALANCE POOL BALANCE BALANCE RATE TERM (MO.) DSCR RATIO
- ------------------------------------------------------------------------------------------------------------------------------------
Balloon 72 $ 697,660,996 59.0% $62,322,215 5.5610% 105 1.43x 72.72%
Partial IO/Balloon 12 272,524,000 23.0 93,000,000 5.0165 113 1.62 69.18
Partial IO/ARD 19 127,680,000 10.8 17,500,000 4.7637 84 1.47 77.28
ARD 8 63,503,505 5.4 17,460,861 5.5707 116 1.37 75.22
Interest Only 3 16,100,000 1.4 7,500,000 5.0298 80 1.77 71.07
Fully Amortizing 1 4,950,297 0.4 4,950,297 6.1000 177 1.22 61.11
- ------------------------------------------------------------------------------------------------------------------------------------
Totals/Wtd. Avg. 115 $1,182,418,798 100.0% 5.3450% 105 1.48x 72.46%
====================================================================================================================================
ACCRUAL TYPE
WEIGHTED AVERAGES
--------------------------------------------------
AGGREGATE
NUMBER OF CUT-OFF % OF INITIAL STATED CUT-OFF DATE
MORTGAGE PRINCIPAL MORTGAGE MORTGAGE REMAINING U/W NCF LOAN-TO-VALUE
ACRRUAL TYPE LOANS BALANCE POOL BALANCE RATE TERM (MO.) DSCR RATIO
- -------------------------------------------------------------------------------------------------------------------
Actual/360 Basis 114 $1,146,918,798 97.0% 5.3210% 105 1.49x 72.32%
30/360 Basis 1 35,500,000 3.0 6.1200 120 1.24 76.84
- -------------------------------------------------------------------------------------------------------------------
Totals/Wtd. Avg. 115 $1,182,418,798 100.0% 5.3450% 105 1.48x 72.46%
===================================================================================================================
A-2-1
MORTGAGE RATES
WEIGHTED AVERAGES
--------------------------------------------------
AGGREGATE CUMULATIVE
NUMBER OF CUT-OFF DATE % OF INITIAL % OF INITIAL STATED CUT-OFF DATE
RANGE OF MORTGAGE PRINCIPAL MORTGAGE MORTGAGE MORTGAGE REMAINING U/W NCF LOAN-TO-VALUE
MORTGAGE RATES LOANS BALANCE POOL BALANCE POOL BALANCE RATE TERM (MO.) DSCR RATIO
- ------------------------------------------------------------------------------------------------------------------------------------
4.2765% to 4.4900% 17 $ 142,422,215 12.0% 12.0% 4.3329% 63 1.60x 72.62%
4.5000% to 4.7400% 2 96,500,000 8.2 20.2 4.6325 117 1.95 58.67
4.7500% to 4.9900% 1 17,500,000 1.5 21.7 4.9200 120 1.56 78.48
5.0000% to 5.2400% 10 151,073,915 12.8 34.5 5.0583 95 1.45 75.20
5.2500% to 5.4900% 26 214,901,857 18.2 52.6 5.3531 108 1.44 73.07
5.5000% to 5.7400% 19 267,764,913 22.6 75.3 5.5914 111 1.45 73.79
5.7500% to 5.9900% 24 161,177,587 13.6 88.9 5.9094 116 1.36 71.81
6.0000% to 6.2400% 15 118,143,251 10.0 98.9 6.1110 122 1.28 76.14
6.2500% to 6.4600% 1 12,935,059 1.1 100.0 6.4600 114 1.43 69.92
- ------------------------------------------------------------------------------------------------------------------------------------
Totals/Wtd. Avg. 115 $1,182,418,798 100.0% 5.3450% 105 1.48x 72.46%
====================================================================================================================================
ORIGINAL TERM TO SCHEDULED MATURITY
WEIGHTED AVERAGES
--------------------------------------------------
RANGE OF AGGREGATE CUMULATIVE
ORIGINAL TERMS NUMBER OF CUT-OFF DATE % OF INITIAL % OF INITIAL STATED CUT-OFF DATE
TO SCHEDULED MORTGAGE PRINCIPAL MORTGAGE MORTGAGE MORTGAGE REMAINING U/W NCF LOAN-TO-VALUE
MATURITY (MONTHS) LOANS BALANCE POOL BALANCE POOL BALANCE RATE TERM (MO.) DSCR RATIO
- ------------------------------------------------------------------------------------------------------------------------------------
(less than) 120 43 $ 313,737,590 26.5% 26.5% 4.8680% 69 1.55x 71.79%
120 66 814,147,132 68.9 95.4 5.4931 117 1.46 72.43
(greater than) 120 6 54,534,076 4.6 100.0 5.8769 138 1.31 76.71
- ------------------------------------------------------------------------------------------------------------------------------------
Totals/Wtd. Avg. 115 $1,182,418,798 100.0% 5.3450% 105 1.48x 72.46%
====================================================================================================================================
MORTGAGE LOAN SEASONING
WEIGHTED AVERAGES
--------------------------------------------------
AGGREGATE CUMULATIVE
NUMBER OF CUT-OFF DATE % OF INITIAL % OF INITIAL STATED CUT-OFF DATE
MORTGAGE PRINCIPAL MORTGAGE MORTGAGE MORTGAGE REMAINING U/W NCF LOAN-TO-VALUE
SEASONING (MONTHS) LOANS BALANCE POOL BALANCE POOL BALANCE RATE TERM (MO.) DSCR RATIO
- ------------------------------------------------------------------------------------------------------------------------------------
0 to 5 88 $ 995,139,228 84.2% 84.2% 5.2831% 106 1.49x 72.33%
6 to 11 24 174,393,152 14.7 98.9 5.6784 101 1.40 73.08
12 to 14 1 7,549,581 0.6 99.5 5.2800 108 1.55 72.24
(greater than) =15 2 5,336,837 0.5 100.0 6.0800 93 1.33 76.68
- ------------------------------------------------------------------------------------------------------------------------------------
Totals/Wtd. Avg. 115 $1,182,418,798 100.0% 5.3450% 105 1.48x 72.46%
====================================================================================================================================
A-2-2
REMAINING TERM TO SCHEDULED MATURITY
WEIGHTED AVERAGES
--------------------------------------------------
RANGE OF AGGREGATE CUMULATIVE
REMAINING TERMS NUMBER OF CUT-OFF DATE % OFINITIAL % OF INITIAL STATED CUT-OFF DATE
TO SCHEDULED MORTGAGE PRINCIPAL MORTGAGE MORTGAGE MORTGAGE REMAINING U/W NCF LOAN-TO-VALUE
MATURITY (MONTHS) LOANS BALANCE POOL BALANCE POOL BALANCE RATE TERM (MO.) DSCR RATIO
- ------------------------------------------------------------------------------------------------------------------------------------
54 to 83 35 $ 273,496,689 23.1% 23.1% 4.7645% 64 1.56x 71.86%
84 to 107 8 40,240,901 3.4 26.5 5.5718 103 1.49 71.37
108 to 119 61 741,787,132 62.7 89.3 5.4728 117 1.48 71.96
120 to 177 11 126,894,076 10.7 100.0% 5.7770 128 1.33 77.01
- ------------------------------------------------------------------------------------------------------------------------------------
Totals/Wtd. Avg. 115 $1,182,418,798 100.0% 5.3450% 105 1.48x 72.46%
====================================================================================================================================
A-2-3
PREPAYMENT PROVISIONS
WEIGHTED AVERAGES
--------------------------------------------------
AGGREGATE
NUMBER OF CUT-OFF DATE % OF INITIAL STATED CUT-OFF DATE
MORTGAGE PRINCIPAL MORTGAGE MORTGAGE REMAINING U/W NCF LOAN-TO-VALUE
PREPAYMENT PROVISIONS LOANS BALANCE POOL BALANCE RATE TERM (MO.) DSCR RATIO
- -----------------------------------------------------------------------------------------------------------------------
LO/Defeasance 98 $1,043,418,798 88.2% 5.4292% 108 1.47x 71.81%
LO/YM 16 82,000,000 6.9 4.5124 64 1.48 77.79
LO/YMorDefeasance 1 $ 57,000,000 4.8 5.0000 118 1.61 76.72
- -----------------------------------------------------------------------------------------------------------------------
Totals/Wtd. Avg. 115 $1,182,418,798 100.0% 5.3450% 105 1.48x 72.46%
=======================================================================================================================
LO = Locked out, YM = Yield maintenance payment required.
INITIAL MORTGAGE POOL PREPAYMENT RESTRICTIONS COMPOSITION OVER TIME (1)
MONTHS FOLLOWING CUT-OFF DATE
--------------------------------------------------------------------------------------------------------
PREPAYMENT RESTRICTION 0 12 24 36 48 60 72 84 96 108 120
- ------------------------------------------------------------------------------------------------------------------------------------
Remaining Pool Balance (2) 100.00% 99.11% 97.88% 96.43% 94.90% 80.34% 74.05% 68.96% 67.10% 62.35% 3.71%
Locked 100.00% 93.61% 93.63% 4.49% 1.51% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Defeasance 0.00% 0.00% 0.00% 83.65% 86.63% 93.59% 93.17% 92.80% 92.74% 91.70% 100.00%
Locked (3) 0.00% 0.00% 0.00% 4.92% 4.92% 5.72% 6.10% 6.43% 6.47% 6.82% 0.00%
Yield Maintenance (4) 0.00% 6.39% 6.37% 6.95% 6.94% 0.69% 0.73% 0.77% 0.78% 0.82% 0.00%
Open 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.65% 0.00%
- ------------------------------------------------------------------------------------------------------------------------------------
Total 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
====================================================================================================================================
(1) All numbers, unless otherwise noted, are as a percentage of the aggregate
mortgage pool balance (exclusive of the principal balance of the
Pecanland Mall Non-Pooled Portion) at the specified point in time.
(2) Remaining aggregate mortgage pool balance (exclusive of the principal
balance of the Pecanland Mall Non-Pooled Portion) as a percentage of the
Initial Mortgage Pool Balance at the specified point in time.
(3) Locked includes loans in defeasance.
(4) Yield maintenance includes loans allowing the option of either yield
maintenance or defeasance.
A-2-4
PROPERTY TYPES
WEIGHTED AVERAGES
-----------------------------------
AGGREGATE MAXIMUM
NUMBER OF CUT-OFF % OF INITIAL CUT-OFF DATE STATED MIN/MAX
MORTGAGED PRINCIPAL MORTGAGE PRINCIPAL MORTGAGE REMAINING U/W NCF U/W NCF
PROPERTY TYPES PROPERTIES BALANCE POOL BALANCE BALANCE RATE TERM (MO.) DSCR DSCR
- ------------------------------------------------------------------------------------------------------------------------------------
Retail 41 $ 469,680,857 39.7% $93,000,000 5.3194% 112 1.53x 1.20x / 1.96x
Anchored 19 200,048,074 16.9 35,500,000 5.6561 119 1.34x 1.21x / 1.72x
Regional Mall 3 174,108,602 14.7 93,000,000 4.6416 100 1.82 1.44x / 1.96x
Single Tenant,
Anchor 8 42,571,553 3.6 11,447,417 5.9283 124 1.30 1.22x / 1.55x
Unanchored 7 30,554,773 2.6 7,500,000 5.8002 114 1.49 1.22x / 1.77x
Shadow Anchored 4 22,397,855 1.9 9,846,801 5.7678 112 1.41 1.20x / 1.49x
Office 19 249,675,342 21.1 57,000,000 5.4343 107 1.41 1.20x / 1.61x
Suburban 14 149,137,446 12.6 28,355,938 5.6243 108 1.35 1.20x / 1.49x
CBD 3 89,790,641 7.6 57,000,000 5.1356 112 1.51 1.35x / 1.61x
Medical Office 2 10,747,256 0.9 5,576,256 5.2939 66 1.30 1.27x / 1.33x
Mobile Home Park 24 114,107,166 9.7 12,634,587 5.3995 104 1.43 1.38x / 1.53x
Self Storage 23 111,358,166 9.4 12,960,663 4.6950 65 1.53 1.48x / 1.64x
Multifamily 15 78,317,029 6.6 17,500,000 5.2307 105 1.41 1.22x / 1.78x
Conventional 11 64,284,557 5.4 17,500,000 5.1628 102 1.42 1.22x / 1.78x
Student Housing 4 14,032,472 1.2 9,700,000 5.5419 116 1.35 1.33x / 1.36x
Mixed Use 6 67,127,595 5.7 32,670,000 5.7145 117 1.35 1.29x / 1.45x
Hospitality 3 53,097,612 4.5 23,067,933 5.7307 103 1.65 1.44x / 1.79x
Land 1 26,864,655 2.3 26,864,655 5.6900 115 1.55 1.55x / 1.55x
Industrial 1 12,190,377 1.0 12,190,377 6.1860 119 1.36 1.36x / 1.36x
- ------------------------------------------------------------------------------------------------------------------------------------
Totals/Wtd. Avg. 133 $1,182,418,798 100.0% 5.3450% 105 1.48x 1.20x / 1.96x
====================================================================================================================================
ENCUMBERED INTEREST
WEIGHTED AVERAGES
-------------------------------------------------
AGGREGATE MAXIMUM
NUMBER OF CUT-OFF % OF INITIAL CUT-OFF DATE STATED CUT-OFF DATE
MORTGAGED PRINCIPAL MORTGAGE PRINCIPAL MORTGAGE REMAINING U/W NCF LOAN-TO-VALUE
ENCUMBERED INTEREST PROPERTIES BALANCE POOL BALANCE BALANCE RATE TERM (MO.) DSCR RATIO
- ------------------------------------------------------------------------------------------------------------------------------------
Fee Simple 126 $1,115,973,974 94.4% $93,000,000 5.3310% 105 1.47x 72.82%
Fee Simple in part and
Leasehold in part 3 37,003,723 3.1 23,067,933 5.6617 97 1.67 61.93
Leasehold 4 29,441,101 2.5 11,964,176 5.4754 111 1.54 72.01
- ------------------------------------------------------------------------------------------------------------------------------------
Totals/Wtd. Avg. 133 $1,182,418,798 100.0% 5.3450% 105 1.48x 72.46%
====================================================================================================================================
A-2-5
UNDERWRITTEN NET CASH FLOW DEBT SERVICE COVERAGE RATIO
WEIGHTED AVERAGES
AGGREGATE --------------------------------------------------
NUMBER OF CUT-OFF % OF INITIAL CUMULATIVE STATED CUT-OFF DATE
RANGE OF MORTGAGE PRINCIPAL MORTGAGE % OF INITIAL MORTGAGE REMAINING U/W NCF LOAN-TO-VALUE
U/W NCF DSCR (X) LOANS BALANCE POOL BALANCE POOL BALANCE RATE TERM (MO.) DSCR RATIO
- ------------------------------------------------------------------------------------------------------------------------------------
1.20 to 1.24 16 $ 122,628,375 10.4% 10.4% 5.9058% 123 1.23x 77.23%
1.25 to 1.29 10 109,389,687 9.3 19.6 5.6237 115 1.28 75.59
1.30 to 1.34 16 117,843,854 10.0 29.6 5.5215 104 1.32 78.03
1.35 to 1.39 11 148,232,147 12.5 42.1 5.5729 110 1.36 74.62
1.40 to 1.44 14 138,051,923 11.7 53.8 5.7592 113 1.43 72.41
1.45 to 1.49 23 158,285,025 13.4 67.2 4.9182 82 1.48 73.00
1.50 to 1.54 4 23,585,278 2.0 69.2 5.3277 111 1.52 76.13
1.55 to 1.59 4 59,466,458 5.0% 74.2% 5.4461 115 1.56 73.34
1.60 to 1.79 16 211,936,052 17.9 92.1 4.9552 90 1.69 68.72
1.80 to 1.96 1 93,000,000 7.9 100.0 4.6300 119 1.96 58.13
- ------------------------------------------------------------------------------------------------------------------------------------
Totals/Wtd. Avg. 115 $1,182,418,798 100.0% 5.3450% 105 1.48x 72.46%
====================================================================================================================================
A-2-6
CUT-OFF DATE LOAN-TO-VALUE RATIO
WEIGHTED AVERAGES
--------------------------------------------------
AGGREGATE CUMULATIVE
RANGE OF CUT-OFF NUMBER OF CUT-OFF % OF INITIAL % OF INITIAL STATED CUT-OFF DATE
DATE LOAN-TO-VALUE MORTGAGE PRINCIPAL MORTGAGE MORTGAGE MORTGAGE REMAINING U/W NCF LOAN-TO-VALUE
RATIO LOANS BALANCE POOL BALANCE POOL BALANCE RATE TERM (MO.) DSCR RATIO
- ------------------------------------------------------------------------------------------------------------------------------------
48.12% to 49.99% 1 $ 4,644,000 0.4% 0.4% 5.3600% 119 1.47x 48.12%
50.00% to 59.99% 3 110,846,801 9.4 9.8 4.7864 118 1.90 58.16
60.00% to 64.99% 5 69,420,833 5.9 15.6 5.7005 109 1.61 62.77
65.00% to 69.99% 9 151,210,286 12.8 28.4 5.0664 84 1.59 66.73
70.00% to 74.99% 35 295,098,271 25.0 53.4 5.5534 108 1.42 73.02
75.00% to 79.99% 60 529,718,606 44.8 98.2 5.3631 106 1.38 77.94
= 80.00% 2 21,480,000 1.8 100.0 5.7266 126 1.36 80.00
- ------------------------------------------------------------------------------------------------------------------------------------
Totals/Wtd. Avg. 115 $1,182,418,798 100.0% 5.3450% 105 1.48x 72.46%
====================================================================================================================================
MATURITY DATE/ARD LOAN-TO-VALUE RATIO
WEIGHTED AVERAGES
RANGE OF AGGREGATE CUMULATIVE -------------------------------------------------
MATURITY NUMBER OF CUT-OFF % OF INITIAL % OF INITIAL STATED CUT-OFF DATE
DATE/ARD MORTGAGE PRINCIPAL MORTGAGE MORTGAGE MORTGAGE REMAINING U/W NCF LOAN-TO-VALUE
LOAN-TO-VALUE RATIO LOANS BALANCE POOL BALANCE POOL BALANCE RATE TERM (MO.) DSCR RATIO
- ------------------------------------------------------------------------------------------------------------------------------------
0.90% to 4.99% 1 $ 4,950,297 0.4% 0.4% 6.1000% 177 1.22x 61.11%
5.00% to 49.99% 5 135,132,742 11.4 11.8 4.9610 118 1.79 59.54
50.00% to 54.99% 5 71,902,722 6.1 17.9 5.6350 105 1.66 63.34
55.00% to 59.99% 14 100,367,580 8.5 26.4 4.8204 85 1.59 67.91
60.00% to 64.99% 33 389,692,152 33.0 59.4 5.6468 113 1.40 73.27
65.00% to 69.99% 34 350,834,945 29.7 89.0 5.4812 111 1.39 77.63
70.00% to 79.07% 23 129,538,360 11.0 100.0 4.6851 67 1.46 78.49
- ------------------------------------------------------------------------------------------------------------------------------------
Totals/Wtd. Avg. 115 $1,182,418,798 100.0% 5.3450% 105 1.48x 72.46%
====================================================================================================================================
A-2-7
STATES
WEIGHTED AVERAGES
------------------------------------------------
AGGREGATE CUMULATIVE
NUMBER OF CUT-OFF % OF INITIAL % OF INITIAL STATED CUT-OFF DATE
MORTGAGED PRINCIPAL MORTGAGE MORTGAGE MORTGAGE REMAINING U/W NCF LOAN-TO-VALUE
STATES PROPERTIES BALANCE POOL BALANCE POOL BALANCE RATE TERM (MO.) DSCR RATIO
- ------------------------------------------------------------------------------------------------------------------------------------
Illinois 10 $ 198,591,011 16.8% 16.8% 4.9203% 116 1.71x 67.65%
Florida 16 177,099,898 15.0 31.8 5.2603 95 1.46 73.04
Southern California (1) 10 63,202,834 5.3 37.1 5.4408 109 1.45 69.83
Northern California (2) 4 46,319,066 3.9 41.0 5.9493 116 1.39 75.96
Texas 9 97,428,390 8.2 49.3 5.7462 110 1.42 70.71
Louisiana 2 65,064,076 5.5 54.8 4.3525 70 1.71 66.07
New York 6 59,038,245 5.0 59.8 5.3212 112 1.42 76.00
Ohio 9 56,017,503 4.7 64.5 5.3958 92 1.44 75.42
New Jersey 4 48,535,989 4.1 68.6 5.4431 103 1.38 75.88
New Hampshire 1 35,500,000 3.0 71.6 6.1200 120 1.24 76.84
Washington 5 33,198,274 2.8 74.4 5.7035 113 1.38 74.76
Connecticut 5 27,830,108 2.4 76.8 5.5942 116 1.52 69.49
Guam 1 26,864,655 2.3 79.0 5.6900 115 1.55 72.61
Massachusetts 2 24,111,938 2.0 81.1 5.7027 130 1.32 70.45
Kansas 8 21,682,868 1.8 82.9 4.7160 76 1.46 77.62
Utah 3 21,219,406 1.8 84.7 5.5300 117 1.41 78.93
Colorado 3 20,970,702 1.8 86.5 5.6547 117 1.41 73.22
North Carolina 4 19,213,257 1.6 88.1 5.3475 84 1.38 77.30
Oregon 4 19,114,917 1.6 89.7 6.0045 120 1.28 77.41
District of Columbia 2 18,800,000 1.6 91.3 5.0500 77 1.32 79.66
Missouri 5 18,404,386 1.6 92.9 4.7513 72 1.45 76.95
Georgia 1 15,000,000 1.3 94.1 5.6500 118 1.34 74.44
Oklahoma 6 11,257,837 1.0 95.1 5.7823 117 1.26 74.95
Nevada 2 9,043,973 0.8 95.9 5.5332 117 1.41 74.19
Michigan 1 7,740,000 0.7 96.5 5.3800 119 1.30 79.22
Maine 1 7,000,000 0.6 97.1 5.9100 120 1.44 75.27
Virginia 2 6,852,675 0.6 97.7 5.9909 117 1.29 77.44
Pennsylvania 1 6,700,000 0.6 98.3 5.1000 120 1.26 76.14
Wyoming 2 5,688,937 0.5 98.7 5.4336 105 1.43 77.24
Maryland 1 5,291,803 0.4 99.2 6.2000 114 1.59 70.56
Arizona 1 4,644,000 0.4 99.6 5.3600 119 1.47 48.12
Mississippi 1 2,594,976 0.2 99.8 6.0800 93 1.33 76.68
Alabama 1 2,397,073 0.2 100.0 6.2300 119 1.20 73.76
- ------------------------------------------------------------------------------------------------------------------------------------
Totals/Wtd. Avg. 133 $1,182,418,798 100.0% 5.3450% 105 1.48x 72.46%
====================================================================================================================================
A-2-8
ANNEX A-3
CHARACTERISTICS OF THE MULTIFAMILY MORTGAGED REAL PROPERTIES
[THIS PAGE INTENTIONALLY LEFT BLANK.]
MULTIFAMILY MORTGAGED REAL PROPERTY CHARACTERISTICS
MORTGAGE ONE
CONTROL LOAN PROPERTY STUDIO STUDIO AVERAGE BEDROOM
NUMBER SELLER LOAN / PROPERTY NAME TYPE UNITS RENT UNITS
- ------------------------------------------------------------------------------------------------------------------------------------
77 CGM Foxcroft Apartments Multifamily NAP NAP 48
- ------------------------------------------------------------------------------------------------------------------------------------
CGM Oklahoma City Apartments Portfolio
59 CGM Newport Grenada Apartments Multifamily 7 306; 295-315 79
60 CGM Emerald Court Apartments Multifamily NAP NAP 29
61 CGM Casa Linda Apartments Multifamily 2 345; 315-375 31
- ------------------------------------------------------------------------------------------------------------------------------------
79 CGM Las Palmas Apartments Multifamily NAP NAP 112
89 CGM Atriums at Somerset III Multifamily NAP NAP 48
93 CGM Barrington Place Apartments Multifamily NAP NAP 24
94 CGM Fielder Crossing Condominiums Multifamily NAP NAP 54
- ------------------------------------------------------------------------------------------------------------------------------------
CGM Edmond Apartments Portfolio
62 CGM Christopher Place Apartments Multifamily 9 359, 350-399 57
63 CGM University Park Apartments Multifamily NAP NAP 60
64 CGM 909 North Place Apartments Multifamily 8 355; 350-370 18
- ------------------------------------------------------------------------------------------------------------------------------------
107 CGM Waterford Apartments Multifamily 24 386; 375-399 179
48 Wachovia Delray Bay Apartments Multifamily NAP NAP 66
69 Wachovia Breckenridge Apartments Multifamily NAP NAP NAP
80 CDCMC Village Knoll Apartments Multifamily NAP NAP NAP
TWO THREE FOUR TENANT NUMBER
CONTROL ONE BEDROOM BEDROOM TWO BEDROOM BEDROOM THREE BEDROOM BEDROOM FOUR BEDROOM PAID OF
NUMBER AVERAGE RENT UNITS AVERAGE RENT UNITS AVERAGE RENT UNITS AVERAGE RENT UTILITIES ELEVATORS
- ------------------------------------------------------------------------------------------------------------------------------------
77 445; 410-490 141 550; 475-660 35 628; 575-690 NAP NAP E 0
- ------------------------------------------------------------------------------------------------------------------------------------
59 317; 295-355 34 395; 365-425 4 550; 550-550 NAP NAP E, G 0
60 352; 335-400 81 417; 325-445 1 550; 550-550 NAP NAP E, G 0
61 360; 300-380 63 454; 390-550 2 550; 550-550 NAP NAP E, G 0
- ------------------------------------------------------------------------------------------------------------------------------------
79 647; 505-820 32 818; 750-865 NAP NAP NAP NAP E, W 0
89 647; 615-675 96 754; 725-780 NAP NAP NAP NAP E 2
93 530; 525-540 48 688; 635-735 36 841; 830-860 NAP NAP E 0
94 640; 562-785 65 792; 715-975 NAP NAP NAP NAP E, S, W 0
- ------------------------------------------------------------------------------------------------------------------------------------
62 402; 399-429 12 501; 499-519 NAP NAP NAP NAP E, S, W 0
63 414; 325-500 NAP NAP NAP NAP NAP NAP E, G 0
64 364; 345-385 11 477; 450-550 NAP NAP NAP NAP E, G 0
- ------------------------------------------------------------------------------------------------------------------------------------
107 426; 354-495 1 610; 610-610 NAP NAP NAP NAP E, W 0
48 961; 950-975 66 1,286; 1,100-1,305 34 1,409; 1,365-1,800 NAP NAP E, W 0
69 NAP NAP NAP 60 1335;1335-1335 60 1720;1720-1720 E, S, W 0
80 NAP 204 608; 550-680 NAP NAP NAP NAP C, E, G, P 0
[THIS PAGE INTENTIONALLY LEFT BLANK.]
ANNEX B
DESCRIPTION OF TWENTY LARGEST MORTGAGE LOANS, GROUPS OF CROSS-COLLATERALIZED
MORTGAGE LOANS AND/OR GROUPS OF BORROWER AFFILIATED MORTGAGE LOANS
[THIS PAGE INTENTIONALLY LEFT BLANK.]
- --------------------------------------------------------------------------------
ARC PORTFOLIO 10-6
- --------------------------------------------------------------------------------
[PHOTO OMITTED] [PHOTO OMITTED]
[PHOTO OMITTED]
B-1
- --------------------------------------------------------------------------------
ARC PORTFOLIO 10-6
- --------------------------------------------------------------------------------
[MAP OMITTED]
B-2
- --------------------------------------------------------------------------------
ARC PORTFOLIO 10-6
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
LOAN INFORMATION
- --------------------------------------------------------------------------------
MORTGAGE LOAN SELLER CGM
CUT-OFF DATE PRINCIPAL BALANCE $37,839,210
PERCENTAGE OF INITIAL MORTGAGE POOL BALANCE 3.2%
NUMBER OF MORTGAGE LOANS 1
LOAN PURPOSE Refinance and Acquisition
SPONSOR Affordable Residential
Communities Inc., a Maryland
corporation, Affordable
Residential Communities LP, a
Delaware limited partnership
OWNERSHIP INTEREST Fee Simple
MORTGAGE RATE 5.530%
MATURITY DATE March 1, 2014
AMORTIZATION TYPE Balloon
ORIGINAL TERM/AMORTIZATION 120/360
REMAINING TERM/AMORTIZATION 117/357
LOCKBOX In-Place Soft, Springing Hard
UP-FRONT RESERVES
TAX/INSURANCE Yes/Yes
REPLACEMENT $6,317
ENGINEERING $201,175
ENVIRONMENTAL $6,250
ONGOING MONTHLY RESERVES
TAX/INSURANCE Yes/Yes
REPLACEMENT $6,317
ADDITIONAL FINANCING None
CUT-OFF DATE PRINCIPAL BALANCE $37,839,210
CUT-OFF DATE PRINCIPAL BALANCE/PAD $24,960
CUT-OFF DATE LTV RATIO 79.8%
MATURITY DATE LTV RATIO 66.9%
UW NCF DSCR 1.42x
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
NUMBER OF MORTGAGED PROPERTIES 7
LOCATION Various, Various
PROPERTY TYPE Mobile Home Park
SIZE (PADS) 1,516
OCCUPANCY % AS OF SEPTEMBER 30 AND OCTOBER 3, 2003 93.7%
YEAR BUILT/YEAR RENOVATED Various/Various
APPRAISED VALUE $47,440,000
PROPERTY MANAGEMENT ARC Management Services, Inc.
UW ECONOMIC OCCUPANCY % 93.0%
UW REVENUES $6,198,414
UW EXPENSES $2,442,706
UW NET OPERATING INCOME (NOI) $3,755,708
UW NET CASH FLOW (NCF) $3,679,908
- --------------------------------------------------------------------------------
B-3
- --------------------------------------------------------------------------------
ARC PORTFOLIO 10-6
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ARC POOL 10-6
- --------------------------------------------------------------------------------
CUT-OFF DATE
ALLOCATED LOAN YEAR BUILT/
PROPERTY NAME PROPERTY LOCATION BALANCE YEAR RENOVATED
- ----------------------------- ---------------------- ---------------- ----------------
Sunshine City Plantation, FL $10,129,805 1972/NAP
Country Club Mobile Estates Salt Lake City, UT 9,930,400 1966/NAP
Windsor Mobile Estates West Valley City, UT 7,736,938 1986/1994
Big Country Estates Cheyenne, WY 4,546,448 1979/NAP
Harper Woods MHP Lawrence, KS 2,352,986 1966/NAP
The Vineyards Clifton, CO 1,834,532 1966/NAP
Rockview Heights Arnold, MO 1,308,101 1968/NAP
-----------
TOTAL/WTD. AVG. $37,839,210
===========
CUT-OFF OCCUPANCY %
DATE PRINCIPAL (AS OF UNDERWRITTEN
NUMBER OF BALANCE SEPT. 30 AND NET CASH AVERAGE
PROPERTY NAME PADS PER PAD OCT. 3, 2003) FLOW RENT
- ----------------------------- ----------- ---------------- --------------- ------------- --------
Sunshine City 350 $28,942 92.0% $ 983,906 $433
Country Club Mobile Estates 323 30,744 99.7% 987,628 355
Windsor Mobile Estates 249 31,072 96.4% 741,989 344
Big Country Estates 251 18,113 93.2% 448,631 228
Harper Woods MHP 142 16,570 88.0% 239,268 255
The Vineyards 98 18,720 87.8% 171,894 245
Rockview Heights 103 12,700 89.3% 106,593 243
--- ----------
TOTAL/WTD. AVG. 1,516 $24,960 93.7% $3,679,908 $327
===== ==========
- --------------------------------------------------------------------------------
B-4
- --------------------------------------------------------------------------------
ARC PORTFOLIO 10-6
- --------------------------------------------------------------------------------
o THE LOAN. The mortgage loan (the "ARC Portfolio 10-6 Mortgage Loan") is
secured by first mortgages encumbering seven mobile home park properties
located in Florida (1 property), Utah (2 properties), Wyoming (1 property),
Kansas (1 property), Colorado (1 property), and Missouri (1 property). Six
of the seven mobile home parks were refinanced with the loan proceeds,
while one was acquired. ARC Portfolio 10-6 Mortgage Loan represents
approximately 3.2% of the Initial Mortgage Pool Balance. The ARC Portfolio
10-6 Mortgage Loan was originated on February 18, 2004 and has an aggregate
principal balance as of the cut-off date of $37,839,210.
The ARC Portfolio 10-6 Mortgage Loan has a remaining term of 117 months and
matures on March 1, 2014. The ARC Portfolio 10-6 Mortgage Loan may be
prepaid on or after January 1, 2014, and permits defeasance with United
States government obligations beginning two years after the issue date.
The ARC Portfolio 10-6 Mortgage Loan is not cross-collateralized or
cross-defaulted with either of the ARC Portfolio 10-4 Mortgage Loan or the
ARC Portfolio 5-1 Mortgage Loan. The borrowers under the ARC Portfolio 10-6
Mortgage Loan, the ARC Portfolio 10-4 Mortgage Loan and the ARC Portfolio
5-1 Mortgage Loan have a common sponsor.
o THE BORROWER. The borrower is ARC Communities 13 LLC, a special purpose
entity. Legal counsel to the borrower delivered a non-consolidation opinion
in connection with the origination of the ARC Portfolio 10-6 Mortgage Loan.
The sponsors of the borrower are Affordable Residential Communities, Inc.,
a Maryland corporation ("ARC"), and Affordable Residential Communities LP,
a Delaware limited partnership. Founded in 1995, ARC is a publicly held,
self-administered and self-managed equity real estate investment trust that
acquires, redevelops, repositions and operates manufactured housing
communities. In February 2004, in conjunction with its initial public
offering, ARC acquired approximately 90 manufactured housing communities
from Hometown America, making ARC one of the largest manufactured home
community operators in the U.S.
o THE PROPERTY. The mortgaged real properties consist of seven mobile home
parks. As of October 3, 2003, the weighted average occupancy rate for the
mortgaged real properties securing the ARC Portfolio 10-6 Mortgage Loan was
approximately 93.7%. Each mortgaged real property has individual asphalt
paved driveways and separate electric meters for each pad. As of the
closing of the ARC Portfolio 10-6 Mortgage Loan, 113 pads are master leased
to ARC Housing LLC or its affiliates, which are subsidiaries of ARC, under
one or more master leases. The master lease(s) provide for base rent to be
payable for each pad leased thereunder in the event (a) such pad is
subleased to a third party or (b) the related manufactured housing
community is more than 97% leased. Any base rents payable under the master
lease for any master leased pad are to be no less than the greater of the
subrental rate for the pad collected by ARC Housing LLC (or its affiliated
master lessee) or the market rate for pad rentals in the community.
o LOCK BOX ACCOUNT. At any time during the term of the ARC Pool 10-6 Mortgage
Loan, upon the occurrence of an event of default under the applicable loan
documents, the borrower is required, upon the request of the lender, to
notify the tenants that any and all tenant payments due under the
applicable tenant leases are to be directly deposited into a
lender-designated lock box account.
o RELEASE OF PARCELS. The loan documents permit the partial release of up to
two (2) individual properties following the initial lockout period under
the loan documents, provided that certain conditions precedent set forth in
the loan documents are satisfied, including, among other things: (i) the
completion of a partial defeasance of a portion of the loan equal to 125%
of the allocated loan amount for the property or properties being released;
and (ii) the remaining properties must meet certain financial tests,
including debt service coverage ratio and loan-to-value ratio tests.
o MANAGEMENT. ARC Management Services, Inc., an affiliate of the borrower, is
the property manager for the mortgaged real properties securing the ARC
Pool 10-6 Mortgage Loan.
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ARC PORTFOLIO 10-4
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ARC PORTFOLIO 10-4
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ARC PORTFOLIO 10-4
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LOAN INFORMATION
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MORTGAGE LOAN SELLER CGM
CUT-OFF DATE PRINCIPAL BALANCE $34,152,200
PERCENTAGE OF INITIAL MORTGAGE POOL BALANCE 2.9%
NUMBER OF MORTGAGE LOANS 1
LOAN PURPOSE Refinance and Acquisition
SPONSOR Affordable Residential
Communities Inc.,
a Maryland corporation,
Affordable Residential
Communities LP, a Delaware
limited partnership
OWNERSHIP INTEREST Fee Simple
MORTGAGE RATE 5.530%
MATURITY DATE March 1, 2014
AMORTIZATION TYPE Balloon
ORIGINAL TERM/AMORTIZATION 120/360
REMAINING TERM/AMORTIZATION 117/357
LOCKBOX In-Place Soft, Springing Hard
UP-FRONT RESERVES
TAX/INSURANCE Yes/Yes
REPLACEMENT $6,396
ENGINEERING $108,294
ENVIRONMENTAL $18,750
ONGOING MONTHLY RESERVES
TAX/INSURANCE Yes/Yes
REPLACEMENT $6,396
ADDITIONAL FINANCING None
CUT-OFF DATE PRINCIPAL BALANCE $34,152,200
CUT-OFF DATE PRINCIPAL BALANCE/PAD $22,249
CUT-OFF DATE LTV RATIO 74.8%
MATURITY DATE LTV RATIO 62.7%
UW NCF DSCR 1.38x
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PROPERTY INFORMATION
- --------------------------------------------------------------------------------
NUMBER OF MORTGAGED PROPERTIES 7
LOCATION Various, Various
PROPERTY TYPE Mobile Home Park
SIZE (PADS) 1,535
OCCUPANCY % AS OF SEPTEMBER 30, 2003 93.2%
YEAR BUILT/YEAR RENOVATED Various/NAP
APPRAISED VALUE $45,670,000
PROPERTY MANAGEMENT ARC Management
Services, Inc.
UW ECONOMIC OCCUPANCY % 93.1%
UW REVENUES $5,733,475
UW EXPENSES $2,425,883
UW NET OPERATING INCOME (NOI) $3,307,592
UW NET CASH FLOW (NCF) $3,230,842
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B-9
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ARC PORTFOLIO 10-4
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ARC POOL 10-4
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CUT-OFF DATE
ALLOCATED LOAN YEAR BUILT/
PROPERTY NAME PROPERTY LOCATION BALANCE YEAR RENOVATED
- ----------------- ------------------- ---------------- -----------------
The Meadows Aurora, CO $11,665,739 1965/NAP
Foxhall Village Raleigh, NC 7,291,087 1982/NAP
New Twin Lakes Bloomingburg, NY 7,029,356 1972 & 1981/NAP
Sundown Clearfield, UT 3,552,068 1970/NAP
Meadowood Topeka, KS 3,028,605 1977/NAP
Blue Valley Manhattan, KS 927,277 1952 & 1969/NAP
Connie Jean Jacksonville, FL 658,067 1984/NAP
-----------
TOTAL/WTD. AVG. $34,152,200
===========
CUT-OFF
DATE OCCUPANCY %
PRINCIPAL (AS OF UNDERWRITTEN
NUMBER OF BALANCE SEPTEMBER NET CASH AVERAGE
PROPERTY NAME PADS PER PAD 30, 2003) FLOW RENT
- ----------------- ----------- ----------- ------------ ------------- --------
The Meadows 303 $38,501 96.4% $1,122,537 $434
Foxhall Village 315 23,146 91.1% 657,961 295
New Twin Lakes 257 27,352 96.5% 595,815 448
Sundown 200 17,760 91.5% 350,249 271
Meadowood 250 12,114 90.4% 308,061 201
Blue Valley 148 6,265 93.9% 125,558 160
Connie Jean 62 10,614 88.7% 70,661 181
--- ------- ----------
TOTAL/WTD. AVG. 1,535 $22,249 93.2% $3,230,842 $314
===== ======= ==========
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ARC PORTFOLIO 10-4
- --------------------------------------------------------------------------------
o THE LOAN. The mortgage loan (the "ARC Portfolio 10-4 Mortgage Loan") is
secured by first mortgages encumbering seven mobile home park properties
located in Colorado (1 property), North Carolina (1 property), New York (1
property), Utah (1 property), Kansas (2 properties), and Florida (1
property). Six of the seven mobile home parks were refinanced with the loan
proceeds, while one was acquired. The ARC Portfolio 10-4 Mortgage Loan
represents approximately 2.9% of the Initial Mortgage Pool Balance. The ARC
Portfolio 10-4 Mortgage Loan was originated on February 18, 2004 and has an
aggregate principal balance as of the cut-off date of $34,152,200.
The ARC Portfolio 10-4 Mortgage Loan has a remaining term of 117 months and
matures on March 1, 2014. The ARC Portfolio 10-4 Mortgage Loan may be
prepaid on or after January 1, 2014, and permits defeasance with United
States government obligations beginning two years after the issue date.
The ARC Portfolio 10-4 Mortgage Loan is not cross-collateralized or
cross-defaulted with either of the ARC Portfolio 10-6 Mortgage Loan or the
ARC Portfolio 5-1 Mortgage Loan. The borrowers under the ARC Portfolio 10-4
Mortgage Loan, the ARC Portfolio 10-6 Mortgage Loan and the ARC Portfolio
5-1 Mortgage Loan have a common sponsor.
o THE BORROWER. The borrower is ARC Communities 11 LLC, a special purpose
entity. Legal counsel to the borrower delivered a non-consolidation opinion
in connection with the origination of the ARC Portfolio 10-4 Mortgage Loan.
The sponsors of the borrower are Affordable Residential Communities, Inc.,
a Maryland corporation ("ARC"), and Affordable Residential Communities LP,
a Delaware limited partnership. Founded in 1995, ARC is a publicly held,
self-administered and self-managed equity real estate investment trust that
acquires, redevelops, repositions and operates manufactured housing
communities. In February 2004, in conjunction with its initial public
offering, ARC acquired approximately 90 manufactured housing communities
from Hometown America, making ARC one of the largest manufactured home
community operators in the U.S.
o THE PROPERTY. The mortgaged real properties consist of seven mobile home
parks. As of September 30, 2003, the weighted average occupancy rate for
the mortgaged real properties securing the ARC Portfolio 10-4 Mortgage Loan
was approximately 93.2%. Each mortgaged real property has individual
asphalt paved driveways and separate electric meters for each pad. As of
the closing of the ARC Portfolio 10-4 Mortgage Loan, 164 pads are master
leased to ARC Housing LLC or its affiliates, which are subsidiaries of ARC,
under one or more master leases. The master lease(s) provide for base rent
to be payable for each pad leased thereunder in the event (a) such pad is
subleased to a third party or (b) the related manufactured housing
community is more than 97% leased. Any base rents payable under the master
lease for any master leased pad are to be no less than the greater or the
subrental rate for the pad collected by ARC Housing LLC (or its affiliated
master lease) or the market rate for pad rentals in the community.
o LOCK BOX ACCOUNT. At any time during the term of the ARC Pool 10-4 Mortgage
Loan, upon the occurrence of an event of default under the applicable loan
documents, the borrower is required, upon the request of the lender, to
notify the tenants that any and all tenant payments due under the
applicable tenant leases are to be directly deposited into a
lender-designated lock box account.
o RELEASE OF PARCELS. The loan documents permit the partial release of up to
two (2) individual properties following the initial lockout period under
the loan documents, provided that certain conditions precedent set forth in
the loan documents are satisfied, including, among other things: (i) the
completion of a partial defeasance of a portion of the loan equal to 125%
of the allocated loan amount for the property or properties being released;
and (ii) the remaining properties must meet certain financial tests,
including debt service coverage ratio and loan-to-value ratio tests.
o MANAGEMENT. ARC Management Services, Inc., an affiliate of the borrower, is
the property manager for the mortgaged real properties securing the ARC
Pool 10-4 Mortgage Loan.
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ARC PORTFOLIO 5-1
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ARC PORTFOLIO 5-1
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ARC PORTFOLIO 5-1
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LOAN INFORMATION
- --------------------------------------------------------------------------------
MORTGAGE LOAN SELLER CGM
CUT-OFF DATE PRINCIPAL BALANCE $24,654,246
PERCENTAGE OF INITIAL MORTGAGE POOL BALANCE 2.1%
NUMBER OF MORTGAGE LOANS 1
LOAN PURPOSE Refinance and Acquisition
SPONSOR Affordable Residential Communities Inc.,
a Maryland corporation,
Affordable Residential Communities LP,
a Delaware limited partnership
OWNERSHIP INTEREST Fee Simple
MORTGAGE RATE 5.050%
MATURITY DATE March 1, 2009
AMORTIZATION TYPE Balloon
ORIGINAL TERM / AMORTIZATION 60 / 360
REMAINING TERM / AMORTIZATION 57 / 357
LOCKBOX In-Place Soft, Springing Hard
UP-FRONT RESERVES
TAX/INSURANCE Yes/Yes
REPLACEMENT $6,350
ENGINEERING $658,416
ENVIRONMENTAL $313
ONGOING MONTHLY RESERVES
TAX/INSURANCE Yes/Yes
REPLACEMENT $6,350
ADDITIONAL FINANCING None
CUT-OFF DATE PRINCIPAL BALANCE $24,654,246
CUT-OFF DATE PRINCIPAL BALANCE/PAD $16,177
CUT-OFF DATE LTV RATIO 67.2%
MATURITY DATE LTV RATIO 62.2%
UW NCF DSCR 1.46x
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- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
NUMBER OF MORTGAGED PROPERTIES 7
LOCATION Various, Various
PROPERTY TYPE Mobile Home Park
SIZE (PADS) 1,524
OCCUPANCY % AS OF SEPTEMBER 30, 2003 86.6%
YEAR BUILT / YEAR RENOVATED Various / NAP
APPRAISED VALUE $36,685,000
PROPERTY MANAGEMENT ARC Management
Services, Inc.
UW ECONOMIC OCCUPANCY % 86.8%
UW REVENUES $5,209,637
UW EXPENSES $2,794,680
UW NET OPERATING INCOME (NOI) $2,414,957
UW NET CASH FLOW (NCF) $2,338,757
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B-15
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ARC PORTFOLIO 5-1
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ARC POOL 5-1
- ----------------------------------------------------------------------------------
CUT-OFF DATE YEAR
ALLOCATED BUILT/YEAR
PROPERTY NAME PROPERTY LOCATION LOAN BALANCE RENOVATED
- ---------------------------------- ------------------- -------------- ------------
Countryside Village Jacksonville Jacksonville, FL $12,634,587 1973/NAP
Parkview Estates San Jacinto, CA 3,494,673 1986/NAP
Falcon Farms Port Byron, IL 3,477,872 1973/NAP
Forest Park Queensbury, NY 2,419,389 1971/NAP
Green Valley Village Casper, WY 1,142,489 1976/NAP
Pleasant Grove Fuquay Varina, NC 840,066 1972/NAP
Rose Country Estates Tyler, TX 645,170 1970/NAP
-----------
TOTAL/WTD. AVG. $24,654,246
===========
CUT-OFF
DATE OCCUPANCY %
PRINCIPAL (AS OF UNDERWRITTEN
NUMBER BALANCE SEPTEMBER 30, NET CASH AVERAGE
PROPERTY NAME OF PADS PER PAD 2003) FLOW RENT
- ---------------------------------- --------- ----------- --------------- ------------- --------
Countryside Village Jacksonville 643 $19,649 86.5% $1,240,925 $320
Parkview Estates 200 17,473 87.0% 223,280 291
Falcon Farms 215 16,176 90.7% 415,741 247
Forest Park 183 13,221 88.0% 183,837 284
Green Valley Village 106 10,778 84.0% 103,243 198
Pleasant Grove 72 11,668 86.1% 103,963 225
Rose Country Estates 105 6,144 79.1% 67,767 207
--- ----------
TOTAL/WTD. AVG. 1,524 $16,177 86.6% $2,338,757 $281
===== ==========
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B-16
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ARC PORTFOLIO 5-1
- --------------------------------------------------------------------------------
o THE LOAN. The mortgage loan (the "ARC Portfolio 5-1 Mortgage Loan") is
secured by first mortgages encumbering seven mobile home park properties
located in Florida (1 property), California (1 property), Illinois (1
property), New York (1 property), Wyoming (1 property), North Carolina (1
property), and Texas (1 property). The ARC Portfolio 5-1 Mortgage Loan
represents approximately 2.1% of the Initial Mortgage Pool Balance. Five of
the seven properties were refinanced with the loan proceeds, while two were
acquired. The ARC Portfolio 5-1 Mortgage Loan was originated on February
18, 2004 and has an aggregate principal balance as of the cut-off date of
$24,654,246.
The ARC Portfolio 5-1 Mortgage Loan has a remaining term of 57 months and
matures on March 1, 2009. The ARC Portfolio 5-1 Mortgage Loan may be
prepaid on or after January 1, 2009, and permits defeasance with United
States government obligations beginning two years after the issue date.
The ARC Portfolio 5-1 Mortgage Loan is not cross-collateralized or
cross-defaulted with either of the ARC Portfolio 10-6 Mortgage Loan or the
ARC Portfolio 10-4 Mortgage Loan. The borrowers under the ARC Portfolio 5-1
Mortgage Loan, the ARC Portfolio 10-6 Mortgage Loan and the ARC Portfolio
10-4 Mortgage Loan have a common sponsor.
o THE BORROWER. The borrowers are ARC Communities 14 LLC and ARC14FLCV LLC, a
special purpose entity. Legal counsel to the borrowers delivered a
non-consolidation opinion in connection with the origination of the ARC
Portfolio 5-1 Mortgage Loan. The sponsors of the borrower are Affordable
Residential Communities, Inc., a Maryland corporation ("ARC"), and
Affordable Residential Communities LP, a Delaware limited partnership.
Founded in 1995, ARC is a publicly held, self-administered and self-managed
equity real estate investment trust that acquires, redevelops, repositions
and operates manufactured housing communities. In February 2004, in
conjunction with its initial public offering, ARC acquired approximately 90
manufactured housing communities from Hometown America, making ARC one of
the largest manufactured home community operators in the U.S.
o THE PROPERTY. The mortgaged real properties consist of seven mobile home
parks. As of September 30, 2003, the weighted average occupancy rate for
the mortgaged real properties securing the ARC Portfolio 5-1 Mortgage Loan
was approximately 86.6%. Each mortgaged real property has individual
asphalt paved driveways and separate electric meters for each pad. As of
the closing of the ARC Portfolio 5-1 Mortgage Loan, 173 pads are master
leased to ARC Housing LLC or its affiliates, which are subsidiaries of ARC,
under one or more master leases. The master lease(s) provide for base rent
to be payable for each pad leased thereunder in the event (a) such pad is
subleased to a third party or (b) the related manufactured housing
community is more than 97% leased. Any base rents payable under the master
lease for any master leased pad are to be no less than the greater of the
subrental rate for the pad collected by ARC Housing LLC (or its affiliated
master lessee) or the market rate for pad rentals in the community.
o LOCK BOX ACCOUNT. At any time during the term of the ARC Pool 5-1 Mortgage
Loan, upon the occurrence of an event of default under the applicable loan
documents, the borrower is required, upon the request of the lender, to
notify the tenants that any and all tenant payments due under the
applicable tenant leases are to be directly deposited into a
lender-designated lock box acount.
o RELEASE OF PARCELS. The loan documents permit the partial release of up to
two (2) individual properties following the initial lockout period under
the loan documents, provided that certain conditions precedent set forth in
the loan documents are satisfied, including, among other things: (i) the
completion of a partial defeasance of a portion of the loan equal to 125%
of the allocated loan amount for the property or properties being released;
and (ii) the remaining properties must meet certain financial tests,
including debt service coverage ratio and loan-to-value ratio tests.
o MANAGEMENT. ARC Management Services, Inc., an affiliate of the borrower, is
the property manager for the mortgaged real properties securing the ARC
Pool 5-1 Mortgage Loan.
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YORKTOWN CENTER
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YORKTOWN CENTER
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YORKTOWN CENTER
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LOAN INFORMATION
- --------------------------------------------------------------------------------
MORTGAGE LOAN SELLER Wachovia
CUT-OFF DATE PRINCIPAL BALANCE $93,000,000
PERCENTAGE OF INITIAL MORTGAGE POOL 7.9%
BALANCE
NUMBER OF MORTGAGE LOANS 1
LOAN PURPOSE Refinance
SPONSOR Yorktown Joint Venture
OWNERSHIP INTEREST Fee Simple
MORTGAGE RATE 4.630%
MATURITY DATE May 11, 2014
AMORTIZATION TYPE Partial IO/Balloon
INTEREST ONLY PERIOD 12
ORIGINAL TERM / AMORTIZATION 120 / 360
REMAINING TERM / AMORTIZATION 119 / 360
LOCKBOX In-Place Soft
UP-FRONT RESERVES
TAX/INSURANCE Yes/No
REPLACEMENT $0
ONGOING MONTHLY RESERVES
TAX/INSURANCE Yes/No
REPLACEMENT $8,566
ADDITIONAL FINANCING None
CUT-OFF DATE PRINCIPAL BALANCE $93,000,000
CUT-OFF DATE PRINCIPAL BALANCE/SF $150
CUT-OFF DATE LTV RATIO 58.1%
MATURITY DATE LTV RATIO 48.5%
UW NCF DSCR 1.96x
LOAN SHADOW RATING (MOODY'S/S&P)(1) Baa3/BBB-
- --------------------------------------------------------------------------------
(1) S&P and Moody's have confirmed that the Yorktown Center Mortgage Loan has,
in the context of its inclusion in the trust, the credit characteristics
consistent with that of an investment-grade rated obligation.
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PROPERTY INFORMATION
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NUMBER OF MORTGAGED REAL PROPERTIES 1
LOCATION Lombard, IL
PROPERTY TYPE Regional Mall
SIZE (SF) 619,283
OCCUPANCY % AS OF MARCH 29, 2004 83.0%
YEAR BUILT / YEAR RENOVATED 1968 / 1994
APPRAISED VALUE $160,000,000
PROPERTY MANAGEMENT Long/Pehrson Associates, L.L.C
UW ECONOMIC OCCUPANCY % 86.5%
UW REVENUES $18,633,136
UW EXPENSES $6,887,924
UW NET OPERATING INCOME (NOI) $11,745,212
UW NET CASH FLOW (NCF) $11,257,540
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B-21
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YORKTOWN CENTER
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- --------------------------------------------------------------------------------------------------------------------------------
TENANT SUMMARY
- --------------------------------------------------------------------------------------------------------------------------------
% OF
TOTAL
NET NET % OF DATE OF
RATINGS RENTABLE RENTABLE RENT ACTUAL ACTUAL LEASE
TENANT MOODY'S/S&P/FITCH(1) AREA (SF) AREA PSF RENT RENT EXPIRATION
- -------------------------------- ---------------------- ----------- ---------- ----------- -------------- ---------- -----------
Anchor Tenants -- Anchor Owned
JCPenney Ba3/BB+/BB 239,000 ANCHOR OWNED -- NOT PART OF COLLATERAL
Carson Pirie Scott Ba3/BB/BB- 218,000 ANCHOR OWNED -- NOT PART OF COLLATERAL
Von Maur NR/NR/NR 210,000 ANCHOR OWNED -- NOT PART OF COLLATERAL
-------
Total Anchor Owned 667,000
Top 5 Tenants
Yorktown Cinema 18 NR/NR/NR 78,485 12.7% $ 10.38 $ 814,674 8.0% 1/31/18
Carson Pirie Scott Furniture Ba3/BB/BB-- 45,708 7.4 $ 7.18 328,183 3.2 6/30/08
Big Idea Productions NR/NR/NR 27,217 4.4 $ 1.09 29,667 0.3 MTM
Sam Goody NR/NR/NR 12,486 2.0 $ 20.58 256,962 2.5 1/31/06
The Limited Baa1/BBB+/NR 11,070 1.8 $ 22.00 243,540 2.4 1/31/07
------- -------- ------------ -----
Total Top 5 Tenants 174,966 28.3% $ 9.56 $ 1,673,026 16.3%
Non-Major Tenants 338,753 54.7% $ 25.29 $ 8,567,467 83.7%
Occupied Collateral Total 513,719 83.0% $ 19.93 $ 10,240,494 100.0%
Vacant Space 105,564 17.0%
------- --------
COLLATERAL TOTAL 619,283 100.0%
PROPERTY TOTAL 1,286,283
- --------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
LEASE EXPIRATION SCHEDULE
- ------------------------------------------------------------------------------------------------------------------
# OF WA BASE CUMULATIVE CUMMULATIVE
ROLLING RENT/SF TOTAL SF % OF TOTAL % OF SF % OF ACTUAL % OF ACTUAL
YEAR LEASES ROLLING ROLLING(2) SF ROLLING(2) ROLLING(2) RENT ROLLING RENT ROLLING
- ------ --------- ----------- ------------ --------------- ------------ -------------- -------------
2004 25 $ 20.52 52,781 10.3% 10.3% 10.6% 10.6%
2005 21 $ 19.55 70,179 13.7% 23.9% 13.4% 24.0%
2006 14 $ 29.76 40,537 7.9% 31.8% 11.8% 35.8%
2007 10 $ 25.56 40,592 7.9% 39.7% 10.1% 45.9%
2008 14 $ 16.73 77,246 15.0% 54.8% 12.6% 58.5%
2009 14 $ 23.82 40,304 7.8% 62.6% 9.4% 67.9%
2010 5 $ 45.89 6,940 1.4% 64.0% 3.1% 71.0%
2011 10 $ 35.97 30,176 5.9% 69.8% 10.6% 81.6%
2012 3 $ 18.44 9,446 1.8% 71.7% 1.7% 83.3%
2013 5 $ 29.82 20,412 4.0% 75.6% 5.9% 89.2%
2014 5 $ 24.69 10,459 2.0% 77.7% 2.5% 91.8%
- ------------------------------------------------------------------------------------------------------------------
(1) Certain credit ratings are those of the parent company whether or not the
parent company guarantees the lease.
(2) Calculated based on approximate square footage occupied by each tenant.
B-22
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YORKTOWN CENTER
- --------------------------------------------------------------------------------
o THE LOAN. The mortgage loan (the "Yorktown Center Mortgage Loan") is
secured by a first mortgage encumbering a regional mall located in Lombard,
Illinois. The Yorktown Center Mortgage Loan represents approximately 7.9%
of the Initial Mortgage Pool Balance. The Yorktown Center Mortgage Loan was
originated on April 29, 2004, and has a principal balance as of the cut-off
date of $93,000,000. The Yorktown Center Mortgage Loan provides for
interest-only payments for the first 12 months of its term, and thereafter,
fixed monthly payments of principal and interest.
The Yorktown Center Mortgage Loan has a remaining term of 119 months and
matures on May 11, 2014. The Yorktown Center Mortgage Loan may be prepaid
on or after February 11, 2014, and permits defeasance with United States
government obligations beginning three years after the loan closing date.
o THE BORROWER. The borrower is Yorktown Holdings LLC, a special purpose
entity. Legal counsel to the borrower delivered a non-consolidation opinion
in connection with the origination of the Yorktown Center Mortgage Loan.
The sponsor of the borrower is Yorktown Joint Venture, whose principals are
the Long/Pehrson and Rogers/Wilder families and The Wilder Companies. The
Long/Pehrson and Rogers/Wilder families originally developed the mortgaged
real property.
o THE PROPERTY. The mortgaged real property is approximately 619,283 square
feet of an approximately 1,286,283 square foot regional mall and an
adjacent community center situated on approximately 59.5 acres. The
mortgaged real property was constructed in 1968 and expanded and renovated
in 1985 and 1994. The mortgaged real property is located in Lombard,
Illinois, within the Chicago-Naperville-Joliet, Illinois-Indiana-Wisconsin
metropolitan statistical area. As of March 29, 2004, the overall occupancy
rate for the mortgaged real property securing the Yorktown Center Mortgage
Loan was approximately 83.0%.
The anchor tenants at the mortgaged real property are J.C. Penney Company,
Inc., Carson Pirie Scott, a subsidiary of Saks Incorporated, and Von Maur.
Each anchor tenant owns its respective land and improvements, which are not
part of the collateral. In addition, Montgomery Ward previously operated as
an anchor store at the mortgaged real property in a currently vacant anchor
space. While this space is not part of the collateral, an affiliate of the
borrower has acquired the land and improvements previously occupied by
Montgomery Ward and intends to construct an approximately 300,000 square
foot outdoor specialty center. The largest tenant that is part of the
mortgaged real property is Yorktown Cinema 18 ("Yorktown Cinema 18"),
occupying 78,485 square feet, or approximately 12.7%, of the net rentable
area. Yorktown Cinema 18 is operated by General Cinema, a subsidiary of AMC
Entertainment, Inc., which is one of the largest movie theater chains in
the United States. The Yorktown Cinema 18 lease expires in January 2018.
The second largest tenant that is part of the mortgaged real property is
Carson Pirie Scott Furniture ("Carson Pirie Scott Furniture"), occupying
45,708 square feet, or approximately 7.4% of the net rentable area. Carson
Pirie Scott Furniture, a subsidiary of Saks Incorporated, offers furniture
for various home settings and budgets, including custom orders, mattresses,
and a design studio staffed with professional interior designers. As of May
13, 2004, Saks Incorporated was rated "Ba3" (Moody's), "BB" (S&P) and "BB-"
(Fitch). The Carson Pirie Scott Furniture lease expires in June 2008. The
third largest tenant that is part of the mortgaged real property is Big
Idea Productions ("Big Idea Productions"), occupying 27,217 square feet, or
approximately 4.4%, of the net rentable area. Big Idea Productions produces
the VeggieTales children's video series and provides family media content
for national distribution. The Big Idea Productions lease is currently
month-to-month.
o LOCK BOX ACCOUNT. All tenant payments due under the applicable tenant
leases are deposited into a borrower-designated lock box account. At any
time during the term of the Yorktown Center Mortgage Loan, (i) if the debt
service coverage ratio, as computed by the lender, is less than 1.25:1 or
(ii) upon the occurrence of an event of default under the loan documents,
the borrower is required to notify the tenants that any and all tenant
payments due under the applicable tenant leases are to be directly
deposited into a lender-designated lock box account.
B-23
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YORKTOWN CENTER
- --------------------------------------------------------------------------------
o 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
providing evidence that the proposed use of the released property will be
consistent with the use of the mortgaged real property or, if not
consistent, the proposed use will not have a material adverse effect on the
mortgaged real property, and (ii) no event of default has occurred and is
continuing.
o MANAGEMENT. Long/Pehrson Associates, L.L.C., an affiliate of the sponsor,
is the property manager for the mortgaged real property securing the
Yorktown Center Mortgage Loan. Long/Pehrson Associates, L.L.C. and its
affiliates have provided owner-related management services at the mortgaged
real property since its construction.
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STORAGEMART PORTFOLIO
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B-26
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STORAGEMART PORTFOLIO
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LOAN INFORMATION
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MORTGAGE LOAN SELLER Wachovia
CUT-OFF DATE PRINCIPAL BALANCE $75,000,000
PERCENTAGE OF INITIAL MORTGAGE POOL 6.3%
BALANCE
NUMBER OF MORTGAGE LOANS 15
LOAN PURPOSE Refinance
SPONSOR Warburg-Storagemart Partners, L.P.
OWNERSHIP INTEREST Fee Simple
MORTGAGE RATE 4.382%
ANTICIPATED REPAYMENT DATE May 11, 2009
AMORTIZATION TYPE Partial IO/ARD
INTEREST ONLY PERIOD 12
ORIGINAL TERM / AMORTIZATION 60 / 360
REMAINING TERM / AMORTIZATION 59 / 360
LOCKBOX Springing Hard
UP-FRONT RESERVES
TAX / INSURANCE Yes/No
REPLACEMENT $9,529
PERFORMANCE(1) $3,500,000
ONGOING MONTHLY RESERVES
TAX / INSURANCE Yes/No
REPLACEMENT $1,992
ADDITIONAL FINANCING None
CUT-OFF DATE PRINCIPAL BALANCE $75,000,000
CUT-OFF DATE PRINCIPAL BALANCE/SF $65
CUT-OFF DATE LTV RATIO 78.0%
MATURITY DATE LTV RATIO 72.7%
UW NCF DSCR 1.48x
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(1) Upfront performance escrow may be released when the gross revenue from all
15 properties for the trailing consecutive 3 calendar months, excluding any
truck rental income, equals or exceeds $10,900,000.
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PROPERTY INFORMATION
- --------------------------------------------------------------------------------
NUMBER OF MORTGAGED REAL PROPERTIES 15
LOCATION Various
PROPERTY TYPE Self Storage
SIZE (SF) 1,152,766
OCCUPANCY % AS OF FEBRUARY 29 AND
MARCH 1, 2004 71.5%
YEAR BUILT / YEAR RENOVATED Various/Various
APPRAISED VALUE $96,130,000
PROPERTY MANAGEMENT Self-Managed
UW ECONOMIC OCCUPANCY % 78.6%
UW REVENUES $12,087,301
UW EXPENSES $5,249,907
UW NET OPERATING INCOME (NOI) $6,837,394
UW NET CASH FLOW (NCF) $6,643,953
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B-27
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STORAGEMART PORTFOLIO
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STORAGEMART PORTFOLIO SUMMARY
- ------------------------------------------------------------------------------------------
CUT-OFF
DATE
PRINCIPAL YEAR BUILT/ TOTAL
PROPERTY NAME BALANCE YEAR RENOVATED SF
- ------------------------------------------ --------------- ----------------- ------------
StorageMart -- Brooklyn, NY $ 11,840,000 1901/2001 57,121
StorageMart -- Secaucus, NJ 8,760,000 2001/NAP 94,939
StorageMart -- Pompano Beach, FL 6,960,000 1979/2002 93,880
StorageMart -- Kansas City, MO
(Wornall Road) 6,760,000 1950 & 2001/NAP 86,503
StorageMart -- Dania Beach, FL 5,920,000 2000/NAP 86,904
StorageMart -- Miami, FL (NW 7th Street) 5,196,000 2001/NAP 75,250
StorageMart -- Kansas City, MO
(Prairie View) 4,512,000 1997 & 2001/NAP 91,635
StorageMart -- Overland Park, KS 4,053,000 2001/NAP 98,675
StorageMart -- Miami, FL
(SW 2nd Avenue) 3,886,000 2002/NAP 35,794
StorageMart -- Lenexa, KS 3,369,000 2001/NAP 80,920
StorageMart -- Kansas City, KS 3,280,000 1998/NAP 61,995
StorageMart -- Lombard, IL 3,240,000 1969/2002 83,550
StorageMart -- Merriam, KS 3,056,000 1997/NAP 66,215
StorageMart -- Kansas City, MO
(North Main) 2,552,000 1997 & 2000/NAP 76,085
StorageMart -- Olathe, KS 1,616,000 1995/NAP 63,300
------------ ------
$ 75,000,000 1,152,766
OCCUPANCY %
CUT-OFF (AS OF
DATE FEBRUARY 29
BALANCE AND APPRAISED
PRINCIPAL MARCH 1, UNDERWRITTEN APPRAISED VALUE
PROPERTY NAME PER SF 2004) NET CASH FLOW VALUE PSF
- ------------------------------------------ ----------- ------------ --------------- --------------- ----------
StorageMart -- Brooklyn, NY $ 207 96.0% $ 1,109,959 $ 14,800,000 $ 259
StorageMart -- Secaucus, NJ $ 92 50.9% 634,842 11,000,000 $ 116
StorageMart -- Pompano Beach, FL $ 74 86.4% 674,980 8,700,000 $ 93
StorageMart -- Kansas City, MO
(Wornall Road) $ 78 69.8% 617,204 8,450,000 $ 98
StorageMart -- Dania Beach, FL $ 68 71.4% 611,290 7,400,000 $ 85
StorageMart -- Miami, FL (NW 7th Street) $ 69 52.2% 429,543 7,000,000 $ 93
StorageMart -- Kansas City, MO
(Prairie View) $ 49 86.1% 398,969 5,640,000 $ 62
StorageMart -- Overland Park, KS $ 41 66.6% 384,872 5,460,000 $ 55
StorageMart -- Miami, FL
(SW 2nd Avenue) $ 109 71.9% 294,850 5,900,000 $ 165
StorageMart -- Lenexa, KS $ 42 42.0% 242,821 4,530,000 $ 56
StorageMart -- Kansas City, KS $ 53 96.7% 320,256 4,170,000 $ 67
StorageMart -- Lombard, IL $ 39 55.2% 262,981 4,050,000 $ 48
StorageMart -- Merriam, KS $ 46 86.1% 294,083 3,820,000 $ 58
StorageMart -- Kansas City, MO
(North Main) $ 34 79.5% 194,771 3,190,000 $ 42
StorageMart -- Olathe, KS $ 26 81.2% 172,532 2,020,000 $ 32
----- ----------- ------------
$ 65 71.6% $ 6,643,953 $ 96,130,000 $ 83
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B-28
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STORAGEMART PORTFOLIO
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o THE LOAN. The 15 mortgage loans (the "StorageMart Portfolio Mortgage
Loans") are secured by first mortgages encumbering 15 self-storage
properties located in Florida (4 properties), Illinois (1 property), Kansas
(5 properties), Missouri (3 properties), New Jersey (1 property) and New
York (1 property). The StorageMart Portfolio Mortgage Loans represent
approximately 6.3% of the Initial Mortgage Pool Balance. The StorageMart
Portfolio Mortgage Loans were originated on May 5, 2004, and have a
principal balance as of the cut-off date of $75,000,000. Each StorageMart
Portfolio Mortgage Loan is cross-collateralized and cross-defaulted with
the other StorageMart Portfolio Mortgage Loans. Each StorageMart Portfolio
Mortgage Loan provides for interest-only payments for the first 12 months
of its term, and thereafter, fixed monthly payments of principal and
interest.
Each StorageMart Portfolio Mortgage Loan has a remaining term of 59 months
to its anticipated repayment date of May 11, 2009. Each StorageMart
Portfolio Mortgage Loan may be prepaid with the payment of a yield
maintenance charge on or after June 11, 2005, and may be prepaid without
penalty or premium on or after March 11, 2009.
o THE BORROWER. The borrower for 14 of the StorageMart Portfolio Mortgage
Loans is WSMP-MW-EAST, L.P. and the borrower for the remaining StorageMart
Portfolio Mortgage Loan--StorageMart--Pompano Beach, FL--is Storage Mart
II, L.L.C. Legal counsel to each borrower delivered a non-consolidation
opinion in connection with the origination of the StorageMart Portfolio
Mortgage Loans. The sponsor of all the borrowers is Warburg-Storagemart
Partners, L.P., an affiliate of StorageMart Partners, L.L.C.
("StorageMart"). StorageMart has ownership and/or management interests in
approximately 3.0 million square feet of self-storage space, representing
approximately 40 self-storage facilities in 10 states.
o THE PROPERTIES. The mortgaged real properties consist of 15 self-storage
facilities containing, in the aggregate, approximately 1,152,766 square
feet of net rentable area. Each mortgaged real property contains regular
storage and/or climate controlled units which are secured by a computerized
access system. Each mortgaged real property also contains a modern
retail/office area offering various storage and packing supplies. As of
March 1, 2004, the aggregate occupancy rate for the mortgaged real
properties securing the StorageMart Portfolio Mortgage Loans was
approximately 71.5%.
o LOCK BOX ACCOUNT. At any time during the term of the StorageMart Portfolio
Mortgage Loans, (i) if the debt service coverage ratio for the StorageMart
Portfolio Mortgage Loans, as computed by the lender, is less than 1.15:1
for a consecutive 12-month period, (ii) upon the occurrence of an event of
default under the loan documents or (iii) upon the anticipated repayment
date, the borrower is required to notify the tenants that any and all
tenant payments due under the applicable tenant leases are to be directly
deposited into a lender-designated lock box account.
o HYPER-AMORTIZATION. Commencing on the anticipated repayment date of May 11,
2009, if the StorageMart Portfolio Mortgage Loans are not paid in full, the
StorageMart Portfolio Mortgage Loans enter into a hyper-amortization period
through May 11, 2014. The interest rate applicable to each StorageMart
Portfolio Mortgage 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 specified in the loan documents. A brief discussion of the
hyper-amortization feature is contained in the prospectus supplement under
"Description of the Mortgage Pool--Terms and Conditions of the Underlying
Mortgage Loans--ARD Loans" in the prospectus supplement.
o SUBSTITUTION AND RELEASE OF COLLATERAL. The mortgaged real properties can
be substituted and released as described under "Description of the Mortgage
Pool--Cross-Collateralized Mortgage Loan Groups and Multiple Property
Loans--Mortgage Loans Which Permit Partial Release of the Related Mortgaged
Real Property" in the prospectus supplement.
o MANAGEMENT. Each mortgaged real property is self-managed
B-29
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B-30
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PECANLAND MALL
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B-31
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PECANLAND MALL
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B-32
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PECANLAND MALL (1)
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LOAN INFORMATION
- --------------------------------------------------------------------------------
MORTGAGE LOAN SELLER CGM
CUT-OFF DATE PRINCIPAL BALANCE(2) $62,322,215
PERCENTAGE OF INITIAL MORTGAGE POOL BALANCE 5.3%
NUMBER OF MORTGAGE LOANS 1
LOAN PURPOSE Refinance
SPONSOR General Growth Properties, Inc.
OWNERSHIP INTEREST Fee Simple
MORTGAGE RATE 4.2765%
MATURITY DATE March 1, 2010
AMORTIZATION TYPE Balloon
ORIGINAL TERM / AMORTIZATION 72 / 300
REMAINING TERM / AMORTIZATION 69 / 297
LOCKBOX Springing Hard
UP-FRONT RESERVES
TAX/INSURANCE No/No
REPLACEMENT $0
ONGOING MONTHLY RESERVES
TAX/INSURANCE No/No
REPLACEMENT (3)
TI/LC (4)
ADDITIONAL FINANCING None(1)
POOLED WHOLE
PORTION(2) LOAN
-------------- -----------
CUT-OFF DATE PRINCIPAL
BALANCE $62,322,215 $65,644,429
CUT-OFF DATE PRINICIPAL
BALANCE/SF $179 $188
CUT-OFF DATE LTV RATIO 65.6% 69.1%
MATURITY DATE LTV RATIO 59.1% 59.1%
UW NCF DSCR 1.83x 1.73x
LOAN SHADOW RATING
(MOODY'S/S&P)(5) Baa3 / BBB-
- --------------------------------------------------------------------------------
(1) For purposes of determining distributions on the certificates, the
Pecanland Mall mortgage loan is treated as being divided into: (a) a pooled
portion that, together with the other mortgage loans in the mortgage pool,
will support all of the certificates other than the class PM certificates;
and (b) a non-pooled portion that will support the class PM certificates.
In general, the non-pooled portion of the Pecanland Mall mortgage loan is
subordinate to the pooled portion. However, subject to the occurrence of
certain trigger events, the holders of the class PM certificates will be
entitled to 50% of all payments (or advances in lieu thereof) or other
collections of principal on the Pecanland Mall mortgage loan until the
class PM certificates are retired.
(2) Reflects pooled portion of Pecanland Mall mortgage loan only.
(3) In the event of default or a debt service coverage of less than 1.20:1.00,
the borrower is required to deposit $7,855/month for replacement reserves,
which is capped at $94,266.
(4) In the event of default or a debt service coverage of less than 1.20:1.00,
the borrower is required to deposit $29,049/month for tenant improvements
and leasing commissions, which is capped at $349,133.
(5) S&P and Moody's have confirmed that the pooled portion of the Pecanland
Mall Mortgage Loan has, in the context of its inclusion in the trust, the
credit characteristics consistent with that of an investment-grade rated
obligation.
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PROPERTY INFORMATION
- --------------------------------------------------------------------------------
NUMBER OF MORTGAGED PROPERTIES 1
LOCATION Monroe, Louisiana
PROPERTY TYPE Regional Mall
SIZE (SF) 349,133
OCCUPANCY % AS OF FEBRUARY 6, 2004 97.2%
YEAR BUILT / YEAR RENOVATED 1985 / NAP
APPRAISED VALUE $95,000,000
PROPERTY MANAGEMENT General Growth
Management, Inc.
UW ECONOMIC OCCUPANCY % 96.0%
UW REVENUES $11,314,565
UW EXPENSES $3,513,233
UW NET OPERATING INCOME (NOI) $7,801,333
UW NET CASH FLOW (NCF) $7,427,949
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B-33
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PECANLAND MALL
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- ----------------------------------------------------------------------------------------------------------------------------
TENANT SUMMARY
- ----------------------------------------------------------------------------------------------------------------------------
RATINGS NET % OF TOTAL % OF DATE OF
FITCH/MOODY'S/ RENTABLE NET RENTABLE RENT ACTUAL LEASE
TENANT NAME S&P (1) AREA (SF) AREA PSF ACTUAL RENT RENT EXPIRATION
- ------------------------------ ---------------- ----------- -------------- ---------- ------------- ---------- -----------
Anchor Tenants - Anchor Owned
Dillard's BB/B2/BB- 165,930 ANCHOR OWNED - NOT PART OF COLLATERAL
JC Penney BB+/Baa3/BB 140,986 ANCHOR OWNED - NOT PART OF COLLATERAL
Sears BBB/Baa1/BBB+ 122,032 ANCHOR OWNED - NOT PART OF COLLATERAL
McRae's BB-/Ba3/BB- 105,650 ANCHOR OWNED - NOT PART OF COLLATERAL
Mervyn's A/A2/A+ 63,436 ANCHOR OWNED - NOT PART OF COLLATERAL
-------
Total Anchor Owned 598,034
Top 5 Tenants
Stage NR/NR/NR 29,914 8.6% $ 7.00 $ 209,400 3.0% 1/1/06
Cinema 10 NR/Caa1/B+ 23,170 6.6 6.38 147,874 2.1 12/31/08
McRae's BB-/Ba3/BB 19,962 5.7 11.00 219,588 3.2 12/31/07
Limited NR/Baa1/BBB+ 15,574 4.5 20.00 311,484 4.5 12/31/06
Express NR/Baa1/BBB+ 13,093 3.8 20.00 261,864 3.8 12/31/05
------- --------- ---------- -----
Top 5 Tenants 101,713 29.1% 11.31 $1,150,210 16.5%
Non-major tenants 237,612 68.1 24.45 5,810,590 83.5
------- --------- ---------- -----
Occupied Mall Total 339,325 97.2 20.51 6,960,801 100.0%
--------- ---------- -----
Vacant Space 9,808 2.8
------- ---------
COLLATERAL TOTAL 349,133 100.%
------- ---------
COLLATERAL AND ANCHOR OWNED
TOTAL 947,167
=======
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- ----------------------------------------------------------------------------------------------------------------------------
LEASE EXPIRATION SCHEDULE
- ----------------------------------------------------------------------------------------------------------------------------
WTD. AVG. IN
PLACE BASE CUMULATIVE % OF IN CUMULATIVE %
# OF LEASES RENT PSF TOTAL SF % OF TOTAL % OF SF PLACE RENT OF IN PLACE
YEAR ROLLING ROLLING ROLLING(2) SF ROLLING(2) ROLLING(2) ROLLING RENT ROLLING
- --------- ------------- ------------- ------------ --------------- ------------ ------------ -------------
2004 10 $ 24.43 22,777 6.5% 6.5% 8.0% 8.0%
2005 21 $ 22.03 59,594 17.1% 23.6% 18.9% 26.9%
2006 14 $ 16.52 79,337 22.7% 46.3% 18.8% 45.7%
2007 10 $ 19.43 30,403 8.7% 55.0% 8.5% 54.2%
2008 8 $ 11.89 49,965 14.3% 69.3% 8.5% 62.7%
2009 7 $ 24.59 24,134 6.9% 76.3% 8.5% 71.2%
2010 3 $ 24.95 11,739 3.4% 79.6% 4.2% 75.4%
2011 9 $ 30.99 20,438 5.9% 85.5% 9.1% 84.5%
2012 5 $ 27.60 8,438 2.4% 87.9% 3.4% 87.9%
2013 8 $ 28.83 21,351 6.1% 94.0% 8.8% 96.7%
2014 2 $ 19.96 9,422 2.7% 96.7% 2.7% 99.4%
------ ----
337,599 96.7%
======= ====
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(1) Certain credit ratings are those of the parent company whether or not the
parent company guarantees the lease.
(2) Calculated based on approximate square footage occupied by each tenant.
B-34
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PECANLAND MALL
- --------------------------------------------------------------------------------
o THE LOAN. The mortgage loan (the "Pecanland Mall Mortgage Loan") is secured
by a first mortgage encumbering a regional mall located in Monroe,
Louisiana. The Pecanland Mall Mortgage Loan represents approximately 5.3%
of the Initial Mortgage Pool Balance. The Pecanland Mall Mortgage Loan was
originated on February 11, 2004 and has a principal balance as of the
cut-off date of $65,644,429, of which $62,322,215 is being allocated to the
pooled portion thereof.
o The Pecanland Mall Mortgage Loan has a remaining term of 69 months and
matures on March 1, 2010. The Pecanland Mall Mortgage Loan may be prepaid
on or after December 1, 2009, and permits defeasance with United States
government obligations beginning two years after the issue date.
o THE BORROWER. The borrower is GGP-Pecanland, L.P., a special purpose
entity. Legal counsel to the borrower delivered a non-consolidation opinion
in connection with the origination of the Pecanland Mall Mortgage Loan. The
sponsor of the borrower is General Growth Properties, Inc. General Growth
Properties, Inc., a publicly-traded, NYSE REIT (ticker GGP). GGP is one of
the largest regional mall REITs. They own, develop, operate, and/or manage
shopping malls across the country.
o THE PROPERTY. The mortgaged real property is approximately 349,133 square
feet of an approximately 947,167 net rentable square foot enclosed
single-story regional mall situated on approximately 57 acres. The subject
property was constructed in 1985 and is located in Monroe, Louisiana,
within the Monroe, Louisiana metropolitan statistical area. As of February
6, 2004, the occupancy rate for the subject property was approximately
97.2%.
The anchor tenants at the mortgaged real property are Dillard's, JC Penney,
McRae's, Mervyn's, and Sears, none of which are part of the collateral.The
largest tenant that is part of the mortgaged real property is Stage Stores,
Inc. ("Stage"), occupying approximately 29,914 square feet, or
approximately 8.6% of the net rentable area. Stage Stores, Inc. is a
specialty department store retailer offering brand name and private label
apparel, accessories, cosmetics and footwear for the entire family. As of
May 19, 2004, Stage was rated "B3" by Moody's and "B+" by S&P. The Stage
lease expires in January 2006. The second largest tenant that is part of
the mortgaged real property is Cinema 10 ("Cinema 10"), occupying
approximately 23,170 square feet, or approximately 6.6% of the net rentable
area. Cinema 10 is a division of Cinemark USA Inc., the third largest
motion picture exhibitor in the U.S., with approximately 3,000 screens in
approximately 280 theaters in the US and several other countries (primarily
Latin America). As of May 19, 2004, Cinemark Inc. was rated "B+" by S&P.
The Cinema lease expires in December 2008. The third largest tenant that is
part of the mortgaged real property is McRae's, occupying 19,962 square
feet of in-line space, or approximately 5.7% of the net rentable area. The
McRae's lease expires in December 2007. McRae's is a division of Saks,
Inc., a top U.S. department store operator with approximately 350
department and outlet stores in 40 states. As of May 19, 2004, Saks, Inc.
was rated "Ba3" by Moody's and "BB" by S&P.
o LOCK BOX ACCOUNT. A lockbox account was established at closing. Borrower
has the right to receive payments from the lockbox, provided, that, at any
time during the term of the Pecanland Mall Mortgage Loan, (i) if the debt
service coverage ratio, as computed by the mortgagee, is less than 1.20x,
or (ii) upon the occurrence of an event of default under the loan
documents, the payments shall be transferred into a mortgagee controlled
lock box account.
o MANAGEMENT. General Growth Management, Inc., an affiliate of the Borrower,
is the property manager for the Mortgaged Property securing the Pecanland
Mall Mortgage Loan.
B-35
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B-36
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LAKE SHORE PLACE
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B-37
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LAKE SHORE PLACE
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B-38
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LAKE SHORE PLACE
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- --------------------------------------------------------------------------------
LOAN INFORMATION
- --------------------------------------------------------------------------------
MORTGAGE LOAN SELLER Wachovia
CUT-OFF DATE PRINCIPAL BALANCE $57,000,000
PERCENTAGE OF INITIAL MORTGAGE
POOL BALANCE 4.8%
NUMBER OF MORTGAGE LOANS 1
LOAN PURPOSE Refinance
SPONSOR Golub Needham
Associates, LLC.
OWNERSHIP INTEREST Fee Simple
MORTGAGE RATE 5.000%
MATURITY DATE April 11, 2014
AMORTIZATION TYPE Partial IO / Balloon
INTEREST ONLY PERIOD 24
ORIGINAL TERM / AMORTIZATION 120 / 360
REMAINING TERM / AMORTIZATION 118 / 360
LOCKBOX Springing Hard
UP-FRONT RESERVES
TAX/INSURANCE Yes/No
REPLACEMENT $8,151
ONGOING MONTHLY RESERVES
TAX/INSURANCE Yes/No
REPLACEMENT $8,151
TI/LC(1) $30,649
ROLLOVER(2) $30,649
ADDITIONAL FINANCING None
CUT-OFF DATE PRINCIPAL BALANCE $57,000,000
CUT-OFF DATE PRINCIPAL BALANCE/SF $117
CUT-OFF DATE LTV RATIO 76.7%
MATURITY DATE LTV RATIO 66.4%
UW NCF DSCR 1.61x
- --------------------------------------------------------------------------------
(1) Up to a maximum amount of $735,576.
(2) $30,649 will be escrowed monthly until March 11, 2006. If the Playboy lease
is not extended by March 11, 2006, the monthly TI/LC escrow will increase
to $122,649, up to a maximum amount of $2,400,000. If Playboy enters into a
lease renewal that is less than the amount of the space currently leased by
Playboy, the maximum amount of the ongoing TI/LC escrow will equal the
product of $22.00 per square foot and the square footage of the vacated
space.
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
NUMBER OF MORTGAGED REAL PROPERTIES 1
LOCATION Chicago, IL
PROPERTY TYPE Office-CBD
SIZE (SF) 489,066
OCCUPANCY % AS OF FEBRUARY 29, 2004 96.4%
YEAR BUILT / YEAR RENOVATED 1923 / 1992
APPRAISED VALUE $74,300,000
PROPERTY MANAGEMENT Golub & Company
UW ECONOMIC OCCUPANCY % 95.0%
UW REVENUES $14,693,481
UW EXPENSES $8,071,340
UW NET OPERATING INCOME (NOI) $6,622,141
UW NET CASH FLOW (NCF) $5,900,512
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B-39
- --------------------------------------------------------------------------------
LAKE SHORE PLACE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
TENANT SUMMARY
- --------------------------------------------------------------------------------------
RATINGS(1) % OF NET
MOODY'S/S&P/ NET RENTABLE RENTABLE
TENANT FITCH AREA (SF) AREA
- --------------------------------------------- -------------- -------------- ----------
Playboy Enterprises Inc ..................... NR/B/NR 127,663 26.1%
Northwestern Medical Faculty Foundation, Inc NR/NR/NR 57,474 11.8
Northwestern Memorial Physicians Group, NCMG NR/NR/NR 27,275 5.6
Northwestern University Medical School ...... NR/NR/NR 25,925 5.3
Treasure Island Foods ....................... NR/NR/NR 21,293 4.4
Non-major Tenants ........................... 212,073 43.4
Vacant Space ................................ 17,363 3.6
------- -----
TOTAL ....................................... 489,066 100.0%
DATE OF LEASE
TENANT RENT PSF ACTUAL RENT % OF ACTUAL RENT EXPIRATION
- --------------------------------------------- ---------- ------------- ------------------ --------------
Playboy Enterprises Inc ..................... $ 13.80 $ 1,761,749 21.7% 8/31/07
Northwestern Medical Faculty Foundation, Inc $ 22.13 1,271,933 15.7 9/30/14
Northwestern Memorial Physicians Group, NCMG $ 20.60 561,851 6.9 2/28/09
Northwestern University Medical School ...... $ 16.75 434,244 5.3 4/30/10
Treasure Island Foods ....................... $ 13.00 276,809 3.4 6/30/13
Non-major Tenants ........................... $ 18.00 3,816,664 47.0
Vacant Space ................................ 0 0.0
----------- -----
TOTAL ....................................... $ 8,123,251 100.0%
- ----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
LEASE EXPIRATION SCHEDULE
- -----------------------------------------------------------------------------------------------------------------------------
# OF WA BASE CUMMULATIVE %
LEASES RENT/SF TOTAL SF % OF TOTAL CUMULATIVE % % OF ACTUAL OF ACTUAL RENT
YEAR ROLLING ROLLING ROLLING(2) SF ROLLING(2) OF SF ROLLING(2) RENT ROLLING ROLLING
- --------- --------- ----------- ------------ --------------- ------------------ -------------- ---------------
2004 9 $ 21.09 15,508 3.3% 3.3% 4.0% 4.0%
2005 8 $ 20.10 27,614 5.9% 9.1% 6.8% 10.9%
2006 4 $ 23.81 5,130 1.1% 10.2% 1.5% 12.4%
2007 14 $ 15.29 174,549 37.0% 47.2% 32.9% 45.2%
2008 5 $ 16.90 18,999 4.0% 51.3% 4.0% 49.2%
2009 7 $ 19.41 38,117 8.1% 59.3% 9.1% 58.3%
2010 7 $ 17.36 33,637 7.1% 66.5% 7.2% 65.5%
2011 4 $ 9.84 27,819 5.9% 72.4% 3.4% 68.8%
2012 2 $ 18.95 14,779 3.1% 75.5% 3.4% 72.3%
2013 7 $ 15.98 42,215 8.9% 84.5% 8.3% 80.6%
2014 4 $ 21.57 61,851 13.1% 97.6% 16.4% 97.0%
- -----------------------------------------------------------------------------------------------------------------------------
(1) Certain ratings are those of the parent company whether or not the parent
company guarantees the lease.
(2) Calculated based on approximate square footage occupied by each tenant.
B-40
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LAKE SHORE PLACE
- --------------------------------------------------------------------------------
o THE LOAN. The mortgage loan (the "Lake Shore Place Mortgage Loan") is
secured by a first mortgage encumbering an office building located in
Chicago, Illinois. The Lake Shore Place Mortgage Loan represents
approximately 4.8% of the Initial Mortgage Pool Balance. The Lake Shore
Place Mortgage Loan was originated on March 24, 2004, and has a principal
balance as of the cut-off date of $57,000,000. The Lake Shore Place
Mortgage Loan provides for interest-only payments for the first 24 months
of its term, and thereafter, fixed monthly payments of principal and
interest.
The Lake Shore Place Mortgage Loan has a remaining term of 118 months and
matures on April 11, 2014. The Lake Shore Place Mortgage Loan may be
prepaid with the payment of a yield maintenance charge on or after July 11,
2006, and may be prepaid without penalty or premium on or after October 11,
2013. In lieu of prepaying the Lake Shore Place Mortgage Loan, the borrower
may elect to defease the Lake Shore Place Mortgage Loan with United States
government obligations beginning two years after the issue date.
o THE BORROWER. The borrower is Golub LSP Investors, LLC, a special purpose
entity. Legal counsel to the borrower delivered a non-consolidation opinion
in connection with the origination of the Lake Shore Place Mortgage Loan.
The sponsor is Michael Newman of Golub Needham Associates LLC. Golub
Needham Associates LLC is an affiliate of Golub & Company, which was formed
in 1960. Golub & Company and its affiliates have developed, owned and/or
managed approximately 25.0 million square feet of commercial space and over
40,000 multifamily units. The borrower has the one time right under the
mortgage loan documents to transfer up to a 49% tenant-in-common interest
to a new entity upon the satisfaction of certain conditions which include
(among things) the delivery of a tenant-in-common agreement that is
acceptable to the lender in its sole discretion.
o THE PROPERTY. The mortgaged real property is an approximately 489,066
square foot office building situated on approximately 2.6 acres. The
mortgaged real property was constructed in 1923 and renovated in 1992. The
mortgaged real property is located in Chicago, Illinois, within the
Chicago-Naperville-Joliet, Illinois-Indiana-Wisconsin metropolitan
statistical area. As of February 29, 2004, the occupancy rate for the
mortgaged real property securing the Lake Shore Place Mortgage Loan was
approximately 96.4%.
The largest tenant is Playboy Enterprises, Inc. ("Playboy"), occupying
approximately 127,663 square feet, or approximately 26.1% of the net
rentable area. The mortgaged real property serves as the headquarters of
Playboy, a developer and international distributor of multimedia
entertainment. As of May 13, 2004, Playboy was rated "B" (S&P). The Playboy
lease expires in August 2007. The second largest tenant is Northwestern
Medical Faculty Foundation ("Northwestern Medical Faculty Foundation"),
occupying approximately 57,474 square feet, or approximately 11.8%, of the
net rentable area. Northwestern Medical Faculty Foundation is considered a
premier, multi-specialty physician organization that provides care to
patients and support to the research and academic programs of the
Northwestern University Feinberg School of Medicine. The Northwestern
Medical Faculty Foundation lease expires in September 2014. The third
largest tenant is Northwestern Memorial Physicians Group ("Northwestern
Physicians Group"), occupying approximately 27,275 square feet, or
approximately 5.6%, of the net rentable area. Northwestern Physicians Group
is a multi-site practice of primary care physicians affiliated with
Northwestern Memorial Hospital. The Northwestern Physicians Group lease
expires in February 2009.
o LOCK BOX ACCOUNT. Upon the occurrence of an event of default under the loan
documents, the borrower is required to notify the tenants that any and all
tenant payments due under the applicable tenant leases are to be directly
deposited into a lender designated lock box account.
o MANAGEMENT. Golub & Company, an affiliate of the sponsor, is the property
manager for the mortgaged real property securing the Lake Shore Place
Mortgage Loan.
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NASHUA MALL
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NASHUA MALL
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NASHUA MALL
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LOAN INFORMATION
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MORTGAGE LOAN SELLER CGM
CUT-OFF DATE PRINCIPAL BALANCE $35,500,000
PERCENTAGE OF INITIAL MORTGAGE POOL BALANCE 3.0%
NUMBER OF MORTGAGE LOANS 1
LOAN PURPOSE Refinance
SPONSOR Robert F. Gordon and
Edward C. Gordon
OWNERSHIP INTEREST Fee Simple
MORTGAGE RATE 6.120%
MATURITY DATE June 11, 2014
AMORTIZATION TYPE Balloon
ORIGINAL TERM / AMORTIZATION 120 / 360
REMAINING TERM / AMORTIZATION 120 / 360
LOCKBOX None
UP-FRONT RESERVES
TAX/INSURANCE No/No
REPLACEMENT $0
ONGOING MONTHLY RESERVES
TAX/INSURANCE Yes/No
REPLACEMENT $1,814
ADDITIONAL FINANCING None
CUT-OFF DATE PRINCIPAL BALANCE $35,500,000
CUT-OFF DATE PRINCIPAL BALANCE/SF $111
CUT-OFF DATE LTV RATIO(1) 76.8%
MATURITY DATE LTV RATIO(1) 64.5%
UW NCF DSCR(1) 1.24x
- --------------------------------------------------------------------------------
(1) The debt service coverage and loan-to-value ratios are presented on an
adjusted basis that: (a) takes into account various assumptions regarding
the financial performance of the related mortgaged real property that are
consistent with the release of the cash holdback; and/or (b) reflects the
application of that cash holdback to pay down the subject mortgage loan,
with a corresponding reamortization of the monthly debt service payment.
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
NUMBER OF MORTGAGED PROPERTIES 1
LOCATION Nashua, New Hampshire
PROPERTY TYPE Retail-Anchored
SIZE (SF) 318,829
OCCUPANCY % AS OF MAY 10, 2004 91.1%
YEAR BUILT / YEAR RENOVATED 1966 / 2003
APPRAISED VALUE $42,800,000
PROPERTY MANAGEMENT The MEG Companies
UW ECONOMIC OCCUPANCY % 86.3%
UW REVENUES $4,963,904
UW EXPENSES $1,921,164
UW NET OPERATING INCOME (NOI) $3,042,740
UW NET CASH FLOW (NCF) $2,976,124
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B-45
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NASHUA MALL
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TENANT SUMMARY
- ----------------------------------------------------------------------------------------------------------------------
% OF
RATINGS NET TOTAL NET % OF DATE OF
FITCH/MOODY'S/ RENTABLE RENTABLE ACTUAL ACTUAL LEASE
TENANT NAME S&P(1) AREA (SF) AREA RENT PSF RENT RENT EXPIRATION
- ---------------------------- ---------------- ----------- ----------- ---------- ------------- ---------- -----------
Anchor Tenants - Anchor Owned
Home Depot AA/Aa3/AA 130,961 ANCHOR OWNED - NOT PART OF COLLATERAL
-------
Total Anchor Owned 130,961
Top 5 Tenants
Kohl's A/A3/A- 86,584 27.2% $ 10.75 $ 930,500 25.7% 1/31/23
Burlington Coat Factory NR/NR/NR 70,000 22.0 $ 3.96 277,364 7.7 2/28/09
Christmas Tree Shops, Inc. NR/NR/BBB 50,444 15.8 $ 16.11 812,500 22.4 12/31/22
Babies R Us BB/Ba2/BB 38,000 11.9 $ 10.00 380,000 10.5 1/31/20
LL Bean(2) NR/NR/NR 12,000 3.8 $ 18.67 224,000 6.2 11/30/07
------- -------- ---------- -----
Top 5 Tenants 257,028 80.6% $ 10.21 $2,624,364 72.5%
Non-major tenants 33,345 10.5% $ 29.93 $ 997,909 27.5%
------- -------- ------- ---------- -----
Occupied Mall Total 290,373 91.1% $ 12.46 $3,622,273 100.0%
Vacant Space 28,456 8.9%
------- --------
COLLATERAL TOTAL 318,829 100.0%
COLLATERAL AND ANCHOR
OWNED TOTAL 449,790 100.0% $3,622,273 100.0%
======= ======== ========== =====
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LEASE EXPIRATION SCHEDULE
- -----------------------------------------------------------------------------------------------------------------------------
WTD. AVG. IN
PLACE BASE CUMULATIVE % OF IN CUMULATIVE %
# OF LEASES RENT PSF TOTAL SF % OF TOTAL % OF SF PLACE RENT OF IN PLACE
YEAR ROLLING ROLLING ROLLING(3) SF ROLLING(3) ROLLING(3) ROLLING RENT 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 $ 14.56 6,800 2.1% 2.1% 2.9% 2.9%
2008 1 $ 25.00 1,300 0.4% 2.5% 1.0% 3.9%
2009 4 $ 5.19 75,406 23.7% 26.2% 11.5% 15.4%
2010 0 $ 0.00 0 0.0% 26.2% 0.0% 15.4%
2011 0 $ 0.00 0 0.0% 26.2% 0.0% 15.4%
2012 0 $ 0.00 0 0.0% 26.2% 0.0% 15.4%
2013 2 $ 25.94 8,288 2.6% 28.8% 6.3% 21.7%
2014 3 $ 23.33 11,551 3.6% 32.4% 7.9% 29.6%
------ ----
TOTALS 103,345 32.4%
======= ====
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(1) Certain credit ratings are those of the parent company whether or not the
parent company guarantees the lease.
(2) LL Bean signed a lease dated 2/5/2004 that provides for rental payments to
begin upon 60 days following the completion of construction. Construction
is estimated to be completed during summer of 2004. Rent roll commencement
date of 9/1/04 is conservatively based on completion of construction and
delivery of space to tenant by 7/1/04 with rent commencement 60 days
thereafter. This space was underwritten as vacant.
(3) Calculated based on approximate square footage occupied by each tenant.
B-46
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NASHUA MALL
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o THE LOAN. The mortgage loan (the "Nashua Mall Mortgage Loan") is secured by
a first mortgage encumbering a regional power center located in Nashua, New
Hampshire. The Nashua Mall Mortgage Loan represents approximately 3.0% of
the Initial Mortgage Pool Balance. The Nashua Mall Mortgage Loan has a
principal balance as of the cut-off date of $35,500,000.
The Nashua Mall Mortgage Loan has a remaining term of 120 months and
matures on June 11, 2014. The Nashua Mall Mortgage Loan may be prepaid on
or after April 11, 2014, and permits defeasance with United States
government obligations beginning two years after the issue date.
o THE BORROWER. The borrower is Vickerry Realty Co. Trust, a special purpose
entity. Legal counsel to the borrower delivered a non-consolidation opinion
in connection with the origination of the Nashua Mall Mortgage Loan. The
sponsors of the borrower are: Robert F. Gordon and Edward C. Gordon. The
sponsors collectively have controlling interests in 14 retail projects with
approximately 1,400,000 square feet of retail space in New Hampshire and
Massachusetts.
o THE PROPERTY. The mortgaged real property is an approximately 318,829
square foot regional power center comprised of ten buildings situated on
approximately 25.2 acres. The mortgaged real property was initially
constructed in 1966 as an interior mall complex and has substantially been
expanded and renovated in 2003 to a regional power center. The mortgaged
real property is located in Nashua, New Hampshire, within the Nashua, New
Hampshire metropolitan statistical area. As of May 10, 2004, the occupancy
rate for the mortgaged real property securing the Nashua Mall Mortgage Loan
was approximately 91.1%.
The largest tenant at the mortgaged real property is Kohl's Department
Stores ("Kohl's"), occupying approximately 86,584 square feet, or
approximately 27.2% of the net rentable area. Kohl's, incorporated in 1988,
operates specialty department stores that feature national brand
merchandise. Kohl's Department Stores sell apparel, shoes, accessories and
home products targeted to middle-income customers shopping for family and
home related items. As of May 19, 2004, Kohl's was rated "A3" by Moody's
and "A-" by S&P. The Kohl lease expires in January 2023. The second largest
tenant at the mortgaged real property is Burlington Coat Factory
("Burlington"), occupying approximately 70,000 square feet, or
approximately 22.0% of the net rentable area. Burlington Coat Factory
Warehouse Corporation is a national retailer offering clothing, footwear,
and accessories for the entire family, a specialty baby product department,
Baby Depot, and Luxury Linens, and a home decor department. The Burlington
lease expires in February 2009. The third largest tenant at the mortgaged
real property is Christmas Tree Shops, Inc., ("CTS"), occupying
approximately 50,444 square feet, or approximately 15.8% of the net
rentable area. CTS, a retailer of giftware and household items, was
acquired by Bed Bath & Beyond on June 19, 2003. As of May 19, 2004, CTS was
rated "BBB" by S&P. The CTS lease expires in December 2022. Additionally,
Home Depot is a tenant at the subject property; however, it owns its pad
and improvements, which are not a part of the collateral for the underlying
mortgage loan.
A holdback of $2,594,267, representing the value of the LL Bean lease, was
taken at closing. This escrow will be released once upon receipt of a clean
estoppel and LL Bean is in occupancy, open for business and paying rent.
Further, the property must also support at that time a 1.20:1 debt service
coverage at the greater of the actual constant or 7.50%.
o LOCK BOX ACCOUNT. The loan documents do not require a lock box account.
o MANAGEMENT. The MEG Companies is the property manager for the Mortgaged
Property securing the Nashua Mall Loan. The property manager is affiliated
with the sponsor.
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CROSSROADS CENTER PORTFOLIO -- CROSSROADS CENTER
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CROSSROADS CENTER PORTFOLIO -- CROSSROADS CENTER
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CROSSROADS CENTER PORTFOLIO -- CROSSROADS CENTER
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LOAN INFORMATION
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MORTGAGE LOAN SELLER CGM
CUT-OFF DATE PRINCIPAL BALANCE $26,960,000
PERCENTAGE OF INITIAL MORTGAGE POOL
BALANCE 2.3%
NUMBER OF MORTGAGE LOANS 1
LOAN PURPOSE Refinance
SPONSOR Ramco-Gershenson Properties,
L.P
OWNERSHIP INTEREST Fee Simple
MORTGAGE RATE 5.380%
MATURITY DATE May 11, 2014
AMORTIZATION TYPE Partial IO/Balloon
INTEREST ONLY PERIOD 12
ORIGINAL TERM / AMORTIZATION 120 / 360
REMAINING TERM / AMORTIZATION 119 / 360
LOCKBOX None
UP-FRONT RESERVES
TAX/INSURANCE No/No
REPLACEMENT $0
ONGOING MONTHLY
RESERVES
TAX/INSURANCE No/No
REPLACEMENT $0
ADDITIONAL FINANCING Future Unsecured Debt Allowed
CUT-OFF DATE PRINCIPAL BALANCE $26,960,000
CUT-OFF DATE PRINCIPAL BALANCE/SF $113
CUT-OFF DATE LTV RATIO 79.2%
MATURITY DATE LTV RATIO 67.6%
UW NCF DSCR 1.30x
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
NUMBER OF MORTGAGED PROPERTIES 1
LOCATION Rossford, OH
PROPERTY TYPE Retail-Anchored
SIZE (SF) 238,145
OCCUPANCY % AS OF FEBRUARY 13, 2004 97.9%
YEAR BUILT / YEAR RENOVATED 2001 / NAP
APPRAISED VALUE $33,700,000
PROPERTY MANAGEMENT Ramco-Gershenson, Inc.
UW ECONOMIC OCCUPANCY % 93.0%
UW REVENUES $3,367,351
UW EXPENSES $835,933
UW NET OPERATING INCOME (NOI) $2,531,418
UW NET CASH FLOW (NCF) $2,350,456
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B-51
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CROSSROADS CENTER PORTFOLIO -- CROSSROADS CENTER
- --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
TENANT SUMMARY
- -------------------------------------------------------------------------------------------------------------------------
NET % OF % OF DATE OF
RATINGS RENTABLE NET RENTABLE ACTUAL ACTUAL LEASE
TENANT NAME FITCH/MOODY'S/S&P(1) AREA (SF) AREA RENT PSF RENT RENT EXPIRATION
- ---------------------- ---------------------- ----------- -------------- ---------- ------------- ---------- -----------
Anchor Tenants - Anchor Owned
Target A/A2/A+ 126,200 SHADOW ANCHOR - NOT PART OF COLLATERAL
Home Depot AA/Aa3/AA 116,000 SHADOW ANCHOR - NOT PART OF COLLATERAL
-------
Total Anchor Owned 242,200
Giant Eagle NR/NR/NR 80,021 33.6% $ 10.30 $ 824,210 29.1% 8/31/22
Linens 'N Things NR/NR/NR 35,100 14.7 $ 11.00 386,100 13.6 1/31/12
Michaels Stores, Inc NR/Ba1/BB+ 23,970 10.1 $ 10.50 251,685 8.9 8/31/11
MC Sporting Goods NR/NR/NR 13,500 5.7 $ 9.00 121,500 4.3 9/30/18
Shoe Carnival NR/NR/NR 9,773 4.1 $ 13.00 127,049 4.5 1/31/12
Non-major tenants 70,881 29.8 $ 15.79 1,119,006 39.6
Vacant space 4,900 2.1 $ 0.00 0 0.0
------- ---------- ---------- -----
TOTALS 238,145 100.0% $2,829,550 100.0%
======= ========== ========== =====
- -------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
LEASE EXPIRATION SCHEDULE
- --------------------------------------------------------------------------------------------------------------------------
WTD. AVG. IN
PLACE BASE CUMULATIVE % OF IN CUMULATIVE %
# OF LEASES RENT PSF TOTAL SF % OF TOTAL % OF SF PLACE RENT OF IN PLACE
YEAR ROLLING ROLLING ROLLING(2) SF ROLLING(2) ROLLING(2) ROLLING RENT 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 1 $ 17.50 3,054 1.3% 1.3% 1.9% 1.9%
2007 3 $ 13.90 10,046 4.2% 5.5% 4.9% 6.8%
2008 2 $ 18.79 8,240 3.5% 9.0% 5.5% 12.3%
2009 1 $ 22.00 1,600 0.7% 9.6% 1.2% 13.5%
2010 0 $ 0.00 0 0.0% 9.6% 0.0% 13.5%
2011 4 $ 12.85 46,773 19.6% 29.3% 21.3% 34.8%
2012 6 $ 12.85 70,011 29.4% 58.7% 31.8% 66.6%
2013 0 $ 0.00 0 0.0% 58.7% 0.0% 66.6%
2014 0 $ 0.00 0 0.0% 58.7% 0.0% 66.6%
------ ----
TOTALS 139,724 58.7%
======= ====
- --------------------------------------------------------------------------------------------------------------------------
(1) Certain credit ratings are those of the parent company whether or not the
parent company guarantees the lease.
(2) Calculated based on approximate square footage occupied by each tenant.
B-52
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CROSSROADS CENTER PORTFOLIO -- CROSSROADS CENTER
- --------------------------------------------------------------------------------
o THE LOAN. The mortgage loan (the "Crossroads Center Mortgage Loan") is
secured by a first mortgage encumbering an anchored retail center located
in Rossford, Ohio. The Crossroads Center Mortgage Loan represents
approximately 2.3% of the Initial Mortgage Pool Balance. The Crossroads
Center Mortgage Loan was originated on April 14, 2004 and has a principal
balance as of the cut-off date of $26,960,000. The Crossroads Center
Mortgage Loan provides for interest-only payments for the first 12 months
of its term, and thereafter, fixed monthly payments of principal and
interest. This loan is cross collateralized and cross defaulted with the
Auburn Mile Mortgage Loan and these loans have the same borrower.
The Crossroads Center Mortgage Loan has a remaining term of 119 months and
matures on May 11, 2014. The Crossroads Center Mortgage Loan may be prepaid
on or after March 11, 2014, and permits defeasance with United States
government obligations beginning two years after the issue date.
o THE BORROWER. The borrower is Ramco Auburn Crossroads SPE LLC, a special
purpose entity. Legal counsel to the Borrower delivered a non-consolidation
opinion in connection with the origination of the Ramco Auburn Crossroads
SPE LLC Loan. The sponsor of the borrower is Ramco-Gershenson Properties,
L.P. Ramco Auburn Crossroads SPE LLC is an entity owned and controlled by
RGPLP, the operating partnership of Ramco-Gershenson Properties Trust
(RPT), a publicly traded real estate investment trust. As of December 31,
2003, the Company owned a portfolio of 64 shopping centers with
approximately 13.3 million square feet located in twelve states.
o THE PROPERTY. The mortgaged real property is an approximately 238,145
square foot anchored retail center situated on approximately 78 acres. The
subject is located within an approximately 474,814 square foot power
shopping center. Excluded from the subject collateral are Home Depot and
Target, which are contiguous to the subject collateral and are currently
owned by the same sponsor. Both Home Depot and Target are currently under
long term ground leases that expire in 2021 and 2022, respectively, and
each of these tenants has a near term option to purchase the fee. The
mortgaged real property was constructed in 2001. The mortgaged real
property is located in Rossford, Ohio, within the Toledo, Ohio metropolitan
statistical area. As of February 13, 2004, the occupancy rate for the
mortgaged real property securing the Crossroads Center Mortgage Loan was
approximately 97.9%.
The largest tenant at the mortgaged real property is Giant Eagle ("Giant
Eagle"), occupying approximately 80,021 square feet, or approximately 33.6%
of the net rentable area. Giant Eagle is the largest grocery retailer in
Pittsburgh, and has about 130 corporate and 83 franchised supermarkets,
throughout Maryland, western Pennsylvania, Ohio, and north central West
Virginia. The Giant Eagle lease expires in August 2022. The second largest
tenant at the mortgaged real property is Linens 'N Things ("Linens 'N
Things"), occupying approximately 35,100 square feet, or approximately
14.7% of the net rentable area. Linens 'N Things is one of the leading,
national large-format retailers of home textiles, housewares and decorative
home accessories operating over 400 stores in 45 states and four Canadian
provinces. The Linens 'N Things lease expires in January 2012. The third
largest tenant at the mortgaged real property is Michaels Stores, Inc.
("Michaels"), occupying approximately 23,970 square feet, or approximately
10.1% of the net rentable area. Michaels is the world's largest retailer of
arts, crafts, framing, floral, wall decor, and seasonal merchandise for the
hobbyist and do-it-yourself home decorator. As of May 19, 2004, Michaels
was rated "Ba1" by Moody's and "BB+" by S&P. The Michaels lease expires in
August 2011.
o LOCK BOX ACCOUNT. The loan documents do not require a lock box account.
o UNSECURED SUBORDINATE DEBT. The mortgage permits an affiliate of the
borrower to make unsecured subordinated loans to the borrower, provided
that such loan(s) are made for the sole purpose of funding, and are used by
the borrower solely for, working capital and/or the relocation or expansion
of certain identified space, provided that the lender consents to such
relocation or expansion and provided that certain additional conditions are
satisfied, including, without limitation: (1) no payments under the
subordinate loans may be due and payable prior to payment in full of the
subject underlying mortgage loan; (2) the aggregate outstanding balance of
the subordinated loans (plus accrued interest) and the related underlying
mortgage loan does not exceed 80% of the value of the related mortgage
property; (3) the affiliate lender delivers a subordination and standstill
agreement acceptable to the lender; and (4) the related borrower pays all
fees incurred by the lender in connection with the proposed transaction.
B-53
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CROSSROADS CENTER PORTFOLIO -- CROSSROADS CENTER
- --------------------------------------------------------------------------------
o RELEASE OF PARCEL. The mortgage permits the partial release of an
unimproved outlot parcel to which no value was attributed at loan
origination, provided that certain conditions precedent set forth in the
mortgage are satisfied.
o MANAGEMENT. Ramco-Gershenson, Inc. is the property manager for the
mortgaged real property securing the Crossroads Center Mortgage Loan. The
property manager is affiliated with the sponsor.
B-54
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CROSSROADS CENTER PORTFOLIO -- AUBURN MILE SHOPPING CENTER
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CROSSROADS CENTER PORTFOLIO -- AUBURN MILE SHOPPING CENTER
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CROSSROADS CENTER PORTFOLIO -- AUBURN MILE SHOPPING CENTER
- --------------------------------------------------------------------------------
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LOAN INFORMATION
- --------------------------------------------------------------------------------
MORTGAGE LOAN SELLER CGM
CUT-OFF DATE PRINCIPAL BALANCE $7,740,000
PERCENTAGE OF INITIAL MORTGAGE POOL BALANCE 0.7%
NUMBER OF MORTGAGE LOANS 1
LOAN PURPOSE Refinance
SPONSOR Ramco-Gershenson Properties, L.P.
OWNERSHIP INTEREST Fee Simple
MORTGAGE RATE 5.380%
MATURITY DATE May 11, 2014
AMORTIZATION TYPE Partial IO/Balloon
INTEREST ONLY PERIOD 12
ORIGINAL TERM / AMORTIZATION 120 / 360
REMAINING TERM / AMORTIZATION 119 / 360
LOCKBOX None
UP-FRONT RESERVES
TAX/INSURANCE No/No
REPLACEMENT $0
ONGOING MONTHLY RESERVES
TAX/INSURANCE No/No
REPLACEMENT $0
ADDITIONAL FINANCING Future Unsecured Debt Allowed
CUT-OFF DATE PRINCIPAL
BALANCE $7,740,000
CUT-OFF DATE PRINCIPAL
BALANCE/SF $89
CUT-OFF DATE LTV RATIO 79.2%
MATURITY DATE LTV RATIO 67.6%
UW NCF DSCR 1.30x
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
NUMBER OF MORTGAGED PROPERTIES 1
LOCATION Auburn Hills, MI
PROPERTY TYPE Retail-Anchored
SIZE (SF) 87,222
OCCUPANCY % AS OF FEBRUARY 13, 2004 100.0%
YEAR BUILT / YEAR RENOVATED 2003 / NAP
APPRAISED VALUE $10,100,000
PROPERTY MANAGEMENT Ramco-Gershenson, Inc.
UW ECONOMIC OCCUPANCY % 96.1%
UW REVENUES $1,135,061
UW EXPENSES $406,110
UW NET OPERATING INCOME (NOI) $728,951
UW NET CASH FLOW (NCF) $687,582
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B-57
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CROSSROADS CENTER PORTFOLIO -- AUBURN MILE SHOPPING CENTER
- --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
TENANT SUMMARY
- ------------------------------------------------------------------------------------------------------------------------
RATINGS NET % OF % OF DATE OF
FITCH/MOODY'S/ RENTABLE NET RENTABLE RENT ACTUAL LEASE
TENANT NAME S&P(1) AREA (SF) AREA PSF ACTUAL RENT RENT EXPIRATION
- --------------------------- ---------------- ----------- -------------- ----------- ------------- ---------- -----------
Anchor Tenants - Anchor Owned
Meijer, Inc. N/A 218,139 SHADOW ANCHOR - NOT PART OF COLLATERAL
Costco A+/A2/A 147,000 SHADOW ANCHOR - NOT PART OF COLLATERAL
Target A/A2/A+ 123,000 SHADOW ANCHOR - NOT PART OF COLLATERAL
-------
Total Anchor Owned 488,139
Jo-Ann Stores NR/B1/B+ 43,998 50.4% $ 10.00 $ 440,150 52.5% 1/31/16
Staples BBB/Baa2/BBB- 20,300 23.3 $ 5.79 117,600 14.0 11/30/17
Olive Garden NR/NR/NR 8,067 9.3 $ 9.92 80,000 9.6 2/28/12
Montana's Cookhouse Grill NR/NR/NR 6,800 7.8 $ 11.76 80,000 9.6 3/31/23
Applebees Neighborhood
Grill NR/NR/NR 5,057 5.8 $ 11.86 60,000 7.2 11/30/18
Non-Major Tenants 3,000 3.4 $ 20.00 60,000 7.2
Vacant Space 0 0.0 $ 0.00 0.00 0.0
------- ---------- ---------- -----
TOTALS 87,222 100.0% $ 837,750 100.0%
======= ========== ========== =====
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
LEASE EXPIRATION SCHEDULE
- ------------------------------------------------------------------------------------------------------------------------
WTD. AVG. IN
PLACE BASE CUMULATIVE % OF IN CUMULATIVE %
# OF LEASES RENT PSF TOTAL SF % OF TOTAL % OF SF PLACE RENT OF IN PLACE
YEAR ROLLING ROLLING ROLLING(2) SF ROLLING(2) ROLLING(2) ROLLING RENT 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 0 $ 0.00 0 0.0% 0.0% 0.0% 0.0%
2009 0 $ 0.00 0 0.0% 0.0% 0.0% 0.0%
2010 0 $ 0.00 0 0.0% 0.0% 0.0% 0.0%
2011 0 $ 0.00 0 0.0% 0.0% 0.0% 0.0%
2012 1 $ 9.92 8,067 9.2% 9.2% 9.6% 9.6%
2013 0 $ 0.00 0 0.0% 9.2% 0.0% 9.6%
2014 0 $ 0.00 0 0.0% 9.2% 0.0% 9.6%
----- ---
TOTALS 8,067 9.3%
===== ===
- ------------------------------------------------------------------------------------------------------------------------
(1) Certain credit ratings are those of the parent company whether or not the
parent company guarantees the lease.
(2) Calculated based on approximate square footage occupied by each tenant.
B-58
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CROSSROADS CENTER PORTFOLIO -- AUBURN MILE SHOPPING CENTER
- --------------------------------------------------------------------------------
o THE LOAN. The mortgage loan (the "Auburn Mile Mortgage Loan") is secured by
a first mortgage encumbering an anchored retail center located in Auburn
Hills, Michigan. The Auburn Mile Mortgage Loan represents approximately
0.7% of the Initial Mortgage Pool Balance. The Auburn Mile Mortgage Loan
was originated on April 14, 2004 and has a principal balance as of the
cut-off date of $7,740,000. The Auburn Mile Mortgage Loan provides for
interest-only payments for the first 12 months of its term, and thereafter,
fixed monthly payments of principal and interest. This loan is cross
collateralized and cross defaulted with the Crossroads Center Mortgage Loan
and these loans have the same borrower.
The Auburn Mile Mortgage Loan has a remaining term of 119 months and
matures on May 11, 2014. The Auburn Mile Mortgage Loan may be prepaid on or
after March 11, 2014, and permits defeasance with United States government
obligations beginning two years after the issue date.
o THE BORROWER. The borrower is Ramco Auburn Crossroads SPE LLC, a special
purpose entity. Legal counsel to the borrower delivered a non-consolidation
opinion in connection with the origination of the Auburn Mile Mortgage
Loan. The sponsor of the borrower is Ramco-Gershenson Properties, L.P.
("RGPLP"). Ramco Auburn Crossroads SPE LLC is an entity owned and
controlled by RGPLP, the operating partnership of Ramco-Gershenson
Properties Trust (RPT), a publicly traded real estate investment trust. As
of December 31, 2003, RPT owned a portfolio of 64 shopping centers with
approximately 13.3 million square feet located in twelve states.
o THE PROPERTY. The mortgage real property is an approximately 87,222 square
foot anchored retail center situated on approximately 12.3 acres. The
subject is located within a 581,571 square foot power center. Excluded from
the subject collateral but located within the power center are Meijer's,
Costco, Target, Best Buy, and Ethan Allen. Although these shadow anchors
are not part of the subject collateral, they are under long-term leases
(Costco 2020, Target 2019, Meijer 2024, and Best Buy 2050), and the subject
benefits from their proximity. The mortgaged real property was constructed
in 2000 and 2003. The mortgage real property is located in Auburn Hills,
Michigan, within the Detroit, Michigan metropolitan statistical area. As of
February 13, 2004, the occupancy rate for the mortgage real property
securing the Auburn Mile Mortgage Loan was approximately 100.0%.
The largest tenant at the mortgaged real property is Jo-Ann Stores ("Jo-Ann
Stores"), occupying approximately 43,998 square feet, or approximately
50.4% of the net rentable area. Operating in 919 stores in 48 states,
Jo-Ann Stores is the nation's largest fabric and craft specialty retailer,
selling apparel and craft sewing, crafting, home decorating, and other
creative endeavors. Jo-Ann Stores was rated B1 by Moody's and B+ by S&P.
The Jo-Ann Stores lease expires in January 2016. The second largest tenant
at the mortgaged real property is Staples ("Staples"), occupying
approximately 20,300 square feet, or approximately 23.3% of the net
rentable area. With nearly 1,600 office superstores, Staples, Inc. is the
largest operator of office superstores in the world, selling a wide range
of office products, including supplies, technology, furniture, and business
services. Staples was rated Baa2 by Moody's and BBB-- by S&P. The Staples
lease expires in November 2017. The third largest tenant at the mortgaged
real property is Olive Garden, occupying approximately 8,067 square feet,
or approximately 9.3% of the net rentable area. Founded in 1982, Olive
Garden is a division of Darden Restaurants, Inc., which is one of the
largest casual dining restaurant companies in the world. Darden Restaurants
was rated Baa1 by Moody's and BBB+ by S&P. The Olive Garden lease expires
in February 2012.
o LOCK BOX ACCOUNT. The loan documents do not require a lock box account.
o RELEASE OF PARCEL. The loan documents, in connection with the exercise of
an option to purchase under the related lease, permit the partial release
of two parcels of the mortgage real property leased by the subject tenant,
provided that, the purchaser of each release parcel is required to pay the
option purchase price as set out in its respective lease and the funds from
such purchase will be placed into an option proceeds reserve, which funds
shall be held in trust as security for the loan.
o UNSECURED SUBORDINATE DEBT. The mortgage permits an affiliate of the
borrower to make unsecured subordinated loans to the borrower, provided
that such loan(s) are made for the sole purpose of funding, and are used by
the borrower solely for, working capital and/or the relocation or expansion
of certain identified space, provided that the lender consents to such
relocation or expansion and provided that certain additional conditions are
satisfied, including, without limitation: (1) no payments under the
subordinate loans may be due and payable prior to payment in full of the
subject underlying mortgage loan; (2) the aggregate outstanding balance of
the subordinated loans (plus accrued interest) and the related underlying
mortgage loan does not exceed 80% of the value of the related mortgage real
property; (3) the affiliate lender delivers a subordination and standstill
agreement acceptable to the lender; and (4) the related borrower pays all
fees incurred by the lender in connection with the proposed transaction.
o MANAGEMENT. Ramco-Gershenson, Inc. is the property manager for the mortgage
real property securing the Auburn Mile Mortgage Loan. The property manager
is affiliated with the sponsor.
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WATERFRONT CLEMATIS
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B-61
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WATERFRONT CLEMATIS
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B-62
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WATERFRONT CLEMATIS
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- --------------------------------------------------------------------------------
LOAN INFORMATION
- --------------------------------------------------------------------------------
MORTGAGE LOAN SELLER CGM
CUT-OFF DATE PRINCIPAL BALANCE $32,670,000
PERCENTAGE OF INITIAL MORTGAGE POOL
BALANCE 2.8%
NUMBER OF MORTGAGE LOANS 1
LOAN PURPOSE Acquisition
SPONSOR Lionstone Partners, Ltd.
OWNERSHIP INTEREST Fee Simple
MORTGAGE RATE 5.370%
MATURITY DATE May 11, 2014
AMORTIZATION TYPE Partial IO/Balloon
INTEREST ONLY PERIOD 24
ORIGINAL TERM / AMORTIZATION 120 / 360
REMAINING TERM / AMORTIZATION 119 / 360
LOCKBOX Springing Hard
UP-FRONT RESERVES
TAX/INSURANCE No/No
REPLACEMENT $0
ONGOING MONTHLY RESERVES
TAX/INSURANCE No/No
REPLACEMENT $0
ADDITIONAL FINANCING None
CUT-OFF DATE PRINCIPAL BALANCE $32,670,000
CUT-OFF DATE PRINCIPAL BALANCE/SF $221
CUT-OFF DATE LTV RATIO 72.6%
MATURITY DATE LTV RATIO 63.4%
UW NCF DSCR 1.29x
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
NUMBER OF MORTGAGED PROPERTIES 1
LOCATION West Palm Beach, Florida
PROPERTY TYPE Office(76)%/Retail(24%)
SIZE (SF) 147,980
OCCUPANCY % AS OF FEBRUARY 11, 2004 89.7%
YEAR BUILT / YEAR RENOVATED 2001 / NAP
APPRAISED VALUE $45,000,000
PROPERTY MANAGEMENT Paramount Real
Estate Services, Inc.
UW ECONOMIC OCCUPANCY % 86.5%
UW REVENUES $5,535,944
UW EXPENSES $2,461,234
UW NET OPERATING INCOME (NOI) $3,074,710
UW NET CASH FLOW (NCF) $2,836,609
- --------------------------------------------------------------------------------
B-63
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WATERFRONT CLEMATIS
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- --------------------------------------------------------------------------------------------------------------------------------
TENANT SUMMARY
- --------------------------------------------------------------------------------------------------------------------------------
NET % OF % OF DATE OF
RATINGS RENTABLE NET RENTABLE ACTUAL ACTUAL LEASE
TENANT NAME FITCH/MOODY'S/S&P(1) AREA (SF) AREA RENT PSF RENT RENT EXPIRATION
- ------------------------------ ---------------------- ----------- -------------- ---------- ------------- ---------- -----------
Edwards & Angell, L.L.P. NR/NR/NR 36,227 24.5% $ 23.20 $ 840,445 26.6% 4/24/11
Florida Crystals Corporation NR/NR/NR 24,606 16.6 $ 21.50 529,032 16.7 5/16/11
Broad & Cassel NR/NR/NR 18,156 12.3 $ 24.50 444,822 14.1 5/31/11
Merrill Lynch AA-/Aa3/A+ 13,837 9.4 $ 22.40 309,964 9.8 6/30/11
Tommy Bahama West Palm, LLC NR/NR/NR 11,000 7.4 $ 27.27 300,000 9.5 3/31/11
Non-Major Tenants 28,877 19.5 $ 25.53 737,133 23.3
Vacant Space 15,277 10.3 $ 0.00 0.00 0.0
------- ----- ---------- -----
TOTALS 147,980 100.0% $3,161,396 100.0%
======= ===== ========== =====
- --------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
LEASE EXPIRATION SCHEDULE
- ---------------------------------------------------------------------------------------------------------------------------
WTD. AVG. IN
PLACE BASE CUMULATIVE % OF IN CUMULATIVE %
# OF LEASES RENT PSF TOTAL SF % OF TOTAL % OF SF PLACE RENT OF IN PLACE
YEAR ROLLING ROLLING ROLLING(2) SF ROLLING(2) ROLLING(2) ROLLING RENT ROLLING
- ----------- ------------- ------------- ------------ --------------- ------------ ------------ -------------
2004 0 $ 0.00 0 0.0% 0.0% 0.0% 0.0%
2005 1 $ 22.28 2,535 1.7% 1.7% 1.8% 1.8%
2006 0 $ 0.00 0 0.0% 1.7% 0.0% 1.8%
2007 1 $ 26.78 2,573 1.7% 3.5% 2.2% 4.0%
2008 0 $ 0.00 0 0.0% 3.5% 0.0% 4.0%
2009 0 $ 0.00 0 0.0% 3.5% 0.0% 4.0%
2010 0 $ 0.00 0 0.0% 3.5% 0.0% 4.0%
2011 13 $ 23.83 125,002 84.5% 87.9% 94.2% 98.2%
2012 1 $ 22.28 2,593 1.8% 89.7% 1.8% 100.0%
2013 0 $ 0.00 0 0.0% 89.7% 0.0% 100.0%
2014 0 $ 0.00 0 0.0% 89.7% 0.0% 100.0%
------- ----
TOTALS 132,703 89.7%
======= ====
- ---------------------------------------------------------------------------------------------------------------------------
(1) Certain credit ratings are those of the parent company whether or not the
parent company guarantees the loan.
(2) Calculated based on approximate square footage occupied by each tenant.
B-64
- --------------------------------------------------------------------------------
WATERFRONT CLEMATIS
- --------------------------------------------------------------------------------
o THE LOAN. The mortgage loan (the "Waterfront Clematis Mortgage Loan") is
secured by a first mortgage encumbering two mixed use buildings and a
parking garage, located in West Palm Beach, Florida. The Waterfront
Clematis Mortgage Loan represents approximately 2.8% of the Initial
Mortgage Pool Balance. The Waterfront Clematis Mortgage Loan was originated
on April 15, 2004 and has a principal balance as of the cut-off date of
$32,670,000. The Waterfront Clematis Mortgage Loan provides for
interest-only payments for the first 24 months of its term, and thereafter,
fixed monthly payments of principal and interest.
The Waterfront Clematis Mortgage Loan has a remaining term of 119 months
and matures on May 11, 2014. The Waterfront Clematis Mortgage Loan may be
prepaid on or after March 11, 2014 and permits defeasance with United
States government obligations beginning two years after the issue date.
o THE BORROWER. The borrower is CF West Palm Office, L.P., a special purpose
entity. Legal counsel to the borrower delivered a non-consolidation opinion
in connection with the origination of the Waterfront Clematis Loan. The
sponsor is Lionstone Partners, Ltd. The capital behind the borrower is the
result of a partnership between The Lionstone Group and Oregon Public
Employees Retirement Fund. In January 2003, the Lionstone Group closed a
$220 million discretionary fund, Cash Flow Office One, with an equity
commitment of $75 million from a single investor, the Oregon Public
Employees Retirement Fund ("OPERF"). Cash Flow Office One acquires
high-occupancy, multi-tenant office buildings in major U.S. cities. As of
January 2004, Lionstone has acquired five buildings totaling $190 million.
o THE PROPERTY. The mortgaged real property, consisting of approximately
106,432 square foot of office, 41,548 square feet of retail and a 500 space
parking garage, is situated on approximately 1.5 acres. The mortgaged real
property was constructed in 2001. The mortgaged real property is located
along the intra-coastal waterway in downtown West Palm Beach, Florida,
within the West Palm Beach, Florida metropolitan statistical area. As of
February 11, 2004, the occupancy rate for the mortgaged real property
securing the Waterfront Clematis Mortgage Loan was approximately 89.7%. The
retail component was approximately 83% leased and 72% occupied and the
office component was approximately 97% occupied.
The largest tenant is Edwards & Angell, L.L.P. ("Edwards & Angell"),
occupying approximately 36,227 square feet, or approximately 24.5% of the
net rentable area. Founded in 1894 and headquartered in Boston,
Massachusetts, Edwards & Angell's law practice includes finance, private
equity and venture capital, bankruptcy and creditor's rights, corporate,
technology, environmental, insurance and reinsurance, labor and employment
law, litigation, patents and intellectual property, biotechnology, real
estate, media, and trust and estate. The Edwards & Angell lease expires
April 2011. The second largest tenant is Florida Crystals Corporation
("Florida Crystals"), occupying approximately 24,606 square feet, or
approximately 16.6% of the net rentable area. One of the top US sugar
producers, Florida Crystals is a unit of Flo-Sun, which merged with other
operations to become The American Sugar Refining Company, which includes
Domino Foods, one of the largest sugar marketers in the US. The Florida
Crystals lease expires in May 2011. The third largest tenant is Broad &
Cassel ("Broad & Cassel"), occupying approximately 18,156 square feet, or
approximately 12.3% of the net rentable area. Founded in 1946, Broad and
Casell is one of the largest full-service law firms in the state of Florida
with seven offices and over 140 attorneys. The Broad & Cassel lease expires
in May 2011.
o LOCK BOX ACCOUNT. On June 1, 2010 to the extent OPREF's ownership interest
in the property is less than 51%, and if the debt service coverage ratio,
as computed by the mortgagee, is less than 1.05x, or upon the occurrence of
an event of default under the loan documents, the borrower must notify the
tenants that any and all tenant payments due under the applicable tenant
leases are to be directly deposited into a mortgagee designated lock box
account.
o MANAGEMENT. Paramount Real Estate Services, Inc. ("Paramount") is the
property manager for the mortgaged real property securing the Waterfront
Clematis Mortgage Loan. Founded in 1988, Paramount is an affiliate of The
Rendina Companies. The Rendina Companies is one of the largest owners and
developers of medical office facilities in the country. Rendina Companies
is headquartered in Palm Beach Gardens, Florida and San Diego, California.
B-65
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305 MADISON
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305 MADISON
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B-68
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305 MADISON
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LOAN INFORMATION
- --------------------------------------------------------------------------------
MORTGAGE LOAN SELLER CDCMC
CUT-OFF DATE PRINCIPAL
BALANCE $28,355,938
PERCENTAGE OF INITIAL
MORTGAGE POOL BALANCE 2.4%
NUMBER OF MORTGAGE
LOANS 1
LOAN PURPOSE Acquisition
SPONSOR Normandy Realty Partners,
LLC
OWNERSHIP INTEREST Fee Simple
MORTGAGE RATE 5.550%
MATURITY DATE November 1, 2013
AMORTIZATION TYPE Balloon
ORIGINAL TERM /
AMORTIZATION 120 / 312
REMAINING TERM /
AMORTIZATION 113 / 305
LOCKBOX In-Place Hard
UP-FRONT RESERVES
TAX/INSURANCE No/No
REPLACEMENT $0
ONGOING MONTHLY
RESERVES
TAX/INSURANCE No/No
REPLACEMENT $0
ADDITIONAL FINANCING None
CUT-OFF DATE PRINCIPAL
BALANCE $28,355,938
CUT-OFF DATE PRINCIPAL
BALANCE/SF $134
CUT-OFF DATE LTV RATIO 75.6%
MATURITY DATE LTV RATIO 64.7%
UW NCF DSCR 1.36x
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
NUMBER OF MORTGAGED PROPERTIES 1
LOCATION Morristown, NJ
PROPERTY TYPE Office-Suburban
SIZE (SF) 212,232
OCCUPANCY % AS OF JULY 1, 2003 100.0%
YEAR BUILT / YEAR RENOVATED 1971 / 1995
APPRAISED VALUE $37,500,000
PROPERTY MANAGEMENT Crum & Forster
UW ECONOMIC OCCUPANCY % 100.0%
UW REVENUES $2,709,114
UW EXPENSES $0
UW NET OPERATING INCOME (NOI) $2,709,114
UW NET CASH FLOW (NCF) $2,709,114
- --------------------------------------------------------------------------------
B-69
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305 MADISON
- --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
TENANT SUMMARY
- -------------------------------------------------------------------------------------------------------------------
% OF
NET NET
RENTABLE RENTABLE RENT ACTUAL LEASE
TENANT NAME RATINGS(1) AREA (SF) AREA PSF RENT EXPIRATION
- --------------------------- ------------- ----------- ---------- ----------- ------------- -----------
Crum & Forster - U.S. Fire
Insurance Company &
North River Insurance
Company NR/Baa3/BBB 212,232 100.0% $ 11.92 $2,530,450 12/31/22
------- -----
TOTALS 212,232 100.0%
======= =====
- -------------------------------------------------------------------------------------------------------------------
(1) Certain credit ratings are those of the parent company whether or not the
parent company guarantees the lease.
B-70
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305 MADISON
- --------------------------------------------------------------------------------
o THE LOAN. The mortgage loan (the "305 Madison Mortgage Loan") is secured by
a first mortgage encumbering an office building located in Morristown, NJ.
The 305 Madison Mortgage Loan represents approximately 2.4% of the Initial
Mortgage Pool Balance. The 305 Madison Mortgage Loan was originated on
October 29, 2003 and has a principal balance as of the cut-off date of
$28,355,938.
The 305 Madison Mortgage Loan initially amortizes on a 420 month schedule
through the January 1, 2008 payment. At this time, the loan coverts to a
312 month amortization schedule for the remainder of the loan term.
The 305 Madison Mortgage Loan has a remaining term of 113 months and
matures on November 1, 2013. The 305 Madison Loan may be prepaid on or
after September 1, 2013 and permits defeasance with United States
government obligations beginning two years after the issue date.
o THE BORROWER. The current borrower is Madison Morristown, LLC, a special
purpose entity. Legal counsel to the borrower delivered a non-consolidation
opinion in connection with the assumption of the 305 Madison Mortgage Loan
from the original borrower. The sponsor is Normandy Realty Partners
("Normandy"), a privately owned real estate investment company based in
Morristown, New Jersey. The founders of Normandy have over 90 years of
combined experience in real estate development, and have acquired,
developed and managed a combined total of over $3 billion of real estate in
a variety of product types throughout the country. Since 2000, Normandy has
acquired over $200 million of real estate assets including 1370 Avenue of
the Americas, a 35-story class A office tower located on the corner of 56th
Street and Avenue of the Americas in midtown Manhattan.
o THE PROPERTY. The mortgaged real property is an approximately 212,232
square foot office building situated on approximately 16.2 acres. The
mortgaged real property was constructed in 1971 and renovated in 1995. The
mortgaged real property is located within the Morris County, New Jersey
metropolitan statistical area. As of July 1, 2003, the occupancy rate for
the mortgaged real property securing the 305 Madison Mortgage Loan was
approximately 100.0%, consisting of leases with two Crum & Forster
insurance companies: United States Fire Insurance Company and North River
Fire Insurance Company, both of which are rated "BBB" by S&P and "Baa3" by
Moody's. The tenant leases the building on a fully triple-net basis and is
responsible for all property expenses, taxes, insurance and maintenance.
o LOCK BOX ACCOUNT. All tenant payments due under the applicable tenant
leases are deposited into a lender-designated lock box account.
o MANAGEMENT. Crum & Forster, the parent company of the tenant, is the
property manager for the mortgaged real property securing the 305 Madison
Mortgage Loan.
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B-72
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DFS -- GUAM
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B-73
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DFS -- GUAM
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[MAP OMITTED]
B-74
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DFS -- GUAM
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
LOAN INFORMATION
- --------------------------------------------------------------------------------
MORTGAGE LOAN SELLER CDCMC
CUT-OFF DATE PRINCIPAL
BALANCE $26,864,655
PERCENTAGE OF INITIAL
MORTGAGE POOL BALANCE 2.3%
NUMBER OF MORTGAGE LOANS 1
LOAN PURPOSE Refinance
SPONSOR Paul M. Calvo
OWNERSHIP INTEREST Fee Simple
MORTGAGE RATE 5.690%
MATURITY DATE January 1, 2014
AMORTIZATION TYPE Balloon
ORIGINAL TERM / AMORTIZATION 120 /360
REMAINING TERM /
AMORTIZATION 115/ 355
LOCKBOX Springing Hard
UP-FRONT RESERVES
TAX/INSURANCE No/No
REPLACEMENT $0
ONGOING MONTHLY RESERVES
TAX/INSURANCE No/No
REPLACEMENT $0
ADDITIONAL FINANCING None
CUT-OFF DATE PRINCIPAL
BALANCE $26,864,655
CUT-OFF DATE PRINCIPAL
BALANCE/SF $365
CUT-OFF DATE LTV RATIO 72.6%
MATURITY DATE LTV RATIO 61.3%
UW NCF DSCR 1.55x
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
NUMBER OF MORTGAGED PROPERTIES 1
LOCATION Tumon Bay, Guam
PROPERTY TYPE Land - Fee Interest
SIZE (SF) 73,572
OCCUPANCY % 100.0%
YEAR BUILT / YEAR RENOVATED NAP/NAP
APPRAISED VALUE $37,000,000
PROPERTY MANAGEMENT Calvo Finance LLP
UW ECONOMIC OCCUPANCY % 100.0%
UW REVENUES $2,916,733
UW EXPENSES $0
UW NET OPERATING INCOME (NOI) $2,916,733
UW NET CASH FLOW (NCF) $2,916,733
- --------------------------------------------------------------------------------
B-75
- --------------------------------------------------------------------------------
DFS -- GUAM
- --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
TENANT SUMMARY
- -------------------------------------------------------------------------------------------------------
RATINGS NET % OF NET
FITCH/MOODY'S/ RENTABLE RENTABLE ACTUAL LEASE
TENANT NAME S&P AREA (SF) AREA RENT PSF RENT EXPIRATION
- ------------- ---------------- ----------- ---------- ---------- ------------- -----------
DFS Guam NR/NR/NR 73,572 100.0% $ 39.64 $2,916,733 8/24/64
------ -----
TOTALS 73,572 100.0%
====== =====
- -------------------------------------------------------------------------------------------------------
B-76
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DFS -- GUAM
- --------------------------------------------------------------------------------
o THE LOAN. The mortgage loan (the "DFS-Guam Mortgage Loan") is secured by a
first lien fee simple mortgage encumbering a six acre land parcel
underlying a Duty Free Shops and Louis Vuitton Moet Hennessy-owned luxury
retail mall in Tumon Bay, Guam, a United States territory. The collateral
for the loan is only the land fee interest, which is 100% leased to Duty
Free Shoppers Limited Partnership ("DFS Guam LP"), the owner of the
improvements, under a 75-year ground lease extending to 2064. The DFS-Guam
Mortgage Loan represents approximately 2.3% of Initial Mortgage Pool
Balance. The DFS-Guam Mortgage Loan was originated on December 19, 2003 and
has a principal balance as of the cut-off date of $26,864,655.
The DFS-Guam Mortgage Loan has a remaining term of 115 months and matures
on January 1, 2014. The DFS-Guam Mortgage Loan may be prepaid on or after
December 1, 2013 and permits defeasance with United States government
obligations beginning two years after the issue date
o THE BORROWER. The borrower is Calvo Finance, LLC, a special purpose entity.
Legal counsel to the borrower delivered a non-consolidation opinion in
connection with the origination of the DFS-Guam Mortgage Loan. The sponsor
of the borrower is Paul M. Calvo and Calvo Finance Corporation. Paul Calvo
was the former governor of Guam and has extensive business operations,
including real estate, insurance, retail and distribution. Mr. Calvo
resides in Guam and conducts his business operations on and from the
island.
o THE PROPERTY. The mortgaged real property is identified as Lot. No.
5076-3-R5 and consists of a gross land area of 262,086 square feet (6.02
acres). The mortgaged real property is improved with Phase I of the DFS
Galleria Shopping Center. Approximately 73,572 leasehold square feet of
development are constructed on the subject parcel, in addition to surface
parking areas and undeveloped land on the eastern portion of the site. The
improvements on the mortgaged real property were constructed in 1994. The
mortgaged real property is located on the east side San Vitores Road on the
Island of Guam.
DFS Guam LP entered into a ground lease on the mortgaged real property in
1989 and constructed a 205,377 square foot high-end specialty shopping
center, which opened in 1994. The boutique mall rests on two separate
parcels with 72,572 square feet of the improvements above the mortgaged
real property and the balance on an adjacent parcel. The triple-net ground
lease has a 75-year term expiring on August 24, 2064, and the ground rent
increases a minimum of 10% every 10 years.
o LOCK BOX ACCOUNT. At any time during the term of the DFS-Guam Mortgage
Loan, (i) upon the occurrence of an event of default under the loan
documents, or (ii) upon termination of the ground lease, the borrower is
required to notify the tenants that any and all tenant payments due under
the applicable tenant leases are to be directly deposited into a
lender-designated lock box account.
o MANAGEMENT. The borrower, Calvo Finance, LLP, is the property manager for
the mortgaged real property securing the DFS-Guam Mortgage Loan. DFS Guam
LP owns and manages the improvements.
B-77
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WILDCAT SELF STORAGE PORTFOLIO
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
LOAN INFORMATION
- --------------------------------------------------------------------------------
MORTGAGE LOAN SELLER CGM
CUT-OFF DATE PRINCIPAL BALANCE $23,397,503
PERCENTAGE OF INITIAL MORTGAGE POOL BALANCE 2.0%
NUMBER OF MORTGAGE LOANS 7
LOAN PURPOSE Acquisition
SPONSOR David Levenfeld
OWNERSHIP INTEREST Fee Simple
MORTGAGE RATE 5.280%
MATURITY DATE December 1, 2008
AMORTIZATION TYPE Balloon
ORIGINAL TERM/AMORTIZATION 60/360
REMAINING TERM/AMORTIZATION 54/354
LOCKBOX Springing Hard
UP-FRONT RESERVES
TAX/INSURANCE Yes/Yes
REPLACEMENT $0
ONGOING MONTHLY RESERVES
TAX/INSURANCE Yes/Yes
REPLACEMENT $5,272
ADDITIONAL FINANCING Existing Mezzanine Debt
CUT-OFF DATE PRINCIPAL BALANCE $23,397,503
CUT-OFF DATE PRINCIPAL $37
BALANCE/SF
CUT-OFF DATE LTV RATIO 70.0%
MATURITY DATE LTV RATIO 65.3%
UW NCF DSCR 1.64x
- --------------------------------------------------------------------------------
[PHOTO OMITTED]
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
NUMBER OF MORTGAGED PROPERTIES 7
LOCATION Various, Ohio
PROPERTY TYPE Self-Storage
SIZE (SF) 632,892
OCCUPANCY % AS OF FEBRUARY 28, 2004 85.7%
YEAR BUILT / YEAR RENOVATED Various / NAP
APPRAISED VALUE $33,425,000
PROPERTY MANAGEMENT Pogoda Management Co.
UW ECONOMIC OCCUPANCY % 83.3%
UW REVENUES $4,669,462
UW EXPENSES $2,035,092
UW NET OPERATING INCOME (NOI) $2,634,370
UW NET CASH FLOW (NCF) $2,571,080
- --------------------------------------------------------------------------------
B-78
- --------------------------------------------------------------------------------
WILDCAT SELF STORAGE PORTFOLIO
- --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
LOAN SUMMARY
- -------------------------------------------------------------------------------------
CUT-OFF
CUT-OFF DATE
DATE PRINCIPAL
PROPERTY NAME PRINCIPAL YEAR BUILT/ BALANCE
(LOCATION) BALANCE YEAR RENOVATED TOTAL SF PSF
- ----------------------------- ------------- ----------------- ---------- -----------
Wildcat - Kettering, OH $ 4,321,832 1996/NAP 89,825 $ 48.11
Wildcat - Norwood, OH 4,046,625 1997 - 2001/NAP 106,725 $ 37.92
Wildcat - S. Fairmount, OH 3,977,079 1994 - 1999/NAP 95,027 $ 41.85
Wildcat - Deerfield, OH 3,477,336 1994 - 1998/NAP 92,325 $ 37.66
Wildcat - Forest Park, OH 3,389,906 1989 - 2000/NAP 106,590 $ 31.80
Wildcat - Huber Heights, OH 2,295,042 1988 - 1999/NAP 72,550 $ 31.63
Wildcat - Blue Ash, OH 1,889,684 1999/NAP 69,850 $ 27.05
----------- ------- -------
TOTAL/WTD. AVG. $23,397,503 632,892 $ 36.97
=========== ======= =======
OCCUPANCY %
(AS OF
PROPERTY NAME FEBRUARY 28, UNDERWRITTEN APPRAISED APPRAISED
(LOCATION) 2004) NET CASH FLOW VALUE VALUE PSF
- ----------------------------- -------------- --------------- ------------- ----------
Wildcat - Kettering, OH 95.0% $ 479,709 $ 5,800,000 $ 64.57
Wildcat - Norwood, OH 84.7% 452,845 6,350,000 59.50
Wildcat - S. Fairmount, OH 82.9% 343,774 5,500,000 57.88
Wildcat - Deerfield, OH 84.4% 387,028 4,750,000 51.45
Wildcat - Forest Park, OH 82.5% 388,773 4,550,000 42.69
Wildcat - Huber Heights, OH 94.0% 289,801 3,475,000 47.90
Wildcat - Blue Ash, OH 77.2% 229,151 3,000,000 42.95
---- ---------- ----------- --------
TOTAL/WTD. AVG. 85.7% $2,571,081 $33,425,000 $ 52.81
==== ========== =========== ========
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B-79
- --------------------------------------------------------------------------------
OCEAN KEY RESORT (1)
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- --------------------------------------------------------------------------------
LOAN INFORMATION
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MORTGAGE LOAN SELLER Wachovia
CUT-OFF DATE PRINCIPAL BALANCE $23,067,933
PERCENTAGE OF INITIAL MORTGAGE POOL
BALANCE 2.0%
NUMBER OF MORTGAGE LOANS 1
LOAN PURPOSE Refinance
SPONSOR Westgroup Partners, Inc. and Colee Family Trust
OWNERSHIP INTEREST Fee In Part and Leasehold
In Part
MORTGAGE RATE 5.563%
MATURITY DATE May 11, 2011
AMORTIZATION TYPE Balloon
ORIGINAL TERM / AMORTIZATION 84 / 300
REMAINING TERM / AMORTIZATION 83 / 299
LOCKBOX None
UP-FRONT RESERVES
TAX/INSURANCE Yes/Yes
GROUND LEASE(2) $1,500,000
ONGOING MONTHLY RESERVES
TAX/INSURANCE Yes/Yes
REPLACEMENT $54,350
ADDITIONAL FINANCING Subordinate Debt $1,899,788
TRUST ASSET LOAN PAIR(3)
----------- ------------
CUT-OFF DATE PRINCIPAL
BALANCE $23,067,933 $24,967,721
CUT-OFF DATE PRINCIPAL
BALANCE/ROOM $230,679 $249,677
CUT-OFF DATE LTV RATIO 60.7% 65.7%
MATURITY DATE LTV RATIO 51.6% 56.4%
UW NCF DSCR 1.79x 1.56x
- --------------------------------------------------------------------------------
(1) Unless indicated otherwise, all statistical information with respect to
Ocean Key House Resort mortgage loan excludes the subordinate companion
loan which is not included in the trust.
(2) To be released upon the extension by the State of Florida of the submerged
lands ground lease for 10 years.
(3) Includes subordinate companion loan.
[PHOTO OMITTED]
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PROPERTY INFORMATION
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NUMBER OF MORTGAGED REAL PROPERTIES 1
LOCATION Key West, FL
Hospitality -- Full
PROPERTY TYPE Service
SIZE (ROOMS) 100
OCCUPANCY % AS OF MARCH 31, 2004 (TTM AVERAGE) 81.4%
YEAR BUILT / YEAR RENOVATED 1984 / 2002
APPRAISED VALUE $38,000,000
PROPERTY MANAGEMENT Noble House Hotels and Resorts
UW ECONOMIC OCCUPANCY % 80.0%
UW REVENUES $13,189,308
UW EXPENSES $9,471,553
UW NET OPERATING INCOME (NOI) $3,717,754
UW NET CASH FLOW (NCF) $3,058,289
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FACILITY SUMMARY
- --------------------------------------------------------------------------------
RENTAL RATES
GUESTROOMS NUMBER RANGE -- 2004
- ---------- ------ -------------
STANDARD GUESTROOMS 16 $249 -- $499
JUNIOR SUITES 34 $289 -- $559
DELUXE OCEANFRONT ROOMS 7 $339 -- $559
LARGE ONE-BEDROOM SUITES 25 $339 -- $669
OCEANFRONT ONE-BEDROOM SUITES 7 $409 -- $669
TWO-BEDROOM SUITES 11 $559 -- $1,049
----- ---------------
TOTAL / AVERAGE: 100 $337 -- $631
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B-80
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B-81
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HALL OFFICE PARK
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LOAN INFORMATION
- --------------------------------------------------------------------------------
MORTGAGE LOAN SELLER CDCMC
CUT-OFF DATE PRINCIPAL $21,914,934
BALANCE
PERCENTAGE OF INITIAL
MORTGAGE POOL BALANCE 1.9%
NUMBER OF MORTGAGE
LOANS 1
LOAN PURPOSE Refinance
SPONSOR Craig Hall
OWNERSHIP INTEREST Fee Simple
MORTGAGE RATE 5.975%
MATURITY DATE February 1, 2014
AMORTIZATION TYPE Balloon
ORIGINAL TERM /
AMORTIZATION 120 / 360
REMAINING TERM /
AMORTIZATION 116 / 356
LOCKBOX In-Place Hard
UP-FRONT RESERVES
TAX/INSURANCE Yes / Yes
REPLACEMENT $0
ONGOING MONTHLY
RESERVES
TAX/INSURANCE Yes / Yes
REPLACEMENT $3,872
TI/LC $10,416.67 / mo. thru 1/1/09
$31,250 / mo. thereafter
ADDITIONAL FINANCING None
CUT-OFF DATE PRINCIPAL
BALANCE $21,914,934
CUT-OFF DATE PRINCIPAL
BALANCE/SF $94
CUT-OFF DATE LTV RATIO 73.0%
MATURITY DATE LTV RATIO 62.1%
UW NCF DSCR 1.30x
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[PHOTO OMITTED]
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PROPERTY INFORMATION
- --------------------------------------------------------------------------------
NUMBER OF MORTGAGED PROPERTIES 1
LOCATION Frisco, TX
PROPERTY TYPE Office - Suburban
SIZE (SF) 232,177
OCCUPANCY % AS OF JANUARY 28, 2004 90.9%
YEAR BUILT / YEAR RENOVATED 2002 / NAP
APPRAISED VALUE $30,000,000
PROPERTY MANAGEMENT Hall Phoenix/Inwood,
Ltd. and Hall Financial
Group
UW ECONOMIC OCCUPANCY % 91.0%
UW REVENUES $4,148,976
UW EXPENSES $1,759,223
UW NET OPERATING INCOME (NOI) $2,389,753
UW NET CASH FLOW (NCF) $2,048,692
- --------------------------------------------------------------------------------
B-82
- --------------------------------------------------------------------------------
HALL OFFICE PARK
- --------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
TENANT SUMMARY
- -----------------------------------------------------------------------------------------------------------------------------
RATINGS NET
FITCH/ RENTABLE
MOODY'S/ AREA % OF ACTUAL % OF DATE OF LEASE
TENANT NAME S&P(1) (SF) NET RENTABLE AREA RENT PSF RENT ACTUAL RENT EXPIRATION
- ---------------------------- ------------ --------- ------------------- ---------- ------------- ------------- --------------
EADS Telecom North
America, Inc. NR/A3/A 115,856 49.9% $ 19.50 $2,259,192 58.8% 10/31/14
G.E. Capital Card Services NR/Aaa/AAA 36,823 15.9 17.85 657,291 17.1 10/31/09
Option One Mortgage NR/NR/BBB+ 21,835 9.4 10.40 227,084 5.9 12/31/09
G.E. Capital Assurance NR/Aaa/AAA 11,884 5.1 18.80 223,419 5.8 11/30/07
NTEC For Technology NR/NR/NR 10,795 4.7 19.50 210,503 5.5 5/30/08
NON-MAJOR TENANTS 13,893 6.0 $ 19.11 265,434 6.9
VACANT SPACE 21,091 9.1
------- ----- ---------- -----
TOTAL 232,177 100.0% $3,842,923 100.0%
======= ===== ========== =====
- -----------------------------------------------------------------------------------------------------------------------------
(1) Certain credit ratings are those of the parent company whether or not the
parent company guarantees the lease.
B-83
- --------------------------------------------------------------------------------
SHERATON SUITES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
LOAN INFORMATION
- --------------------------------------------------------------------------------
MORTGAGE LOAN SELLER CGM
CUT-OFF DATE PRINCIPAL BALANCE $20,941,941
PERCENTAGE OF INITIAL MORTGAGE POOL BALANCE 1.8%
NUMBER OF MORTGAGE LOANS 1
LOAN PURPOSE Refinance
SPONSOR Wedge Hotels Corporation, GS Hotel
Managment LLC, GS Hotel Investment
LLC
OWNERSHIP INTEREST Fee Simple
MORTGAGE RATE 5.920%
MATURITY DATE April 11, 2014
AMORTIZATION TYPE Balloon
ORIGINAL TERM / AMORTIZATION TERM 120 / 300
REMAINING TERM / REMAINING AMORTIZATION TERM 118 / 298
LOCKBOX In-Place Hard
UP-FRONT RESERVES
TAX / INSURANCE Yes / No
FF&E 29,667
ONGOING MONTHLY
RESERVES
TAX MONTHLY /
INSURANCE MONTHLY Yes / No
FF&E MONTHLY 4% of Gross Revenue
ADDITIONAL FINANCING None
CUT-OFF DATE PRINCIPAL
BALANCE $20,941,941
CUT-OFF DATE
BALANCE/ROOM $74,526
CUT-OFF DATE LTV RATIO 63.5%
MATURITY DATE LTV RATIO 49.1%
UW NCF DSCR 1.44x
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[PHOTO OMITTED]
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
NUMBER OF MORTGAGED PROPERTIES 1
LOCATION Houston, TX
PROPERTY TYPE Hospitality-Full Service
SIZE (ROOMS) 281
OCCUPANCY % AS OF DECEMBER 31, 2003 (TTM AVERAGE) 59.5%
YEAR BUILT / YEAR RENOVATED 2000 / NAP
APPRAISED VALUE $33,000,000
PROPERTY MANAGEMENT WEDGE Hotels Management
Corporation
UW ECONOMIC OCCUPANCY % 59.5%
UW REVENUES $8,038,887
UW EXPENSES $5,391,406
UW NET OPERATING INCOME (NOI) $2,647,481
UW NET CASH FLOW (NCF) $2,325,926
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHERATON SUITES
- --------------------------------------------------------------------------------
2001 AVERAGE 2002 AVERAGE 2003 AVERAGE
-------------- -------------- --------------
OCCUPANCY 69.3% 63.7% 59.5%
ADR 113.58 123.68 114.76
REV PAR 78.70 78.74 68.26
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B-84
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B-85
- --------------------------------------------------------------------------------
400 ATLANTIC AVENUE
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- --------------------------------------------------------------------------------
LOAN INFORMATION
- --------------------------------------------------------------------------------
MORTGAGE LOAN SELLER CGM
CUT-OFF DATE PRINCIPAL BALANCE $19,161,641
PERCENTAGE OF INITIAL MORTGAGE POOL BALANCE 1.6%
NUMBER OF MORTGAGE LOANS 1
LOAN PURPOSE Refinance
SPONSOR Kenneth H. Simpson
OWNERSHIP INTEREST Fee Simple
MORTGAGE RATE 5.600%
MATURITY DATE April 11, 2014
AMORTIZATION TYPE Balloon
ORIGINAL TERM / AMORTIZATION 120 / 360
REMAINING TERM / AMORTIZATION 118 / 358
LOCKBOX Springing Hard
UP-FRONT RESERVES
TAX/INSURANCE Yes / Yes
REPLACEMENT $0
ENGINEERING $811,815
ENVIRONMENTAL $0
ONGOING MONTHLY RESERVES
TAX / INSURANCE Yes / Yes
REPLACEMENT $0
ADDITIONAL FINANCING None
CUT-OFF DATE PRINCIPAL BALANCE $19,161,641
CUT-OFF DATE PRINCIPAL BALANCE / SF $192
CUT-OFF DATE LTV RATIO 72.9%
MATURITY DATE LTV RATIO 61.2%
UW NCF DSCR 1.35x
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[PHOTO OMITTED]
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PROPERTY INFORMATION
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NUMBER OF MORTGAGED PROPERTIES 1
LOCATION Boston, MA
PROPERTY TYPE Office, CBD
SIZE (SF) 99,749
OCCUPANCY % AS OF DECEMBER 29, 2003 100.0%
YEAR BUILT / YEAR RENOVATED 1899 / 1984
APPRAISED VALUE $26,300,000
PROPERTY MANAGEMENT Northland Investment Corp.
UW ECONOMIC OCCUPANCY % 90.0%
UW REVENUES $3,397,513
UW EXPENSES $1,437,934
UW NET OPERATING INCOME (NOI) $1,959,580
UW NET CASH FLOW (NCF) $1,786,295
- --------------------------------------------------------------------------------
B-86
- --------------------------------------------------------------------------------
400 ATLANTIC AVENUE
- --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
TENANT SUMMARY
- ------------------------------------------------------------------------------------------------------------------
RATINGS NET % OF NET DATE OF
FITCH/MOODY'S/ RENTABLE RENTABLE ACTUAL LEASE
TENANT NAME S&P(1) AREA (SF) AREA RENT PSF RENT EXPIRATION
- ------------------------- ---------------- ----------- ---------- ---------- ------------- -----------
Goulston & Storrs, P.C. NR/NR/NR 99,749 100.0% $ 34.75 $3,466,278 5/31/14
------ -----
TOTALS 99,749 100.0%
====== =====
- ------------------------------------------------------------------------------------------------------------------
(1) Certain credit ratings are those of the parent company whether or not the
parent company guarantees the lease.
B-87
- --------------------------------------------------------------------------------
VICTORIA MALL
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- --------------------------------------------------------------------------------
LOAN INFORMATION
- --------------------------------------------------------------------------------
MORTGAGE LOAN SELLER CDCMC
CUT-OFF DATE PRINCIPAL
BALANCE $18,786,388
PERCENTAGE OF INITIAL
MORTGAGE POOL BALANCE 1.6%
NUMBER OF MORTGAGE LOANS 1
LOAN PURPOSE Acquisition
SPONSOR Hull Storey Retail Group LLC
OWNERSHIP INTEREST Fee Simple
MORTGAGE RATE 5.910%
MATURITY DATE October 9, 2013
AMORTIZATION TYPE Balloon
ORIGINAL TERM / AMORTIZATION 120 / 300
REMAINING TERM /
AMORTIZATION 112 / 292
LOCKBOX In-Place Hard
UP-FRONT RESERVES
TAX/INSURANCE Yes / Yes
REPLACEMENT $273,903
ONGOING MONTHLY RESERVES
TAX/INSURANCE Yes / Yes
REPLACEMENT $5,575
TI/LC $27,084 /mo. thru 12/9/06;
& $18,750 / mo. thereafter
ADDITIONAL FINANCING None
CUT-OFF DATE PRINCIPAL
BALANCE $18,786,388
CUT-OFF DATE PRINCIPAL
BALANCE/SF $42
CUT-OFF DATE LTV RATIO 65.7%
MATURITY DATE LTV RATIO 51.3%
UW NCF DSCR 1.44x
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[PHOTO OMITTED]
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PROPERTY INFORMATION
- --------------------------------------------------------------------------------
NUMBER OF MORTGAGED PROPERTIES 1
LOCATION Victoria, TX
PROPERTY TYPE Retail - Regional Mall
SIZE (SF) 445,862
OCCUPANCY % AS OF JANUARY 31, 2004 87.5%
YEAR BUILT / YEAR RENOVATED 1981 / 1998
APPRAISED VALUE $28,600,000
PROPERTY MANAGEMENT Hull Story Retail Group, LLC
UW ECONOMIC OCCUPANCY % 86.6%
UW REVENUES $5,225,723
UW EXPENSES $2,856,906
UW NET OPERATING INCOME (NOI) $2,368,817
UW NET CASH FLOW (NCF) $2,092,081
- --------------------------------------------------------------------------------
B-88
- --------------------------------------------------------------------------------
VICTORIA MALL
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- ---------------------------------------------------------------------------------------------------------------------
TENANT SUMMARY
- ---------------------------------------------------------------------------------------------------------------------
RATINGS NET % OF DATE OF
FITCH/MOODY'S/ RENTABLE NET RENTABLE % OF LEASE
TENANT NAME S&P(1) AREA (SF) AREA RENT PSF ACTUAL RENT ACTUAL RENT EXPIRATION
- ---------------------- ---------------- ----------- -------------- ---------- ------------- ------------- -----------
Sears BBB+/Baa1/BBB 82,743 18.6% $ 2.35 $ 194,034 6.2% 10/31/30
Cinemark NR/NR/NR 43,708 9.8 12.25 535,423 17.1 5/31/12
Bealls NR/NR/NR 40,451 9.1 5.00 202,255 6.4 12/31/05
Old Navy(2) BB+/Ba3/BB+ 25,000 5.6 0.00 0 0.0 8/31/05
Sears Service Center BBB+/Baa1/BBB 18,700 4.2 2.20 41,140 1.3 8/25/30
NON-MAJOR TENANTS 179,334 40.2 12.09 2,167,452 69.0
-----
VACANT SPACE 55,926 12.5 0.00
------- ------ ----------
TOTAL 445,862 100.00% $3,140,304 100.0%
======= ====== ========== =====
- ---------------------------------------------------------------------------------------------------------------------
(1) Certain ratings are those of parent company whether or not the parent
company guarantees the lease.
(2) Under the current lease, Old Navy is only required to pay rent based on
percentage of sales.
B-89
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DELRAY BAY APARTMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
LOAN INFORMATION
- --------------------------------------------------------------------------------
MORTGAGE LOAN SELLER Wachovia
CUT-OFF DATE PRINCIPAL BALANCE $17,500,000
PERCENTAGE OF INITIAL MORTGAGE POOL
BALANCE 1.5%
NUMBER OF MORTGAGE LOANS 1
LOAN PURPOSE Refinance
SPONSOR Olen Communities, Inc.
OWNERSHIP INTEREST Fee Simple
MORTGAGE RATE 4.920%
ANTICIPATED REPAYMENT DATE June 11, 2014
AMORTIZATION TYPE Partial IO/ARD
INTEREST ONLY PERIOD 24
ORIGINAL TERM / AMORTIZATION 120 / 360
REMAINING TERM / AMORTIZATION 120 / 360
LOCKBOX Springing Hard
UP-FRONT RESERVES
TAX/INSURANCE Yes / No
REPLACEMENT $ 3,458
PERFORMANCE(1) $5,000,000
ONGOING MONTHLY RESERVES
TAX/INSURANCE Yes / No
REPLACEMENT $3,458
ADDITIONAL FINANCING None
CUT-OFF DATE PRINCIPAL BALANCE $17,500,000
CUT-OFF DATE PRINCIPAL BALANCE/UNIT $105,422
CUT-OFF DATE LTV RATIO 78.5%
MATURITY DATE LTV RATIO 67.8%
UW NCF DSCR(2) 1.56x
- --------------------------------------------------------------------------------
(1) Provided at closing as additional collateral for the loan. The borrower may
obtain a partial or full release of the occupancy reserve upon the
satisfaction of the following conditions: (i) up to $1,500,000 may be
released at such time as the total collections from the mortgaged property
equal or exceed $179,000/month for a consecutive 3-month period, (ii) an
additional $1,500,000 may be released at such time as the total collections
from the mortgaged property equal or exceed $190,000/month for a
consecutive 3-month period and (iii) the remaining balance may be released
at such time as the total collections from the mortgaged property equal or
exceed $202,000/month for a consecutive 3-month period.
(2) The debt service coverage ratio is presented on an adjusted basis that: (a)
takes into account various assumptions regarding the financial performance
of the related mortgaged real property that are consistent with the release
of the cash holdback and/or letters of credit; and/or (b) reflects an
application of the cash holdback and/or letter of credit to pay down the
mortgage loan, with a corresponding reamortization of the monthly debt
service payment.
[PHOTO OMITTED]
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PROPERTY INFORMATION
- --------------------------------------------------------------------------------
NUMBER OF MORTGAGED REAL PROPERTIES 1
LOCATION Delray Beach, FL
PROPERTY TYPE Multifamily -- Conventional
SIZE (UNITS) 166
OCCUPANCY % AS OF APRIL 20, 2004 86.8%
YEAR BUILT / YEAR RENOVATED 2002 / NAP
APPRAISED VALUE $22,300,000
PROPERTY MANAGEMENT Realty Services Corp
UW ECONOMIC OCCUPANCY % 88.8%
UW REVENUES $2,321,767
UW EXPENSES $1,037,639
UW NET OPERATING INCOME (NOI) $1,284,128
UW NET CASH FLOW (NCF) $1,242,628
- --------------------------------------------------------------------------------
B-90
- --------------------------------------------------------------------------------
DELRAY BAY APARTMENTS
- --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
UNIT MIX
APPROXIMATE APPROXIMATE % OF NET ASKING
UNIT SIZE NET RENTABLE RENTABLE RENTAL
UNIT TYPE NO. OF UNITS (SF) AREA (SF) AREA RANGE
- -------------------------- -------------- ------------- -------------- ---------- --------------------
1-BR/1-BA 38 824 31,312 15.8% $ 950
1-BR/1-BA 28 933 26,124 13.2 $ 975
2-BR/2-BA 2 1,301 2,602 1.3 $ 1,100
2-BR/2-BA 34 1,353 46,002 23.2 $ 1,280
2-BR/2-BA 30 1,373 41,190 20.7 $ 1,305
3-BR/2-BA 16 1,449 23,184 11.7 $ 1,365
3-BR/2-BA 16 1,543 24,688 12.4 $ 1,405
3-BR/2-BA 2 1,800 3,600 1.8 $ 1,800
-- ----- ------ -----
TOTAL/WEIGHTED AVERAGE 166 1,197 198,702 100.0% $ 1,182/$0.99/SF
=== ===== ======= =====
- ------------------------------------------------------------------------------------------------------
B-91
- --------------------------------------------------------------------------------
THE YARDS PLAZA
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
LOAN INFORMATION
- --------------------------------------------------------------------------------
MORTGAGE LOAN SELLER Wachovia
CUT-OFF DATE PRINCIPAL BALANCE $17,460,861
PERCENTAGE OF INITIAL MORTGAGE POOL
BALANCE 1.5%
NUMBER OF MORTGAGE LOANS 1
LOAN PURPOSE Acquisition
David Walker and Aria
SPONSOR Mehrabi
OWNERSHIP INTEREST Fee Simple
MORTGAGE RATE 5.070%
MATURITY DATE April 11, 2014
AMORTIZATION TYPE ARD
ORIGINAL TERM / AMORTIZATION 120 / 360
REMAINING TERM / AMORTIZATION 118 / 358
LOCKBOX Springing Hard
UP-FRONT RESERVES
TAX/INSURANCE Yes / Yes
REPLACEMENT $4,471
ONGOING MONTHLY RESERVES
TAX/INSURANCE Yes / Yes
REPLACEMENT $4,471
ADDITIONAL FINANCING None
CUT-OFF DATE PRINCIPAL BALANCE $17,460,861
CUT-OFF DATE PRINCIPAL BALANCE/SF $66
CUT-OFF DATE LTV RATIO 79.4%
MATURITY DATE LTV RATIO 65.5%
UW NCF DSCR 1.24x
- --------------------------------------------------------------------------------
[PHOTO OMITTED]
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
NUMBER OF MORTGAGED REAL PROPERTIES 1
LOCATION Chicago, IL
PROPERTY TYPE Retail -- Anchored
SIZE (SF) 265,359
OCCUPANCY % AS OF MARCH 11, 2004 100.0%
YEAR BUILT / YEAR RENOVATED 1990 / NAP
APPRAISED VALUE $22,000,000
PROPERTY MANAGEMENT Edgemark Asset Management, LLC
UW ECONOMIC OCCUPANCY % 95.0%
UW REVENUES $3,257,974
UW EXPENSES $1,666,583
UW NET OPERATING INCOME (NOI) $1,591,391
UW NET CASH FLOW (NCF) $1,403,834
- --------------------------------------------------------------------------------
B-92
- --------------------------------------------------------------------------------
THE YARDS PLAZA
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TENANT SUMMARY
- --------------------------------------------------------------------------------
NET % OF NET
RATINGS(1) RENTABLE RENTABLE
TENANT MOODY'S/S&P/FITCH AREA (SF) AREA
- --------------------------- ------------------- ----------- ----------
Dominick's (Value City) Baa2/BBB/BBB 93,368 35.2%
Food for Less Baa2/BBB/BBB 82,620 31.1
Burlington Coat Factory NR/NR/NR 52,875 19.9
Back of the Yards Library NR/NR/NR 5,996 2.3
Kay Bee Toys NR/NR/NR 5,902 2.2
Non-major tenants 24,598 9.3
Vacant Space 0 0.0
------ -----
TOTAL 265,359 100.0%
======= =====
DATE OF
% OF LEASE
TENANT RENT PSF ACTUAL RENT ACTUAL RENT EXPIRATION
- --------------------------- ----------------- ----------------- ------------- -----------
Dominick's (Value City) $ 10.08 $ 941,029 50.8% 2/28/12
Food for Less 4.00 330,480 17.9 10/31/17
Burlington Coat Factory 0.00 (2) 0(2) 0.0(2) 7/31/06
Back of the Yards Library 17.47 104,768 5.7 10/31/04
Kay Bee Toys 10.06 59,350 3.2 9/30/07
Non-major tenants 16.87 415,041 22.4
Vacant Space -- 0.0
------------ -------
TOTAL $ 1,850,668 100.0%
============ =======
- ------------------------------------------------------------------------------------------
(1) Certain Ratings are those of the parent company whether or not the parent
company gurantees the lease. (2) Under the current lease, Burlington Coat
Factory is only required to pay rent based on percentage of sales.
B-93
- --------------------------------------------------------------------------------
CARMEL RANCHO SHOPPING CENTER
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
LOAN INFORMATION
- --------------------------------------------------------------------------------
MORTGAGE LOAN SELLER CGM
CUT-OFF DATE PRINCIPAL BALANCE $15,689,288
PERCENTAGE OF INITIAL MORTGAGE POOL
BALANCE 1.3%
NUMBER OF MORTGAGE LOANS 1
LOAN PURPOSE Refinance
SPONSOR Prim Ridge, Inc., Wayne Prim,
Jr., Dorla 308, Inc.
OWNERSHIP INTEREST Fee Simple
MORTGAGE RATE 5.990%
MATURITY DATE February 1, 2014
AMORTIZATION TYPE Balloon
ORIGINAL TERM / AMORTIZATION TERM 120 / 360
REMAINING TERM / REMAINING
AMORTIZATION TERM 116 / 356
LOCKBOX None
UP-FRONT RESERVES
TAX / INSURANCE Yes / Yes
REPLACEMENT $0
ONGOING MONTHLY RESERVES
TAX / INSURANCE Yes / Yes
REPLACEMENT $0
ADDITIONAL FINANCING None
CUT-OFF DATE PRINCIPAL BALANCE $15,689,288
CUT-OFF DATE PRINCIPAL BALANCE/SF $137
CUT-OFF DATE LTV RATIO 78.8%
MATURITY DATE LTV RATIO 67.1%
UW NCF DSCR 1.25x
- --------------------------------------------------------------------------------
[PHOTO OMITTED]
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
NUMBER OF MORTGAGED PROPERTIES 1
LOCATION Carmel, CA
PROPERTY TYPE Retail, Anchored
SIZE (SF) 114,897
OCCUPANCY % AS OF OCTOBER 18, 2003 96.2%
YEAR BUILT / YEAR RENOVATED 1962 / NAP
APPRAISED VALUE $19,900,000
PROPERTY MANAGEMENT Prim & Associates
UW ECONOMIC OCCUPANCY % 85.1%
UW REVENUES $1,795,883
UW EXPENSES $372,607
UW NET OPERATING INCOME (NOI) $1,423,276
UW NET CASH FLOW (NCF) $1,355,119
- --------------------------------------------------------------------------------
B-94
- --------------------------------------------------------------------------------
CARMEL RANCHO SHOPPING CENTER
- --------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
TENANT SUMMARY
- ----------------------------------------------------------------------------------------------------------------------------
RATINGS NET DATE OF
FITCH/MOODY'S/ RENTABLE % OF NET ACTUAL % OF LEASE
TENANT NAME S&P(1) AREA (SF) RENTABLE AREA RENT PSF RENT ACTUAL RENT EXPIRATION
- -------------------------- ------------------ ----------- --------------- ---------- ------------- ------------- -----------
Brinton's (Ace Hardware) NR/NR/NR 37,773 32.9% $ 10.51 $ 396,882 27.0% 7/31/08
Albertson's BBB / Baa2 / BBB 30,000 26.1 $ 2.00 60,000 4.1 10/31/07
Prudential Securities A / A3 / A- 9,160 8.0 $ 27.00 247,320 16.8 2/28/07
Cornucopia Market NR/NR/NR 5,855 5.1 $ 21.13 123,744 8.4 6/30/09
Citibank AA+ / Aa1 / AA- 3,519 3.1 $ 32.50 114,375 7.8 11/30/05
Non-Major Tenants 24,219 21.1 $ 21.85 529,121 36.0
------ ----- ------- ----------
Occupied Total 110,526 96.2 $ 13.31 $1,471,442 100.0%
Vacant Space 4,371 3.8
------- -----
TOTALS 114,897 100.0%
======= =====
- ----------------------------------------------------------------------------------------------------------------------------
(1) Certain credit ratings are those of the parent company whether or not the
parent company guarantees the lease.
B-95
- --------------------------------------------------------------------------------
CUMBERLAND OFFICE PARK
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
LOAN INFORMATION
- --------------------------------------------------------------------------------
MORTGAGE LOAN SELLER Wachovia
CUT-OFF DATE PRINCIPAL BALANCE $15,000,000
PERCENTAGE OF INITIAL MORTGAGE
POOL BALANCE 1.3%
NUMBER OF MORTGAGE LOANS 1
LOAN PURPOSE Acquisition
SPONSOR Grant M. Wilson,
Richard G. Fownes
OWNERSHIP INTEREST Fee Simple
MORTGAGE RATE 5.650%
MATURITY DATE April 11, 2014
AMORTIZATION TYPE Partial IO/ARD
INTEREST ONLY PERIOD 48
ORIGINAL TERM / AMORTIZATION 120 / 360
REMAINING TERM / AMORTIZATION 118 / 360
LOCKBOX Springing Hard
UP-FRONT RESERVES
TAX/INSURANCE Yes / No
TI/LC(1) $250,000
OTHER(2) $573,090
ONGOING MONTHLY RESERVES
TAX/INSURANCE Yes / (3)
TI/LC (4)
REPLACEMENT $1,316
ADDITIONAL FINANCING None
CUT-OFF DATE PRINCIPAL BALANCE $15,000,000
CUT-OFF DATE PRINCIPAL
BALANCE/SF $104
CUT-OFF DATE LTV RATIO 74.4%
MATURITY DATE LTV RATIO 68.1%
UW NCF DSCR 1.34x
- --------------------------------------------------------------------------------
(1) An upfront reserve of $250,000 was required for tenant improvements and
leasing commissions.
(2) An upfront reserve of $394,590 was taken at closing related to tenant
improvement allowances owed to 3 specified tenants, as well as $179,100
related to free rent for 2 tenants.
(3) Monthly reserves for insurance are required by borrower, at lender's
option, if (i) an event of default occurs or (ii) borrower fails to
deliver paid receipts or other proof evidencing the payment of insurance
premiums within 15 days prior to the expiration of any insurance policies
obtained by borrower.
(4) If Unipro Foodservice, Inc. fails to exercise its extension option before
the lease end date in August 2012, a deposit of $150,000 is required for
tenant improvements and leasing commissions.
[PHOTO OMITTED]
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
NUMBER OF MORTGAGED REAL PROPERTIES 1
LOCATION Atlanta, GA
PROPERTY TYPE Office - Suburban
SIZE (SF) 143,546
OCCUPANCY % AS OF MARCH 04, 2004 87.2%
YEAR BUILT / YEAR RENOVATED 1998 / NAP
APPRAISED VALUE $20,150,000
PROPERTY MANAGEMENT Research Management Corp.
UW ECONOMIC OCCUPANCY % 87.2%
UW REVENUES $2,763,443
UW EXPENSES $1,209,113
UW NET OPERATING INCOME (NOI) $1,554,330
UW NET CASH FLOW (NCF) $1,394,951
- --------------------------------------------------------------------------------
B-96
- --------------------------------------------------------------------------------
CUMBERLAND OFFICE PARK
- --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
TENANT SUMMARY
- ------------------------------------------------------------------------------
NET % OF NET
RATINGS RENTABLE RENTABLE
TENANT FITCH/MOODY'S/S&P(1) AREA (SF) AREA
- ------------------------------ ---------------------- ----------- ----------
Unipro Food Service NR/NR/NR 52,315 36.4%
Thomas Concrete of Georgia NR/NR/NR 20,590 14.3
World Travel Partners I, LLC NR/NR/NR 13,780 9.6
P & O Nedlloyd Limited NR/NR/NR 13,212 9.2
Aspect Communications NR/B/NR 11,655 8.1
Non-major tenants 13,664 9.5
Vacant Space 18,330 12.8
------ -----
TOTAL 143,546 100.0%
% OF DATE OF LEASE
TENANT RENT PSF ACTUAL RENT ACTUAL RENT EXPIRATION
- ------------------------------ ------------ ------------- ------------- --------------
Unipro Food Service $ 19.50 $ 1,020,143 40.7% 8/31/12
Thomas Concrete of Georgia $ 19.00 391,210 15.6 12/31/09
World Travel Partners I, LLC $ 18.00 248,040 9.9 8/31/10
P & O Nedlloyd Limited $ 21.75 287,402 11.5 7/31/09
Aspect Communications $ 19.50 227,273 9.1 4/30/07
Non-major tenants $ 24.12 329,636 13.2
Vacant Space -- 0.0
----------- -----
TOTAL $ 2,503,703 100.0%
- ---------------------------------------------------------------------------------------
(1) Certain ratings are those of the parent company whether or not the parent
company guarantees the lease.
B-97
[THIS PAGE INTENTIONALLY LEFT BLANK.]
ANNEX C
DECREMENT TABLES FOR CLASS A-1, CLASS A-2, CLASS A-3, CLASS A-4,
CLASS B, CLASS C, CLASS D AND CLASS E CERTIFICATES
[THIS PAGE INTENTIONALLY LEFT BLANK.]
ANNEX C
DECREMENT TABLES
PERCENTAGES OF INITIAL TOTAL PRINCIPAL BALANCE AT THE SPECIFIED CPRS
(PREPAYMENTS LOCKED OUT THROUGH LOCK-OUT PERIOD, DEFEASANCE PERIOD AND
YIELD MAINTENANCE PERIOD, THEN AT FOLLOWING CPR)
CLASS A-1
PAYMENT DATE 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ------------------------------------------- ------ ------- ------- ------- --------
Initial Percentage......................... 100% 100% 100% 100% 100%
June 2005.................................. 85 85 85 85 85
June 2006.................................. 63 63 63 63 63
June 2007.................................. 38 38 38 38 38
June 2008.................................. 12 12 12 12 12
June 2009 and thereafter................... 0 0 0 0 0
Weighted Average Life (in Years)........... 2.47 2.47 2.47 2.47 2.47
CLASS A-2
PAYMENT DATE 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ------------------------------------------- ------ ------- ------- ------- --------
Initial Percentage......................... 100% 100% 100% 100% 100%
June 2005.................................. 100 100 100 100 100
June 2006.................................. 100 100 100 100 100
June 2007.................................. 100 100 100 100 100
June 2008.................................. 100 100 100 100 100
June 2009 and thereafter................... 0 0 0 0 0
Weighted Average Life (in Years)........... 4.76 4.75 4.75 4.74 4.62
C-1
PERCENTAGES OF INITIAL TOTAL PRINCIPAL BALANCE AT THE SPECIFIED CPRS
(PREPAYMENTS LOCKED OUT THROUGH LOCK-OUT PERIOD, DEFEASANCE PERIOD AND
YIELD MAINTENANCE PERIOD, THEN AT FOLLOWING CPR)
CLASS A-3
PAYMENT DATE 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ------------------------------------------- ------ ------- ------- ------- --------
Initial Percentage......................... 100% 100% 100% 100% 100%
June 2005.................................. 100 100 100 100 100
June 2006.................................. 100 100 100 100 100
June 2007.................................. 100 100 100 100 100
June 2008.................................. 100 100 100 100 100
June 2009.................................. 99 99 99 99 99
June 2010.................................. 66 66 66 66 66
June 2011.................................. 39 39 39 39 39
June 2012.................................. 30 30 30 30 30
June 2013.................................. 5 4 4 4 2
June 2014 and thereafter................... 0 0 0 0 0
Weighted Average Life (in Years)........... 7.02 7.01 7.01 6.99 6.89
CLASS A-4
PAYMENT DATE 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ------------------------------------------- ------ ------- ------- ------- --------
Initial Percentage......................... 100% 100% 100% 100% 100%
June 2005.................................. 100 100 100 100 100
June 2006.................................. 100 100 100 100 100
June 2007.................................. 100 100 100 100 100
June 2008.................................. 100 100 100 100 100
June 2009.................................. 100 100 100 100 100
June 2010.................................. 100 100 100 100 100
June 2011.................................. 100 100 100 100 100
June 2012.................................. 100 100 100 100 100
June 2013.................................. 100 100 100 100 100
June 2014 and thereafter................... 0 0 0 0 0
Weighted Average Life (in Years)........... 9.69 9.68 9.66 9.64 9.49
C-2
PERCENTAGES OF INITIAL TOTAL PRINCIPAL BALANCE AT THE SPECIFIED CPRS
(PREPAYMENTS LOCKED OUT THROUGH LOCK-OUT PERIOD, DEFEASANCE PERIOD AND
YIELD MAINTENANCE PERIOD, THEN AT FOLLOWING CPR)
CLASS B
PAYMENT DATE 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ------------------------------------------- ------ ------- ------- ------- --------
Initial Percentage......................... 100% 100% 100% 100% 100%
June 2005.................................. 100 100 100 100 100
June 2006.................................. 100 100 100 100 100
June 2007.................................. 100 100 100 100 100
June 2008.................................. 100 100 100 100 100
June 2009.................................. 100 100 100 100 100
June 2010.................................. 100 100 100 100 100
June 2011.................................. 100 100 100 100 100
June 2012.................................. 100 100 100 100 100
June 2013.................................. 100 100 100 100 100
June 2014 and thereafter................... 0 0 0 0 0
Weighted Average Life (in Years)........... 9.89 9.89 9.89 9.89 9.73
CLASS C
PAYMENT DATE 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ------------------------------------------- ------ ------- ------- ------- --------
Initial Percentage......................... 100% 100% 100% 100% 100%
June 2005.................................. 100 100 100 100 100
June 2006.................................. 100 100 100 100 100
June 2007.................................. 100 100 100 100 100
June 2008.................................. 100 100 100 100 100
June 2009.................................. 100 100 100 100 100
June 2010.................................. 100 100 100 100 100
June 2011.................................. 100 100 100 100 100
June 2012.................................. 100 100 100 100 100
June 2013.................................. 100 100 100 100 100
June 2014 and thereafter................... 0 0 0 0 0
Weighted Average Life (in Years)........... 9.89 9.89 9.89 9.89 9.73
C-3
PERCENTAGES OF INITIAL TOTAL PRINCIPAL BALANCE AT THE SPECIFIED CPRS
(PREPAYMENTS LOCKED OUT THROUGH LOCK-OUT PERIOD, DEFEASANCE PERIOD AND
YIELD MAINTENANCE PERIOD, THEN AT FOLLOWING CPR)
CLASS D
PAYMENT DATE 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ------------------------------------------- ------ ------- ------- ------- --------
Initial Percentage......................... 100% 100% 100% 100% 100%
June 2005.................................. 100 100 100 100 100
June 2006.................................. 100 100 100 100 100
June 2007.................................. 100 100 100 100 100
June 2008.................................. 100 100 100 100 100
June 2009.................................. 100 100 100 100 100
June 2010.................................. 100 100 100 100 100
June 2011.................................. 100 100 100 100 100
June 2012.................................. 100 100 100 100 100
June 2013.................................. 100 100 100 100 100
June 2014 and thereafter................... 0 0 0 0 0
Weighted Average Life (in Years)........... 9.89 9.89 9.89 9.89 9.79
CLASS E
PAYMENT DATE 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- ------------------------------------------- ------ ------- ------- ------- --------
Initial Percentage......................... 100% 100% 100% 100% 100%
June 2005.................................. 100 100 100 100 100
June 2006.................................. 100 100 100 100 100
June 2007.................................. 100 100 100 100 100
June 2008.................................. 100 100 100 100 100
June 2009.................................. 100 100 100 100 100
June 2010.................................. 100 100 100 100 100
June 2011.................................. 100 100 100 100 100
June 2012.................................. 100 100 100 100 100
June 2013.................................. 100 100 100 100 100
June 2014 and thereafter................... 0 0 0 0 0
Weighted Average Life (in Years)........... 9.94 9.92 9.90 9.89 9.81
C-4
ANNEX D
FORM OF PAYMENT DATE STATEMENT
[THIS PAGE INTENTIONALLY LEFT BLANK.]
ANNEX D
ABN AMRO CITIGROUP COMMERCIAL MORTGAGE TRUST Statement Date: 07/16/2004
LaSalle Bank N.A. COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES Payment Date: 07/16/2004
135 S. LaSalle Street Suite 1625 SERIES 2004-C1 Prior Payment: N/A
Chicago, IL 60603 Next Payment: 08/17/2004
Record Date: 06/30/2004
ABN AMRO ACCT: XXXXXX
Administrator: Analyst:
REPORTING PACKAGE TABLE OF CONTENTS
====================================================================================================================================
================================ ==================================================== ======================================
Page(s)
Issue Id: CCMT04C1 REMIC Certificate Report Closing Date: 06/18/2004
Monthly Data File Name: Bond Interest Reconciliation First Payment Date: 07/16/2004
CCMT04C1_YYYYMM_3.zip Cash Reconciliation Summary Assumed Final Payment Date: 07/16/2034
15 Month Historical Loan Status Summary
15 Month Historical Payoff/Loss Summary
Historical Collateral Level Prepayment Report
Delinquent Loan Detail
Mortgage Loan Characteristics
Loan Level Detail
Specially Serviced Report
Modified Loan Detail
Realized Loss Detail
Appraisal Reduction Detail
================================ ==================================================== ======================================
======================================================================================================
PARTIES TO THE TRANSACTION
------------------------------------------------------------------------------------------------------
DEPOSITOR: Citigroup Commercial Mortgage Securities Inc.
UNDERWRITER: Citigroup Global Markets, Inc./Wachovia Capital Markets, LLC
MASTER SERVICER: Wachovia Bank, National Association
SPECIAL SERVICER: Lennar Partners
RATING AGENCY: Moody's Investors Service, Inc. /Standard & Poor's Ratings Services
======================================================================================================
==========================================================================
INFORMATION IS AVAILABLE FOR THIS ISSUE FROM THE FOLLOWING SOURCES
--------------------------------------------------------------------------
LaSalle Web Site www.etrustee.net
Servicer Website www.wachovia.com
LaSalle Factor Line (800) 246-5761
==========================================================================
====================================================================================================================================
05/21/2004 - 11:01 (MXXX-MXXX) (c) 2000 LaSalle Bank N.A.
D-1
ABN AMRO CITIGROUP COMMERCIAL MORTGAGE TRUST Statement Date: 07/16/2004
LaSalle Bank N.A. COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES Payment Date: 07/16/2004
SERIES 2004-C1 Prior Payment: N/A
WAC: Next Payment: 08/17/2004
WA Life Term: Record Date: 06/30/2004
WA Amort Term: ABN AMRO ACCT: XXXXXX
Current Index:
Next Index: REMIC CERTIFICATE REPORT
====================================================================================================================================
ORIGINAL OPENING PRINCIPAL PRINCIPAL NEGATIVE CLOSING INTEREST INTEREST PASS-THROUGH
CLASS FACE VALUE (1) BALANCE PAYMENT ADJ. OR LOSS AMORTIZATION BALANCE PAYMENT (2) ADJUSTMENT RATE
CUSIP Per 1,000 Per 1,000 Per 1,000 Per 1,000 Per 1,000 Per 1,000 Per 1,000 Per 1,000 Next Rate (3)
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
====================================================================================================================================
Total P&I Payment 0.00
===========================
Notes: (1) N denotes notional balance not included in total (2) Accrued Interest plus/minus Interest Adjustment minus Deferred
Interest equals Interest Payment (3) Estimated
05/21/2004 - 11:01 (MXXX-MXXX) (c) 2000 LaSalle Bank N.A.
D-2
ABN AMRO CITIGROUP COMMERCIAL MORTGAGE TRUST Statement Date: 07/16/2004
LaSalle Bank N.A. COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES Payment Date: 07/16/2004
SERIES 2004-C1 Prior Payment: N/A
Next Payment: 08/17/2004
ABN AMRO ACCT: XXXXXX Record Date: 06/30/2004
BOND INTEREST RECONCILIATION
====================================================================================================================================
Deductions Additions
--------------------------------- ----------------------------------------------------
Pass Accrued Deferred & Prior Int Accrual Prepay- Other
Accrual Thru Certificate Allocable Accretion Interest Int. Short- on prior ment Interest
Class Method Days Rate Interest PPIS Interest Loss/Exp falls Due Shortfall (3) Penalties Proceeds (1)
====================================================================================================================================
------------------------------------------------------------------------------------------------------
0.00 0.00 0.00 0.00 0.00 0.00 0.00
====================================================================================================================================
======================================================== ======================
Remaining
Distributable Interest Current Period Outstanding Credit Support
Certificate Payment (Shortfall)/ Interest ----------------------
Interest (2) Amount Recovery Shortfalls Original Current (4)
======================================================== ======================
- --------------------------------------------------------
0.00 0.00 0.00
======================================================== ======================
(1) Other Interest Proceeds are additional interest amounts specifically allocated to the bond(s) and used in determining the
Distributable Interest of the bonds.
(2) Accrued - Deductions + Additional Interest.
(3) Where applicable.
(4) Determined as follows: (A) the ending balance of all the classes less (B) the sum of (i) the ending balance of the class and
(ii) the ending balance of all classes which are not subordinate to the class divided by (A).
05/21/2004 - 11:01 (MXXX-MXXX) (c) 2000 LaSalle Bank N.A.
D-3
ABN AMRO CITIGROUP COMMERCIAL MORTGAGE TRUST Statement Date: 07/16/2004
LaSalle Bank N.A. COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES Payment Date: 07/16/2004
SERIES 2004-C1 Prior Payment: N/A
Next Payment: 08/17/2004
ABN AMRO ACCT: XXXXXX Record Date: 06/30/2004
CASH RECONCILIATION SUMMARY
====================================================================================================================================
- ------------------------------------------- ------------------------------------------- ------------------------------------------
INTEREST SUMMARY PRINCIPAL SUMMARY SERVICING FEE SUMMARY
- ------------------------------------------- ------------------------------------------- ------------------------------------------
Current Scheduled Interest SCHEDULED PRINCIPAL: Current Servicing Fees
Less Deferred Interest Current Scheduled Principal Plus Fees Advanced for PPIS
Less PPIS Reducing Scheduled Int Advanced Scheduled Principal Less Reduction for PPIS
Plus Gross Advance Interest ------------------------------------------- Plus Delinquent Servicing Fees
Less ASER Interest Adv Reduction Scheduled Principal ------------------------------------------
Less Other Interest Not Advanced ------------------------------------------- Total Servicing Fees
Less Other Adjustment UNSCHEDULED PRINCIPAL: ------------------------------------------
- ------------------------------------------- Curtailments
Total Advanced Scheduled Principal
- ------------------------------------------- Liquidation Proceeds
UNSCHEDULED INTEREST: Repurchase Proceeds
- ------------------------------------------- Other Principal Proceeds
Prepayment Penalties -------------------------------------------
Yield Maintenance Penalties Total Unscheduled Principal
Other Interest Proceeds -------------------------------------------
- ------------------------------------------- Remittance Principal
Total -------------------------------------------
- ------------------------------------------- Remittance P&I Due Trust
Less Fees Paid to Servicer -------------------------------------------
Less Fee Strips Paid by Servicer Remittance P&I Due Certs
- ------------------------------------------- -------------------------------------------
LESS FEES & EXPENSES PAID BY/TO SERVICER
- ------------------------------------------- ------------------------------------------- ------------------------------------------
Special Servicing Fees POOL BALANCE SUMMARY PPIS SUMMARY
Workout Fees ------------------------------------------- ------------------------------------------
Liquidation Fees Balance Count Gross PPIS
Interest Due Serv on Advances ------------------------------------------- Reduced by PPIE
Non Recoverable Advances Beginning Pool Reduced by Shortfalls in Fees
Misc. Fees & Expenses Scheduled Principal Reduced by Other Amounts
- ------------------------------------------- Unscheduled Principal ------------------------------------------
Plus Trustee Fees Paid by Servicer Deferred Interest PPIS Reducing Scheduled Interest
- ------------------------------------------- Liquidations ------------------------------------------
Total Unscheduled Fees & Expenses Repurchases PPIS Reducing Servicing Fee
- ------------------------------------------- ------------------------------------------- ------------------------------------------
Total Interest Due Trust Ending Pool PPIS Due Certificate
- ------------------------------------------- ------------------------------------------- ------------------------------------------
LESS FEES & EXPENSES PAID BY/TO TRUST
- ------------------------------------------- ------------------------------------------
Trustee Fee ADVANCE SUMMARY (ADVANCE MADE BY SERVICER)
Fee Strips ------------------------------------------
Misc. Fees Principal Interest
Interest Reserve Withholding ------------------------------------------
Plus Interest Reserve Deposit Prior Outstanding
- ------------------------------------------- Plus Current Period
Total Less Recovered
- ------------------------------------------- Less Non Recovered
Total Interest Due Certs ------------------------------------------
- ------------------------------------------- Ending Outstanding
------------------------------------------
====================================================================================================================================
05/21/2004 - 11:01 (MXXX-MXXX) (c) 2000 LaSalle Bank N.A.
D-4
ABN AMRO CITIGROUP COMMERCIAL MORTGAGE TRUST Statement Date: 07/16/2004
LaSalle Bank N.A. COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES Payment Date: 07/16/2004
SERIES 2004-C1 Prior Payment: N/A
Next Payment: 08/17/2004
ABN AMRO ACCT: XXXXXX Record Date: 06/30/2004
ASSET BACKED FACTS ~ 15 MONTH HISTORICAL LOAN STATUS SUMMARY
============ ================================================================== ================================================
Delinquency Aging Categories Special Event Categories (1)
------------------------------------------------------------------ ------------------------------------------------
Delinq Delinq Delinq
1 Month 2 Months 3+ Months Foreclosure REO Modifications Specially Serviced Bankruptcy
Distribution ------------------------------------------------------------------ ------------------------------------------------
Date # Balance # Balance # Balance # Balance # Balance # Balance # Balance # Balance
============ ================================================================== ================================================
07/16/04
- ------------ ------------------------------------------------------------------ ------------------------------------------------
- ------------ ------------------------------------------------------------------ ------------------------------------------------
- ------------ ------------------------------------------------------------------ ------------------------------------------------
- ------------ ------------------------------------------------------------------ ------------------------------------------------
- ------------ ------------------------------------------------------------------ ------------------------------------------------
- ------------ ------------------------------------------------------------------ ------------------------------------------------
- ------------ ------------------------------------------------------------------ ------------------------------------------------
- ------------ ------------------------------------------------------------------ ------------------------------------------------
- ------------ ------------------------------------------------------------------ ------------------------------------------------
- ------------ ------------------------------------------------------------------ ------------------------------------------------
- ------------ ------------------------------------------------------------------ ------------------------------------------------
- ------------ ------------------------------------------------------------------ ------------------------------------------------
- ------------ ------------------------------------------------------------------ ------------------------------------------------
- ------------ ------------------------------------------------------------------ ------------------------------------------------
============ ================================================================== ================================================
(1) Modification, Specially Serviced & Bankruptcy Totals are Included in the Appropriate Delinquency Aging Category.
05/21/2004 - 11:01 (MXXX-MXXX) (c) 2000 LaSalle Bank N.A.
D-5
ABN AMRO CITIGROUP COMMERCIAL MORTGAGE TRUST Statement Date: 07/16/2004
LaSalle Bank N.A. COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES Payment Date: 07/16/2004
SERIES 2004-C1 Prior Payment: N/A
Next Payment: 08/17/2004
ABN AMRO ACCT: XXXXXX Record Date: 06/30/2004
ASSET BACKED FACTS ~ 15 MONTH HISTORICAL PAYOFF/LOSS SUMMARY
============= ===================================================================================== ================================
Appraisal Realized Curr
Ending Pool (1) Payoffs(2) Penalties Reduct. (2) Liquidations (2) Losses (2) Remaining Term Weighted Avg.
Distribution ------------------------------------------------------------------------------------- --------------------------------
Date # Balance # Balance # Amount # Balance # Balance # Amount Life Amort. Coupon Remit
============= ===================================================================================== ================================
07/16/04
- ------------------------------------------------------------------------------------------------------------------------------------
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- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
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- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
====================================================================================================================================
(1) Percentage based on pool as of cutoff.
(2) Percentage based on pool as of beginning of period.
05/21/2004 - 11:01 (MXXX-MXXX) (c) 2000 LaSalle Bank N.A.
D-6
ABN AMRO CITIGROUP COMMERCIAL MORTGAGE TRUST Statement Date: 07/16/2004
LaSalle Bank N.A. COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES Payment Date: 07/16/2004
SERIES 2004-C1 Prior Payment: N/A
Next Payment: 08/17/2004
ABN AMRO ACCT: XXXXXX Record Date: 06/30/2004
HISTORICAL COLLATERAL LEVEL PREPAYMENT REPORT
======================== ================================================ ============================ =============================
Disclosure Payoff Initial Payoff Penalty Prepayment Maturity Property Geographic
Control # Period Balance Type Amount Amount Date Date Type Location
- ------------------------ ------------------------------------------------ ---------------------------- -----------------------------
====================================================================================================================================
CURRENT 0 0
CUMULATIVE
05/21/2004 - 11:01 (MXXX-MXXX) (c) 2000 LaSalle Bank N.A.
D-7
ABN AMRO CITIGROUP COMMERCIAL MORTGAGE TRUST Statement Date: 07/16/2004
LaSalle Bank N.A. COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES Payment Date: 07/16/2004
SERIES 2004-C1 Prior Payment: N/A
Next Payment: 08/17/2004
ABN AMRO ACCT: XXXXXX Record Date: 06/30/2004
DELINQUENT LOAN DETAIL
====================================================================================================================================
Paid Outstanding Out. Property Special
Disclosure Thru Current P&I P&I Protection Advance Servicer Foreclosure Bankruptcy REO
Control # Date Advance Advances** Advances Description (1) Transfer Date Date Date Date
====================================================================================================================================
====================================================================================================================================
A. P&I Advance - Loan in Grace Period 1. P&I Advance - Loan delinquent 1 month
B. P&I Advance - Late Payment but < 1 month delinq 2. P&I Advance - Loan delinquent 2 months
3. P&I Advance - Loan delinquent 3 months or More
4. Matured Balloon/Assumed Scheduled Payment
7. P&I Advance (Foreclosure)
9. P&I Advance (REO)
====================================================================================================================================
** Outstanding P&I Advances include the current period P&I Advance
05/21/2004 - 11:01 (MXXX-MXXX) (c) 2000 LaSalle Bank N.A.
D-8
ABN AMRO CITIGROUP COMMERCIAL MORTGAGE TRUST Statement Date: 07/16/2004
LaSalle Bank N.A. COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES Payment Date: 07/16/2004
SERIES 2004-C1 Prior Payment: N/A
Next Payment: 08/17/2004
ABN AMRO ACCT: XXXXXX Record Date: 06/30/2004
MORTGAGE LOAN CHARACTERISTICS
================================================================= =================================================================
DISTRIBUTION OF PRINCIPAL BALANCES DISTRIBUTION OF MORTGAGE INTEREST RATES
================================================================= =================================================================
Weighted Average Weighted Average
Current Scheduled # of Scheduled % of ------------------ Current Mortgage # of Scheduled % of ------------------
Balances Loans Balance Balance Term Coupon DSCR Interest Rate Loans Balance Balance Term Coupon DSCR
================================================================= =================================================================
=================================================================
0 0 0.00%
=================================================================
Minimum Mortgage Interest Rate 10.0000%
Maximum Mortgage Interest Rate 10.0000%
=================================================================
0 0 0.00%
=================================================================
Average Scheduled Balance DISTRIBUTION OF REMAINING TERM (BALLOON)
Maximum Scheduled Balance =================================================================
Minimum Scheduled Balance Weighted Average
- ------------------------- Balloon # of Scheduled % of --------------------
Mortgage Loans Loans Balance Balance Term Coupon DSCR
DISTRIBUTION OF REMAINING TERM (FULLY AMORTIZING) =================================================================
================================================================= 0 to 60
Weighted Average 61 to 120
Fully Amortizing # of Scheduled % of ------------------ 121 to 180
Mortgage Loans Loans Balance Balance Term Coupon DSCR 181 to 240
================================================================= 241 to 360
================================================================= =================================================================
0 0 0.00% 0 0 0.00%
================================================================= =================================================================
Minimum Remaining Term Minimum Remaining Term 0
Maximum Remaining Term Maximum Remaining Term 0
05/21/2004 - 11:01 (MXXX-MXXX) (c) 2000 LaSalle Bank N.A.
D-9
ABN AMRO CITIGROUP COMMERCIAL MORTGAGE TRUST Statement Date: 07/16/2004
LaSalle Bank N.A. COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES Payment Date: 07/16/2004
SERIES 2004-C1 Prior Payment: N/A
Next Payment: 08/17/2004
ABN AMRO ACCT: XXXXXX Record Date: 06/30/2004
MORTGAGE LOAN CHARACTERISTICS
============================================================ =================================================================
DISTRIBUTION OF DSCR (CURRENT) GEOGRAPHIC DISTRIBUTION
=========================================================== ================================================================
Debt Service # of Scheduled % of # of Scheduled % of
Coverage Ratio Loans Balance Balance WAMM WAC DSCR Geographic Location Loans Balance Balance WAMM WAC DSCR
=========================================================== ================================================================
===========================================================
0 0 0.00%
===========================================================
Maximum DSCR 0.000
Minimum DSCR 0.000
DISTRIBUTION OF DSCR (CUTOFF)
===========================================================
Debt Service # of Scheduled % of
Coverage Ratio Loans Balance Balance WAMM WAC DSCR
===========================================================
=========================================================== ================================================================
0 0 0.00% 0 0.00%
=========================================================== ================================================================
Maximum DSCR 0.00
Minimum DSCR 0.00
05/21/2004 - 11:01 (MXXX-MXXX) (c) 2000 LaSalle Bank N.A.
D-10
ABN AMRO CITIGROUP COMMERCIAL MORTGAGE TRUST Statement Date: 07/16/2004
LaSalle Bank N.A. COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES Payment Date: 07/16/2004
SERIES 2004-C1 Prior Payment: N/A
Next Payment: 08/17/2004
ABN AMRO ACCT: XXXXXX Record Date: 06/30/2004
MORTGAGE LOAN CHARACTERISTICS
================================================================ ================================================================
DISTRIBUTION OF PROPERTY TYPES DISTRIBUTION OF LOAN SEASONING
=========================================================== ===========================================================
# of Scheduled % of # of Scheduled % of
Property Types Loans Balance Balance WAMM WAC DSCR Number of Years Loans Balance Balance WAMM WAC DSCR
=========================================================== ===========================================================
=========================================================== ===========================================================
0 0 0.00% 0 0 0.00%
=========================================================== ===========================================================
DISTRIBUTION OF AMORTIZATION TYPE DISTRIBUTION OF YEAR LOANS MATURING
=========================================================== ===========================================================
Amortization # of Scheduled % of # of Scheduled % of
Type Loans Balance Balance WAMM WAC DSCR Year Loans Balance Balance WAMM WAC DSCR
=========================================================== ===========================================================
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014 & Longer
=========================================================== ===========================================================
0 0 0.00%
=========================================================== ===========================================================
05/21/2004 - 11:01 (MXXX-MXXX) (c) 2000 LaSalle Bank N.A.
D-11
ABN AMRO CITIGROUP COMMERCIAL MORTGAGE TRUST Statement Date: 07/16/2004
LaSalle Bank N.A. COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES Payment Date: 07/16/2004
SERIES 2004-C1 Prior Payment: N/A
Next Payment: 08/17/2004
ABN AMRO ACCT: XXXXXX Record Date: 06/30/2004
LOAN LEVEL DETAIL
=================================================================================================================================
Operating Ending Spec.
Disclosure Property Statement Maturity Principal Note Scheduled Mod. Serv
Control # Grp Type State DSCR NOI Date Date Balance Rate P&I Flag Flag
=================================================================================================================================
=================================================================================================================================
W/Avg 0.00 0 0 0
=================================================================================================================================
===========================================
Loan Prepayment
ASER Status -------------------------
Flag Code(1) Amount Penalty Date
===========================================
===========================================
0 0
===========================================
* NOI and DSCR, if available and reportable under the terms of the Pooling and Servicing Agreement, are based on information
obtained from the related borrower, and no other party to the agreement shall be held liable for the accuracy or methodology used
to determine such figures.
(1) Legend: A. P&I Adv - in Grace Period 1. P&I Adv - delinquent 1 month 7. Foreclosure
B. P&I Adv - < one month delinq 2. P&I Adv - delinquent 2 months 8. Bankruptcy
3. P&I Adv - delinquent 3+ months 9. REO
4. Mat. Balloon/Assumed P&I 10. DPO
5. Prepaid in Full 11. Modification
6. Specially Serviced
====================================================================================================================================
05/21/2004 - 11:01 (MXXX-MXXX) (c) 2000 LaSalle Bank N.A.
D-12
ABN AMRO CITIGROUP COMMERCIAL MORTGAGE TRUST Statement Date: 07/16/2004
LaSalle Bank N.A. COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES Payment Date: 07/16/2004
SERIES 2004-C1 Prior Payment: N/A
Next Payment: 08/17/2004
ABN AMRO ACCT: XXXXXX Record Date: 06/30/2004
SPECIALLY SERVICED (PART I) ~ LOAN DETAIL
====================== ============== ===================== ================================== =============== =====================
Balance Remaining Term
Disclosure Transfer Loan Status ------------------- Note Maturity -------------- Property NOI
Control # Date Code (1) Scheduled Actual Rate Date Life Amort. Type State NOI DSCR Date
====================== ============== ===================== ================================== =============== =====================
====================================================================================================================================
(1) Legend: A. P&I Adv - in Grace Period 1. P&I Adv - delinquent 1 month
B. P&I Adv - < 1 month delinq. 2. P&I Adv - delinquent 2 months
3. P&I Adv - delinquent 3+ months
4. Mat. Balloon/Assumed P&I
7. Foreclosure
9. REO
====================================================================================================================================
05/21/2004 - 11:01 (MXXX-MXXX) (c) 2000 LaSalle Bank N.A.
D-13
ABN AMRO CITIGROUP COMMERCIAL MORTGAGE TRUST Statement Date: 07/16/2004
LaSalle Bank N.A. COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES Payment Date: 07/16/2004
SERIES 2004-C1 Prior Payment: N/A
Next Payment: 08/17/2004
ABN AMRO ACCT: XXXXXX Record Date: 06/30/2004
SPECIALLY SERVICED LOAN DETAIL (PART II) ~ SERVICER COMMENTS
====================================================================================================================================
Disclosure Resolution
Control # Strategy Comments
====================================================================================================================================
====================================================================================================================================
05/21/2004 - 11:01 (MXXX-MXXX) (c) 2000 LaSalle Bank N.A.
D-14
ABN AMRO CITIGROUP COMMERCIAL MORTGAGE TRUST Statement Date: 07/16/2004
LaSalle Bank N.A. COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES Payment Date: 07/16/2004
SERIES 2004-C1 Prior Payment: N/A
Next Payment: 08/17/2004
ABN AMRO ACCT: XXXXXX Record Date: 06/30/2004
MODIFIED LOAN DETAIL
====================================================================================================================================
Cutoff Modified
Disclosure Modification Maturity Maturity Modification
Control # Date Date Date Description
====================================================================================================================================
====================================================================================================================================
05/21/2004 - 11:01 (MXXX-MXXX) (c) 2000 LaSalle Bank N.A.
D-15
ABN AMRO CITIGROUP COMMERCIAL MORTGAGE TRUST Statement Date: 07/16/2004
LaSalle Bank N.A. COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES Payment Date: 07/16/2004
SERIES 2004-C1 Prior Payment: N/A
Next Payment: 08/17/2004
ABN AMRO ACCT: XXXXXX Record Date: 06/30/2004
REALIZED LOSS DETAIL
====================================================================================================================================
Beginning Gross Proceeds Aggregate Net Net Proceeds
Disclosure Appraisal Appraisal Scheduled Gross as a % of Liquidation Liquidation as a % of Realized
Period Control # Date Value Balance Proceeds Sched Principal Expenses * Proceeds Sched. Balance Loss
====================================================================================================================================
====================================================================================================================================
Current Total 0.00 0.00 0.00 0.00 0.00
Cumulative 0.00 0.00 0.00 0.00 0.00
====================================================================================================================================
* Aggregate liquidation expenses also include outstanding P&I advances and unpaid servicing fees, unpaid trustee fees, etc.
05/21/2004 - 11:01 (MXXX-MXXX) (c) 2000 LaSalle Bank N.A.
D-16
ABN AMRO CITIGROUP COMMERCIAL MORTGAGE TRUST Statement Date: 07/16/2004
LaSalle Bank N.A. COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES Payment Date: 07/16/2004
SERIES 2004-C1 Prior Payment: N/A
Next Payment: 08/17/2004
ABN AMRO ACCT: XXXXXX Record Date: 06/30/2004
APPRAISAL REDUCTION DETAIL
====================== =================================== ================================================ ====== =================
Remaining Term Appraisal
Disclosure Appraisal Scheduled ARA Current P&I Note Maturity -------------- Property ------------
Control # Red. Date Balance Amount Advance ASER Rate Date Life Amort. Type State DSCR Value Date
====================== =================================== ================================================ ====== =================
====================================================================================================================================
05/21/2004 - 11:01 (MXXX-MXXX) (c) 2000 LaSalle Bank N.A.
D-17
[THIS PAGE INTENTIONALLY LEFT BLANK.]
ANNEX E
CLASS X-2 REFERENCE RATE SCHEDULE
E-1
[THIS PAGE INTENTIONALLY LEFT BLANK.]
ANNEX F
GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES
Except in limited circumstances, the globally offered Citigroup
Commercial Mortgage Trust 2004-C1, Commercial Mortgage Pass-Through
Certificates, Series 2004-C1, Class A-1, Class A-2, Class A-3, Class A-4, Class
B, Class C, Class D and Class E, will be available only in book-entry form.
The book-entry certificates will be tradable as home market instruments
in both the European and U.S. domestic markets. Initial settlement and all
secondary trades will settle in same-day funds.
Secondary market trading between investors holding book-entry
certificates through Clearstream and Euroclear will be conducted in the ordinary
way in accordance with their normal rules and operating procedures and in
accordance with conventional Eurobond practice, which is seven calendar days'
settlement.
Secondary market trading between investors holding book-entry
certificates through DTC will be conducted according to the rules and procedures
applicable to U.S. corporate debt obligations.
Secondary cross-market trading between member organizations of
Clearstream or Euroclear and DTC participants holding book-entry certificates
will be accomplished on a delivery against payment basis through the respective
depositaries of Clearstream and Euroclear, in that capacity, as DTC
participants.
As described under "U.S. Federal Income Tax Documentation
Requirements" below, non-U.S. holders of book-entry certificates will be
subject to U.S. withholding taxes unless those holders meet specific
requirements and deliver appropriate U.S. tax documents to the securities
clearing organizations of their participants.
INITIAL SETTLEMENT
All certificates of each class of offered certificates will be held in
registered form by DTC in the name of Cede & Co. as nominee of DTC. Investors'
interests in the book-entry certificates will be represented through financial
institutions acting on their behalf as direct and indirect DTC participants. As
a result, Clearstream and Euroclear will hold positions on behalf of their
member organizations through their respective depositaries, which in turn will
hold positions in accounts as DTC participants.
Investors' securities custody accounts will be credited with their
holdings against payment in same-day funds on the settlement date.
Investors electing to hold their book-entry certificates through
Clearstream or Euroclear accounts will follow the settlement procedures
applicable to conventional Eurobonds, except that there will be no temporary
global security and no "lock up" or restricted period. Global securities will be
credited to the securities custody accounts on the settlement date against
payment in same-day funds.
SECONDARY MARKET TRADING
Since the purchaser determines the place of delivery, it is important
to establish at the time of the trade where both the purchaser's and seller's
accounts are located to ensure that settlement can be made on the desired value
date.
Trading between DTC Participants. Secondary market trading between DTC
participants will be settled in same-day funds.
F-1
Trading between Clearstream and/or Euroclear Participants. Secondary
market trading between member organizations of Clearstream or Euroclear will be
settled using the procedures applicable to conventional Eurobonds in same-day
funds.
Trading between DTC Seller and Clearstream or Euroclear Purchaser. When
book-entry certificates are to be transferred from the account of a DTC
participant to the account of a member organization of Clearstream or Euroclear,
the purchaser will send instructions to Clearstream or Euroclear through that
member organization at least one business day prior to settlement. Clearstream
or Euroclear, as the case may be, will instruct the respective depositary to
receive the book-entry certificates against payment. Payment will include
interest accrued on the book-entry certificates from and including the 1st day
of the calendar month in which the last coupon payment date occurs (or, if no
coupon payment date has occurred, from and including June 1, 2004) to and
excluding the settlement date, calculated on the basis of a year of 360 days
consisting of twelve 30-day months. Payment will then be made by the respective
depositary to the DTC participant's account against delivery of the book-entry
certificates. After settlement has been completed, the book-entry certificates
will be credited to the respective clearing system and by the clearing system,
in accordance with its usual procedures, to the account of the member
organization of Clearstream or Euroclear, as the case may be. The securities
credit will appear the next day, European time, and the cash debit will be
back-valued to, and the interest on the book-entry certificates will accrue
from, the value date, which would be the preceding day when settlement occurred
in New York. If settlement is not completed on the intended value date, which
means the trade fails, the Clearstream or Euroclear cash debit will be valued
instead as of the actual settlement date.
Member organizations of Clearstream and Euroclear will need to make
available to the respective clearing systems the funds necessary to process
same-day funds settlement. The most direct means of doing so is to pre-position
funds for settlement, either from cash on hand or existing lines of credit, as
they would for any settlement occurring within Clearstream or Euroclear. Under
this approach, they may take on credit exposure to Clearstream or Euroclear
until the book-entry certificates are credited to their accounts one day later.
As an alternative, if Clearstream or Euroclear has extended a line of
credit to them, member organizations of Clearstream or Euroclear can elect not
to pre-position funds and allow that credit line to be drawn upon to finance
settlement. Under this procedure, the member organizations purchasing book-entry
certificates would incur overdraft charges for one day, assuming they cleared
the overdraft when the book-entry certificates were credited to their accounts.
However, interest on the book-entry certificates would accrue from the value
date. Therefore, in many cases the investment income on the book-entry
certificates earned during that one-day period may substantially reduce or
offset the amount of those overdraft charges, although this result will depend
on the cost of funds of the respective member organization of Clearstream or
Euroclear.
Since the settlement is taking place during New York business hours,
DTC participants can employ their usual procedures for sending book-entry
certificates to the respective depositary for the benefit of member
organizations of Clearstream or Euroclear. The sale proceeds will be available
to the DTC seller on the settlement date. Thus, to the DTC participant a
cross-market transaction will settle no differently than a trade between two DTC
participants.
Trading between Clearstream or Euroclear Seller and DTC Purchaser. Due
to time zone differences in their favor, member organizations of Clearstream or
Euroclear may employ their customary procedures for transactions in which
book-entry certificates are to be transferred by the respective clearing system,
through the respective depositary, to a DTC participant. The seller will send
instructions to Clearstream or Euroclear through a member organization of
Clearstream or Euroclear at least one business day prior to settlement. In these
cases, Clearstream or Euroclear, as appropriate, will instruct the respective
depositary to deliver the book-entry certificates to the DTC participant's
account against payment. Payment will include interest accrued on the book-entry
certificates from and including the 1st day of the calendar month in which the
last coupon payment date occurs (or, if no coupon payment date has occurred,
from and including June 1, 2004) to and excluding the settlement date,
calculated on the basis of a year of 360 days consisting of twelve 30-day
months. The payment
F-2
will then be reflected in the account of the member organization of Clearstream
or Euroclear the following day, and receipt of the cash proceeds in the account
of that member organization of Clearstream or Euroclear would be back-valued to
the value date, which would be the preceding day, when settlement occurred in
New York. Should the member organization of Clearstream or Euroclear have a line
of credit with its respective clearing system and elect to be in debit in
anticipation of receipt of the sale proceeds in its account, the back-valuation
will extinguish any overdraft charges incurred over the one-day period. If
settlement is not completed on the intended value date, which means the trade
fails, receipt of the cash proceeds in the account of the member organization of
Clearstream or Euroclear would be valued instead as of the actual settlement
date.
Finally, day traders that use Clearstream or Euroclear and that
purchase book-entry certificates from DTC participants for delivery to member
organizations of Clearstream or Euroclear should note that these trades would
automatically fail on the sale side unless affirmative action were taken. At
least three techniques should be readily available to eliminate this potential
problem:
o borrowing through Clearstream or Euroclear for one day, until
the purchase side of the day trade is reflected in their
Clearstream or Euroclear accounts, in accordance with the
clearing system's customary procedures;
o borrowing the book-entry certificates in the United States
from a DTC participant no later than one day prior to
settlement, which would allow sufficient time for the
book-entry certificates to be reflected in their Clearstream
or Euroclear accounts in order to settle the sale side of the
trade; or
o staggering the value dates for the buy and sell sides of the
trade so that the value date for the purchase from the DTC
participant is at least one day prior to the value date for
the sale to the member organization of Clearstream or
Euroclear.
CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
A holder that is not a "United States person" (a "U.S. person")
within the meaning of Section 7701(a)(30) of the Internal Revenue Code (a
"non-U.S. holder") holding a book-entry certificate through Clearstream,
Euroclear or DTC may be subject to U.S. withholding tax unless such holder
provides certain documentation to the issuer of such holder's book-entry
certificate, the paying agent or any other entity required to withhold tax (any
of the foregoing, a "U.S. withholding agent") establishing an exemption from
withholding. A non-U.S. holder may be subject to withholding unless each U.S.
withholding agent receives:
1. from a non-U.S. holder that is classified as a corporation
for U.S. federal income tax purposes or is an individual, and
is eligible for the benefits of the portfolio interest
exemption or an exemption (or reduced rate) based on a treaty,
a duly completed and executed IRS Form W-8BEN (or any
successor form);
2. from a non-U.S. holder that is eligible for an exemption on
the basis that the holder's income from the certificate is
effectively connected to its U.S. trade or business, a duly
completed and executed IRS Form W-8ECI (or any successor
form);
3. from a non-U.S. holder that is classified as a partnership for
U.S. federal income tax purposes, a duly completed and
executed IRS Form W-8IMY (or any successor form) with all
supporting documentation (as specified in the U.S. Treasury
Regulations) required to substantiate exemptions from
withholding on behalf of its partners; certain partnerships
may enter into agreements with the IRS providing for different
documentation requirements and it is recommended that such
partnerships consult their tax advisors with respect to these
certification rules;
F-3
4. from a non-U.S. holder that is an intermediary (i.e., a
person acting as a custodian, a broker, nominee or otherwise
as an agent for the beneficial owner of a certificate):
(a) if the intermediary is a "qualified intermediary"
within the meaning of section 1.1441-1(e)(5)(ii) of
the U.S. Treasury Regulations (a "qualified
intermediary"), a duly completed and executed IRS
Form W-8IMY (or any successor or substitute form):
(i) stating the name, permanent residence
address and qualified intermediary employer
identification number of the qualified
intermediary and the country under the laws
of which the qualified intermediary is
created, incorporated or governed;
(ii) certifying that the qualified intermediary
has provided, or will provide, a
withholding statement as required under
section 1.1441-1(e)(5)(v) of the U.S.
Treasury Regulations;
(iii) certifying that, with respect to accounts it
identifies on its withholding statement, the
qualified intermediary is not acting for its
own account but is acting as a qualified
intermediary; and
(iv) providing any other information,
certifications, or statements that may be
required by the IRS Form W-8IMY or
accompanying instructions in addition
to, or in lieu of, the information and
certifications described in
section 1.1441-1(e)(3)(ii) or
1.1441-1(e)(5)(v) of the U.S. Treasury
Regulations; or
(b) if the intermediary is not a qualified intermediary
(a "nonqualified intermediary"), a duly completed and
executed IRS Form W-8IMY (or any successor or
substitute form):
(i) stating the name and permanent residence
address of the nonqualified intermediary
and the country under the laws of which the
nonqualified intermediary is created,
incorporated or governed;
(ii) certifying that the nonqualified
intermediary is not acting for its own
account;
(iii) certifying that the nonqualified
intermediary has provided, or will provide,
a withholding statement that is associated
with the appropriate IRS Forms W-8 and W-9
required to substantiate exemptions from
withholding on behalf of such nonqualified
intermediary's beneficial owners; and
(iv) providing any other information,
certifications or statements that may be
required by the IRS Form W-8IMY or
accompanying instructions in addition to,
or in lieu of, the information,
certifications, and statements described in
section 1.1441-1(e)(3)(iii) or (iv) of the
U.S. Treasury Regulations; or
5. from a non-U.S. holder that is a trust, depending on
whether the trust is classified for U.S. federal
income tax purposes as the beneficial owner of the
certificate, either an IRS Form W-8BEN or W-8IMY; any
non-U.S. holder that is a trust should consult its
tax advisors to determine which of these forms it
should provide.
All non-U.S. holders will be required to update the above-listed forms
and any supporting documentation in accordance with the requirements under the
U.S. Treasury Regulations. These forms generally remain in effect for a period
starting on the date the form is signed and ending on the last day of the third
succeeding calendar year, unless a change in circumstances makes any information
on the form incorrect. Under certain
F-4
circumstances, an IRS Form W-8BEN, if furnished with a taxpayer identification
number, remains in effect until the status of the beneficial owner changes, or a
change in circumstances makes any information on the form incorrect.
In addition, all holders, including holders that are U.S. persons,
holding book-entry certificates through Clearstream, Euroclear or DTC may be
subject to backup withholding unless the holder:
o provides the appropriate IRS Form W-8 (or any successor
or substitute form), duly completed and executed, if the
holder is a non-U.S. holder;
o provides a duly completed and executed IRS Form W-9, if the
holder is a U.S. person; or
o can be treated as an "exempt recipient" within the meaning
of section 1.6049-4(c)(1)(ii) of the U.S. Treasury
Regulations (e.g., a corporation or a financial institution
such as a bank).
This summary does not deal with all of the aspects of U.S. federal
income tax withholding or backup withholding that may be relevant to investors
that are non-U.S. holders. Such holders are advised to consult their own tax
advisors for specific tax advice concerning their holding and disposing of
book-entry certificates.
F-5
[THIS PAGE INTENTIONALLY LEFT BLANK.]
PROSPECTUS
CITIGROUP COMMERCIAL MORTGAGE SECURITIES INC.,
THE DEPOSITOR
MORTGAGE PASS-THROUGH CERTIFICATES, ISSUABLE IN SERIES
Our name is Citigroup Commercal Mortgage Securities Inc. We intend to offer
from time to time mortgage pass-through certificates. These offers may be made
through one or more different methods, including offerings through underwriters.
We do not currently intend to list the offered certificates of any series on any
national securities exchange or the NASDAQ stock market. See "Method of
Distribution."
- --------------------------------------------------------------- -----------------------------------------------------------------
THE OFFERED CERTIFICATES: THE TRUST ASSETS:
The offered certificates will be issuable in series. The assets of each of our trusts will include--
Each series of offered certificates will--
o mortgage loans secured by first and junior liens on,
o have its own series designation, or security interests in, various interests in
commercial and multifamily real properties,
o consist of one or more classes with various payment
characteristics, o mortgage-backed securities that directly or
indirectly evidence interests in, or are directly
o evidence beneficial ownership interests in a trust or indirectly secured by, those types of mortgage
established by us, and loans, or
o be payable solely out of the related trust assets. o some combination of those types of mortgage loans
and mortgage-backed securities.
No governmental agency or instrumentality will insure
or guarantee payment on the offered certificates. Neither Trust assets may also include letters of credit,
we nor any of our affiliates are responsible for making surety bonds, insurance policies, guarantees, reserve
payments on the offered certificates if collections on the funds, guaranteed investment contracts, interest rate
related trust assets are insufficient. exchange agreements, interest rate cap or floor
agreements, currency exchange agreements, or other
similar instruments and agreements.
- --------------------------------------------------------------- -----------------------------------------------------------------
In connection with each offering, we will prepare a supplement to this
prospectus in order to describe in more detail the particular certificates being
offered and the related trust assets. In that document, we will also state the
price to public for each class of offered certificates or explain the method for
determining that price. In that document, we will also identify the applicable
lead or managing underwriter(s), if any, and provide information regarding the
relevant underwriting arrangements and the underwriters' compensation. You may
not purchase the offered certificates of any series unless you have also
received the prospectus supplement for that series.
- --------------------------------------------------------------------------------
YOU SHOULD CAREFULLY CONSIDER THE RISK FACTORS BEGINNING ON PAGE 14 IN THIS
PROSPECTUS, AS WELL AS THOSE SET FORTH IN THE RELATED PROSPECTUS SUPPLEMENT,
PRIOR TO INVESTING.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the offered certificates or passed
upon the adequacy or accuracy of this prospectus. Any representation to the
contrary is a criminal offense.
- --------------------------------------------------------------------------------
The date of this prospectus is May 24, 2004.
TABLE OF CONTENTS
-----------------
Important Notice About the Information Presented in this Prospectus............2
Available Information; Incorporation by Reference..............................2
Summary of Prospectus..........................................................4
Risk Factors..................................................................14
Capitalized Terms Used in this Prospectus.....................................35
Description of the Trust Assets...............................................35
Yield and Maturity Considerations.............................................65
Citigroup Commercial Mortgage Securities Inc..................................71
Description of the Certificates...............................................72
Description of the Governing Documents........................................82
Description of Credit Support.................................................92
Legal Aspects of Mortgage Loans...............................................94
Federal Income Tax Consequences..............................................109
State and Other Tax Consequences.............................................154
ERISA Considerations.........................................................155
Legal Investment.............................................................159
Use of Proceeds..............................................................162
Method of Distribution.......................................................162
Legal Matters................................................................163
Financial Information........................................................164
Rating.......................................................................164
Glossary.....................................................................165
IMPORTANT NOTICE ABOUT THE INFORMATION PRESENTED IN THIS PROSPECTUS
When deciding whether to invest in any of the offered certificates, you
should only rely on the information contained in this prospectus and the related
prospectus supplement. We have not authorized any dealer, salesman or other
person to give any information or to make any representation that is different.
In addition, information in this prospectus or any related prospectus supplement
is current only as of the date on its cover. By delivery of this prospectus and
any related prospectus supplement, we are not offering to sell any securities,
and are not soliciting an offer to buy any securities, in any state where the
offer and sale is not permitted.
AVAILABLE INFORMATION; INCORPORATION BY REFERENCE
We have filed with the Securities and Exchange Commission a registration
statement under the Securities Act of 1933, as amended, with respect to the
certificates offered by this prospectus. This prospectus forms a part of the
registration statement. This prospectus and the related prospectus supplement do
not contain all of the information with respect to an offering that is contained
in the registration statement. For further information regarding the documents
referred to in this prospectus and the related prospectus supplement, you should
refer to the registration statement and its exhibits. You can inspect the
registration statement and its exhibits, and make copies of these documents at
prescribed rates, at the public reference facilities maintained by the SEC at
its Public Reference Room, 450 Fifth Street, NW, Washington, D.C. 20549. The
public may obtain information on the operation of the Public Reference Room by
calling the SEC at 1-800-SEC-0330. The SEC maintains an internet
2
website that contains reports and other information regarding issuers that file
electronically with the SEC, in addition to copies of these materials, and that
internet website is located at http://www.sec.gov.
In connection with each series of offered certificates, we will file or
arrange to have filed with the SEC with respect to the related trust any
periodic reports that are required under the Securities Exchange Act of 1934, as
amended. All documents and reports that are so filed for the related trust prior
to the termination of an offering of certificates are incorporated by reference
into, and should be considered a part of, this prospectus. Upon request, we will
provide without charge to each person receiving this prospectus in connection
with an offering, a copy of any or all documents or reports that are so
incorporated by reference. All requests should be directed to us in writing at
388 Greenwich Street, New York, New York 10013, Attention: Secretary, or by
telephone at 212-816-6000.
3
SUMMARY OF PROSPECTUS
This summary contains selected information from this prospectus. It does
not contain all of the information you need to consider in making your
investment decision. TO UNDERSTAND ALL OF THE TERMS OF A PARTICULAR OFFERING OF
CERTIFICATES, YOU SHOULD READ CAREFULLY THIS PROSPECTUS AND THE RELATED
PROSPECTUS SUPPLEMENT IN FULL.
WHO WE ARE.......................... Citigroup Commercial Mortgage Securities
Inc. is a Delaware corporation. Our
principal offices are located at 388
Greenwich Street, New York, New York
10013. Our main telephone number is
212-816-6000. We are an indirect,
wholly-owned subsidiary of Citigroup
Global Markets Holdings Inc. and an
affiliate of Citigroup Global Markets Inc.
See "Citigroup Commercial Mortgage
Securities Inc."
THE SECURITIES BEING OFFERED........ The securities that will be offered by
this prospectus and the related prospectus
supplements consist of mortgage
pass-through certificates. These
certificates will be issued in series, and
each series will, in turn, consist of one
or more classes. Each class of offered
certificates must, at the time of
issuance, be assigned an investment grade
rating by at least one nationally
recognized statistical rating
organization. Typically, the four highest
rating categories, within which there may
be sub-categories or gradations to
indicate relative standing, signify
investment grade. See "Rating."
Each series of offered certificates will
evidence beneficial ownership interests in
a trust established by us and containing
the assets described in this prospectus
and the related prospectus supplement.
THE OFFERED CERTIFICATES MAY BE
ISSUED WITH OTHER CERTIFICATES...... We may not publicly offer all the mortgage
pass-through certificates evidencing
interests in one of our trusts. We may
elect to retain some of those
certificates, to place some privately with
institutional investors or to deliver some
to the applicable seller as partial
consideration for the related mortgage
assets. In addition, some of those
certificates may not satisfy the rating
requirement for offered certificates
described under "--The Securities Being
Offered" above.
THE GOVERNING DOCUMENTS............. In general, a pooling and servicing
agreement or other similar agreement or
collection of agreements will govern,
among other things--
o the issuance of each series of offered
certificates,
o the creation of and transfer of assets
to the related trust, and
4
o the servicing and administration of
those assets.
The parties to the governing document(s)
for a series of offered certificates will
always include us and a trustee. We will
be responsible for establishing the trust
relating to each series of offered
certificates. In addition, we will
transfer or arrange for the transfer of
the initial trust assets to that trust. In
general, the trustee for a series of
offered certificates will be responsible
for, among other things, making payments
and preparing and disseminating various
reports to the holders of those offered
certificates.
If the trust assets for a series of
offered certificates include mortgage
loans, the parties to the governing
document(s) will also include--
o a master servicer that will generally
be responsible for performing
customary servicing duties with
respect to those mortgage loans that
are not defaulted, nonperforming or
otherwise problematic in any material
respect, and
o a special servicer that will generally
be responsible for servicing and
administering those mortgage loans
that are defaulted, nonperforming or
otherwise problematic in any material
respect and real estate assets
acquired as part of the related trust
with respect to defaulted mortgage
loans.
The same person or entity, or affiliated
entities, may act as both master servicer
and special servicer for any trust.
If the trust assets for a series of
offered certificates include
mortgage-backed securities, the parties to
the governing document(s) may also include
a manager that will be responsible for
performing various administrative duties
with respect to those mortgage-backed
securities. If the related trustee assumes
those duties, however, there will be no
manager.
In the related prospectus supplement, we
will identify the trustee and any master
servicer, special servicer or manager for
each series of offered certificates and
will describe their respective duties in
further detail. See "Description of the
Governing Documents."
CHARACTERISTICS OF THE MORTGAGE
ASSETS.............................. The trust assets with respect to any
series of offered certificates will, in
general, include mortgage loans. Each of
those mortgage loans will constitute the
obligation of one or more persons to repay
a debt. The performance of that obligation
will be secured by a first or junior lien
on, or security interest in, the
ownership,
5
leasehold or other interest(s) of the
related borrower or another person in or
with respect to one or more commercial or
multifamily real properties. In
particular, those properties may include:
o rental or cooperatively-owned
buildings with multiple dwelling
units;
o retail properties related to the sale
of consumer goods and other products,
or related to providing entertainment,
recreational or personal services, to
the general public;
o office buildings;
o hospitality properties;
o casino properties;
o health care-related facilities;
o industrial facilities;
o warehouse facilities, mini-warehouse
facilities and self-storage
facilities;
o restaurants, taverns and other
establishments involved in the food
and beverage industry;
o manufactured housing communities,
mobile home parks and recreational
vehicle parks;
o recreational and resort properties;
o arenas and stadiums;
o churches and other religious
facilities;
o parking lots and garages;
o mixed use properties;
o other income-producing properties;
and/or
o unimproved land.
The mortgage loans underlying a series of
offered certificates may have a variety of
payment terms. For example, any of those
mortgage loans--
6
o may provide for the accrual of
interest at a mortgage interest rate
that is fixed over its term, that
resets on one or more specified dates
or that otherwise adjusts from time to
time;
o may provide for the accrual of
interest at a mortgage interest rate
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;
o may provide for no accrual of
interest;
o may provide for level payments to
stated maturity, for payments that
reset in amount on one or more
specified dates or for payments that
otherwise adjust from time to time to
accommodate changes in the mortgage
interest rate or to reflect the
occurrence of specified events;
o may be fully amortizing or,
alternatively, may be partially
amortizing or nonamortizing, with a
substantial payment of principal due
on its stated maturity date;
o may permit the negative amortization
or deferral of accrued interest;
o may prohibit some or all voluntary
prepayments or require payment of a
premium, fee or charge in connection
with those prepayments;
o may permit defeasance and the release
of real property collateral in
connection with that defeasance;
o may provide for payments of principal,
interest or both, on due dates that
occur monthly, bi-monthly, quarterly,
semi-annually, annually or at some
other interval; and/or
o may have two or more component parts,
each having characteristics that are
otherwise described in this prospectus
as being attributable to separate and
distinct mortgage loans.
Most, if not all, of the mortgage loans
underlying a series of offered
certificates will be secured by liens on
real properties located in the United
States, its territories and possessions.
However, some of those mortgage loans may
be secured by liens on real properties
located outside the United States, its
territories and possessions, provided that
foreign mortgage loans do not represent
more than 10% of the related mortgage
asset pool, by balance.
7
We do not originate mortgage loans.
However, some or all of the mortgage loans
included in one of our trusts may be
originated by our affiliates.
Neither we nor any of our affiliates will
guarantee or insure repayment of any of
the mortgage loans underlying a series of
offered certificates. Unless we expressly
state otherwise in the related prospectus
supplement, no governmental agency or
instrumentality will guarantee or insure
repayment of any of the mortgage loans
underlying a series of offered
certificates. See "Description of the
Trust Assets--Mortgage Loans."
The trust assets with respect to any
series of offered certificates may also
include mortgage participations, mortgage
pass-through certificates, collateralized
mortgage obligations and other
mortgage-backed securities, that evidence
an interest in, or are secured by a pledge
of, one or more mortgage loans of the type
described above. We will not include a
mortgage-backed security among the trust
assets with respect to any series of
offered certificates unless--
o the security has been registered under
the Securities Act of 1933, as
amended, or
o we would be free to publicly resell
the security without registration.
See "Description of the Trust
Assets--Mortgage-Backed Securities."
We will describe the specific
characteristics of the mortgage assets
underlying a series of offered
certificates in the related prospectus
supplement.
In general, the total outstanding
principal balance of the mortgage assets
transferred by us to any particular trust
will equal or exceed the initial total
outstanding principal balance of the
related series of certificates. In the
event that the total outstanding principal
balance of the related mortgage assets
initially delivered by us to the related
trustee is less than the initial total
outstanding principal balance of any
series of certificates, we may deposit or
arrange for the deposit of cash or liquid
investments on an interim basis with the
related trustee to cover the shortfall.
For 90 days following the date of initial
issuance of that series of certificates,
we will be entitled to obtain a release of
the deposited cash or investments if we
deliver or arrange for delivery of a
corresponding amount of mortgage assets.
If we fail, however, to deliver mortgage
assets sufficient to make up the entire
shortfall, any of the cash or, following
liquidation, investments remaining on
deposit with the related
8
trustee will be used by the related
trustee to pay down the total principal
balance of the related series of
certificates, as described in the related
prospectus supplement.
SUBSTITUTION, ACQUISITION AND
REMOVAL OF MORTGAGE ASSETS.......... If so specified in the related prospectus
supplement, we or another specified person
or entity may be permitted, at our or its
option, but subject to the conditions
specified in that prospectus supplement,
to acquire from the related trust
particular mortgage assets underlying a
series of certificates in exchange for:
o cash that would be applied to pay down
the principal balances of certificates
of that series; and/or
o other mortgage loans or
mortgage-backed securities that--
1. conform to the description of
mortgage assets in this
prospectus, and
2. satisfy the criteria set forth in
the related prospectus supplement.
In addition, if so specified in the
related prospectus supplement, the related
trustee may be authorized or required, to
apply collections on the mortgage assets
underlying a series of offered
certificates to acquire new mortgage loans
or mortgage-backed securities that--
1. conform to the description of
mortgage assets in this
prospectus, and
2. satisfy the criteria set forth in
the related prospectus supplement.
No replacement of mortgage assets or
acquisition of new mortgage assets will be
permitted if it would result in a
qualification, downgrade or withdrawal of
the then-current rating assigned by any
rating agency to any class of affected
offered certificates.
Further, if so specified under
circumstances described in the related
prospectus supplement, a certificateholder
of a series of certificates that includes
offered certificates may exchange the
certificates it holds for one or more of
the mortgage loans or mortgage-backed
securities constituting part of the
mortgage pool underlying those
certificates.
CHARACTERISTICS OF THE OFFERED
CERTIFICATES........................ An offered certificate may entitle the
holder to receive:
9
o a stated principal amount;
o interest on a principal balance or
notional amount, at a fixed, variable
or adjustable pass-through rate;
o specified, fixed or variable portions
of the interest, principal or other
amounts received on the related
mortgage assets;
o payments of principal, with
disproportionate, nominal or no
payments of interest;
o payments of interest, with
disproportionate, nominal or no
payments of principal;
o payments of interest or principal that
commence only as of a specified date
or only after the occurrence of
specified events, such as the payment
in full of the interest and principal
outstanding on one or more other
classes of certificates of the same
series;
o payments of principal to be made, from
time to time or for designated
periods, at a rate that is--
1. faster and, in some cases,
substantially faster, or
2. slower and, in some cases,
substantially slower,
than the rate at which payments or other
collections of principal are received on
the related mortgage assets;
o payments of principal to be made,
subject to available funds, based on a
specified principal payment schedule
or other methodology; or
o payments of all or part of the
prepayment or repayment premiums, fees
and charges, equity participations
payments or other similar items
received on the related mortgage
assets.
Any class of offered certificates may be
senior or subordinate to one or more other
classes of certificates of the same
series, including a non-offered class of
certificates of that series, for purposes
of some or all payments and/or allocations
of losses.
A class of offered certificates may have
two or more component parts, each having
characteristics that are otherwise
described in this prospectus as being
attributable to separate and distinct
classes.
10
We will describe the specific
characteristics of each class of offered
certificates in the related prospectus
supplement. See "Description of the
Certificates."
CREDIT SUPPORT AND REINVESTMENT;
INTEREST RATE AND CURRENCY
RELATED PROTECTION FOR THE
OFFERED CERTIFICATES................ Some classes of offered certificates may
be protected in full or in part against
defaults and losses, or select types of
defaults and losses, on the related
mortgage assets through the subordination
of one or more other classes of
certificates of the same series or by
other types of credit support. The other
types of credit support may include a
letter of credit, a surety bond, an
insurance policy, a guarantee, or a
reserve fund. We will describe the credit
support, if any, for each class of offered
certificates in the related prospectus
supplement.
The trust assets with respect to any
series of offered certificates may also
include any of the following agreements:
o guaranteed investment contracts in
accordance with which moneys held in
the funds and accounts established
with respect to those offered
certificates will be invested at a
specified rate;
o interest rate exchange agreements,
interest rate cap or floor agreements,
or other agreements and arrangements
designed to reduce the effects of
interest rate fluctuations on the
related mortgage assets or on one or
more classes of those offered
certificates; or
o currency exchange agreements or other
agreements and arrangements designed
to reduce the effects of currency
exchange rate fluctuations with
respect to the related mortgage assets
and one or more classes of those
offered certificates.
We will describe the types of
reinvestment, interest rate and currency
related protection, if any, for each class
of offered certificates in the related
prospectus supplement.
See "Risk Factors," "Description of the
Trust Assets" and "Description of Credit
Support."
ADVANCES WITH RESPECT TO
THE MORTGAGE ASSETS................. If the trust assets for a series of
offered certificates include mortgage
loans, then, as and to the extent
described in the related prospectus
supplement, the related master servicer,
the related special servicer, the related
trustee, any related provider of credit
support and/or any other specified person
may be obligated to
11
make, or may have the option of making,
advances with respect to those mortgage
loans to cover--
o delinquent scheduled payments of
principal and/or interest, other than
balloon payments,
o property protection expenses,
o other servicing expenses, or
o any other items specified in the
related prospectus supplement.
Any party making advances will be entitled
to reimbursement from subsequent
recoveries on the related mortgage loan
and as otherwise described in this
prospectus or the related prospectus
supplement. That party may also be
entitled to receive interest on its
advances for a specified period. See
"Description of the
Certificates--Advances."
If the trust assets for a series of
offered certificates include
mortgage-backed securities, we will
describe in the related prospectus
supplement any comparable advancing
obligations with respect to those
mortgage-backed securities or the
underlying mortgage loans.
OPTIONAL TERMINATION................ We will describe in the related prospectus
supplement any circumstances in which a
specified party is permitted or obligated
to purchase or sell any of the mortgage
assets underlying a series of offered
certificates. In particular, a master
servicer, special servicer or other
designated party may be permitted or
obligated to purchase or sell--
o all the mortgage assets in any
particular trust, thereby resulting in
a termination of the trust, or
o that portion of the mortgage assets in
any particular trust as is necessary
or sufficient to retire one or more
classes of offered certificates of the
related series.
See "Description of the Certificates--
Termination."
FEDERAL INCOME TAX CONSEQUENCES..... Any class of offered certificates will
constitute or evidence ownership of:
o regular interests or residual
interests in a real estate mortgage
investment conduit within the meaning
of Sections 860D(a) of the Internal
Revenue Code of 1986; or
12
o regular interests in a financial asset
securitization investment trust within
the meaning of Section 860L(a) of the
Internal Revenue Code of 1986; or
o interests in a grantor trust under
Subpart E of Part I of Subchapter J of
the Internal Revenue Code of 1986.
See "Federal Income Tax Consequences."
ERISA CONSIDERATIONS................ If you are a fiduciary or any other person
investing assets of an employee benefit
plan or other retirement plan or
arrangement, you should review with your
legal advisor whether the purchase or
holding of offered certificates could give
rise to a transaction that is prohibited
under the Employee Retirement Income
Security Act of 1974, as amended, or the
Internal Revenue Code of 1986. See "ERISA
Considerations."
LEGAL INVESTMENT.................... If your investment authority is 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 securities. You should consult
your legal advisor to determine whether
and to what extent the offered
certificates constitute a legal investment
for you. We will specify in the related
prospectus supplement which classes of the
offered certificates will constitute
mortgage-related securities for purposes
of the Secondary Mortgage Market
Enhancement Act of 1984, as amended. See
"Legal Investment."
13
RISK FACTORS
You should consider the following factors, as well as the factors set forth
under "Risk Factors" in the related prospectus supplement, in deciding whether
to purchase offered certificates.
LACK OF LIQUIDITY WILL IMPAIR YOUR ABILITY TO SELL YOUR OFFERED CERTIFICATES AND
MAY HAVE AN ADVERSE EFFECT ON THE MARKET VALUE OF YOUR OFFERED CERTIFICATES
The offered certificates may have limited or no liquidity. We cannot assure
you that a secondary market for your offered certificates will develop. There
will be no obligation on the part of anyone to establish a secondary market.
Even if a secondary market does develop for your offered certificates, it may
provide you with less liquidity than you anticipated and it may not continue for
the life of your offered certificates.
We will describe in the related prospectus supplement the information that
will be available to you with respect to your offered certificates. The limited
nature of the information may adversely affect the liquidity of your offered
certificates.
We do not currently intend to list the offered certificates on any national
securities exchange or the NASDAQ stock market.
Lack of liquidity will impair your ability to sell your offered
certificates and may prevent you from doing so at a time when you may want or
need to. Lack of liquidity could adversely affect the market value of your
offered certificates. We do not expect that you will have any redemption rights
with respect to your offered certificates.
If you decide to sell your offered certificates, you may have to sell them
at a discount from the price you paid for reasons unrelated to the performance
of your offered certificates or the related mortgage assets. Pricing information
regarding your offered certificates may not be generally available on an ongoing
basis.
THE MARKET VALUE OF YOUR OFFERED CERTIFICATES MAY BE ADVERSELY AFFECTED BY
FACTORS UNRELATED TO THE PERFORMANCE OF YOUR OFFERED CERTIFICATES AND THE
UNDERLYING MORTGAGE ASSETS, SUCH AS FLUCTUATIONS IN INTEREST RATES AND THE
SUPPLY AND DEMAND OF CMBS GENERALLY
The market value of your offered certificates can decline even if those
certificates and the underlying mortgage assets are performing at or above your
expectations.
The market value of your offered certificates will be sensitive to
fluctuations in current interest rates. However, a change in the market value of
your offered certificates as a result of an upward or downward movement in
current interest rates may not equal the change in the market value of your
offered certificates as a result of an equal but opposite movement in interest
rates.
The market value of your offered certificates will also be influenced by
the supply of and demand for commercial mortgage-backed securities generally.
The supply of commercial mortgage-backed securities will depend on, among other
things, the amount of commercial and multifamily mortgage loans, whether newly
originated or held in portfolio, that are available for securitization. A number
of factors will affect investors' demand for commercial mortgage-backed
securities, including--
o the availability of alternative investments that offer higher yields
or are perceived as being a better credit risk, having a less volatile
market value or being more liquid,
14
o legal and other restrictions that prohibit a particular entity from
investing in commercial mortgage-backed securities or limit the amount
or types of commercial mortgage-backed securities that it may acquire,
o investors' perceptions regarding the commercial and multifamily real
estate markets, which may be adversely affected by, among other
things, a decline in real estate values or an increase in defaults and
foreclosures on mortgage loans secured by income-producing properties,
and
o investors' perceptions regarding the capital markets in general, which
may be adversely affected by political, social and economic events
completely unrelated to the commercial and multifamily real estate
markets.
If you decide to sell your offered certificates, you may have to sell at
discount from the price you paid for reasons unrelated to the performance of
your offered certificates or the related mortgage assets. Pricing information
regarding your offered certificates may not be generally available on an ongoing
basis.
PAYMENTS ON THE OFFERED CERTIFICATES WILL BE MADE SOLELY FROM THE LIMITED ASSETS
OF THE RELATED TRUST, AND THOSE ASSETS MAY BE INSUFFICIENT TO MAKE ALL REQUIRED
PAYMENTS ON THOSE CERTIFICATES
The offered certificates do not represent obligations of any person or
entity and do not represent a claim against any assets other than those of the
related trust. No governmental agency or instrumentality will guarantee or
insure payment on the offered certificates. In addition, neither we nor our
affiliates are responsible for making payments on the offered certificates if
collections on the related trust assets are insufficient. If the related trust
assets are insufficient to make payments on your offered certificates, no other
assets will be available to you for payment of the deficiency, and you will bear
the resulting loss. Any advances made by a master servicer or other party with
respect to the mortgage assets underlying your offered certificates are intended
solely to provide liquidity and not credit support. The party making those
advances will have a right to reimbursement, probably with interest, which is
senior to your right to receive payment on your offered certificates.
ANY CREDIT SUPPORT FOR YOUR OFFERED CERTIFICATES MAY BE INSUFFICIENT TO PROTECT
YOU AGAINST ALL POTENTIAL LOSSES
The Amount of Credit Support Will Be Limited. The rating agencies that
assign ratings to your offered certificates will establish the amount of credit
support, if any, for your offered certificates based on, among other things, an
assumed level of defaults, delinquencies and losses with respect to the related
mortgage assets. Actual losses may, however, exceed the assumed levels. See
"Description of the Certificates--Allocation of Losses and Shortfalls" and
"Description of Credit Support." If actual losses on the related mortgage assets
exceed the assumed levels, you may be required to bear the additional losses.
Credit Support May Not Cover All Types of Losses. The credit support, if
any, for your offered certificates may not cover all of your potential losses.
For example, some forms of credit support may not cover or may provide limited
protection against losses that you may suffer by reason of fraud or negligence
or as a result of uninsured casualties at the real properties securing the
underlying mortgage loans. You may be required to bear any losses which are not
covered by the credit support.
Disproportionate Benefits May Be Given to Some Classes and Series to the
Detriment of Others. If a form of credit support covers multiple classes or
series and losses exceed the amount of that credit support, it is possible that
the holders of offered certificates of another series or class will be
disproportionately benefited by that credit support to your detriment.
15
THE INVESTMENT PERFORMANCE OF YOUR OFFERED CERTIFICATES WILL DEPEND UPON
PAYMENTS, DEFAULTS AND LOSSES ON THE UNDERLYING MORTGAGE LOANS; AND THOSE
PAYMENTS, DEFAULTS AND LOSSES MAY BE HIGHLY UNPREDICTABLE
The Terms of the Underlying Mortgage Loans Will Affect Payments on Your
Offered Certificates. Each of the mortgage loans underlying the offered
certificates will specify the terms on which the related borrower must repay the
outstanding principal amount of the loan. The rate, timing and amount of
scheduled payments of principal may vary, and may vary significantly, from
mortgage loan to mortgage loan. The rate at which the underlying mortgage loans
amortize will directly affect the rate at which the principal balance or
notional amount of your offered certificates is paid down or otherwise reduced.
In addition, any mortgage loan underlying the offered certificates may
permit the related borrower during some or all of the loan term to prepay the
loan. In general, a borrower will be more likely to prepay its mortgage loan
when it has an economic incentive to do so, such as obtaining a larger loan on
the same underlying real property or a lower or otherwise more advantageous
interest rate through refinancing. If a mortgage loan includes some form of
prepayment restriction, the likelihood of prepayment should decline. These
restrictions may include--
o an absolute or partial prohibition against voluntary prepayments
during some or all of the loan term, or
o a requirement that voluntary prepayments be accompanied by some form
of prepayment premium, fee or charge during some or all of the loan
term.
In many cases, however, there will be no restriction associated with the
application of insurance proceeds or condemnation proceeds as a prepayment of
principal.
The Terms of the Underlying Mortgage Loans Do Not Provide Absolute
Certainty as Regards to the Rate, Timing and Amount of Payments on Your Offered
Certificates. Notwithstanding the terms of the mortgage loans backing your
offered certificates, the amount, rate and timing of payments and other
collections on those mortgage loans will, to some degree, be unpredictable
because of borrower defaults and because of casualties and condemnations with
respect to the underlying real properties.
The investment performance of your offered certificates may vary materially
and adversely from your expectations due to--
o the rate of prepayments and other unscheduled collections of principal
on the underlying mortgage loans being faster or slower than you
anticipated, or
o the rate of defaults on the underlying mortgage loans being faster, or
the severity of losses on the underlying mortgage loans being greater,
than you anticipated.
The actual yield to you, as a holder of an offered certificate, may not
equal the yield you anticipated at the time of your purchase, and the total
return on investment that you expected may not be realized. In deciding whether
to purchase any offered certificates, you should make an independent decision as
to the appropriate prepayment, default and loss assumptions to be used. If the
trust assets underlying your offered certificates include mortgage-backed
securities, the terms of those securities may soften or enhance the effects to
you that may result from prepayments, defaults and losses on the mortgage loans
that ultimately back those securities.
16
Prepayments on the Underlying Mortgage Loans Will Affect the Average Life
of Your Offered Certificates; and the Rate and Timing of Those Prepayments May
Be Highly Unpredictable. Payments of principal and/or interest on your offered
certificates will depend upon, among other things, the rate and timing of
payments on the related mortgage assets. Prepayments on the underlying mortgage
loans may result in a faster rate of principal payments on your offered
certificates, thereby resulting in a shorter average life for your offered
certificates than if those prepayments had not occurred. The rate and timing of
principal prepayments on pools of mortgage loans varies among pools and is
influenced by a variety of economic, demographic, geographic, social, tax and
legal factors. Accordingly, neither you nor we can predict the rate and timing
of principal prepayments on the mortgage loans underlying your offered
certificates. As a result, repayment of your offered certificates could occur
significantly earlier or later, and the average life of your offered
certificates could be significantly shorter or longer, than you expected.
The extent to which prepayments on the underlying mortgage loans ultimately
affect the average life of your offered certificates depends on the terms and
provisions of your offered certificates. A class of offered certificates may
entitle the holders to a pro rata share of any prepayments on the underlying
mortgage loans, to all or a disproportionately large share of those prepayments,
or to none or a disproportionately small share of those prepayments. If you are
entitled to a disproportionately large share of any prepayments on the
underlying mortgage loans, your offered certificates may be retired at an
earlier date. If, however, you are only entitled to a small share of the
prepayments on the underlying mortgage loans, the average life of your offered
certificates may be extended. Your entitlement to receive payments, including
prepayments, of principal of the underlying mortgage loans may--
o vary based on the occurrence of specified events, such as the
retirement of one or more other classes of certificates of the same
series, or
o be subject to various contingencies, such as prepayment and default
rates with respect to the underlying mortgage loans.
We will describe the terms and provisions of your offered certificates more
fully in the related prospectus supplement.
Prepayments on the Underlying Mortgage Loans Will Affect the Yield on Your
Offered Certificates; and the Rate and Timing of Those Prepayments May Be Highly
Unpredictable. If you purchase your offered certificates at a discount or
premium, the yield on your offered certificates will be sensitive to prepayments
on the underlying mortgage loans. If you purchase your offered certificates at a
discount, you should consider the risk that a slower than anticipated rate of
principal payments on the underlying mortgage loans could result in your actual
yield being lower than your anticipated yield. Alternatively, if you purchase
your offered certificates at a premium, you should consider the risk that a
faster than anticipated rate of principal payments on the underlying mortgage
loans could result in your actual yield being lower than your anticipated yield.
The potential effect that prepayments may have on the yield of your offered
certificates will increase as the discount deepens or the premium increases. If
the amount of interest payable on your offered certificates is
disproportionately large, as compared to the amount of principal payable on your
offered certificates, you may fail to recover your original investment under
some prepayment scenarios. The rate and timing of principal prepayments on pools
of mortgage loans varies among pools and is influenced by a variety of economic,
demographic, geographic, social, tax and legal factors. Accordingly, neither you
nor we can predict the rate and timing of principal prepayments on the mortgage
loans underlying your offered certificates.
Delinquencies, Defaults and Losses on the Underlying Mortgage Loans May
Affect the Amount and Timing of Payments on Your Offered Certificates; and the
Rate and Timing of Those Delinquencies and Defaults, and the Severity of Those
Losses, Are Highly Unpredictable. The rate and timing of delinquencies and
defaults,
17
and the severity of losses, on the underlying mortgage loans will impact the
amount and timing of payments on a series of offered certificates to the extent
that their effects are not offset by delinquency advances or some form of credit
support.
Unless otherwise covered by delinquency advances or some form of credit
support, defaults on the underlying mortgage loans may delay payments on a
series of offered certificates while the defaulted mortgage loans are worked-out
or liquidated. However, liquidations of defaulted mortgage loans prior to
maturity could affect the yield and average life of an offered certificate in a
manner similar to a voluntary prepayment.
If you calculate your anticipated yield to maturity based on an assumed
rate of default and amount of losses on the underlying mortgage loans that is
lower than the default rate and amount of losses actually experienced, then, to
the extent that you are required to bear the additional losses, your actual
yield to maturity will be lower than you calculated and could, under some
scenarios, be negative. Furthermore, the timing of losses on the underlying
mortgage loans can affect your yield. In general, the earlier you bear any loss
on an underlying mortgage loan, the greater the negative effect on your yield.
See "--Repayment of a Commercial or Multifamily Mortgage Loan Depends Upon
the Performance and Value of the Underlying Real Property, Which May Decline
Over Time, and the Related Borrower's Ability to Refinance the Property, of
Which There Is No Assurance" below.
There Is an Increased Risk of Default Associated with Balloon Payments. Any
of the mortgage loans underlying your offered certificates may be nonamortizing
or only partially amortizing. The borrower under a mortgage loan of that type is
required to make substantial payments of principal and interest, which are
commonly called balloon payments, on the maturity date of the loan. The ability
of the borrower to make a balloon payment depends upon the borrower's ability to
refinance or sell the real property securing the loan. The ability of the
borrower to refinance or sell the property will be affected by a number of
factors, including:
o the fair market value and condition of the underlying real property;
o the level of interest rates;
o the borrower's equity in the underlying real property;
o the borrower's financial condition;
o the operating history of the underlying real property;
o changes in zoning and tax laws;
o changes in competition in the relevant area;
o changes in rental rates in the relevant area;
o changes in governmental regulation and fiscal policy;
o prevailing general and regional economic conditions;
o the state of the fixed income and mortgage markets; and
18
o the availability of credit for multifamily rental or commercial
properties.
See "--Repayment of a Commercial or Multifamily Mortgage Loan Depends Upon
the Performance and Value of the Underlying Real Property, Which May Decline
Over Time, and the Related Borrower's Ability to Refinance the Property, of
Which There Is No Assurance" below.
Neither we nor any of our affiliates will be obligated to refinance any
mortgage loan underlying your offered certificates.
The related master servicer or special servicer may, within prescribed
limits, extend and modify mortgage loans underlying your offered certificates
that are in default or as to which a payment default is imminent in order to
maximize recoveries on the defaulted loans. The related master servicer or
special servicer is only required to determine that any extension or
modification is reasonably likely to produce a greater recovery than a
liquidation of the real property securing the defaulted loan. There is a risk
that the decision of the master servicer or special servicer to extend or modify
a mortgage loan may not in fact produce a greater recovery.
REPAYMENT OF A COMMERCIAL OR MULTIFAMILY MORTGAGE LOAN DEPENDS UPON THE
PERFORMANCE AND VALUE OF THE UNDERLYING REAL PROPERTY, WHICH MAY DECLINE OVER
TIME, AND THE RELATED BORROWER'S ABILITY TO REFINANCE THE PROPERTY, OF WHICH
THERE IS NO ASSURANCE
Most of the Mortgage Loans Underlying Your Offered Certificates Will Be
Nonrecourse. You should consider all of the mortgage loans underlying your
offered certificates to be nonrecourse loans. This means that, in the event of a
default, recourse will be limited to the related real property or properties
securing the defaulted mortgage loan. In those cases where recourse to a
borrower or guarantor is permitted by the loan documents, we generally will not
undertake any evaluation of the financial condition of that borrower or
guarantor. Consequently, full and timely payment on each mortgage loan
underlying your offered certificates will depend on one or more of the
following:
o the sufficiency of the net operating income of the applicable real
property;
o the market value of the applicable real property at or prior to
maturity; and
o the ability of the related borrower to refinance or sell the
applicable real property.
In general, the value of a multifamily or commercial property will depend
on its ability to generate net operating income. The ability of an owner to
finance a multifamily or commercial property will depend, in large part, on the
property's value and ability to generate net operating income.
Unless we state otherwise in the related prospectus supplement, none of the
mortgage loans underlying your offered certificates will be insured or
guaranteed by any governmental entity or private mortgage insurer.
The risks associated with lending on multifamily and commercial properties
are inherently different from those associated with lending on the security of
single-family residential properties. This is because multifamily rental and
commercial real estate lending involves larger loans and, as described above,
repayment is dependent upon the successful operation and value of the related
real estate project.
Many Risk Factors Are Common to Most or All Multifamily and Commercial
Properties. The following factors, among others, will affect the ability of a
multifamily or commercial property to generate net operating income and,
accordingly, its value:
19
o the age, design and construction quality of the property;
o perceptions regarding the safety, convenience and attractiveness of
the property;
o the characteristics of the neighborhood where the property is located;
o the proximity and attractiveness of competing properties;
o the existence and construction of competing properties;
o the adequacy of the property's management and maintenance;
o national, regional or local economic conditions, including plant
closings, industry slowdowns and unemployment rates;
o local real estate conditions, including an increase in or oversupply
of comparable commercial or residential space;
o demographic factors;
o customer tastes and preferences;
o retroactive changes in building codes; and
o changes in governmental rules, regulations and fiscal policies,
including environmental legislation.
Particular factors that may adversely affect the ability of a multifamily
or commercial property to generate net operating income include:
o an increase in interest rates, real estate taxes and other operating
expenses;
o an increase in the capital expenditures needed to maintain the
property or make improvements;
o a decline in the financial condition of a major tenant and, in
particular, a sole tenant or anchor tenant;
o an increase in vacancy rates;
o a decline in rental rates as leases are renewed or replaced; and
o natural disasters and civil disturbances such as earthquakes,
hurricanes, floods, eruptions or riots.
The volatility of net operating income generated by a multifamily or
commercial property over time will be influenced by many of the foregoing
factors, as well as by:
o the length of tenant leases;
o the creditworthiness of tenants;
20
o the rental rates at which leases are renewed or replaced;
o the percentage of total property expenses in relation to revenue;
o the ratio of fixed operating expenses to those that vary with
revenues; and
o the level of capital expenditures required to maintain the property
and to maintain or replace tenants.
Therefore, commercial and multifamily properties with short-term or less
creditworthy sources of revenue and/or relatively high operating costs, such as
those operated as hospitality and self-storage properties, can be expected to
have more volatile cash flows than commercial and multifamily properties with
medium- to long-term leases from creditworthy tenants and/or relatively low
operating costs. A decline in the real estate market will tend to have a more
immediate effect on the net operating income of commercial and multifamily
properties with short-term revenue sources and may lead to higher rates of
delinquency or defaults on the mortgage loans secured by those properties.
The Successful Operation of a Multifamily or Commercial Property Depends on
Tenants. Generally, multifamily and commercial properties are subject to leases.
The owner of a multifamily or commercial property typically uses lease or rental
payments for the following purposes:
o to pay for maintenance and other operating expenses associated with
the property;
o to fund repairs, replacements and capital improvements at the
property; and
o to service mortgage loans secured by, and any other debt obligations
associated with operating, the property.
Factors that may adversely affect the ability of a multifamily or
commercial property to generate net operating income from lease and rental
payments include:
o an increase in vacancy rates, which may result from tenants deciding
not to renew an existing lease or discontinuing operations;
o an increase in tenant payment defaults;
o a decline in rental rates as leases are entered into, renewed or
extended at lower rates;
o an increase in the capital expenditures needed to maintain the
property or to make improvements; and
o a decline in the financial condition of a major or sole tenant.
Various factors that will affect the operation and value of a commercial
property include:
o the business operated by the tenants;
o the creditworthiness of the tenants; and
21
o the number of tenants.
Dependence on a Single Tenant or a Small Number of Tenants Makes a Property
Riskier Collateral. In those cases where an income-producing property is leased
to a single tenant or is primarily leased to one or a small number of major
tenants, a deterioration in the financial condition or a change in the plan of
operations of any of those tenants can have particularly significant effects on
the net operating income generated by the property. If any of those tenants
defaults under or fails to renew its lease, the resulting adverse financial
effect on the operation of the property will be substantially more severe than
would be the case with respect to a property occupied by a large number of less
significant tenants.
An income-producing property operated for retail, office or industrial
purposes also may be adversely affected by a decline in a particular business or
industry if a concentration of tenants at the property is engaged in that
business or industry.
Tenant Bankruptcy Adversely Affects Property Performance. The bankruptcy or
insolvency of a major tenant, or a number of smaller tenants, at a commercial
property may adversely affect the income produced by the property. Under the
U.S. 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 unless
there is collateral securing the claim. The claim would be limited to:
o the unpaid rent reserved under the lease for the periods prior to the
bankruptcy petition or any earlier surrender of the leased premises;
plus
o an amount, not to exceed three years' rent, equal to the greater of
one year's rent and 15% of the remaining reserved rent.
The Success of an Income-Producing Property Depends on Reletting Vacant
Spaces. The operations at an income-producing property will be adversely
affected if the owner or property manager is unable to renew leases or relet
space on comparable terms when existing leases expire and/or become defaulted.
Even if vacated space is successfully relet, the costs associated with
reletting, including tenant improvements and leasing commissions in the case of
income-producing properties operated for retail, office or industrial purposes,
can be substantial and could reduce cash flow from the income producing
properties. Moreover, if a tenant at a income-producing property defaults in its
lease obligations, the landlord may incur substantial costs and experience
significant delays associated with enforcing its rights and protecting its
investment, including costs incurred in renovating and reletting the property.
If an income-producing property has multiple tenants, re-leasing
expenditures may be more frequent than in the case of a property with fewer
tenants, thereby reducing the cash flow generated by the multi-tenanted
property. Multi-tenanted properties may also experience higher continuing
vacancy rates and greater volatility in rental income and expenses.
Property Value May Be Adversely Affected Even When Current Operating Income
Is Not. Various factors may affect the value of multifamily and commercial
properties without affecting their current net operating income, including:
o changes in interest rates;
o the availability of refinancing sources;
o changes in governmental regulations, licensing or fiscal policy;
22
o changes in zoning or tax laws; and
o potential environmental or other legal liabilities.
Property Management May Affect Property Operations and Value. The operation
of an income-producing property will depend upon the property manager's
performance and viability. The property manager generally is responsible for--
o responding to changes in the local market;
o planning and implementing the rental structure, including staggering
durations of leases and establishing levels of rent payments;
o operating the property and providing building services;
o managing operating expenses; and
o ensuring that maintenance and capital improvements are carried out in
a timely fashion.
Income-producing properties that derive revenues primarily from short-term
rental commitments, such as hospitality or self-storage properties, generally
require more intensive management than properties leased to tenants under
long-term leases.
By controlling costs, providing appropriate and efficient services to
tenants and maintaining improvements in good condition, a property manager can--
o maintain or improve occupancy rates, business and cash flow,
o reduce operating and repair costs, and
o preserve building value.
On the other hand, management errors can, in some cases, impair the long term
viability of an income-producing property.
Maintaining a Property in Good Condition Is Expensive. The owner may be
required to expend a substantial amount to maintain, renovate or refurbish a
commercial or multifamily property. Failure to do so may materially impair the
property's ability to generate cash flow. The effects of poor construction
quality will increase over time in the form of increased maintenance and capital
improvements. Even superior construction will deteriorate over time if
management does not schedule and perform adequate maintenance in a timely
fashion. There can be no assurance that an income-producing property will
generate sufficient cash flow to cover the increased costs of maintenance and
capital improvements in addition to paying debt service on the mortgage loan(s)
that may encumber that property.
Competition Will Adversely Affect the Profitability and Value of an
Income-Producing Property. Some income-producing properties are located in
highly competitive areas. Comparable income-producing properties located in the
same area compete on the basis of a number of factors including:
o rental rates;
23
o location;
o type of business or services and amenities offered; and
o nature and condition of the particular property.
The profitability and value of an income-producing property may be
adversely affected by a comparable property that:
o offers lower rents;
o has lower operating costs;
o offers a more favorable location; or
o offers better facilities.
Costs of renovating, refurbishing or expanding an income-producing property
in order to remain competitive can be substantial.
Various Types of Income-Producing Properties May Present Special Risks. The
relative importance of any factor affecting the value or operation of an
income-producing property will depend on the type and use of the property. In
addition, the type and use of a particular income-producing property may present
special risks. For example--
o Health care-related facilities and casinos are subject to significant
governmental regulation of the ownership, operation, maintenance
and/or financing of those properties.
o Multifamily rental properties, manufactured housing communities and
mobile home parks may be subject to rent control or rent stabilization
laws and laws governing landlord/tenant relationships.
o Hospitality and restaurant properties are often operated under
franchise, management or operating agreements, which may be terminable
by the franchisor or operator. Moreover, the transferability of a
hotel's or restaurant's operating, liquor and other licenses upon a
transfer of the hotel or restaurant is subject to local law
requirements.
o Depending on their location, recreational and resort properties,
properties that provide entertainment services, hospitality
properties, restaurants and taverns, mini-warehouses and self-storage
facilities tend to be adversely affected more quickly by a general
economic downturn than other types of commercial properties.
o Marinas will be affected by various statutes and government
regulations that govern the use of, and construction on, rivers, lakes
and other waterways.
o Some recreational and hospitality properties may have seasonal
fluctuations and/or may be adversely affected by prolonged unfavorable
weather conditions.
o Churches and other religious facilities may be highly dependent on
donations which are likely to decline as economic conditions decline.
24
o Properties used as gas stations, automotive sales and service centers,
dry cleaners, warehouses and industrial facilities may be more likely
to have environmental issues.
Additionally, many types of commercial properties are not readily
convertible to alternative uses if the original use is not successful or may
require significant capital expenditures to effect any conversion to an
alternative use. As a result, the liquidation value of any of those types of
property would be substantially less than would otherwise be the case. See
"Description of the Trust Assets--Mortgage Loans--A Discussion of the Various
Types of Multifamily and Commercial Properties that May Secure Mortgage Loans
Underlying a Series of Offered Certificates."
BORROWER CONCENTRATION WITHIN A TRUST EXPOSES INVESTORS TO GREATER RISK OF
DEFAULT AND LOSS
A particular borrower or group of related borrowers may be associated with
multiple real properties securing the mortgage loans underlying a series of
offered certificates. The bankruptcy or insolvency of, or other financial
problems with respect to, that borrower or group of borrowers could have an
adverse effect on--
o the operation of all of the related real properties, and
o the ability of those properties to produce sufficient cash flow to
make required payments on the related mortgage loans.
For example, if a borrower or group of related borrowers that owns or controls
several real properties experiences financial difficulty at one of those
properties, it could defer maintenance at another of those properties in order
to satisfy current expenses with respect to the first property. That borrower or
group of related borrowers could also attempt to avert foreclosure by filing a
bankruptcy petition that might have the effect of interrupting debt service
payments on all the related mortgage loans for an indefinite period. In
addition, multiple real properties owned by the same borrower or related
borrowers are likely to have common management. This would increase the risk
that financial or other difficulties experienced by the property manager could
have a greater impact on the owner of the related loans.
LOAN CONCENTRATION WITHIN A TRUST EXPOSES INVESTORS TO GREATER RISK OF DEFAULT
AND LOSS
Any of the mortgage assets in one of our trusts may be substantially larger
than the other assets in that trust. In general, the inclusion in a trust of one
or more mortgage assets that have outstanding principal balances that are
substantially larger than the other mortgage assets in the trust can result in
losses that are more severe, relative to the size of the related mortgage asset
pool, than would be the case if the total principal balance of that pool were
distributed more evenly.
GEOGRAPHIC CONCENTRATION WITHIN A TRUST EXPOSES INVESTORS TO GREATER RISK OF
DEFAULT AND LOSS
If a material concentration of mortgage loans underlying a series of
offered certificates is secured by real properties in a particular locale, state
or region, then the holders of those certificates will have a greater exposure
to:
o any adverse economic developments that occur in the locale, state or
region where the properties are located;
o changes in the real estate market where the properties are located;
25
o changes in governmental rules and fiscal policies in the governmental
jurisdiction where the properties are located; and
o acts of nature, including floods, tornadoes and earthquakes, in the
areas where properties are located.
CHANGES IN POOL COMPOSITION WILL CHANGE THE NATURE OF YOUR INVESTMENT
The mortgage loans underlying any series of offered certificates will
amortize at different rates and mature on different dates. In addition, some of
those mortgage loans may be prepaid or liquidated. As a result, the relative
composition of the related mortgage asset pool will change over time.
If you purchase certificates with a pass-through rate that is equal to or
calculated based upon a weighted average of interest rates on the underlying
mortgage loans, your pass-through rate will be affected, and may decline, as the
relative composition of the mortgage pool changes.
In addition, as payments and other collections of principal are received
with respect to the underlying mortgage loans, the remaining mortgage pool
backing your offered certificates may exhibit an increased concentration with
respect to property type, number and affiliation of borrowers and geographic
location.
ADJUSTABLE RATE MORTGAGE LOANS MAY ENTAIL GREATER RISKS OF DEFAULT TO LENDERS
THAN FIXED RATE MORTGAGE LOANS
Some or all of the mortgage loans underlying a series of offered
certificates may provide for adjustments to their respective mortgage interest
rates and corresponding adjustments to their respective periodic debt service
payments. As the periodic debt service payment for any of those mortgage loans
increases, the likelihood that cash flow from the underlying real property will
be insufficient to make that periodic debt service payment and pay operating
expenses also increases.
SUBORDINATE DEBT INCREASES THE LIKELIHOOD THAT A BORROWER WILL DEFAULT ON A
MORTGAGE LOAN UNDERLYING YOUR OFFERED CERTIFICATES
Some or all of the mortgage loans included in one of our trusts may permit
the related borrower to encumber the related real property with additional
secured debt.
Even if a mortgage loan prohibits further encumbrance of the related real
property, a violation of this prohibition may not become evident until the
affected mortgage loan otherwise defaults. Accordingly, a lender, such as one of
our trusts, may not realistically be able to prevent a borrower from incurring
subordinate debt.
The existence of any secured subordinated indebtedness increases the
difficulty of refinancing a mortgage loan at the loan's maturity. In addition,
the related borrower may have difficulty repaying multiple loans. 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 out the junior lien.
See "Legal Aspects of Mortgage Loans--Subordinate Financing."
26
BORROWER BANKRUPTCY PROCEEDINGS CAN DELAY AND IMPAIR RECOVERY ON A MORTGAGE LOAN
UNDERLYING YOUR OFFERED CERTIFICATES
Under the U.S. Bankruptcy Code, the filing of a petition in bankruptcy by
or against a borrower will stay the sale of a real property owned by that
borrower, as well as the commencement or continuation of a foreclosure action.
In addition, if a court determines that the value of a real property is
less than the principal balance of the mortgage loan it secures, the court may
reduce the amount of secured indebtedness to the then-value of the property.
This would make the lender a general unsecured creditor for the difference
between the then-value of the property and the amount of its outstanding
mortgage indebtedness.
A bankruptcy court also may:
o grant a debtor a reasonable time to cure a payment default on a
mortgage loan;
o reduce monthly payments due under a mortgage loan;
o change the rate of interest due on a mortgage loan; or
o otherwise alter a mortgage loan's repayment schedule.
Furthermore, the borrower, as debtor-in-possession, or its bankruptcy trustee
has special powers to avoid, subordinate or disallow debts. In some
circumstances, the claims of a secured lender, such as one of our trusts, may be
subordinated to financing obtained by a debtor-in-possession subsequent to its
bankruptcy.
Under the U.S. Bankruptcy Code, a lender will be stayed from enforcing a
borrower's assignment of rents and leases. The U.S. Bankruptcy Code also may
interfere with a lender's ability to enforce lockbox requirements. The legal
proceedings necessary to resolve these issues can be time consuming and may
significantly delay the receipt of rents. Rents also may escape an assignment to
the extent they are used by borrower to maintain its property or for other court
authorized expenses.
As a result of the foregoing, the related trust's recovery with respect to
borrowers in bankruptcy proceedings may be significantly delayed, and the total
amount ultimately collected may be substantially less than the amount owed.
TAXES ON FORECLOSURE PROPERTY WILL REDUCE AMOUNTS AVAILABLE TO MAKE PAYMENTS ON
THE OFFERED CERTIFICATES
One of our trusts may be designated, in whole or in part, as a real estate
mortgage investment conduit for federal income tax purposes. If that trust
acquires a real property through a foreclosure or deed in lieu of foreclosure,
then the related special servicer may be required to retain an independent
contractor to operate and manage the property. Receipt of the following types of
income on that property will subject the trust to federal, and possibly state or
local, tax on that income at the highest marginal corporate tax rate:
o any net income from that operation and management that does not
consist of qualifying rents from real property within the meaning of
Section 856(d) of the Internal Revenue Code of 1986; and
27
o any rental income based on the net profits of a tenant or sub-tenant
or allocable to a service that is non-customary in the area and for
the type of building involved.
These taxes would reduce the net proceeds available for payment with respect to
the related offered certificates.
ENVIRONMENTAL LIABILITIES WILL ADVERSELY AFFECT THE VALUE AND OPERATION OF THE
CONTAMINATED PROPERTY AND MAY DETER A LENDER FROM FORECLOSING
There can be no assurance--
o as to the degree of environmental testing conducted at any of the real
properties securing the mortgage loans that back your offered
certificates;
o that the environmental testing conducted by or on behalf of the
applicable originators or any other parties in connection with the
origination of those mortgage loans or otherwise identified all
adverse environmental conditions and risks at the related real
properties;
o that the results of the environmental testing were accurately
evaluated in all cases;
o that the related borrowers have implemented or will implement all
operations and maintenance plans and other remedial actions
recommended by any environmental consultant that may have conducted
testing at the related real properties; or
o that the recommended action will fully remediate or otherwise address
all the identified adverse environmental conditions and risks.
Environmental site assessments vary considerably in their content, quality
and cost. Even when adhering to good professional practices, environmental
consultants will sometimes not detect significant environmental problems because
to do an exhaustive environmental assessment would be far too costly and
time-consuming to be practical.
In addition, the current environmental condition of a real property
securing a mortgage loan underlying your offered certificates could be adversely
affected by--
o tenants at the property, such as gasoline stations or dry cleaners, or
o conditions or operations in the vicinity of the property, such as
leaking underground storage tanks at another property nearby.
Various environmental laws may make a current or previous owner or operator
of real property liable for the costs of removal or remediation of hazardous or
toxic substances on, under or adjacent to the property. Those laws often impose
liability whether or not the owner or operator knew of, or was responsible for,
the presence of the hazardous or toxic substances. For example, there are laws
that impose liability for release of asbestos containing materials into the air
or require the removal or containment of the materials. The owner's liability
for any required remediation generally is unlimited and could exceed the value
of the property and/or the total assets of the owner. In addition, the presence
of hazardous or toxic substances, or the failure to remediate the adverse
environmental condition, may adversely affect the owner's or operator's ability
to use the affected property. In some states, contamination of a property may
give rise to a lien on the property to ensure the costs of cleanup. Depending on
the state, this lien may have priority over the lien of an existing mortgage,
deed of trust or other
28
security instrument. In addition, third parties may seek recovery from owners or
operators of real property for personal injury associated with exposure to
hazardous substances, including asbestos and lead-based paint. Persons who
arrange for the disposal or treatment of hazardous or toxic substances may be
liable for the costs of removal or remediation of the substances at the disposal
or treatment facility.
The federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, as well as other federal and state laws,
provide that a secured lender, such as one of our trusts, may be liable as an
"owner" or "operator" of the real property, regardless of whether the borrower
or a previous owner caused the environmental damage, if--
o agents or employees of the lender are deemed to have participated in
the management of the borrower, or
o the lender actually takes possession of a borrower's property or
control of its day-to-day operations, including through the
appointment of a receiver or foreclosure.
Although recently enacted legislation clarifies the activities in which a
lender may engage without becoming subject to liability under the federal
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, and similar federal laws, that legislation has no applicability to
state environmental laws. Moreover, future laws, ordinances or regulations could
impose material environmental liability.
Federal law requires owners of residential housing constructed prior
to 1978--
o to disclose to potential residents or purchasers information in their
possession regarding the presence of known lead-based paint or
lead-based paint-related hazards in such housing, and
o to deliver to potential residents or purchasers a United States
Environmental Protection Agency-approved information pamphlet
describing the potential hazards to pregnant women and young children,
including that the ingestion of lead-based paint chips and/or the
inhalation of dust particles from lead-based paint by children can
cause permanent injury, even at low levels of exposure.
Property owners may be liable for injuries to their tenants resulting from
exposure under various laws that impose affirmative obligations on property
owners of residential housing containing lead-based paint.
SOME PROVISIONS IN THE MORTGAGE LOANS UNDERLYING YOUR OFFERED CERTIFICATES MAY
BE CHALLENGED AS BEING UNENFORCEABLE
Cross-Collateralization Arrangements. It may be possible to challenge
cross-collateralization arrangements involving more than one borrower as a
fraudulent conveyance, even if the borrowers are related. If one of those
borrowers were to become a debtor in a bankruptcy case, creditors of the
bankrupt party or the representative of the bankruptcy estate of the bankrupt
party could seek to have the bankruptcy court avoid any lien granted by the
bankrupt party to secure repayment of another borrower's loan. In order to do
so, the court would have to determine that:
o the bankrupt party--
1. was insolvent at the time of granting the lien,
29
2. was rendered insolvent by the granting of the lien,
3. was left with inadequate capital, or
4. was not able to pay its debts as they matured; and
o the bankrupt party did not, when it allowed its property to be
encumbered by a lien securing the other borrower's loan, receive fair
consideration or reasonably equivalent value for pledging its property
for the equal benefit of the other borrower.
If the court were to conclude that the granting of the lien was an avoidable
fraudulent conveyance, it could nullify the lien or security instrument
effecting the cross-collateralization. The court could also allow the bankrupt
party to recover payments it made under the avoided cross-collateralization.
Prepayment Premiums, Fees and Charges. Under the laws of a number of
states, the enforceability of any mortgage loan provisions that require payment
of a prepayment premium, fee or charge upon an involuntary prepayment, is
unclear. If those provisions were unenforceable, borrowers would have an
incentive to default in order to prepay their loans.
Due-on-Sale and Debt Acceleration Clauses. Some or all of the mortgage
loans included in one of our trusts may contain a due-on-sale clause, which
permits the lender, with some exceptions, to accelerate the maturity of the
mortgage loan upon the sale, transfer or conveyance of--
o the related real property, or
o a majority ownership interest in the related borrower.
We anticipate that all of the mortgage loans included in one of our trusts
will contain some form of debt-acceleration clause, which permits the lender to
accelerate the debt upon specified monetary or non-monetary defaults by the
related borrower.
The courts of all states will enforce acceleration clauses in the event of
a material payment default. The equity courts of any state, however, may refuse
to allow the foreclosure of a mortgage, deed of trust or other security
instrument or to permit the acceleration of the indebtedness if:
o the default is deemed to be immaterial;
o the exercise of those remedies would be inequitable or unjust; or
o the circumstances would render the acceleration unconscionable.
Assignments of Leases. Some or all of the mortgage loans included in one of
our trusts may be secured by, among other things, an assignment of leases and
rents. Under that document, the related borrower will assign its right, title
and interest as landlord under the leases on the related real property and the
income derived from those leases to the lender as further security for the
related mortgage loan, while retaining a license to collect rents for so long as
there is no default. In the event the borrower defaults, the license terminates
and the lender is entitled to collect rents. In some cases, those assignments
may not be perfected as security interests prior to actual possession of the
cash flow. Accordingly, state law may require that the lender take possession of
the property and obtain a judicial appointment of a receiver before becoming
entitled to collect the rents. In addition, the
30
commencement of bankruptcy or similar proceedings by or with respect to the
borrower will adversely affect the lender's ability to collect the rents. See
"Legal Aspects of Mortgage Loans--Bankruptcy Laws."
Defeasance. A mortgage loan underlying a series of offered certificates may
permit the related borrower, during the periods specified and subject to the
conditions set forth in the loan, to pledge to the holder of the mortgage loan a
specified amount of direct, non-callable United States government securities and
thereby obtain a release of the related mortgaged property. The cash amount
which a borrower must expend to purchase, or must deliver to a master servicer
in order for the master servicer to purchase, the required United States
government securities may be in excess of the principal balance of the mortgage
loan. A court could interpret that excess amount as a form of prepayment premium
or could take it into account for usury purposes. In some states, some forms of
prepayment premiums are unenforceable. If the payment of that excess amount were
held to be unenforceable, the remaining portion of the cash amount to be
delivered may be insufficient to purchase the requisite amount of United States
government securities.
LACK OF INSURANCE COVERAGE EXPOSES A TRUST TO RISK FOR PARTICULAR SPECIAL HAZARD
LOSSES
In general, the standard form of fire and extended coverage policy covers
physical damage to or destruction of the improvements of a property by fire,
lightning, explosion, smoke, windstorm and hail, and riot, strike and civil
commotion, subject to the conditions and exclusions specified in the related
policy. Most insurance policies typically do not cover any physical damage
resulting from, among other things--
o war,
o revolution,
o governmental actions,
o floods and other water-related causes,
o earth movement, including earthquakes, landslides and mudflows,
o wet or dry rot,
o vermin, and
o domestic animals.
Unless the related mortgage loan documents specifically require the
borrower to insure against physical damage arising from these causes, then the
resulting losses may be borne by you as a holder of offered certificates.
GROUND LEASES CREATE RISKS FOR LENDERS THAT ARE NOT PRESENT WHEN LENDING ON AN
ACTUAL OWNERSHIP INTEREST IN A REAL PROPERTY
In order to secure a mortgage loan, a borrower may grant a lien on its
leasehold interest in a real property as tenant under a ground lease. If the
ground lease does not provide for notice to a lender of a default thereunder on
the part of the borrower, together with a reasonable opportunity for the lender
to cure the default, the lender may be unable to prevent termination of the
lease and may lose its collateral.
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In addition, upon the bankruptcy of a landlord or a tenant under a ground
lease, the debtor entity has the right to assume or reject the ground lease. If
a debtor landlord rejects the lease, the tenant has the right to remain in
possession of its leased premises at the rent reserved in the lease for the
term, including renewals. If a debtor tenant rejects any or all of its leases,
the tenant's lender may not be able to succeed to the tenant's position under
the lease unless the landlord has specifically granted the lender that right. If
both the landlord and the tenant are involved in bankruptcy proceedings, the
trustee for your offered certificates may be unable to enforce the bankrupt
tenant's obligation to refuse to treat as terminated a ground lease rejected by
a bankrupt landlord. In those circumstances, it is possible that the trustee
could be deprived of its security interest in the leasehold estate,
notwithstanding lender protection provisions contained in the lease or mortgage
loan documents.
Further, in a recent decision by the United States Court of Appeals for the
Seventh Circuit (Precision Indus. v. Qualitech Steel SBQ, LLC, 2003 U.S. App.
LEXIS 7612 (7th Cir. Apr. 23, 2003)), the court ruled that where a statutory
sale of the leased property occurs under Section 363(f) of the U.S. Bankruptcy
Code 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 U.S. Bankruptcy Code, 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. As a result, there can be no assurance that,
in the event of a statutory sale of leased property pursuant to Section 363(f)
of the Bankruptcy Code, the lessee may be able to maintain possession of the
property under the ground lease. In addition, there can be no assurance that the
lessee and/or the lender (to the extent it can obtain standing to intervene)
will be able to recuperate the full value of the leasehold interest in
bankruptcy court.
CHANGES IN ZONING LAWS MAY ADVERSELY AFFECT THE USE OR VALUE OF A REAL PROPERTY
Due to changes in zoning requirements since construction, an
income-producing property may not comply with current zoning laws, including
density, use, parking and set back requirements. Accordingly, the property may
be a permitted non-conforming structure or the operation of the property may be
a permitted non-conforming use. This means that the owner is not required to
alter the property's structure or use to comply with the new law, but the owner
may be limited in its ability to rebuild the premises "as is" in the event of a
substantial casualty loss. This may adversely affect the cash flow available
following the casualty. If a substantial casualty were to occur, insurance
proceeds may not be sufficient to pay a mortgage loan secured by the property in
full. In addition, if the property were repaired or restored in conformity with
the current law, its value or revenue-producing potential may be less than that
which existed before the casualty.
COMPLIANCE WITH THE AMERICANS WITH DISABILITIES ACT OF 1990 MAY BE EXPENSIVE
Under the Americans with Disabilities Act of 1990, all public
accommodations are required to meet federal requirements related to access and
use by disabled persons. If a property does not currently comply with that Act,
the property owner may be required to incur significant costs in order to effect
that compliance. This will reduce the amount of cash flow available to cover
other required maintenance and capital improvements and to pay debt service on
the mortgage loan(s) that may encumber that property. There can be no assurance
that the owner will have sufficient funds to cover the costs necessary to comply
with that Act. In addition, noncompliance could result in the imposition of
fines by the federal government or an award or damages to private litigants.
LITIGATION MAY ADVERSELY AFFECT A BORROWER'S ABILITY TO REPAY ITS MORTGAGE LOAN
The owner of a multifamily or commercial property may be a defendant in a
litigation arising out of, among other things, the following:
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o breach of contract involving a tenant, a supplier or other party;
o negligence resulting in a personal injury; or
o responsibility for an environmental problem.
Litigation will divert the owner's attention from operating its property.
If the litigation were decided adversely to the owner, the award to the
plaintiff may adversely affect the owner's ability to repay a mortgage loan
secured by the property.
RESIDUAL INTERESTS IN A REAL ESTATE MORTGAGE INVESTMENT CONDUIT HAVE ADVERSE TAX
CONSEQUENCES
Inclusion of Taxable Income in Excess of Cash Received. If you own a
certificate that is a residual interest in a real estate mortgage investment
conduit, or REMIC, for federal income tax purposes, you will have to report on
your income tax return as ordinary income your pro rata share of the taxable
income of that REMIC, regardless of the amount or timing of your possible
receipt of any cash on the certificate. As a result, your offered certificate
may have phantom income early in the term of the REMIC because the taxable
income from the certificate may exceed the amount of economic income, if any,
attributable to the certificate. While you will have a corresponding amount of
tax losses later in the term of the REMIC, the present value of the phantom
income may significantly exceed the present value of the tax losses. Therefore,
the after-tax yield on any REMIC residual certificate may be significantly less
than that of a corporate bond or other instrument having similar cash flow
characteristics. In fact, some offered certificates that are residual interests,
may have a negative value.
You have to report your share of the taxable income and net loss of the
REMIC until all the certificates in the related series have a principal balance
of zero. See "Federal Income Tax Consequences--REMICs."
Some Taxable Income of a Residual Interest Can Not Be Offset Under the
Internal Revenue Code of 1986. A portion of the taxable income from a REMIC
residual certificate may be treated as excess inclusions under the Internal
Revenue Code of 1986. You will have to pay tax on the excess inclusions
regardless of whether you have other credits, deductions or losses. In
particular, the tax on excess inclusion:
o generally will not be reduced by losses from other activities;
o for a tax-exempt holder, will be treated as unrelated business taxable
income; and
o for a foreign holder, will not qualify for any exemption from
withholding tax.
Individuals and Certain Entities Should Not Invest in REMIC Residual
Certificates. The fees and non-interest expenses of a REMIC will be allocated
pro rata to certificates that are residual interests in the REMIC. However,
individuals will only be able to deduct these expenses as miscellaneous itemized
deductions, which are subject to numerous restrictions and limitations under the
Internal Revenue Code of 1986. Therefore, the certificates that are residual
interests generally are not appropriate investments for--
o individuals,
o estates,
o trusts beneficially owned by any individual or estate, and
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o pass-through entities having any individual, estate or trust as a
shareholder, member or partner.
In addition, the REMIC residual certificates will be subject to numerous
transfer restrictions. These restrictions will reduce your ability to liquidate
a REMIC residual certificate. For example, unless we indicate otherwise in the
related prospectus supplement, you will not be able to transfer a REMIC residual
certificate to:
o a foreign person under the Internal Revenue Code of 1986, or
o a U.S. person that is classified as a partnership under the Internal
Revenue Code of 1986, unless all of its beneficial owners are U.S.
persons, or
o a foreign permanent establishment or fixed base (within the meaning of
an applicable income tax treaty) of a U.S. person.
See "Federal Income Tax Consequences--REMICs--Taxation of Owners of REMIC
Residual Certificates."
PROBLEMS WITH BOOK-ENTRY REGISTRATION
Your offered certificates may be issued in book-entry form through the
facilities of the Depository Trust Company. As a result--
o you will be able to exercise your rights as a certificateholder only
indirectly through the Depository Trust Company and its participating
organizations;
o you may have only limited access to information regarding your offered
certificates;
o you may suffer delays in the receipt of payments on your offered
certificates; and
o your ability to pledge or otherwise take action with respect to your
offered certificates may be limited due to the lack of a physical
certificate evidencing your ownership of those certificates.
See "Description of the Certificates--Book-Entry Registration and
Definitive Certificates."
POTENTIAL CONFLICTS OF INTEREST CAN AFFECT A PERSON'S PERFORMANCE
The master servicer or special servicer for one of our trusts, or any of
their respective affiliates, may purchase certificates evidencing interests in
that trust.
In addition, the master servicer or special servicer for one of our trusts,
or any of their respective affiliates, may have interests in, or other financial
relationships with, borrowers under the related mortgage loans.
In servicing the mortgage loans in any of our trusts, the related master
servicer and special servicer will each be required to observe the terms of the
governing document(s) for the related series of offered certificates and, in
particular, to act in accordance with the servicing standard described in the
related prospectus supplement. You should consider, however, that either of
these parties, if it or an affiliate owns certificates, or has financial
interests in or other financial dealings with any of the related borrowers, may
have interests when dealing with the mortgage loans underlying your offered
certificates that are in conflict with your interests. For example, if the
related special servicer owns any certificates, it could seek to mitigate the
potential loss on its certificates from a troubled mortgage loan by delaying
enforcement in the hope of realizing greater proceeds in the future. However,
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this action by a special servicer could result a lower recovery to the related
trust than would have been the case if the special servicer had not delayed in
taking enforcement action.
Furthermore, the master servicer or special servicer for any of our trusts
may service existing and new loans for third parties, including portfolios of
loans similar to the mortgage loans included in that trust. The properties
securing these other loans may be in the same markets as and compete with the
properties securing mortgage loans in our trust. Accordingly, that master
servicer or special servicer may be acting on behalf of parties with conflicting
interests.
CAPITALIZED TERMS USED IN THIS PROSPECTUS
From time to time we use capitalized terms in this prospectus. Each of
those capitalized terms will have the meaning assigned to it in the "Glossary"
attached to this prospectus.
DESCRIPTION OF THE TRUST ASSETS
GENERAL
We will be responsible for establishing the trust underlying each series of
offered certificates. The assets of the trust will primarily consist of:
o various types of multifamily and/or commercial mortgage loans;
o mortgage participations, pass-through certificates, collateralized
mortgage obligations or other mortgage-backed securities that directly
or indirectly evidence interests in, or are secured by pledges of, one
or more of various types of multifamily and/or commercial mortgage
loans; or
o a combination of mortgage loans and mortgage-backed securities of the
types described above.
We do not originate mortgage loans. Accordingly, we must acquire each of
the mortgage loans to be included in one of our trusts from the originator or a
subsequent assignee. In some cases, that originator or subsequent assignee will
be one of our affiliates.
Unless we indicate otherwise in the related prospectus supplement, we will
acquire, directly or through one of our affiliates, in the secondary market, any
mortgage-backed security to be included in one of our trusts.
Neither we nor any of our affiliates will guarantee any of the mortgage
assets included in one of our trusts. Furthermore, unless we indicate otherwise
in the related prospectus supplement, no governmental agency or instrumentality
will guarantee or insure any of those mortgage assets.
MORTGAGE LOANS
General. Each mortgage loan underlying the offered certificates will
constitute the obligation of one or more persons to repay a debt. That
obligation will be evidenced by a promissory note or bond. In addition, that
obligation will be secured by a mortgage, deed of trust or other security
instrument that creates a first or junior lien on, or security interest in, an
interest in one or more of the following types of real property:
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o rental or cooperatively-owned buildings with multiple dwelling units;
o retail properties related to the sale of consumer goods and other
products to the general public, such as shopping centers, malls,
factory outlet centers, automotive sales centers, department stores
and other retail stores, grocery stores, specialty shops, convenience
stores and gas stations;
o retail properties related to providing entertainment, recreational and
personal services to the general public, such as movie theaters,
fitness centers, bowling alleys, salons, dry cleaners and automotive
service centers;
o office properties;
o hospitality properties, such as hotels, motels and other lodging
facilities;
o casino properties;
o health care-related properties, such as hospitals, skilled nursing
facilities, nursing homes, congregate care facilities and, in some
cases, assisted living centers and senior housing;
o industrial properties;
o warehouse facilities, mini-warehouse facilities and self-storage
facilities;
o restaurants, taverns and other establishments involved in the food and
beverage industry;
o manufactured housing communities, mobile home parks and recreational
vehicle parks;
o recreational and resort properties, such as golf courses, marinas, ski
resorts and amusement parks;
o arenas and stadiums;
o churches and other religious facilities;
o parking lots and garages;
o mixed use properties;
o other income-producing properties; and
o unimproved land.
The real property interests that may be encumbered in order to secure a
mortgage loan underlying your offered certificates, include--
o a fee interest or estate, which consists of ownership of the property
for an indefinite period,
o an estate for years, which consists of ownership of the property for a
specified period of years,
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o a leasehold interest or estate, which consists of a right to occupy
and use the property for a specified period of years, subject to the
terms and conditions of a lease,
o shares in a cooperative corporation which owns the property, or
o any other real estate interest under applicable local law.
Any of these real property interests may be subject to deed restrictions,
easements, rights of way and other matters of public record with respect to the
related property. In addition, the use of, and improvements that may be
constructed on, any particular real property will, in most cases, be subject to
zoning laws and other legal restrictions.
Most, if not all, of the mortgage loans underlying a series of offered
certificates will be secured by liens on real properties located in the United
States, its territories and possessions. However, some of those mortgage loans
may be secured by liens on real properties located outside the United States,
its territories and possessions, provided that foreign mortgage loans do not
represent more than 10% of the related mortgage asset pool, by balance.
If we so indicate in the related prospectus supplement, one or more of the
mortgage loans underlying a series of offered certificates may be secured by a
junior lien on the related real property. However, the loan or loans secured by
the more senior liens on that property may not be included in the related trust.
The primary risk to the holder of a mortgage loan secured by a junior lien on a
real property is the possibility that the foreclosure proceeds remaining after
payment of the loans secured by more senior liens on that property will be
insufficient to pay the junior loan in full. In a foreclosure proceeding, the
sale proceeds are applied--
o first, to the payment of court costs and fees in connection with the
foreclosure,
o second, to the payment of real estate taxes, and
o third, to the payment of any and all principal, interest, prepayment
or acceleration penalties, and other amounts owing to the holder of
the senior loans.
The claims of the holders of the senior loans must be satisfied in full before
the holder of the junior loan receives any payments with respect to the junior
loan. If a lender forecloses on a junior loan, it does so subject to any related
senior loans.
If we so indicate in the related prospectus supplement, the mortgage loans
underlying a series of offered certificates may be delinquent as of the date the
certificates are initially issued. In those cases, we will describe in the
related prospectus supplement--
o the period of the delinquency,
o any forbearance arrangement then in effect,
o the condition of the related real property, and
o the ability of the related real property to generate income to service
the mortgage debt.
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We will not, however, transfer any mortgage loan to a trust if we know that the
mortgage loan is, at the time of transfer, more than 90 days delinquent with
respect to any scheduled payment of principal or interest or in foreclosure.
A Discussion of the Various Types of Multifamily and Commercial Properties
that May Secure Mortgage Loans Underlying a Series of Offered Certificates. The
mortgage loans underlying a series of offered certificates may be secured by
numerous types of multifamily and commercial properties. As we discuss below
under "--Mortgage Loans--Default and Loss Considerations with Respect to
Commercial and Multifamily Mortgage Loans," the adequacy of an income-producing
property as security for a mortgage loan depends in large part on its value and
ability to generate net operating income. Set forth below is a discussion of
some of the various factors that may affect the value and operations of the
indicated types of multifamily and commercial properties.
Multifamily Rental Properties. Factors affecting the value and operation of
a multifamily rental property include:
o the physical attributes of the property, such as its age, appearance,
amenities and construction quality;
o the types of services offered at the property;
o the location of the property;
o the characteristics of the surrounding neighborhood, which may change
over time;
o the rents charged for dwelling units at the property relative to the
rents charged for comparable units at competing properties;
o the ability of management to provide adequate maintenance and
insurance;
o the property's reputation;
o the level of mortgage interest rates, which may encourage tenants to
purchase rather than lease housing;
o the existence or construction of competing or alternative residential
properties, including other apartment buildings and complexes,
manufactured housing communities, mobile home parks and single-family
housing;
o the 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 ability of management to respond to competition;
o the tenant mix and whether the property is primarily occupied by
workers from a particular company or type of business, personnel from
a local military base or students;
o adverse local, regional or national economic conditions, which may
limit the amount that may be charged for rents and may result in a
reduction in timely rent payments or a reduction in occupancy levels;
38
o state and local regulations, which may affect the property owner's
ability to increase rent to the market rent for an equivalent
apartment;
o the extent to which the property is subject to land use restrictive
covenants or contractual covenants that require that units be rented
to low income tenants;
o the extent to which the cost of operating the property, including the
cost of utilities and the cost of required capital expenditures, may
increase; and
o the extent to which increases in operating costs may be passed through
to tenants.
Because units in a multifamily rental property are leased to individuals on
a short-term basis the property is likely to respond relatively quickly to a
downturn in the local economy or to the closing of a major employer in the area.
Some states regulate the relationship of an owner and its tenants at a
multifamily rental property. Among other things, these states may:
o require written leases;
o require good cause for eviction;
o require disclosure of fees;
o prohibit unreasonable rules;
o prohibit retaliatory evictions;
o prohibit restrictions on a resident's choice of unit vendors;
o limit the bases on which a landlord may increase rent; or
o prohibit a landlord from terminating a tenancy solely by reason of the
sale of the owner's building.
Apartment building owners have been the subject of suits under state Unfair
and Deceptive Practices Acts and other general consumer protection statutes for
coercive, abusive or unconscionable leasing and sales practices.
Some counties and municipalities also impose rent control regulations on
apartment buildings. These regulations may limit rent increases to--
o fixed percentages,
o percentages of increases in the consumer price index,
o increases set or approved by a governmental agency, or
o increases determined through mediation or binding arbitration.
39
In many cases, the rent control laws do not provide for decontrol of rental
rates upon vacancy of individual units. Any limitations on a landlord's ability
to raise rents at a multifamily rental property may impair the landlord's
ability to repay a mortgage loan secured by the property or to meet operating
costs.
Some multifamily rental properties are subject to land use restrictive
covenants or contractual covenants in favor of federal or state housing
agencies. These covenants generally require that a minimum number or percentage
of units be rented to tenants who have incomes that are substantially lower than
median incomes in the area or region. These covenants may limit the potential
rental rates that may be charged at a multifamily rental property, the potential
tenant base for the property or both. An owner may subject a multifamily rental
property to these covenants in exchange for tax credits or rent subsidies. When
the credits or subsidies cease, net operating income will decline. 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 the property.
Some mortgage loans underlying the offered certificates will be secured
by--
o the related borrower's interest in multiple units in a residential
condominium project, and
o the related voting rights in the owners' association for the project.
Due to the nature of condominiums, a default on any of those mortgage loans will
not allow the related special servicer the same flexibility in realizing on the
real property collateral as is generally available with respect to multifamily
rental properties that are not condominiums. The rights of other unit owners,
the governing documents of the owners' association and the state and local laws
applicable to condominiums must be considered and respected. Consequently,
servicing and realizing upon the collateral for those mortgage loans could
subject the related trust to greater delay, expense and risk than a loan secured
by a multifamily rental property that is not a condominium.
Cooperatively-Owned Apartment Buildings. Some multifamily properties are
owned or leased by cooperative corporations. In general, each shareholder in the
corporation is entitled to occupy a particular apartment unit under a long-term
proprietary lease or occupancy agreement.
A tenant/shareholder of a cooperative corporation must make a monthly
maintenance payment to the corporation. The monthly maintenance payment
represents a tenant/shareholder's pro rata share of the corporation's--
o mortgage loan payments,
o real property taxes,
o maintenance expenses, and
o other capital and ordinary expenses of the property.
These monthly maintenance payments are in addition to any payments of principal
and interest the tenant/shareholder must make on any loans of the
tenant/shareholder secured by its shares in the corporation.
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A cooperative corporation is directly responsible for building maintenance
and payment of real estate taxes and hazard and liability insurance premiums. A
cooperative corporation's ability to meet debt service obligations on a mortgage
loan secured by, and to pay all other operating expenses of, the cooperatively
owned property depends primarily upon the receipt of--
o maintenance payments from the tenant/shareholders, and
o any rental income from units or commercial space that the cooperative
corporation might control.
A cooperative corporation may have to impose special assessments on the
tenant/shareholders in order to pay unanticipated expenditures. Accordingly, a
cooperative corporation is highly dependent on the financial well being of its
tenant/shareholders. A cooperative corporation's ability to pay the amount of
any balloon payment due at the maturity of a mortgage loan secured by the
cooperatively owned property depends primarily on its ability to refinance the
property. Additional factors likely to affect the economic performance of a
cooperative corporation include--
o the failure of the corporation to qualify for favorable tax treatment
as a "cooperative housing corporation" each year, which may reduce the
cash flow available to make debt service payments on a mortgage loan
secured by cooperatively owned property; and
o the possibility that, upon foreclosure, if the cooperatively owned
property becomes a rental property, certain units could be subject to
rent control, stabilization and tenants' rights law, at below market
rents, which may affect rental income levels and the marketability and
sale proceeds of the ensuing rental property as a whole.
In a typical cooperative conversion plan, the owner of a rental apartment
building contracts to sell the building to a newly formed cooperative
corporation. Shares are allocated to each apartment unit by the owner or
sponsor. The current tenants have a specified period to subscribe at prices
discounted from the prices to be offered to the public after that period. As
part of the consideration for the sale, the owner or sponsor receives all the
unsold shares of the cooperative corporation. In general the sponsor controls
the corporation's board of directors and management for a limited period of
time. If the sponsor holds the shares allocated to a large number of apartment
units, the lender on a mortgage loan secured by a cooperatively owned property
may be adversely affected by a decline in the creditworthiness of the sponsor.
Many cooperative conversion plans are non-eviction plans. Under a
non-eviction plan, a tenant at the time of conversion who chooses not to
purchase shares is entitled to reside in its apartment unit as a subtenant from
the owner of the shares allocated to that unit. Any applicable rent control or
rent stabilization laws would continue to be applicable to the subtenancy. In
addition, the subtenant may be entitled to renew its lease for an indefinite
number of years with continued protection from rent increases above those
permitted by any applicable rent control and rent stabilization laws. The
owner/shareholder is responsible for the maintenance payments to the cooperative
corporation without regard to whether it receives rent from the subtenant or
whether the rent payments are lower than maintenance payments on the unit.
Newly-formed cooperative corporations typically have the greatest concentration
of non-tenant/ shareholders.
Retail Properties. The term "retail property" encompasses a broad range of
properties at which businesses sell consumer goods and other products and
provide various entertainment, recreational or personal services to the general
public. Some examples of retail properties include--
o shopping centers,
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o factory outlet centers,
o malls,
o automotive sales and service centers,
o consumer oriented businesses,
o department stores,
o grocery stores,
o convenience stores,
o specialty shops,
o gas stations,
o movie theaters,
o fitness centers,
o bowling alleys,
o salons, and
o dry cleaners.
Unless owner occupied, retail properties generally derive all or a
substantial percentage of their income from lease payments from commercial
tenants. Therefore, it is important for the owner of a retail property to
attract and keep tenants, particularly significant tenants, that are able to
meet their lease obligations. In order to attract tenants, the owner of a retail
property may be required to--
o lower rents,
o grant a potential tenant a free rent or reduced rent period,
o improve the condition of the property generally, or
o make at its own expense, or grant a rent abatement to cover, tenant
improvements for a potential tenant.
A prospective tenant will also be interested in the number and type of
customers that it will be able to attract at a particular retail property. The
ability of a tenant at a particular retail property to attract customers will be
affected by a number of factors related to the property and the surrounding
area, including:
o competition from other retail properties;
o perceptions regarding the safety, convenience and attractiveness of
the property;
42
o perceptions regarding the safety of the surrounding area;
o demographics of the surrounding area;
o the strength and stability of the local, regional and national
economies;
o traffic patterns and access to major thoroughfares;
o the visibility of the property;
o availability of parking;
o the particular mixture of the goods and services offered at the
property;
o customer tastes, preferences and spending patterns; and
o the drawing power of other tenants.
The success of a retail property is often dependent on the success of its
tenants' businesses. A significant component of the total rent paid by tenants
of retail properties is often tied to a percentage of gross sales or revenues.
Declines in sales or revenues of the tenants will likely cause a corresponding
decline in percentage rents and/or impair the tenants' ability to pay their rent
or other occupancy costs. A default by a tenant under its lease could result in
delays and costs in enforcing the landlord's rights. Retail properties would be
directly and adversely affected by a decline in the local economy and reduced
consumer spending.
Repayment of a mortgage loan secured by a retail property will be affected
by the expiration of space leases at the property and the ability of the
borrower to renew or relet the space on comparable terms. Even if vacant space
is successfully relet, the costs associated with reletting, including tenant
improvements, leasing commissions and free rent, may be substantial and could
reduce cash flow from a retail property.
The presence or absence of an anchor tenant in a multi-tenanted retail
property can be important. Anchor tenants play a key role in generating customer
traffic and making the center desirable for other tenants. An anchor tenant is,
in general, a retail tenant whose space is substantially larger in size than
that of other tenants at the same retail property and whose operation is vital
in attracting customers to the property. A shadow anchor is usually
significantly larger in size than most tenants in the property, is important in
attracting customers to a retail property and is located sufficiently close and
conveniently to the property, but not on the property, so as to influence and
attract potential customers. At some retail properties, the anchor tenant owns
the space it occupies. In those cases where the property owner does not control
the space occupied by the anchor tenant, the property owner may not be able to
take actions with respect to the space that it otherwise typically would, such
as granting concessions to retain an anchor tenant or removing an ineffective
anchor tenant. In some cases, an anchor tenant may cease to operate at the
property, thereby leaving its space unoccupied even though it continues to own
or pay rent on the vacant or dark space. If an anchor tenant ceases operations
at a retail property, other tenants at the property may be entitled to terminate
their leases prior to the scheduled termination date or to pay rent at a reduced
rate for the remaining term of the lease. Additionally, if an anchor store that
was part of the mortgaged property were to close, the related borrower may be
unable to replace the anchor in a timely manner or without suffering adverse
economic consequences. In addition, in the event that a shadow anchor fails to
renew its lease, terminates its lease or otherwise ceases to conduct business
within a close proximity to a mortgaged property, customer traffic at the
mortgaged property may be substantially reduced.
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Various factors will adversely affect the economic performance of an
anchored retail property, including:
o an anchor tenant's failure to renew its lease;
o termination of an anchor tenant's lease;
o the bankruptcy or economic decline of an anchor tenant or a self-owned
anchor;
o the cessation of the business of a self-owned anchor or of an anchor
tenant, notwithstanding its continued ownership of the previously
occupied space or its continued payment of rent, as the case may be;
or
o a loss of an anchor tenant's ability to attract shoppers.
Retail properties may also face competition from sources outside a given
real estate market or with lower operating costs. For example, all of the
following compete with more traditional department stores and specialty shops
for consumer dollars:
o factory outlet centers;
o discount shopping centers and clubs;
o catalogue retailers;
o television shopping networks and programs;
o internet web sites; and
o telemarketing.
Similarly, home movie rentals and pay-per-view movies provide alternate
sources of entertainment to movie theaters. Continued growth of these
alternative retail outlets and entertainment sources, which are often
characterized by lower operating costs, could adversely affect the rents
collectible at retail properties.
Gas stations, automotive sales and service centers and dry cleaners also
pose unique environmental risks because of the nature of their businesses and
the types of products used or sold in those businesses.
Office Properties. Factors affecting the value and operation of an office
property include:
o the number and quality of the tenants, particularly significant
tenants, at the property;
o the physical attributes of the building in relation to competing
buildings;
o the location of the property with respect to the central business
district or population centers;
o demographic trends within the metropolitan area to move away from or
towards the central business district;
44
o social trends combined with space management trends, which may change
towards options such as telecommuting or hoteling to satisfy space
needs;
o tax incentives offered to businesses or property owners by cities or
suburbs adjacent to or near where the building is located;
o local competitive conditions, such as the supply of office space or
the existence or construction of new competitive office buildings;
o the quality and philosophy of building management;
o access to mass transportation; and
o changes in zoning laws.
Office properties may be adversely affected by an economic decline in the
business operated by their tenants. The risk associated with that economic
decline 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 properties are also subject to competition with other office
properties in the same market. Competitive factors affecting an office property
include:
o rental rates;
o the building's age, condition and design, including floor sizes and
layout;
o access to public transportation and availability of parking; and
o amenities offered to its tenants, including sophisticated building
systems, such as fiber optic cables, satellite communications or other
base building technological features.
The cost of refitting office space for a new tenant is often higher than
for other property types.
The success of an office property also depends on the local economy.
Factors influencing a company's decision to locate in a given area include:
o the cost and quality of labor;
o tax incentives; and
o quality of life matters, such as schools and cultural amenities.
The strength and stability of the local or regional economy will affect an
office property's ability to attract stable tenants on a consistent basis. A
central business district may have a substantially different economy from that
of a suburb.
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Hospitality Properties. Hospitality properties may involve different types
of hotels and motels, including:
o full service hotels;
o resort hotels with many amenities;
o limited service hotels;
o hotels and motels associated with national or regional franchise
chains;
o hotels that are not affiliated with any franchise chain but may have
their own brand identity; and
o other lodging facilities.
Factors affecting the economic performance of a hospitality property
include:
o the location of the property and its proximity to major population
centers or attractions;
o the seasonal nature of business at the property;
o the level of room rates relative to those charged by competitors;
o quality and perception of the franchise affiliation;
o economic conditions, either local, regional or national, which may
limit the amount that can be charged for a room and may result in a
reduction in occupancy levels;
o the existence or construction of competing hospitality properties;
o nature and quality of the services and facilities;
o financial strength and capabilities of the owner and operator;
o the need for continuing expenditures for modernizing, refurbishing and
maintaining existing facilities;
o increases in operating costs, which may not be offset by increased
room rates;
o the property's dependence on business and commercial travelers and
tourism;
o changes in travel patterns caused by changes in access, energy prices,
labor strikes, relocation of highways, the reconstruction of
additional highways or other factors; and
o changes in travel patterns caused by perceptions of travel safety,
which perceptions can be significantly and adversely influenced by
terrorist acts and foreign conflict as well as apprehension regarding
the possibility of such acts or conflicts.
Because limited service hotels and motels are relatively quick and
inexpensive to construct and may quickly reflect a positive value, an
over-building of these hotels and motels could occur in any given region,
46
which would likely adversely affect occupancy and daily room rates. Further,
because rooms at hospitality properties are generally rented for short periods
of time, hospitality properties tend to be more sensitive to adverse economic
conditions and competition than many other types of commercial properties.
Additionally, the revenues of some hospitality properties, particularly those
located in regions whose economies depend upon tourism, may be highly seasonal
in nature.
Hospitality properties may be operated under franchise agreements. The
continuation of a franchise is typically subject to specified operating
standards and other terms and conditions. The franchisor periodically inspects
its licensed properties to confirm adherence to its operating standards. The
failure of the hospitality property to maintain those standards or adhere to
those other terms and conditions could result in the loss or cancellation of the
franchise license. It is possible that the franchisor could condition the
continuation of a franchise license on the completion of capital improvements or
the making of capital expenditures that the owner of the hospitality property
determines are too expensive or are otherwise unwarranted in light of the
operating results or prospects of the property. In that event, the owner of the
hospitality property may elect to allow the franchise license to lapse. In any
case, if the franchise is terminated, the owner of the hospitality property may
seek to obtain a suitable replacement franchise or to operate property
independently of a franchise license. The loss of a franchise license could have
a material adverse effect upon the operations or value of the hospitality
property because of the loss of associated name recognition, marketing support
and centralized reservation systems provided by the franchisor.
The viability of any hospitality property that is a franchise of a national
or a regional hotel or motel chain is dependent upon:
o the continued existence and financial strength of the franchisor;
o the public perception of the franchise service mark; and
o the duration of the franchise licensing agreement.
The transferability of franchise license agreements may be restricted. The
consent of the franchisor would be required for the continued use of the
franchise license by the hospitality property following a foreclosure.
Conversely, a lender may be unable to remove a franchisor that it desires to
replace following a foreclosure. Additionally, any provision in a franchise
agreement or management agreement providing for termination because of a
bankruptcy of a franchisor or manager will generally not be enforceable. Further
in the event of a foreclosure on a hospitality property, the lender or other
purchaser of the hospitality property may not be entitled to the rights under
any associated liquor license. That party would be required to apply in its own
right for a new liquor license. There can be no assurance that a new license
could be obtained or that it could be obtained promptly.
Casino Properties. Factors affecting the economic performance of a casino
property include:
o location, including proximity to or easy access from major population
centers;
o appearance;
o economic conditions, either local, regional or national, which may
limit the amount of disposable income that potential patrons may have
for gambling;
o the existence or construction of competing casinos;
47
o dependence on tourism; and
o local or state governmental regulation.
Competition among major casinos may involve attracting patrons by--
o providing alternate forms of entertainment, such as performers and
sporting events, and
o offering low-priced or free food and lodging.
Casino owners may expend substantial sums to modernize, refurbish and
maintain existing facilities.
Because of their dependence on disposable income of patrons, casino
properties are likely to respond quickly to a downturn in the economy.
The ownership and operation of casino properties is often subject to local
or state governmental regulation. A government agency or authority may have
jurisdiction over or influence with respect to the foreclosure of a casino
property or the bankruptcy of its owner or operator. In some jurisdictions, it
may be necessary to receive governmental approval before foreclosing, thereby
resulting in substantial delays to a lender. Gaming licenses are not
transferable, including in connection with a foreclosure. There can be no
assurance that a lender or another purchaser in foreclosure or otherwise will be
able to obtain the requisite approvals to continue operating the foreclosed
property as a casino.
Any given state or municipality that currently allows legalized gambling
could pass legislation banning it.
The loss of a gaming license for any reason would have a material adverse
effect on the value of a casino property.
Health Care-Related Properties. Health-care related properties include:
o hospitals;
o medical offices;
o skilled nursing facilities;
o nursing homes;
o congregate care facilities; and
o in some cases, assisted living centers and housing for seniors.
Health care-related facilities, particularly nursing homes, may receive a
substantial portion of their revenues from government reimbursement programs,
primarily Medicaid and Medicare. Medicaid and Medicare are subject to:
o statutory and regulatory changes;
o retroactive rate adjustments;
48
o administrative rulings;
o policy interpretations;
o delays by fiscal intermediaries; and
o government funding restrictions.
All of the foregoing can adversely affect revenues from the operation a health
care-related facility. Moreover, governmental payors have employed
cost-containment measures that limit payments to health care providers. In
addition, there are currently under consideration various proposals for national
health care relief that could further limit these payments.
Providers of long-term nursing care and other medical services are highly
regulated by federal, state and local law. They are subject to numerous factors
which can increase the cost of operation, limit growth and, in extreme cases,
require or result in suspension or cessation of operations, including:
o federal and state licensing requirements;
o facility inspections;
o rate setting;
o reimbursement policies; and
o laws relating to the adequacy of medical care, distribution of
pharmaceuticals, use of equipment, personnel operating policies and
maintenance of and additions to facilities and services.
Under applicable federal and state laws and regulations, Medicare and
Medicaid reimbursements generally may not be made to any person other than the
provider who actually furnished the related material goods and services.
Accordingly, in the event of foreclosure on a health care-related facility,
neither a lender nor other subsequent lessee or operator of the property would
generally be entitled to obtain from federal or state governments any
outstanding reimbursement payments relating to services furnished at the
property prior to foreclosure. Furthermore, in the event of foreclosure, there
can be no assurance that a lender or other purchaser in a foreclosure sale would
be entitled to the rights under any required licenses and regulatory approvals.
The lender or other purchaser may have to apply in its own right for those
licenses and approvals. There can be no assurance that a new license could be
obtained or that a new approval would be granted.
Health care-related facilities are generally special purpose properties
that could not be readily converted to general residential, retail or office
use. This will adversely affect their liquidation value. Furthermore, transfers
of health care-related facilities are subject to regulatory approvals under
state, and in some cases federal, law not required for transfers of most other
types of commercial properties.
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Industrial Properties. Industrial properties may be adversely affected by
reduced demand for industrial space occasioned by a decline in a particular
industry segment and/or by a general slowdown in the economy. In addition, an
industrial property that suited the particular needs of its original tenant may
be difficult to relet to another tenant or may become functionally obsolete
relative to newer properties. Also, lease terms with respect to industrial
properties are generally for shorter periods of time and may result in a
substantial percentage of leases expiring in the same year at any particular
industrial property.
The value and operation of an industrial property depends on:
o location of the property, the desirability of which in a particular
instance may depend on--
1. availability of labor services,
2. proximity to supply sources and customers, and
3. accessibility to various modes of transportation and shipping,
including railways, roadways, airline terminals and ports;
o building design of the property, the desirability of which in a
particular instance may depend on--
1. ceiling heights,
2. column spacing,
3. number and depth of loading bays,
4. divisibility,
5. floor loading capacities,
6. truck turning radius,
7. overall functionality, and
8. adaptability of the property, because industrial tenants often
need space that is acceptable for highly specialized activities;
and
o the quality and creditworthiness of individual tenants, because
industrial properties frequently have higher tenant concentrations.
Industrial properties are generally special purpose properties that could
not be readily converted to general residential, retail or office use. This will
adversely affect their liquidation value. In addition, properties used for many
industrial purposes are more prone to environmental concerns than other property
types.
Warehouse, Mini-Warehouse and Self-Storage Facilities. Warehouse,
mini-warehouse and self-storage properties are considered vulnerable to
competition because both acquisition costs and break-even occupancy are
relatively low. In addition, it would require substantial capital expenditures
to convert a warehouse, mini-warehouse or self-storage property to an
alternative use. This will materially impair the liquidation value of the
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property if its operation for storage purposes becomes unprofitable due to
decreased demand, competition, age of improvements or other factors.
Successful operation of a warehouse, mini-warehouse or self-storage
property depends on--
o building design,
o location and visibility,
o tenant privacy,
o efficient access to the property,
o proximity to potential users, including apartment complexes or
commercial users,
o services provided at the property, such as security,
o age and appearance of the improvements, and
o quality of management.
In addition, it is difficult to assess the environmental risks posed by
warehouse, mini-warehouse and self-storage properties due to tenant privacy
restrictions, tenant anonymity and unsupervised access to such facilities.
Therefore, these facilities may pose additional environmental risks to
investors. Environmental site assessments performed with respect to warehouse,
mini-warehouse and self-storage properties would not include an inspection of
the contents of the facilities. Therefore, it would not be possible to provide
assurance that any of the units included in these kinds of facilities are free
from hazardous substances or other pollutants or contaminants.
Restaurants and Taverns. Factors affecting the economic viability of
individual restaurants, taverns and other establishments that are part of the
food and beverage service industry include:
o competition from facilities having businesses similar to a particular
restaurant or tavern;
o perceptions by prospective customers of safety, convenience, services
and attractiveness;
o the cost, quality and availability of food and beverage products;
o negative publicity, resulting from instances of food contamination,
food-borne illness and similar events;
o changes in demographics, consumer habits and traffic patterns;
o the ability to provide or contract for capable management; and
o retroactive changes to building codes, similar ordinances and other
legal requirements.
Adverse economic conditions, whether local, regional or national, may limit
the amount that may be charged for food and beverages and the extent to which
potential customers dine out. Because of the nature of the business, restaurants
and taverns tend to respond to adverse economic conditions more quickly than do
many
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other types of commercial properties. Furthermore, the transferability of any
operating, liquor and other licenses to an entity acquiring a bar or restaurant,
either through purchase or foreclosure, is subject to local law requirements.
The food and beverage service industry is highly competitive. The principal
means of competition are--
o market segment,
o product,
o price,
o value,
o quality,
o service,
o convenience,
o location, and
o the nature and condition of the restaurant facility.
A restaurant or tavern operator competes with the operators of comparable
establishments in the area in which its restaurant or tavern is located. Other
restaurants could have--
o lower operating costs,
o more favorable locations,
o more effective marketing,
o more efficient operations, or
o better facilities.
The location and condition of a particular restaurant or tavern will affect
the number of customers and, to an extent, the prices that may be charged. The
characteristics of an area or neighborhood in which a restaurant or tavern is
located may change over time or in relation to competing facilities. Also, the
cleanliness and maintenance at a restaurant or tavern will affect its appeal to
customers. In the case of a regionally- or nationally-known chain restaurant,
there may be costly expenditures for renovation, refurbishment or expansion,
regardless of its condition.
Factors affecting the success of a regionally- or nationally-known chain
restaurant include:
o actions and omissions of any franchisor, including management
practices that--
1. adversely affect the nature of the business, or
52
2. require renovation, refurbishment, expansion or other
expenditures;
o the degree of support provided or arranged by the franchisor,
including its franchisee organizations and third-party providers of
products or services; and
o the bankruptcy or business discontinuation of the franchisor or any of
its franchisee organizations or third-party providers.
Chain restaurants may be operated under franchise agreements. Those
agreements typically do not contain provisions protective of lenders. A
borrower's rights as franchisee typically may be terminated without informing
the lender, and the borrower may be precluded from competing with the franchisor
upon termination. In addition, a lender that acquires title to a restaurant site
through foreclosure or similar proceedings may be restricted in the use of the
site or may be unable to succeed to the rights of the franchisee under the
related franchise agreement. The transferability of a franchise may be subject
to other restrictions. Also, federal and state franchise regulations may impose
additional risk, including the risk that the transfer of a franchise acquired
through foreclosure or similar proceedings may require registration with
governmental authorities or disclosure to prospective transferees.
Manufactured Housing Communities, Mobile Home Parks and Recreational
Vehicle Parks. Manufactured housing communities and mobile home parks consist of
land that is divided into "spaces" or "home sites" that are primarily leased to
owners of the individual mobile homes or other housing units. The home owner
often invests in site-specific improvements such as carports, steps, fencing,
skirts around the base of the home, and landscaping. The land owner typically
provides private roads within the park, common facilities and, in many cases,
utilities. Due to relocation costs and, in some cases, demand for homesites, the
value of a mobile home or other housing unit in place in a manufactured housing
community or mobile home park is generally higher, and can be significantly
higher, than the value of the same unit not placed in a manufactured housing
community or mobile home park. As a result, a well-operated manufactured housing
community or mobile home park that has achieved stabilized occupancy is
typically able to maintain occupancy at or near that level. For the same reason,
a lender that provided financing for the home of a tenant who defaulted in his
or her space rent generally has an incentive to keep rental payments current
until the home can be resold in place, rather than to allow the unit to be
removed from the park. In general, the individual mobile homes and other housing
units will not constitute collateral for a mortgage loan underlying a series of
offered certificates.
Recreational vehicle parks lease spaces primarily or exclusively for motor
homes, travel trailers and portable truck campers, primarily designed for
recreational, camping or travel use. In general, parks that lease recreational
vehicle spaces can be viewed as having a less stable tenant population than
parks occupied predominantly by mobile homes. However, it is not unusual for the
owner of a recreational vehicle to leave the vehicle at the park on a year-round
basis or to use the vehicle as low cost housing and reside in the park
indefinitely.
Factors affecting the successful operation of a manufactured housing
community, mobile home park or recreational vehicle park include:
o location of the manufactured housing property;
o the ability of management to provide adequate maintenance and
insurance;
o the number of comparable competing properties in the local market;
53
o the age, appearance and reputation of the property;
o the quality of management; and
o the types of facilities and services it provides.
Manufactured housing communities and mobile home parks also compete against
alternative forms of residential housing, including--
o multifamily rental properties,
o cooperatively-owned apartment buildings,
o condominium complexes, and
o single-family residential developments.
Recreational vehicle parks also compete against alternative forms of
recreation and short-term lodging, such as staying at a hotel at the beach.
Manufactured housing communities, mobile home parks and recreational
vehicle parks are special purpose properties that could not be readily converted
to general residential, retail or office use. This will adversely affect the
liquidation value of the property if its operation as a manufactured housing
community, mobile home park or recreational vehicle park, as the case may be,
becomes unprofitable due to competition, age of the improvements or other
factors.
Some states regulate the relationship of an owner of a manufactured housing
community or mobile home park and its tenants in a manner similar to the way
they regulate the relationship between a landlord and tenant at a multifamily
rental property. In addition, some states also regulate changes in the use of a
manufactured housing community or mobile home park and require that the owner
give written notice to its tenants a substantial period of time prior to the
projected change.
In addition to state regulation of the landlord-tenant relationship,
numerous counties and municipalities impose rent control on manufactured housing
communities and mobile home parks. These ordinances may limit rent increases
to--
o fixed percentages,
o percentages of increases in the consumer price index,
o increases set or approved by a governmental agency, or
o increases determined through mediation or binding arbitration.
In many cases, the rent control laws either do not permit vacancy decontrol
or permit vacancy decontrol only in the relatively rare event that the mobile
home or manufactured housing unit is removed from the homesite. Local authority
to impose rent control on manufactured housing communities and mobile home parks
is pre-empted by state law in some states
54
and rent control is not imposed at the state level in those states. In some
states, however, local rent control ordinances are not pre-empted for tenants
having short-term or month-to-month leases, and properties there may be subject
to various forms of rent control with respect to those tenants.
Recreational and Resort Properties. Any mortgage loan underlying a series
of offered certificates may be secured by a golf course, marina, ski resort,
amusement park or other property used for recreational purposes or as a resort.
Factors affecting the economic performance of a property of this type include:
o the location and appearance of the property;
o the appeal of the recreational activities offered;
o the existence or construction of competing properties, whether are not
they offer the same activities;
o the need to make capital expenditures to maintain, refurbish, improve
and/or expand facilities in order to attract potential patrons;
o geographic location and dependence on tourism;
o changes in travel patterns caused by changes in energy prices,
strikes, location of highways, construction of additional highways and
similar factors;
o seasonality of the business, which may cause periodic fluctuations in
operating revenues and expenses;
o sensitivity to weather and climate changes; and
o local, regional and national economic conditions.
A marina or other recreational or resort property located next to water
will also be affected by various statutes and government regulations that govern
the use of, and construction on, rivers, lakes and other waterways.
Because of the nature of the business, recreational and resort properties
tend to respond to adverse economic conditions more quickly than do many other
types of commercial properties.
Recreational and resort properties are generally special purpose properties
that are not readily convertible to alternative uses. This will adversely affect
their liquidation value.
Arenas and Stadiums. The success of an arena or stadium generally depends
on its ability to attract patrons to a variety of events, including:
o sporting events;
o musical events;
o theatrical events;
o animal shows; and/or
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o circuses.
The ability to attract patrons is dependent on, among others, the following
factors:
o the appeal of the particular event;
o the cost of admission;
o perceptions by prospective patrons of the safety, convenience,
services and attractiveness of the arena or stadium;
o perceptions by prospective patrons of the safety of the surrounding
area; and
o the alternative forms of entertainment available in the particular
locale.
In some cases, an arena's or stadium's success will depend on its ability
to attract and keep a sporting team as a tenant. An arena or stadium may become
unprofitable, or unacceptable to a tenant of that type, due to decreased
attendance, competition and age of improvements. Often, substantial expenditures
must be made to modernize, refurbish and/or maintain existing facilities.
Arenas and stadiums are special purpose properties which cannot be readily
convertible to alternative uses. This will adversely affect their liquidation
value.
Churches and Other Religious Facilities. Churches and other religious
facilities generally depend on charitable donations to meet expenses and pay for
maintenance and capital expenditures. The extent of those donations is dependent
on the attendance at any particular religious facility and the extent to which
attendees are prepared to make donations, which is influenced by a variety of
social, political and economic factors. Donations may be adversely affected by
economic conditions, whether local, regional or national. Religious facilities
are special purpose properties that are not readily convertible to alternative
uses. This will adversely affect their liquidation value.
Parking Lots and Garages. The primary source of income for parking lots and
garages is the rental fees charged for parking spaces. Factors affecting the
success of a parking lot or garage include:
o the number of rentable parking spaces and rates charged;
o the location of the lot or garage and, in particular, its proximity to
places where large numbers of people work, shop or live;
o the amount of alternative parking spaces in the area;
o the availability of mass transit; and
o the perceptions of the safety, convenience and services of the lot or
garage.
Unimproved Land. The value of unimproved land is largely a function of its
potential use. This may depend on--
o its location,
56
o its size,
o the surrounding neighborhood, and
o local zoning laws.
Default and Loss Considerations with Respect to Commercial and Multifamily
Mortgage Loans. Mortgage loans secured by liens on income-producing properties
are substantially different from mortgage loans made on the security of
owner-occupied single-family homes. The repayment of a loan secured by a lien on
an income-producing property is typically dependent upon--
o the successful operation of the property, and
o its ability to generate income sufficient to make payments on the
loan.
This is particularly true because most or all of the mortgage loans underlying
the offered certificates will be nonrecourse loans.
The debt service coverage ratio of a multifamily or commercial mortgage
loan is an important measure of the likelihood of default on the loan. In
general, the debt service coverage ratio of a multifamily or commercial mortgage
loan at any given time is the ratio of--
o the amount of income derived or expected to be derived from the
related real property for a twelve-month period that is available to
pay debt service, to
o the annualized scheduled payments of principal and/or interest on the
mortgage loan and any other senior loans that are secured by the
related real property.
The amount described in the first bullet point of the preceding sentence is
often a highly subjective number based on a variety of assumptions regarding,
and adjustments to, revenues and expenses with respect to the related real
property. We will provide a more detailed discussion of its calculation in the
related prospectus supplement.
The cash flow generated by a multifamily or commercial property will
generally fluctuate over time and may or may not be sufficient to--
o make the loan payments on the related mortgage loan,
o cover operating expenses, and
o fund capital improvements at any given time.
Operating revenues of a nonowner occupied, income-producing property may be
affected by the condition of the applicable real estate market and/or area
economy. Properties leased, occupied or used on a short-term basis, such as--
o some health care-related facilities,
o hotels and motels,
57
o recreational vehicle parks, and
o mini-warehouse and self-storage facilities,
tend to be affected more rapidly by changes in market or business conditions
than do properties typically leased for longer periods, such as--
o warehouses,
o retail stores,
o office buildings, and
o industrial facilities.
Some commercial properties may be owner-occupied or leased to a small
number of tenants. Accordingly, the operating revenues may depend substantially
on the financial condition of the borrower or one or a few tenants. Mortgage
loans secured by liens on owner-occupied and single tenant properties may pose a
greater likelihood of default and loss than loans secured by liens on
multifamily properties or on multi-tenant commercial properties.
Increases in property operating expenses can increase the likelihood of a
borrower default on a multifamily or commercial mortgage loan secured by the
property. Increases in property operating expenses may result from:
o increases in energy costs and labor costs;
o increases in interest rates and real estate tax rates; and
o changes in governmental rules, regulations and fiscal policies.
Some net leases of commercial properties may provide that the lessee,
rather than the borrower/landlord, is responsible for payment of operating
expenses. However, a net lease will result in stable net operating income to the
borrower/landlord only if the lessee is able to pay the increased operating
expense while also continuing to make rent payments.
Lenders also look to the loan-to-value ratio of a mortgage loan as a factor
in evaluating the likelihood of loss if a property is liquidated following a
default. In general, the loan-to-value ratio of a multifamily or commercial
mortgage loan at any given time is the ratio, expressed as a percentage, of--
o the then outstanding principal balance of the mortgage loan and any
other senior loans that are secured by the related real property, to
o the estimated value of the related real property based on an
appraisal, a cash flow analysis, a recent sales price or another
method or benchmark of valuation.
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A low loan-to-value ratio means the borrower has a large amount of its own
equity in the multifamily or commercial property that secures its loan. In these
circumstances--
o the borrower has a greater incentive to perform under the terms of the
related mortgage loan in order to protect that equity, and
o the lender has greater protection against loss on liquidation
following a borrower default.
Loan-to-value ratios are not necessarily an accurate measure of the
likelihood of liquidation loss in a pool of multifamily and commercial mortgage
loans. For example, the value of a multifamily or commercial property as of the
date of initial issuance of a series of offered certificates may be less than
the estimated value determined at loan origination. The value of any real
property, in particular a multifamily or commercial property, will likely
fluctuate from time to time. Moreover, even a current appraisal is not
necessarily a reliable estimate of value. Appraised values of income-producing
properties are generally based on:
o the market comparison method, which takes into account the recent
resale value of comparable properties at the date of the appraisal;
o the cost replacement method, which takes into account the cost of
replacing the property at the date of the appraisal;
o the income capitalization method, which takes into account the
property's projected net cash flow; or
o a selection from the values derived from the foregoing methods.
Each of these appraisal methods presents analytical difficulties. For
example:
o it is often difficult to find truly comparable properties that have
recently been sold;
o the replacement cost of a property may have little to do with its
current market value; and
o income capitalization is inherently based on inexact projections of
income and expense and the selection of an appropriate capitalization
rate and discount rate.
If more than one appraisal method is used and significantly different
results are produced, an accurate determination of value and, correspondingly, a
reliable analysis of the likelihood of default and loss, is even more difficult.
The value of a multifamily or commercial property will be affected by
property performance. As a result, if a multifamily or commercial mortgage loan
defaults because the income generated by the related property is insufficient to
pay operating costs and expenses as well as debt service, then the value of the
property will decline and a liquidation loss may occur.
We believe that the foregoing considerations are important factors that
generally distinguish mortgage loans secured by liens on income-producing real
estate from single-family mortgage loans. However, the originators of the
mortgage loans underlying your offered certificates may not have considered all
of those factors for all or any of those loans.
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See "Risk Factors--Repayment of a Commercial or Multifamily Mortgage Loan
Depends Upon the Performance and Value of the Underlying Real Property, Which
May Decline Over Time, and the Related Borrower's Ability to Refinance the
Property, of Which There Is No Assurance."
Payment Provisions of the Mortgage Loans. Each of the mortgage loans
included in one of our trusts will have the following features:
o an original term to maturity of not more than approximately 40 years;
and
o scheduled payments of principal, interest or both, to be made on
specified dates, that occur monthly, bi-monthly, quarterly,
semi-annually, annually or at some other interval.
A mortgage loan included in one of our trusts may also include terms that:
o provide for the accrual of interest at a mortgage interest rate that
is fixed over its term, that resets on one or more specified dates or
that otherwise adjusts from time to time;
o provide for the accrual of interest at a mortgage interest rate 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;
o provide for no accrual of interest;
o provide for level payments to stated maturity, for payments that reset
in amount on one or more specified dates or for payments that
otherwise adjust from time to time to accommodate changes in the
coupon rate or to reflect the occurrence of specified events;
o be fully amortizing or, alternatively, may be partially amortizing or
nonamortizing, with a substantial payment of principal due on its
stated maturity date;
o permit the negative amortization or deferral of accrued interest;
o permit defeasance and the release of the real property collateral in
connection with that defeasance; and/or
o prohibit some or all voluntary prepayments or require payment of a
premium, fee or charge in connection with those prepayments.
Mortgage Loan Information in Prospectus Supplements. We will describe in
the related prospectus supplement the characteristics of the mortgage loans that
we will include in any of our trusts. In general, we will provide in the related
prospectus supplement, among other items, the following information on the
particular mortgage loans in one of our trusts:
o the total outstanding principal balance and the largest, smallest and
average outstanding principal balance of the mortgage loans;
o the type or types of property that provide security for repayment of
the mortgage loans;
o the earliest and latest origination date and maturity date of the
mortgage loans;
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o the original and remaining terms to maturity of the mortgage loans, or
the range of each of those terms to maturity, and the weighted average
original and remaining terms to maturity of the mortgage loans;
o loan-to-value ratios of the mortgage loans either at origination or as
of a more recent date, or the range of those loan-to-value ratios, and
the weighted average of those loan-to-value ratios;
o the mortgage interest rates of the mortgage loans, or the range of
those mortgage interest rates, and the weighted average mortgage
interest rate of the mortgage loans;
o if any mortgage loans have adjustable mortgage interest rates, the
index or indices upon which the 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 loan;
o information on the payment characteristics of the mortgage loans,
including applicable prepayment restrictions;
o debt service coverage ratios of the mortgage loans either at
origination or as of a more recent date, or the range of those debt
service coverage ratios, and the weighted average of those debt
service coverage ratios; and
o the geographic distribution of the properties securing the mortgage
loans on a state-by-state basis.
If we are unable to provide the specific information described above at the
time a series of offered certificates is initially offered, we will provide--
o more general information in the related prospectus supplement, and
o specific information in a report which will be filed with the SEC as
part of a Current Report on Form 8-K within 15 days following the
issuance of those certificates.
If any mortgage loan, or group of related mortgage loans, included in one
of our trusts represents a material concentration of credit risk, we will
include in the related prospectus supplement financial statements or other
financial information on the related real property or properties.
MORTGAGE-BACKED SECURITIES
The mortgage-backed securities underlying a series of offered certificates
may include:
o mortgage participations, mortgage pass-through certificates,
collateralized mortgage obligations or other mortgage-backed
securities that are not insured or guaranteed by any governmental
agency or instrumentality, or
o certificates issued and/or insured or guaranteed by Freddie Mac,
Fannie Mae, Ginnie Mae, Farmer Mac, or another federal or state
governmental agency or instrumentality.
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In addition, each of those mortgage-backed securities will directly or
indirectly evidence an interest in, or be secured by a pledge of, multifamily
and/or commercial mortgage loans.
Each mortgage-backed security included in one of our trusts--
o will have been registered under the Securities Act of 1933, as
amended, or
o will be exempt from the registration requirements of that Act, or
o will have been held for at least the holding period specified in Rule
144(k) under that Act, or
o may otherwise be resold by us publicly without registration under that
Act.
We will describe in the related prospectus supplement the characteristics
of the mortgage-backed securities that we will include in any of our trusts. In
general, we will provide in the related prospectus supplement, among other
items, the following information on the particular mortgage-backed securities
included in one of our trusts:
o the initial and outstanding principal amount(s) and type of the
securities;
o the original and remaining term(s) to stated maturity of the
securities;
o the pass-through or bond rate(s) of the securities or the formula for
determining those rate(s);
o the payment characteristics of the securities;
o the identity of the issuer(s), servicer(s) and trustee(s) for the
securities;
o a description of the related credit support, if any;
o the type of mortgage loans underlying the securities;
o the circumstances under which the related underlying mortgage loans,
or the securities themselves, may be purchased prior to maturity;
o the terms and conditions for substituting mortgage loans backing the
securities; and
o the characteristics of any agreements or instruments providing
interest rate protection to the securities.
With respect to any mortgage-backed security included in one of our trusts,
we will provide in our reports filed under the Securities Exchange Act of 1934,
as amended, the same information regarding the security as is provided by the
issuer of the security in its own reports filed under that Act, if the security
was publicly offered, or in the reports the issuer of the security provides to
the related trustee, if the security was privately issued.
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SUBSTITUTION, ACQUISITION AND REMOVAL OF MORTGAGE ASSETS
If so specified in the related prospectus supplement, we or another
specified person or entity may be permitted, at our or its option, but subject
to the conditions specified in that prospectus supplement, to acquire from the
related trust particular mortgage assets underlying a series of offered
certificates in exchange for:
o cash that would be applied to pay down the principal balances of the
certificates of that series; and/or
o other mortgage loans or mortgage-backed securities that--
1. conform to the description of mortgage assets in this prospectus,
and
2. satisfy the criteria set forth in the related prospectus
supplement.
In addition, if so specified in the related prospectus supplement, the
trustee may be authorized or required to apply collections on the related
mortgage assets to acquire new mortgage loans or mortgage-backed securities
that--
o conform to the description of mortgage assets in this prospectus, and
o satisfy the criteria set forth in the related prospectus supplement.
No replacement of mortgage assets or acquisition of new mortgage assets
will be permitted if it would result in a qualification, downgrade or withdrawal
of the then-current rating assigned by any rating agency to any class of
affected offered certificates.
Further, if so specified in the related prospectus supplement, a
certificateholder of a series of certificates that includes offered certificates
may exchange the certificates it holds for one or more of the mortgage loans or
mortgage-backed securities constituting part of the mortgage pool underlying
those certificates. We will describe in the related prospectus supplement the
circumstances under which the exchange may occur.
UNDELIVERED MORTGAGE ASSETS
In general, the total outstanding principal balance of the mortgage assets
transferred by us to any particular trust will equal or exceed the initial total
outstanding principal balance of the related series of certificates. In the
event that the total outstanding principal balance of the related mortgage
assets initially delivered by us to the related trustee is less than the initial
total outstanding principal balance of any series of certificates, we may
deposit or arrange for the deposit of cash or liquid investments on an interim
basis with the related trustee to cover the shortfall. For 90 days following the
date of initial issuance of that series of certificates, we will be entitled to
obtain a release of the deposited cash or investments if we deliver or arrange
for delivery of a corresponding amount of mortgage assets. If we fail, however,
to deliver mortgage assets sufficient to make up the entire shortfall, any of
the cash or, following liquidation, investments remaining on deposit with the
related trustee will be used by the related trustee to pay down the total
principal balance of the related series of certificates, as described in the
related prospectus supplement.
ACCOUNTS
The trust assets underlying a series of offered certificates will include
one or more accounts established and maintained on behalf of the holders. All
payments and collections received or advanced on the mortgage
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assets and other trust assets will be deposited and held in those accounts. We
will identify and describe those accounts, and will further describe the
deposits to and withdrawals from those accounts, in the related prospectus
supplement.
CREDIT SUPPORT
The holders of any class of offered certificates may be the beneficiaries
of credit support designed to protect them partially or fully against all or
particular defaults and losses on the related mortgage assets. The types of
credit support that may benefit the holders of a class of offered certificates
include:
o the subordination or one or more other classes of certificates of the
same series;
o a letter of credit;
o a surety bond;
o an insurance policy;
o a guarantee; and/or
o a reserve fund.
In the related prospectus supplement, we will describe the amount and types
of any credit support benefiting the holders of a class of offered certificates.
ARRANGEMENTS PROVIDING REINVESTMENT, INTEREST RATE AND CURRENCY RELATED
PROTECTION
The trust assets for a series of offered certificates may include
guaranteed investment contracts in accordance with which moneys held in the
funds and accounts established for that series will be invested at a specified
rate. Those trust assets may also include:
o interest rate exchange agreements;
o interest rate cap agreements;
o interest rate floor agreements;
o currency exchange agreements; or
o other agreements or arrangements designed to reduce the effects of
interest rate or currency exchange rate fluctuations with respect to
the related mortgage assets and one or more classes of offered
certificates.
In the related prospectus supplement, we will describe any agreements or
other arrangements designed to protect the holders of a class of offered
certificates against shortfalls resulting from movements or fluctuations in
interest rates or currency exchange rates. If applicable, we will also identify
any obligor under the agreement or other arrangement.
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YIELD AND MATURITY CONSIDERATIONS
GENERAL
The yield on your offered certificates will depend on--
o the price you paid for your offered certificates,
o the pass-through rate on your offered certificates,
o the amount and timing of payments on your offered certificates.
The following discussion contemplates a trust established by us that
consists only of mortgage loans. If one of our trusts also includes a
mortgage-backed security, the payment terms of that security will soften or
enhance the effects that the characteristics and behavior of mortgage loans
backing that security can have on the yield to maturity and/or weighted average
life of a class of offered certificates. If one of our trusts includes a
mortgage-backed security, we will discuss in the related prospectus supplement
the effect, if any, that the security may have on the yield to maturity and
weighted average lives of the related offered certificates.
PASS-THROUGH RATE
A class of interest-bearing offered certificates may have a fixed, variable
or adjustable pass-through rate. We will specify in the related prospectus
supplement the pass-through rate for each class of interest-bearing offered
certificates or, if the pass-through rate is variable or adjustable, the method
of determining the pass-through rate.
PAYMENT DELAYS
There will be a delay between the date on which payments on the underlying
mortgage loans are due and the date on which those payments are passed through
to you and other investors. That delay will reduce the yield that would
otherwise be produced if those payments were passed through on your offered
certificates on the same date that they were due.
YIELD AND PREPAYMENT CONSIDERATIONS
The yield to maturity on your offered certificates will be affected by the
rate of principal payments on the underlying mortgage loans and the allocation
of those principal payments to reduce the principal balance or notional amount
of your offered certificates. The rate of principal payments on those mortgage
loans will be affected by the following:
o the amortization schedules of the mortgage loans, which may change
from time to time to reflect, among other things, changes in mortgage
interest rates or partial prepayments of principal;
o the dates on which any balloon payments are due; and
o the rate of principal prepayments on the mortgage loans, including
voluntary prepayments by borrowers and involuntary prepayments
resulting from liquidations, casualties or purchases of mortgage
loans.
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Because the rate of principal prepayments on the mortgage loans underlying
your offered certificates will depend on future events and a variety of factors,
we cannot give you any assurance as to that rate.
The extent to which the yield to maturity of your offered certificates may
vary from your anticipated yield will depend upon--
o whether you purchased your offered certificates at a discount or
premium and, if so, the extent of that discount or premium, and
o when, and to what degree, payments of principal on the underlying
mortgage loans are applied or otherwise result in the reduction of the
principal balance or notional amount of your offered certificates.
If you purchase your offered certificates at a discount, you should
consider the risk that a slower than anticipated rate of principal payments on
the underlying mortgage loans could result in an actual yield to you that is
lower than your anticipated yield. If you purchase your offered certificates at
a premium, you should consider the risk that a faster than anticipated rate of
principal payments on the underlying mortgage loans could result in an actual
yield to you that is lower than your anticipated yield.
If your offered certificates entitle you to payments of interest, with
disproportionate, nominal or no payments of principal, you should consider that
your yield will be extremely sensitive to prepayments on the underlying mortgage
loans and, under some prepayment scenarios, may be negative.
If a class of offered certificates accrues interest on a notional amount,
that notional amount will, in general, either--
o be based on the principal balances of some or all of the mortgage
assets in the related trust, or
o equal the total principal balance of one or more of the other classes
of certificates of the same series.
Accordingly, the yield on that class of certificates will be inversely
related to, as applicable, the rate at which--
o payments and other collections of principal are received on the
mortgage assets referred to in the first bullet point of the prior
sentence, or
o payments are made in reduction of the total principal balance of the
class or classes of certificates referred to in the second bullet
point of the prior sentence.
The extent of prepayments of principal of the mortgage loans underlying
your offered certificates may be affected by a number of factors, including:
o the availability of mortgage credit;
o the relative economic vitality of the area in which the related real
properties are located;
o the quality of management of the related real properties;
o the servicing of the mortgage loans;
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o possible changes in tax laws; and
o other opportunities for investment.
In general, those factors that increase--
o the attractiveness of selling or refinancing a commercial or
multifamily property, or
o the likelihood of default under a commercial or multifamily mortgage
loan, would be expected to cause the rate of prepayment to accelerate.
In contrast, those factors having an opposite effect would be expected
to cause the rate of prepayment to slow.
The rate of principal payments on the mortgage loans underlying your
offered certificates may also be affected by the existence and enforceability of
prepayment restrictions, such as--
o prepayment lock-out periods, and
o requirements that voluntary principal prepayments be accompanied by
prepayment premiums, fees or charges.
If enforceable, those provisions could constitute either an absolute
prohibition, in the case of a prepayment lock-out period, or a disincentive, in
the case of a prepayment premium, fee or charge, to a borrower's voluntarily
prepaying its mortgage loan, thereby slowing the rate of prepayments.
The rate of prepayment on a pool of mortgage loans is likely to be affected
by prevailing market interest rates for mortgage loans of a comparable type,
term and risk level. As prevailing market interest rates decline, a borrower may
have an increased incentive to refinance its mortgage loan. Even in the case of
adjustable rate mortgage loans, as prevailing market interest rates decline, the
related borrowers may have an increased incentive to refinance for the following
purposes:
o to convert to a fixed rate loan and thereby lock in that rate; or
o to take advantage of a different index, margin or rate cap or floor on
another adjustable rate mortgage loan.
Subject to prevailing market interest rates and economic conditions
generally, a borrower may sell a real property in order to--
o realize its equity in the property,
o meet cash flow needs, or
o make other investments.
Additionally, some borrowers may be motivated by federal and state tax
laws, which are subject to change, to sell their properties prior to the
exhaustion of tax depreciation benefits.
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We make no representation as to--
o the particular factors that will affect the prepayment of the mortgage
loans underlying any series of offered certificates,
o the relative importance of those factors,
o the percentage of the principal balance of those mortgage loans that
will be paid as of any date, or
o the overall rate of prepayment on those mortgage loans.
WEIGHTED AVERAGE LIFE AND MATURITY
The rate at which principal payments are received on the mortgage loans
underlying any series of offered certificates will affect the ultimate maturity
and the weighted average life of one or more classes of those certificates. In
general, weighted average life refers to the average amount of time that will
elapse from the date of issuance of an instrument until each dollar allocable as
principal of that instrument is repaid to the investor.
The weighted average life and maturity of a class of offered certificates
will be influenced by the rate at which principal on the underlying mortgage
loans is paid to that class, whether in the form of--
o scheduled amortization, or
o prepayments, including--
1. voluntary prepayments by borrowers, and
2. involuntary prepayments resulting from liquidations, casualties
or condemnations and purchases of mortgage loans out of the
related trust.
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 mortgage 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 mortgage loans,
with different prepayment assumptions often expressed as percentages of SPA. For
example, a prepayment assumption of 100% of SPA assumes prepayment rates of 0.2%
per annum of the then outstanding principal balance of those loans in the first
month of the life of the loans and an additional 0.2% per annum in each month
thereafter until the 30th month. Beginning in the 30th month, and in each month
thereafter during the life of the loans, 100% of SPA assumes a constant
prepayment rate of 6% per annum each month.
Neither CPR nor SPA nor any other prepayment model or assumption is a
historical description of prepayment experience or a prediction of the
anticipated rate of prepayment of any particular pool of mortgage loans.
Moreover, the CPR and SPA models were developed based upon historical prepayment
experience for single-family mortgage loans. It is unlikely that the prepayment
experience of the mortgage loans underlying your offered certificates will
conform to any particular level of CPR or SPA.
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In the prospectus supplement for a series of offered certificates, we will
include tables, if applicable, setting forth--
o the projected weighted average life of each class of those offered
certificates with principal balances, and
o the percentage of the initial total principal balance of each class of
those offered certificates that would be outstanding on specified
dates,
based on the assumptions stated in that prospectus supplement, including
assumptions regarding prepayments on the underlying mortgage loans. Those tables
and assumptions illustrate the sensitivity of the weighted average lives of
those offered certificates to various assumed prepayment rates and are not
intended to predict, or to provide information that will enable you to predict,
the actual weighted average lives of your offered certificates.
OTHER FACTORS AFFECTING YIELD, WEIGHTED AVERAGE LIFE AND MATURITY
Balloon Payments; Extensions of Maturity. Some or all of the mortgage loans
underlying a series of offered certificates may require that balloon payments be
made at maturity. The ability of a borrower to make a balloon payment typically
will depend upon its ability either--
o to refinance the loan, or
o to sell the related real property.
If a borrower is unable to refinance or sell the related real property,
there is a possibility that the borrower may default on the mortgage loan or
that the maturity of the mortgage loan may be extended in connection with a
workout. If a borrower defaults, recovery of proceeds may be delayed by--
o the bankruptcy of the borrower, or
o adverse economic conditions in the market where the related real
property is located.
In order to minimize losses on defaulted mortgage loans, the related master
servicer or special servicer may be authorized within prescribed limits to
modify mortgage loans that are in default or as to which a payment default is
reasonably foreseeable. Any defaulted balloon payment or modification that
extends the maturity of a mortgage loan may delay payments of principal on your
offered certificates and extend the weighted average life of your offered
certificates.
Negative Amortization. The weighted average life of a class of offered
certificates can be affected by mortgage loans that permit negative amortization
to occur. Those are the mortgage loans that provide for the current payment of
interest calculated at a rate lower than the rate at which interest accrues on
the mortgage loan, with the unpaid portion of that interest being added to the
related principal balance. Negative amortization most commonly occurs with
respect to an adjustable rate mortgage loan that:
o limits the amount by which its scheduled payment may adjust in
response to a change in its mortgage interest rate;
o provides that its scheduled payment will adjust less frequently than
its mortgage interest rate; or
o provides for constant scheduled payments regardless of adjustments to
its mortgage interest rate.
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Negative amortization on one or more mortgage loans in any of our trusts
may result in negative amortization on a related class of offered certificates.
We will describe in the related prospectus supplement, if applicable, the manner
in which negative amortization with respect to the underlying mortgage loans is
allocated among the respective classes of a series of offered certificates.
The portion of any mortgage loan negative amortization allocated to a class
of offered certificates may result in a deferral of some or all of the interest
payable on those certificates. Deferred interest may be added to the total
principal balance of a class of offered certificates. In addition, an adjustable
rate mortgage loan that permits negative amortization would be expected during a
period of increasing interest rates to amortize, if at all, at a slower rate
than if interest rates were declining or were remaining constant. This slower
rate of mortgage loan amortization would be reflected in a slower rate of
amortization for one or more classes of certificates of the related series.
Accordingly, there may be an increase in the weighted average lives of those
classes of certificates to which any mortgage loan negative amortization would
be allocated or that would bear the effects of a slower rate of amortization of
the underlying mortgage loans.
The extent to which the yield on your offered certificates may be affected
by any negative amortization on the underlying mortgage loans will depend, in
part, upon whether you purchase your offered certificates at a premium or a
discount.
During a period of declining interest rates, the scheduled payment on an
adjustable rate mortgage loan may exceed the amount necessary to amortize the
loan fully over its remaining amortization schedule and pay interest at the then
applicable mortgage interest rate. The result is the accelerated amortization of
the mortgage loan. The acceleration in amortization of a mortgage loan will
shorten the weighted average lives of those classes of certificates that entitle
their holders to a portion of the principal payments on the mortgage loan.
Foreclosures and Payment Plans. The weighted average life of and yield on
your offered certificates will be affected by--
o the number of foreclosures with respect to the underlying mortgage
loans; and
o the principal amount of the foreclosed mortgage loans in relation to
the principal amount of those mortgage loans that are repaid in
accordance with their terms.
Servicing decisions made with respect to the underlying mortgage loans,
including the use of payment plans prior to a demand for acceleration and the
restructuring of mortgage loans in bankruptcy proceedings or otherwise, may also
affect the payment patterns of particular mortgage loans and, as a result, the
weighted average life of and yield on your offered certificates.
Losses and Shortfalls on the Mortgage Assets. The yield on your offered
certificates will directly depend on the extent to which you are required to
bear the effects of any losses or shortfalls in collections on the underlying
mortgage loans and the timing of those losses and shortfalls. In general, the
earlier that you bear any loss or shortfall, the greater will be the negative
effect on the yield of your offered certificates.
The amount of any losses or shortfalls in collections on the mortgage
assets in any of our trusts will, to the extent not covered or offset by draws
on any reserve fund or under any instrument of credit support, be allocated
among the various classes of certificates of the related series in the priority
and manner, and subject to the limitations, that we specify in the related
prospectus supplement. As described in the related prospectus supplement, those
allocations may be effected by the following:
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o a reduction in the entitlements to interest and/or the total principal
balances of one or more classes of certificates; and/or
o the establishment of a priority of payments among classes of
certificates.
If you purchase subordinated certificates, the yield to maturity on those
certificates may be extremely sensitive to losses and shortfalls in collections
on the underlying mortgage loans.
Additional Certificate Amortization. If your offered certificates have a
principal balance, then they entitle you to a specified portion of the principal
payments received on the underlying mortgage loans. They may also entitle you to
payments of principal from the following sources:
o amounts attributable to interest accrued but not currently payable on
one or more other classes of certificates of the applicable series;
o interest received or advanced on the underlying mortgage assets that
is in excess of the interest currently accrued on the certificates of
the applicable series;
o prepayment premiums, fees and charges, payments from equity
participations or any other amounts received on the underlying
mortgage assets that do not constitute interest or principal; or
o any other amounts described in the related prospectus supplement.
The amortization of your offered certificates out of the sources described
in the prior paragraph would shorten their weighted average life and, if your
offered certificates were purchased at a premium, reduce their yield to
maturity.
CITIGROUP COMMERCIAL MORTGAGE SECURITIES INC.
We were incorporated in Delaware on July 17, 2003. We were organized, among
other things, for the purpose of serving as a private secondary mortgage market
conduit.
We are an indirect, wholly-owned subsidiary of Citigroup Global Markets
Holdings Inc. and an affiliate of Citigroup Global Markets Inc. Our principal
executive offices are located at 388 Greenwich Street, New York, New York 10013.
Our telephone number is 212-816-6000.
We do not have, and do not expect in the future to have, any significant
assets.
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DESCRIPTION OF THE CERTIFICATES
GENERAL
Each series of offered certificates, together with any non-offered
certificates of the same series, will represent the entire beneficial ownership
interest in a trust established by us. Each series of offered certificates will
consist of one or more classes. Any non-offered certificates of that series will
likewise consist of one or more classes.
A series of certificates consists of all those certificates that--
o have the same series designation,
o were issued under the same Governing Document, and
o represent beneficial ownership interests in the same trust.
A class of certificates consists of all those certificates of a particular
series that--
o have the same class designation, and
o have the same payment terms.
The respective classes of offered and non-offered certificates of any
series may have a variety of payment terms. An offered certificate may entitle
the holder to receive:
o a stated principal amount, which will be represented by its principal
balance;
o interest on a principal balance or notional amount, at a fixed,
variable or adjustable pass-through rate;
o specified, fixed or variable portions of the interest, principal or
other amounts received on the related mortgage assets;
o payments of principal, with disproportionate, nominal or no payments
of interest;
o payments of interest, with disproportionate, nominal or no payments of
principal;
o payments of interest or principal that commence only as of a specified
date or only after the occurrence of specified events, such as the
payment in full of the interest and principal outstanding on one or
more other classes of certificates of the same series;
o payments of principal to be made, from time to time or for designated
periods, at a rate that is--
1. faster and, in some cases, substantially faster, or
2. slower and, in some cases, substantially slower,
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than the rate at which payments or other collections of principal
are received on the related mortgage assets;
o payments of principal to be made, subject to available funds, based on
a specified principal payment schedule or other methodology; or
o payments of all or part of the prepayment or repayment premiums, fees
and charges, equity participations payments or other similar items
received on the related mortgage assets.
Any class of offered certificates may be senior or subordinate to one or
more other classes of certificates of the same series, including a non-offered
class of certificates of that series, for purposes of some or all payments
and/or allocations of losses or other shortfalls.
A class of offered certificates may have two or more component parts, each
having characteristics that are described in this prospectus as being
attributable to separate and distinct classes. For example, a class of offered
certificates may have a total principal balance on which it accrues interest at
a fixed, variable or adjustable rate. That class of offered certificates may
also accrue interest on a total notional amount at a different fixed, variable
or adjustable rate. In addition, a class of offered certificates may accrue
interest on one portion of its total principal balance or notional amount at one
fixed, variable or adjustable rate and on another portion of its total principal
balance or notional amount at a different fixed, variable or adjustable rate.
Each class of offered certificates will be issued in minimum denominations
corresponding to specified principal balances, notional amounts or percentage
interests, as described in the related prospectus supplement. A class of offered
certificates may be issued in fully registered, definitive form and evidenced by
physical certificates or may be issued in book-entry form through the facilities
of The Depository Trust Company. Offered certificates held in fully registered,
definitive form may be transferred or exchanged, subject to any restrictions on
transfer described in the related prospectus supplement, at the location
specified in the related prospectus supplement, without the payment of any
service charges, except for any tax or other governmental charge payable in
connection with the transfer or exchange. Interests in offered certificates held
in book-entry form will be transferred on the book-entry records of DTC and its
participating organizations. If we so specify in the related prospectus
supplement, we will arrange for clearance and settlement through Clearstream
Banking Luxembourg or Euroclear Bank S.A./N.V. as operator of the Euroclear
System, for so long as they are participants in DTC.
PAYMENTS ON THE CERTIFICATES
General. Payments on a series of offered certificates may occur monthly,
bi-monthly, quarterly, semi-annually, annually or at any other specified
interval. In the prospectus supplement for each series of offered certificates,
we will identify:
o the periodic payment date for that series; and
o the record date as of which certificateholders entitled to payments on
any particular payment date will be established.
All payments with respect to a class of offered certificates on any payment
date will be allocated pro rata among the outstanding certificates of that class
in proportion to the respective principal balances, notional amounts or
percentage interests, as the case may be, of those certificates. Payments on an
offered certificate will be made to the holder entitled thereto either--
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o by wire transfer of immediately available funds to the account of that
holder at a bank or similar entity, provided that the holder has
furnished the party making the payments with wiring instructions no
later than the applicable record date, or a specified number of days
prior to that date, and has satisfied any other conditions specified
in the related prospectus supplement, or
o by check mailed to the address of that holder as it appears in the
certificate register, in all other cases.
In general, the final payment on any offered certificate will be made only
upon presentation and surrender of that certificate at the location specified to
the holder in notice of final payment.
Payments of Interest. In the case of each class of interest-bearing offered
certificates, interest will accrue from time to time, at the applicable
pass-through rate and in accordance with the applicable interest accrual method,
on the total outstanding principal balance or notional amount of that class.
The pass-through rate for a class of interest-bearing offered certificates
may be fixed, variable or adjustable. We will specify in the related prospectus
supplement the pass-through rate for each class of interest-bearing offered
certificates or, in the case of a variable or adjustable pass-through rate, the
method for determining that pass-through rate.
Interest may accrue with respect to any offered certificate on the basis
of--
o a 360-day year consisting of 12 30-day months,
o the actual number of days elapsed during each relevant period in a
year assumed to consist of 360 days,
o the actual number of days elapsed during each relevant period in a
normal calendar year, or
o any other method identified in the related prospectus supplement.
We will identify the interest accrual method for each class of offered
certificates in the related prospectus supplement.
Subject to available funds and any adjustments to interest entitlements
described in the related prospectus supplement, accrued interest with respect to
each class of interest-bearing offered certificates will normally be payable on
each payment date. However, in the case of some classes of interest-bearing
offered certificates, payments of accrued interest will only begin on a
particular payment date or under the circumstances described in the related
prospectus supplement. Prior to that time, the amount of accrued interest
otherwise payable on that class will be added to its total principal balance on
each date or otherwise deferred as described in the related prospectus
supplement.
If a class of offered certificates accrues interest on a total notional
amount, that total notional amount, in general, will be either:
o based on the principal balances of some or all of the related mortgage
assets; or
o equal to the total principal balances of one or more other classes of
certificates of the same series.
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Reference to the notional amount of any certificate is solely for
convenience in making calculations of interest and does not represent the right
to receive any payments of principal.
We will describe in the related prospectus supplement the extent to which
the amount of accrued interest that is payable on, or that may be added to the
total principal balance of, a class of interest-bearing offered certificates may
be reduced as a result of any contingencies, including shortfalls in interest
collections due to prepayments, delinquencies, losses and deferred interest on
the related mortgage assets.
Payments of Principal. An offered certificate may or may not have a
principal balance. If it does, that principal balance outstanding from time to
time will represent the maximum amount that the holder of that certificate will
be entitled to receive as principal out of the future cash flow on the related
mortgage assets and the other related trust assets.
The total outstanding principal balance of any class of offered
certificates will be reduced by--
o payments of principal actually made to the holders of that class, and
o if and to the extent that we so specify in the related prospectus
supplement, losses of principal on the related mortgage assets that
are allocated to or are required to be borne by that class.
A class of interest-bearing offered certificates may provide that payments
of accrued interest will only begin on a particular payment date or under the
circumstances described in the related prospectus supplement. If so, the total
outstanding principal balance of that class may be increased by the amount of
any interest accrued, but not currently payable, on that class.
We will describe in the related prospectus supplement any other adjustments
to the total outstanding principal balance of a class of offered certificates.
Unless we so state in the related prospectus supplement, the initial total
principal balance of all classes of a series will not be greater than the total
outstanding principal balance of the related mortgage assets transferred by us
to the related trust. We will specify the expected initial total principal
balance of each class of offered certificates in the related prospectus
supplement.
The payments of principal to be made on a series of offered certificates
from time to time will, in general, be a function of the payments, other
collections and advances received or made with respect to the related prospectus
supplement. Payments of principal on a series of offered certificates may also
be made from the following sources:
o amounts attributable to interest accrued but not currently payable on
one or more other classes of certificates of the applicable series;
o interest received or advanced on the underlying mortgage assets that
is in excess of the interest currently accrued on the certificates of
the applicable series;
o prepayment premiums, fees and charges, payments from equity
participations or any other amounts received on the underlying
mortgage assets that do not constitute interest or principal; or
o any other amounts described in the related prospectus supplement.
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We will describe in the related prospectus supplement the principal
entitlement of each class of offered certificates on each payment date.
ALLOCATION OF LOSSES AND SHORTFALLS
If and to the extent that any losses or shortfalls in collections on the
mortgage assets in any of our trusts are not covered or offset by delinquency
advances or draws on any reserve fund or under any instrument of credit support,
they will be allocated among the various classes of certificates of the related
series in the priority and manner, and subject to the limitations, specified in
the related prospectus supplement. As described in the related prospectus
supplement, the allocations may be effected as follows:
o by reducing the entitlements to interest and/or the total principal
balances of one or more of those classes; and/or
o by establishing a priority of payments among those classes.
See "Description of Credit Support."
ADVANCES
If any trust established by us includes mortgage loans, then as and to the
extent described in the related prospectus supplement, the related master
servicer, the related special servicer, the related trustee, any related
provider of credit support and/or any other specified person may be obligated to
make, or may have the option of making, advances with respect to those mortgage
loans to cover--
o delinquent payments of principal and/or interest, other than balloon
payments,
o property protection expenses,
o other servicing expenses, or
o any other items specified in the related prospectus supplement.
If there are any limitations with respect to a party's advancing
obligations, we will discuss those limitations in the related prospectus
supplement.
Advances are intended to maintain a regular flow of scheduled interest and
principal payments to certificateholders. Advances are not a guarantee against
losses. The advancing party will be entitled to recover all of its advances out
of--
o subsequent recoveries on the related mortgage loans, including amounts
drawn under any fund or instrument constituting credit support, and
o any other specific sources identified in the related prospectus
supplement.
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If and to the extent that we so specify in the related prospectus
supplement, any entity making advances will be entitled to receive interest on
some or all of those advances for a specified period during which they are
outstanding at the rate specified in that prospectus supplement. That entity may
be entitled to payment of interest on its outstanding advances--
o periodically from general collections on the mortgage assets in the
related trust, prior to any payment to the related series of
certificateholders, or
o at any other times and from any other sources as we may describe in
the related prospectus supplement.
If any trust established by us includes mortgage-backed securities, we will
discuss in the related prospectus supplement any comparable advancing
obligations with respect to those securities or the mortgage loans that back
them.
REPORTS TO CERTIFICATEHOLDERS
On or about each payment date, the related master servicer, manager or
trustee or another specified party will forward, upon request, or otherwise make
available to each offered certificateholder a statement substantially in the
form, or specifying the information, set forth in the related prospectus
supplement. In general, that statement will include information regarding--
o the payments made on that payment date with respect to the applicable
class of offered certificates, and
o the recent performance of the mortgage assets.
Within a reasonable period of time after the end of each calendar year,
upon request, the related master servicer, manager or trustee or another
specified party will be required to furnish to each person who at any time
during the calendar year was a holder of an offered certificate a statement
containing information regarding the principal, interest and other amounts paid
on the applicable class of offered certificates, aggregated for--
o that calendar year, or
o the applicable portion of that calendar year during which the person
was a certificateholder.
The obligation to provide that annual statement will be deemed to have been
satisfied by the related master servicer, manager or trustee or another
specified party, as the case may be, to the extent that substantially comparable
information is provided in accordance with any requirements of the Internal
Revenue Code.
If one of our trusts includes mortgage-backed securities, the ability of
the related master servicer, manager or trustee or another specified party, as
the case may be, to include in any payment date statement information regarding
the mortgage loans that back those securities will depend on comparable reports
being received with respect to them.
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VOTING RIGHTS
Voting rights will be allocated among the respective classes of offered and
non-offered certificates of each series in the manner described in the related
prospectus supplement. Certificateholders will generally not have a right to
vote, except--
o with respect to those amendments to the governing documents described
under "Description of the Governing Documents--Amendment," or
o as otherwise specified in this prospectus or in the related prospectus
supplement.
As and to the extent described in the related prospectus supplement, the
certificateholders entitled to a specified amount of the voting rights for a
particular series will have the right to act as a group to remove or replace the
related trustee, master servicer, special servicer or manager. In general, that
removal or replacement must be for cause. We will identify exceptions in the
related prospectus supplement.
TERMINATION
The trust for each series of offered certificates will terminate and cease
to exist following:
o the final payment or other liquidation of the last mortgage asset in
that trust; and
o the payment, or provision for payment, to the certificateholders of
that series of all amounts required to be paid to them.
Written notice of termination of a trust will be given to each affected
certificateholder. The final payment will be made only upon presentation and
surrender of the certificates of the related series at the location to be
specified in the notice of termination.
If we so specify in the related prospectus supplement, one or more
designated parties will be entitled to purchase all of the mortgage assets
underlying a series of offered certificates, thereby effecting early retirement
of the certificates and early termination of the related trust. We will describe
in the related prospectus supplement the circumstances under which that purchase
may occur.
If we so specify in the related prospectus supplement, one or more
certificateholders will be entitled to exchange all of the certificates of a
particular series for all of the mortgage assets underlying that series, thereby
effecting early termination of the related trust. We will describe in the
related prospectus supplement the circumstances under which that exchange may
occur.
In addition, if we so specify in the related prospectus supplement, on a
specified date or upon the reduction of the total principal balance of a
specified class or classes of certificates by a specified percentage or amount,
a party designated in the related prospectus supplement may be authorized or
required to solicit bids for the purchase of all the mortgage assets of the
related trust or of a sufficient portion of the mortgage assets to retire that
class or those classes of certificates. The solicitation of bids must be
conducted in a commercially reasonable manner, and assets will, in general, be
sold at their fair market value. If the fair market value of the mortgage assets
being sold is less than their unpaid balance, then the certificateholders of one
or more classes of certificates may receive an amount less than the total
principal balance of, and accrued and unpaid interest on, their certificates.
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BOOK-ENTRY REGISTRATION
General. Any class of offered certificates may be issued in book-entry form
through the facilities of DTC. If so, that class will be represented by one or
more global certificates registered in the name of DTC or its nominee. If we so
specify in the related prospectus supplement, we will arrange for clearance and
settlement through the Euroclear System or Clearstream Banking Luxembourg, for
so long as they are participants in DTC.
DTC, Euroclear and Clearstream. DTC is:
o a limited-purpose trust company organized under the New York Banking
Law;
o a "banking corporation" within the meaning of the New York Banking
Law;
o a member of the Federal Reserve System;
o a "clearing corporation" within the meaning of the New York Uniform
Commercial Code; and
o a "clearing agency" registered under the provisions of Section 17A of
the Securities Exchange Act of 1934, as amended.
DTC was created to hold securities for participants in the DTC system and
to facilitate the clearance and settlement of securities transactions between
those participants through electronic computerized book-entry changes in their
accounts, thereby eliminating the need for physical movement of securities
certificates. Organizations that maintain accounts with DTC include securities
brokers and dealers, banks, trust companies and clearing corporations and may
include other organizations. DTC is owned by a number of its participating
organizations and by the New York Stock Exchange, Inc., the American Stock
Exchange, Inc. and the National Association of Securities Dealers, Inc. Access
to the DTC system is also available to others such as banks, brokers, dealers
and trust companies that directly or indirectly clear through or maintain a
custodial relationship with one of the organizations that maintains an account
with DTC. The rules applicable to DTC and its participating organizations are on
file with the SEC.
It is our understanding that Clearstream holds securities for its member
organizations and facilitates the clearance and settlement of securities
transactions between its member organizations through electronic book-entry
changes in accounts of those organizations, thereby eliminating the need for
physical movement of certificates. Transactions may be settled in Clearstream in
over 28 currencies, including United States dollars. Clearstream provides to its
member organizations, among other things, services for safekeeping,
administration, clearance and settlement of internationally traded securities
and securities lending and borrowing. Clearstream interfaces with domestic
securities markets in over 39 countries through established depository and
custodial relationships. Clearstream is registered as a bank in Luxembourg. It
is subject to regulation by the Commission de Surveillance du Secteur Financier,
which supervises Luxembourg banks. Clearstream's customers are world-wide
financial institutions including underwriters, securities brokers and dealers,
banks, trust companies and clearing corporations. Clearstream's U.S. customers
are limited to securities brokers and dealers, and banks. Indirect access to
Clearstream is available to other institutions that clear through or maintain a
custodial relationship with an account holder of Clearstream. Clearstream and
Euroclear have established an electronic bridge between their two systems across
which their respective participants may settle trades with each other.
It is our understanding that Euroclear holds securities for its member
organizations and facilitates the clearance and settlement of securities
transactions between its member organizations through simultaneous electronic
book-entry delivery against payment, thereby eliminating the need for physical
movement of certificates and any risk from lack of simultaneous transfers of
securities and cash. Over 210,000 different
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securities are accepted for settlement through Euroclear, the majority of which
are domestic securities from over 30 markets. Transactions may be settled in
Euroclear in any of over 30 currencies, including United States dollars. The
Euroclear system includes various other services, including securities lending
and borrowing and interfaces with domestic markets in several countries
generally similar to the arrangements for cross-market transfers with DTC
described below in this "--Book-Entry Registration" section. Euroclear is
operated by Euroclear Bank S.A./N.V., as Euroclear Operator, under a license
agreement with Euroclear Clearance System Public Limited Company. All operations
are conducted by the Euroclear Operator, and all Euroclear securities clearance
accounts and Euroclear cash accounts are accounts with the Euroclear Operator,
not ECS. ECS establishes policy for the Euroclear system on behalf of the more
than 120 member organizations of Euroclear. Those member organizations include
banks, including central banks, securities brokers and dealers and other
professional financial intermediaries. Indirect access to the Euroclear system
is also available to other firms that clear through or maintain a custodial
relationship with a member organization of Euroclear, either directly or
indirectly. Euroclear and Clearstream have established an electronic bridge
between their two systems across which their respective participants may settle
trades with each other.
Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Euroclear Terms and Conditions. The Euroclear 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. All securities in
the Euroclear system are held on a fungible basis without attribution of
specific securities to specific securities clearance accounts. The Euroclear
Operator acts under the Euroclear Terms and Conditions only on behalf of member
organizations of Euroclear and has no record of or relationship with persons
holding through those member organizations.
The information in this prospectus concerning DTC, Euroclear and
Clearstream, and their book-entry systems, has been obtained from sources
believed to be reliable, but we do not take any responsibility for the accuracy
or completeness of that information.
Holding and Transferring Book-Entry Certificates. Purchases of book-entry
certificates under the DTC system must be made by or through, and will be
recorded on the records of, the Financial Intermediary that maintains the
beneficial owner's account for that purpose. In turn, the Financial
Intermediary's ownership of those certificates will be recorded on the records
of DTC or, alternatively, if the Financial Intermediary does not maintain an
account with DTC, on the records of a participating firm that acts as agent for
the Financial Intermediary, whose interest will in turn be recorded on the
records of DTC. A beneficial owner of book-entry certificates must rely on the
foregoing procedures to evidence its beneficial ownership of those certificates.
DTC has no knowledge of the actual beneficial owners of the book-entry
certificates. DTC's records reflect only the identity of the direct participants
to whose accounts those certificates are credited, which may or may not be the
actual beneficial owners. The participants in the DTC system will remain
responsible for keeping account of their holdings on behalf of their customers.
Transfers between participants in the DTC system will be effected in the
ordinary manner in accordance with DTC's rules and will be settled in same-day
funds. Transfers between direct account holders at Euroclear and Clearstream, or
between persons or entities participating indirectly in Euroclear or
Clearstream, will be effected in the ordinary manner in accordance with their
respective procedures and in accordance with DTC's rules.
Cross-market transfers between direct participants in DTC, on the one hand,
and member organizations at Euroclear or Clearstream, on the other, will be
effected through DTC in accordance with DTC's rules and the rules of Euroclear
or Clearstream, as applicable. These cross-market transactions will require,
among other things, delivery of instructions by the applicable member
organization to Euroclear or Clearstream, as the case may be, in accordance with
the rules and procedures and within deadlines, Brussels time, established in
Euroclear
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or Clearstream, as the case may be. If the transaction complies with all
relevant requirements, Euroclear or Clearstream, as the case may be, will then
deliver instructions to its depositary to take action to effect final settlement
on its behalf.
Because of time-zone differences, the securities account of a member
organization of Euroclear or Clearstream purchasing an interest in a global
certificate from a DTC participant that is not a member organization, will be
credited during the securities settlement processing day, which must be a
business day for Euroclear or Clearstream, as the case may be, immediately
following the DTC settlement date. Transactions in interests in a book-entry
certificate settled during any securities settlement processing day will be
reported to the relevant member organization of Euroclear or Clearstream on the
same day. Cash received in Euroclear or Clearstream as a result of sales of
interests in a book-entry certificate by or through a member organization of
Euroclear or Clearstream, as the case may be, to a DTC participant that is not a
member organization will be received with value on the DTC settlement date, but
will not be available in the relevant Euroclear or Clearstream cash account
until the business day following settlement in DTC. The related prospectus
supplement will contain additional information regarding clearance and
settlement procedures for the book-entry certificates and with respect to tax
documentation procedures relating to the book-entry certificates.
Conveyance of notices and other communications by DTC to DTC participants,
and by DTC participants to Financial Intermediaries and beneficial owners, will
be governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Payments on the book-entry certificates will be made to DTC. DTC's practice
is to credit DTC participants' accounts on the related payment 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 that date. Disbursement of
those payments by DTC participants to Financial Intermediaries and beneficial
owners will be--
o 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
o the sole responsibility of each of those DTC participants, subject to
any statutory or regulatory requirements in effect from time to time.
Under a book-entry system, beneficial owners may receive payments after the
related payment date.
The only "certificateholder" of book-entry certificates will be DTC or its
nominee. Parties to the governing documents for any series of offered
certificates need not recognize beneficial owners of book-entry certificates as
"certificateholders." The beneficial owners of book-entry certificates will be
permitted to exercise the rights of "certificateholders" only indirectly through
the DTC participants, who in turn will exercise their rights through DTC. We
have been informed that DTC will take action permitted to be taken by a
"certificateholder" only at the direction of one or more DTC participants. DTC
may take conflicting actions with respect to the book-entry certificates to the
extent that those actions are taken on behalf of Financial Intermediaries whose
holdings include those certificates.
Because DTC can act only on behalf of DTC participants, who in turn act on
behalf of Financial Intermediaries and beneficial owners of the applicable
book-entry securities, the ability of a beneficial owner to pledge its interest
in a class of book-entry certificates to persons or entities that do not
participate in the DTC system, or otherwise to take actions with respect to its
interest in a class of book-entry certificates, may be limited due to the lack
of a physical certificate evidencing that interest.
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Issuance of Definitive Certificates. Unless we specify otherwise in the
related prospectus supplement, beneficial owners of affected offered
certificates initially issued in book-entry form will not be able to obtain
physical certificates that represent those offered certificates, unless:
o we advise the related trustee in writing that DTC is no longer willing
or able to discharge properly its responsibilities as depository with
respect to those offered certificates and we are unable to locate a
qualified successor; or
o we notify DTC of our intent to terminate the book-entry system through
DTC and, upon receipt of notice of such intent from DTC, the
participants holding beneficial interests in the subject offered
certificates agree to initiate such termination.
Upon the occurrence of either of the two events described in the prior
paragraph, the related trustee or another designated party will be required to
notify all DTC participants, through DTC, of the availability of physical
certificates with respect to the affected offered certificates. Upon surrender
by DTC of the certificate or certificates representing a class of book-entry
offered certificates, together with instructions for registration, the related
trustee or other designated party will be required to issue to the beneficial
owners identified in those instructions physical certificates representing those
offered certificates.
DESCRIPTION OF THE GOVERNING DOCUMENTS
GENERAL
The Governing Document for purposes of issuing the offered certificates of
each series will be a pooling and servicing agreement or other similar agreement
or collection of agreements. In general, the parties to the Governing Document
for a series of offered certificates will include us, a trustee, a master
servicer and a special servicer. However, if the related trust assets include
mortgage-backed securities, the Governing Document may include a manager as a
party, but may not include a master servicer, special servicer or other servicer
as a party. We will identify in the related prospectus supplement the parties to
the Governing Document for a series of offered certificates.
If we so specify in the related prospectus supplement, a party from whom we
acquire mortgage assets or one of its affiliates may perform the functions of
master servicer, special servicer or manager for the trust to which we transfer
those assets. The same person or entity may act as both master servicer and
special servicer for one of our trusts.
Any party to the Governing Document for a series of offered certificates,
or any of its affiliates, may own certificates issued thereunder. However,
except in limited circumstances, including with respect to required consents to
amendments to the Governing Document for a series of offered certificates,
certificates that are held by the related master servicer, special servicer or
manager will not be allocated voting rights.
A form of a pooling and servicing agreement has been filed as an exhibit to
the registration statement of which this prospectus is a part. However, the
provisions of the Governing Document for each series of offered certificates
will vary depending upon the nature of the certificates to be issued thereunder
and the nature of the related trust assets. The following summaries describe
select provisions that may appear in the Governing Document for each series of
offered certificates. The prospectus supplement for each series of offered
certificates will provide material additional information regarding the
Governing Document for that series. The summaries in this prospectus do not
purport to be complete, and you should refer to the provisions of the Governing
Document
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for your offered certificates and, further, to the description of those
provisions in the related prospectus supplement. We will provide a copy of the
Governing Document, exclusive of exhibits, that relates to your offered
certificates, without charge, upon written request addressed to our principal
executive offices specified under "Citigroup Commercial Mortgage Securities
Inc."
ASSIGNMENT OF MORTGAGE ASSETS
At the time of initial issuance of any series of offered certificates, we
will assign or cause to be assigned to the designated trustee the mortgage
assets and any other assets to be included in the related trust. We will specify
in the related prospectus supplement all material documents to be delivered, and
all other material actions to be taken, by us or any prior holder of the related
mortgage assets in connection with that assignment. We will also specify in the
related prospectus supplement any remedies available to the related
certificateholders, or the related trustee on their behalf, in the event that
any of those material documents are not delivered or any of those other material
actions are not taken as required. Concurrently with that assignment, the
related trustee will deliver to us or our designee the certificates of that
series in exchange for the mortgage assets and the other assets to be included
in the related trust.
Each mortgage asset included in one of our trusts will be identified in a
schedule appearing as an exhibit to the related Governing Document. That
schedule generally will include detailed information about each mortgage asset
transferred to the related trust, including:
o in the case of a mortgage loan--
1. the address of the related real property,
2. the mortgage interest rate and, if applicable, the applicable
index, gross margin, adjustment date and any rate cap
information,
3. the remaining term to maturity,
4. in the case of a balloon loan, the remaining amortization term,
and
5. the outstanding principal balance; and
o in the case of a mortgage-backed security,
1. the outstanding principal balance, and
2. the pass-through rate or coupon rate.
REPRESENTATIONS AND WARRANTIES WITH RESPECT TO MORTGAGE ASSETS
Unless we state otherwise in the prospectus supplement for any series of
offered certificates, we will, with respect to each mortgage asset in the
related trust, make or assign, or cause to be made or assigned, a limited set of
representations and warranties covering, by way of example:
o the accuracy of the information set forth for each mortgage asset on
the schedule of mortgage assets appearing as an exhibit to the
Governing Document for that series;
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o the warranting party's title to each mortgage asset and the authority
of the warranting party to sell that mortgage asset; and
o in the case of a mortgage loan--
1. the enforceability of the related mortgage note and mortgage,
2. the existence of title insurance insuring the lien priority of
the related mortgage, and
3. the payment status of the mortgage loan.
We will identify the warranting party, and give a more complete sampling of
the representations and warranties made thereby, in the related prospectus
supplement. We will also specify in the related prospectus supplement any
remedies against the warranting party available to the related
certificateholders, or the related trustee on their behalf, in the event of a
breach of any of those representations and warranties. In most cases, the
warranting party will be a prior holder of the particular mortgage assets.
COLLECTION AND OTHER SERVICING PROCEDURES WITH RESPECT TO MORTGAGE LOANS
The Governing Document for each series of offered certificates will govern
the servicing and administration of any mortgage loans included in the related
trust.
In general, the related master servicer and special servicer, directly or
through sub-servicers, will be obligated to service and administer for the
benefit of the related certificateholders the mortgage loans in any of our
trusts. The master servicer and the special servicer will be required to service
and administer those mortgage loans in accordance with applicable law and,
further, in accordance with the terms of the related Governing Document, the
mortgage loans themselves and any instrument of credit support included in that
trust. Subject to the foregoing, the master servicer and the special servicer
will each have full power and authority to do any and all things in connection
with that servicing and administration that it may deem necessary and desirable.
As part of its servicing duties, each of the master servicer and the
special servicer for one of our trusts will be required to make reasonable
efforts to collect all payments called for under the terms and provisions of the
related mortgage loans that it services. In general, each of the master servicer
and the special servicer for one of our trusts will be obligated to follow those
collection procedures as are consistent with the servicing standard set forth in
the related Governing Document. Consistent with the foregoing, the master
servicer and the special servicer will each be permitted, in its discretion, to
waive any default interest or late payment charge in connection with collecting
a late payment on any defaulted mortgage loan.
The master servicer and/or the special servicer for one or our trusts,
directly or through sub-servicers, will also be required to perform various
other customary functions of a servicer of comparable loans, including:
o maintaining escrow or impound accounts for the payment of taxes,
insurance premiums, ground rents and similar items, or otherwise
monitoring the timely payment of those items;
o ensuring that the related properties are properly insured;
o attempting to collect delinquent payments;
o supervising foreclosures;
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o negotiating modifications;
o responding to borrower requests for partial releases of the encumbered
property, easements, consents to alteration or demolition and similar
matters;
o protecting the interests of certificateholders with respect to senior
lienholders;
o conducting inspections of the related real properties on a periodic or
other basis;
o collecting and evaluating financial statements for the related real
properties;
o managing or overseeing the management of real properties acquired on
behalf of the trust through foreclosure, deed-in-lieu of foreclosure
or otherwise; and
o maintaining servicing records relating to mortgage loans in the trust.
We will specify in the related prospectus supplement when, and the extent
to which, servicing of a mortgage loan is to be transferred from a master
servicer to a special servicer. In general, a special servicer for any of our
trusts will be responsible for the servicing and administration of:
o mortgage loans that are delinquent with respect to a specified number
of scheduled payments;
o mortgage loans as to which there is a material non-monetary default;
o mortgage loans as to which the related borrower has--
1. entered into or consented to bankruptcy, appointment of a
receiver or conservator or similar insolvency proceeding, or
2. become the subject of a decree or order for such a proceeding
which has remained in force undischarged or unstayed for a
specified number of days; and
o real properties acquired as part of the trust with respect to
defaulted mortgage loans.
The related Governing Document may also provide that if, in the judgment of
the related master servicer or special servicer, a payment default or material
non-monetary default is reasonably foreseeable, the related master servicer may
elect or be required to transfer the servicing of that mortgage loan, in whole
or in part, to the related special servicer. When the circumstances no longer
warrant a special servicer's continuing to service a particular mortgage loan,
such as when the related borrower is paying in accordance with the forbearance
arrangement entered into between the special servicer and that borrower, the
master servicer will generally resume the servicing duties with respect to the
particular mortgage loan.
A borrower's failure to make required mortgage loan payments may mean that
operating income from the related real property 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 otherwise to
maintain and insure the related real property. In general, with respect to each
series of offered certificates, the related special servicer will be required to
monitor any mortgage loan in the related trust 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 real property,
initiate
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corrective action in cooperation with the mortgagor if cure is likely, inspect
the related real property and take any other actions as it deems necessary and
appropriate. A significant period of time may elapse before a special servicer
is able to assess the success of any corrective action or the need for
additional initiatives. The time period within which a special servicer can--
o make the initial determination of appropriate action,
o evaluate the success of corrective action,
o develop additional initiatives,
o institute foreclosure proceedings and actually foreclose, or
o accept a deed to a real property in lieu of foreclosure, on behalf of
the certificateholders of the related series,
may vary considerably depending on the particular mortgage loan, the related
real property, the borrower, the presence of an acceptable party to assume the
mortgage loan and the laws of the jurisdiction in which the related real
property is located. If a borrower files a bankruptcy petition, the special
servicer may not be permitted to accelerate the maturity of the defaulted loan
or to foreclose on the related real property for a considerable period of time.
See "Legal Aspects of Mortgage Loans--Bankruptcy Laws."
A special servicer for one of our trusts may also perform limited duties
with respect to mortgage loans in that trust for which the related master
servicer is primarily responsible, such as--
o performing property inspections and collecting, and
o evaluating financial statements.
A master servicer for one of our trusts may perform limited duties with
respect to any mortgage loan in that trust for which the related special
servicer is primarily responsible, such as--
o continuing to receive payments on the mortgage loan,
o making calculations with respect to the mortgage loan, and
o making remittances and preparing reports to the related trustee and/or
certificateholders with respect to the mortgage loan.
The duties of the master servicer and special servicer for your series will
be more fully described in the related prospectus supplement.
Unless we state otherwise in the related prospectus supplement, the master
servicer for your series will be responsible for filing and settling claims with
respect to particular mortgage loans for your series under any applicable
instrument of credit support. See "Description of Credit Support" in this
prospectus.
SUB-SERVICERS
A master servicer or special servicer may delegate its servicing
obligations to one or more third-party servicers or sub-servicers. However,
unless we specify otherwise in the related prospectus supplement, the master
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servicer or special servicer will remain obligated under the related Governing
Document. Each sub-servicing agreement between a master servicer or special
servicer, as applicable, and a sub-servicer must provide for servicing of the
applicable mortgage loans consistent with the related Governing Document. Any
master servicer and special servicer for one of our trusts will each be required
to monitor the performance of sub-servicers retained by it.
Unless we specify otherwise in the related prospectus supplement, any
master servicer or special servicer for one of our trusts will be solely liable
for all fees owed by it to any sub-servicer, regardless of whether the master
servicer's or special servicer's compensation under the related Governing
Document is sufficient to pay those fees. Each sub-servicer will be entitled to
reimbursement from the master servicer or special servicer, as the case may be,
that retained it, for expenditures which it makes, generally to the same extent
the master servicer or special servicer would be reimbursed under the related
Governing Document.
COLLECTION OF PAYMENTS ON MORTGAGE-BACKED SECURITIES
Unless we specify otherwise in the related prospectus supplement, if a
mortgage-backed security is included among the trust assets underlying any
series of offered certificates, then--
o that mortgage-backed security will be registered in the name of the
related trustee or its designee;
o the related trustee will receive payments on that mortgage-backed
security; and
o subject to any conditions described in the related prospectus
supplement, the related trustee or a designated manager will, on
behalf and at the expense of the trust, exercise all rights and
remedies with respect to that mortgaged-backed security, including the
prosecution of any legal action necessary in connection with any
payment default.
MATTERS REGARDING THE MASTER SERVICER, THE SPECIAL SERVICER, THE MANAGER AND US
Unless we specify otherwise in the related prospectus supplement, no master
servicer, special servicer or manager for any of our trusts may resign from its
obligations in that capacity, except upon--
o the appointment of, and the acceptance of that appointment by, a
successor to the resigning party and receipt by the related trustee of
written confirmation from each applicable rating agency that the
resignation and appointment will not result in a withdrawal or
downgrade of any rating assigned by that rating agency to any class of
certificates of the related series, or
o a determination that those 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 the resigning party.
In general, no resignation will become effective until the related trustee
or other successor has assumed the obligations and duties of the resigning
master servicer, special servicer or manager, as the case may be.
With respect to each series of offered certificates, we and the related
master servicer, special servicer and/or manager, if any, will, in each case, be
obligated to perform only those duties specifically required under the related
Governing Document.
In no event will we, any master servicer, special servicer or manager for
one of our trusts, or any of our or their respective members, managers,
directors, officers, employees or agents, be under any liability to that trust
or
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the related certificateholders for any action taken, or not taken, in good faith
under the related Governing Document or for errors in judgment. Neither we nor
any of those other parties to the related Governing Document will be protected,
however, against any liability that would otherwise be imposed by reason of--
o willful misfeasance, bad faith or gross negligence in the performance
of obligations or duties under the related Governing Document for any
series of offered certificates, or
o reckless disregard of those obligations and duties.
Furthermore, the Governing Document for each series of offered certificates
will entitle us, the master servicer, special servicer and/or manager for the
related trust, and our and their respective members, managers, directors,
officers, employees and agents, to indemnification out of the related trust
assets for any loss, liability or expense incurred in connection with that
Governing Document or series of offered certificates or the related trust. The
indemnification will not extend, however, to any loss, liability or expense:
o specifically required to be borne by the relevant party, without right
of reimbursement, under the terms of that Governing Document;
o incurred in connection with any breach on the part of the relevant
party of a representation or warranty made in that Governing Document;
or
o incurred by reason of willful misfeasance, bad faith or gross
negligence in the performance of, or reckless disregard of,
obligations or duties on the part of the relevant party under that
Governing Document.
Neither we nor any master servicer, special servicer or manager for the
related trust will be under any obligation to appear in, prosecute or defend any
legal action unless:
o the action is related to the respective responsibilities of that party
under the Governing Document for the affected series of offered
certificates; and
o either--
1. that party is specifically required to bear the expense of the
action, or
2. the action will not, in its opinion, involve that party in any
ultimate expense or liability for which it would not be
reimbursed under the Governing Document for the affected series
of offered certificates.
However, we and each of those other parties may undertake any legal action that
we or any of them may deem necessary or desirable with respect to the
enforcement or protection of the rights and duties of the parties to the
Governing Document for any series of offered certificates and the interests of
the certificateholders of that series under that Governing Document. In that
event, the legal expenses and costs of the action, and any liability resulting
from the action, will be expenses, costs and liabilities of the related trust
and payable out of related trust assets.
With limited exception, any person or entity--
o into which we or any related master servicer, special servicer or
manager may be merged or consolidated, or
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o resulting from any merger or consolidation to which we or any related
master servicer, special servicer or manager is a party, or
o succeeding to all or substantially all of our business or the business
of any related master servicer, special servicer or manager,
will be the successor of us or that master servicer, special servicer or
manager, as the case may be, under the Governing Document for a series of
offered certificates.
The compensation arrangements with respect to any master servicer, special
servicer or manager for any of our trusts will be set forth in the related
prospectus supplement. In general, that compensation will be payable out of the
related trust assets.
EVENTS OF DEFAULT
We will identify in the related prospectus supplement the various events of
default under the Governing Document for each series of offered certificates for
which any related master servicer, special servicer or manager may be terminated
in that capacity.
AMENDMENT
The Governing Document for each series of offered certificates may be
amended by the parties thereto, without the consent of any of the holders of
those certificates, or of any non-offered certificates of the same series, for
the following reasons:
1. to cure any ambiguity;
2. to correct, modify or supplement any provision in the Governing
Document which may be inconsistent with any other provision in that
document;
3. to add any other provisions with respect to matters or questions
arising under the Governing Document that are not inconsistent with
the already existing provisions of that document;
4. to comply with any requirements imposed by the Internal Revenue Code,
or any final, temporary or, in some cases, proposed regulation,
revenue ruling, revenue procedure or other written official
announcement or interpretation relating to federal income tax laws, or
to avoid a prohibited transaction or reduce the incidence of any tax
that would arise from any actions taken with respect to the operation
of any REMIC, FASIT or grantor trust created under the Governing
Document;
5. to relax or eliminate any requirement under the Governing Document
imposed by the REMIC provisions of the Internal Revenue Code if such
REMIC provisions are amended or clarified such that the subject
requirement may be relaxed or eliminated;
6. to the extent applicable, to modify, add to or eliminate the transfer
restrictions relating to the certificates which are residual interests
in a REMIC or ownership interests in a FASIT; or
7. to otherwise modify or delete existing provisions of the Governing
Document.
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However, no such amendment of the Governing Document for any series of offered
certificates that is covered solely by clause 3., 5. or 7. above, may adversely
affect in any material respect the interests of any holders of offered or
non-offered certificates of that series, and no such amendment of the Governing
Document for any series of offered certificates may significantly change the
activities of the related trust.
In general, the Governing Document for a series of offered certificates may
also be amended by the parties to that document, with the consent of the holders
of offered and non-offered certificates representing, in total, not less than
51%, or any other percentage specified in the related prospectus supplement, of
all the voting rights allocated to those classes of that series that are
affected by the amendment. However, the Governing Document for a series of
offered certificates may not be so amended to:
o reduce in any manner the amount of, or delay the timing of, payments
received or advanced on the related mortgage assets which are required
to be distributed on any offered or non-offered certificate of that
series, without the consent of the holder of that certificate; or
o adversely affect in any material respect the interests of the holders
of any class of offered or non-offered certificates of that series in
any other manner, without the consent of the holders of all
certificates of that class; or
o significantly change the activities of the related trust without the
consent of the holders of offered and/or non-offered certificates of
that series representing, in total, not less than 51% of all the
voting rights for that series, without taking into account
certificates of that series held by us or any of our affiliates and/or
agents;
o modify the provisions of the Governing Document relating to amendments
of that document without the consent of the holders of all offered and
non-offered certificates of that series then outstanding; or
o modify the specified percentage of voting rights which is required to
be held by certificateholders to consent, approve or object to any
particular action under the Governing Document, without the consent of
the holders of all offered and non-offered certificates of that series
then outstanding.
LIST OF CERTIFICATEHOLDERS
Upon written request of any certificateholder of record of any series made
for purposes of communicating with other holders of certificates of the same
series with respect to their rights under the related Governing Document, the
related trustee or other certificate registrar of that series will afford the
requesting certificateholder access during normal business hours to the most
recent list of certificateholders of that series. However, the trustee or other
certificate registrar may first require a copy of the communication that the
requesting certificateholder proposes to send.
THE TRUSTEE
The trustee for each series of offered certificates will be named in the
related prospectus supplement. The commercial bank, banking association, banking
corporation or trust company that serves as trustee for any series of offered
certificates may have typical banking relationships with the us and our
affiliates and with any of the other parties to the related Governing Document
and its affiliates.
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DUTIES OF THE TRUSTEE
The trustee for each series of offered certificates will not--
o make any representation as to the validity or sufficiency of those
certificates, the related Governing Document or any underlying
mortgage asset or related document, or
o be accountable for the use or application by or on behalf of any other
party to the related Governing Document of any funds paid to that
party with respect to those certificates or the underlying mortgage
assets.
If no event of default has occurred and is continuing under the related
Governing Document, the trustee for each series of offered certificates will be
required to perform only those duties specifically required under the related
Governing Document. However, upon receipt of any of the various certificates,
reports or other instruments required to be furnished to it under the related
Governing Document, the trustee must examine those documents and determine
whether they conform to the requirements of that Governing Document.
MATTERS REGARDING THE TRUSTEE
As and to the extent described in the related prospectus supplement, the
fees and normal disbursements of the trustee for any series of offered
certificates may be the expense of the related master servicer or other
specified person or may be required to be paid out of the related trust assets.
The trustee for each series of offered certificates, and each of its
directors, officers, employees, affiliates, agents and control persons, will be
entitled to indemnification, out of related trust assets, for any loss,
liability or expense incurred by that trustee or any of those other persons in
connection with that trustee's acceptance or administration of its trusts under
the related Governing Document. However, the indemnification of a trustee will
not extend to any loss, liability or expense incurred by reason of willful
misfeasance, bad faith or gross negligence on the part of the trustee in the
performance of its obligations and duties under the related Governing Document.
No trustee for any series of offered certificates will be liable for any
action taken, suffered or omitted by it in good faith and believed by it to be
authorized or permitted under the related Governing Document.
No trustee for any series of offered certificates will be under any
obligation to exercise any of the trusts or powers vested in it by the related
Governing Document or to institute, conduct or defend any litigation under or in
relation to that Governing Document at the request, order or direction of any of
the certificateholders of that series, unless those certificateholders have
offered the trustee reasonable security or indemnity against the costs, expenses
and liabilities that may be incurred as a result.
No trustee for any series of offered certificates will be required to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties under the related Governing Document, or in the
exercise of any of its rights or powers, if it has reasonable grounds for
believing that repayment of those funds or adequate indemnity against that risk
or liability is not reasonably assured to it.
The trustee for each series of offered certificates will be entitled to
execute any of its trusts or powers and perform any of its duties under the
related Governing Document, either directly or by or through agents or
attorneys. The trustee will not be responsible for any willful misconduct or
gross negligence on the part of any agent or attorney appointed by it with due
care.
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RESIGNATION AND REMOVAL OF THE TRUSTEE
The trustee for any series of offered certificates may resign at any time.
We or the related master servicer or manager, as applicable, will be obligated
to appoint a successor to a resigning trustee. We may also remove the trustee
for any series of offered certificates if that trustee ceases to be eligible to
continue as such under the related Governing Document or if that trustee becomes
insolvent. Unless we indicate otherwise in the related prospectus supplement,
the trustee for any series of offered certificates may also be removed at any
time by the holders of the offered and non-offered certificates of that series
evidencing not less than 51%, or any other percentage specified in the related
prospectus supplement, of the voting rights for that series. However, if the
removal was without cause, the certificateholders effecting the removal may be
responsible for any costs and expenses incurred by the terminated trustee in
connection with its removal. Any resignation or removal of a trustee and
appointment of a successor trustee will not become effective until acceptance of
the appointment by the successor trustee.
DESCRIPTION OF CREDIT SUPPORT
GENERAL
Credit support may be provided with respect to one or more classes of the
offered certificates of any series or with respect to the related mortgage
assets. That credit support may be in the form of any of the following:
o the subordination of one or more other classes of certificates of the
same series;
o the use of a letter of credit, a surety bond, an insurance policy or a
guarantee;
o the establishment of one or more reserve funds; or
o any combination of the foregoing.
If and to the extent described in the related prospectus supplement, any of
the above forms of credit support may provide credit enhancement for non-offered
certificates, as well as offered certificates, or for more than one series of
certificates.
If you are the beneficiary of any particular form of credit support, that
credit support may not protect you against all risks of loss and will not
guarantee payment to you of all amounts to which you are entitled under your
offered certificates. If losses or shortfalls occur that exceed the amount
covered by that credit support or that are of a type not covered by that credit
support, you will bear your allocable share of deficiencies. Moreover, if that
credit support covers the offered certificates of more than one class or series
and total losses on the related mortgage assets exceed the amount of that credit
support, it is possible that the holders of offered certificates of other
classes and/or series will be disproportionately benefited by that credit
support to your detriment.
If you are the beneficiary of any particular form of credit support, we
will include in the related prospectus supplement a description of the
following:
o the nature and amount of coverage under that credit support;
o any conditions to payment not otherwise described in this prospectus;
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o any conditions under which the amount of coverage under that credit
support may be reduced and under which that credit support may be
terminated or replaced; and
o the material provisions relating to that credit support.
Additionally, we will set forth in the related prospectus supplement
information with respect to the obligor, if any, under any instrument of credit
support.
SUBORDINATE CERTIFICATES
If and to the extent described in the related prospectus supplement, one or
more classes of certificates of any series may be subordinate to one or more
other classes of certificates of that series. If you purchase subordinate
certificates, your right to receive payments out of collections and advances on
the related trust assets on any payment date will be subordinated to the
corresponding rights of the holders of the more senior classes of certificates.
If and to the extent described in the related prospectus supplement, the
subordination of a class of certificates may not cover all types of losses or
shortfalls. In the related prospectus supplement, we will set forth information
concerning the method and amount of subordination provided by a class or classes
of subordinate certificates in a series and the circumstances under which that
subordination will be available.
If the mortgage assets in any trust established us are divided into
separate groups, each supporting a separate class or classes of certificates of
the related series, credit support may be provided by cross-support provisions
requiring that payments be made on senior certificates evidencing interests in
one group of those mortgage assets prior to payments on subordinate certificates
evidencing interests in a different group of those mortgage assets. We will
describe in the related prospectus supplement the manner and conditions for
applying any cross-support provisions.
INSURANCE OR GUARANTEES WITH RESPECT TO MORTGAGE LOANS
The mortgage loans included in any trust established by us may be covered
for some default risks by insurance policies or guarantees. If so, we will
describe in the related prospectus supplement the nature of those default risks
and the extent of that coverage.
LETTERS OF CREDIT
If and to the extent described in the related prospectus supplement,
deficiencies in amounts otherwise payable on a series of offered certificates or
select classes of those certificates will be covered by one or more letters of
credit, issued by a bank or other financial institution specified in the related
prospectus supplement. The issuer of a letter of credit will be obligated to
honor draws under that letter of credit in a total fixed dollar amount, net of
unreimbursed payments under the letter of credit, generally equal to a
percentage specified in the related prospectus supplement of the total principal
balance of some or all of the related mortgage assets as of the date the related
trust was formed or of the initial total principal balance of one or more
classes of certificates of the applicable series. The letter of credit may
permit draws only in the event of select types of losses and shortfalls. The
amount available under the letter of credit will, in all cases, be reduced to
the extent of the unreimbursed payments thereunder and may otherwise be reduced
as described in the related prospectus supplement. The obligations of the letter
of credit issuer under the letter of credit for any series of offered
certificates will expire at the earlier of the date specified in the related
prospectus supplement or the termination of the related trust.
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CERTIFICATE INSURANCE AND SURETY BONDS
If and to the extent described in the related prospectus supplement,
deficiencies in amounts otherwise payable on a series of offered certificates or
select classes of those certificates will be covered by insurance policies or
surety bonds provided by one or more insurance companies or sureties. Those
instruments may cover, with respect to one or more classes of the offered
certificates of the related series, timely payments of interest and principal or
timely payments of interest and payments of principal on the basis of a schedule
of principal payments set forth in or determined in the manner specified in the
related prospectus supplement. We will describe in the related prospectus
supplement any limitations on the draws that may be made under any of those
instruments.
RESERVE FUNDS
If and to the extent described in the related prospectus supplement,
deficiencies in amounts otherwise payable on a series of offered certificates or
select classes of those certificates 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 of the foregoing, will be deposited,
in the amounts specified in the related prospectus supplement. If and to the
extent described in the related prospectus supplement, the reserve fund for the
related series of offered certificates may also be funded over time.
Amounts on deposit in any reserve fund for a series of offered certificates
will be applied for the purposes, in the manner, and to the extent specified in
the related prospectus supplement. If and to the extent described in the related
prospectus supplement, reserve funds may be established to provide protection
only against select types of losses and shortfalls. Following each payment date
for the related series of offered certificates, amounts in a reserve fund in
excess of any required balance may be released from the reserve fund under the
conditions and to the extent specified in the related prospectus supplement.
CREDIT SUPPORT WITH RESPECT TO MBS
If and to the extent described in the related prospectus supplement, any
mortgage-backed security included in one of our trusts and/or the mortgage loans
that back that security may be covered by one or more of the types of credit
support described in this prospectus. We will specify in the related prospectus
supplement, as to each of those forms of credit support, the information
indicated above with respect to that mortgage-backed security, to the extent
that the information is material and available.
LEGAL ASPECTS OF MORTGAGE LOANS
Most, if not all, of the mortgage loans underlying a series of offered
certificates will be secured by multifamily and commercial properties in the
United States, its territories and possessions. However, some of those mortgage
loans may be secured by multifamily and commercial properties outside the United
States, its territories and possessions.
The following discussion contains general summaries of select legal aspects
of mortgage loans secured by multifamily and commercial properties in the United
States. Because these legal aspects are governed by applicable state law, which
may differ substantially from state to state, the summaries do not purport to be
complete, to reflect the laws of any particular state, or to encompass the laws
of all jurisdictions in which the security for the mortgage loans underlying the
offered certificates is situated. Accordingly, you should be aware
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that the summaries are qualified in their entirety by reference to the
applicable laws of those states. See "Description of the Trust Assets--Mortgage
Loans."
If a significant percentage of mortgage loans underlying a series of
offered certificates, are secured by properties in a particular state, we will
discuss the relevant state laws, to the extent they vary materially from this
discussion, in the related prospectus supplement.
GENERAL
Each mortgage loan underlying a series of offered certificates will be
evidenced by a note or bond and secured by an instrument granting a security
interest in real property. The instrument granting a security interest in real
property 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 that real property is
located. Mortgages, deeds of trust and deeds to secure debt are often
collectively referred to in this prospectus as "mortgages." A mortgage creates a
lien upon, or grants a title interest in, the real property covered by the
mortgage, 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--
o the terms of the mortgage,
o the terms of separate subordination agreements or intercreditor
agreements with others that hold interests in the real property,
o the knowledge of the parties to the mortgage, and
o in general, the order of recordation of the mortgage in the
appropriate public recording office.
However, the lien of a recorded mortgage will generally be subordinate to
later arising liens for real estate taxes and assessments and other charges
imposed under governmental police powers.
TYPES OF MORTGAGE INSTRUMENTS
There are two parties to a mortgage--
o a mortgagor, who is the owner of the encumbered interest in the real
property, and
o a mortgagee, who is the lender.
In general, the mortgagor is also the borrower.
In contrast, a deed of trust is a three-party instrument. The parties to a
deed of trust are--
o the trustor, who is the equivalent of a mortgagor,
o the trustee to whom the real property is conveyed, and
o the beneficiary for whose benefit the conveyance is made, who is the
lender.
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Under a deed of trust, the trustor grants the property, irrevocably until
the debt is paid, in trust and generally with a power of sale, to the trustee to
secure repayment of the indebtedness evidenced by the related note.
A deed to secure debt typically has two parties. Under a deed to secure
debt, the grantor, who is the equivalent of a mortgagor, conveys title to the
real property to the grantee, who is the lender, generally with a power of sale,
until the debt is repaid.
Where the borrower is a land trust, there would be an additional party
because legal title to the property is held by a land trustee under a land trust
agreement for the benefit of the borrower. At origination of a mortgage loan
involving a land trust, the borrower may execute a separate undertaking to make
payments on the mortgage note. In no event is the land trustee personally liable
for the mortgage note obligation.
The mortgagee's authority under a mortgage, the trustee's authority under a
deed of trust and the grantee's authority under a deed to secure debt are
governed by:
o the express provisions of the related instrument,
o the law of the state in which the real property is located,
o various federal laws, and
o in some deed of trust transactions, the directions of the beneficiary.
INSTALLMENT CONTRACTS
The mortgage loans underlying your offered certificates may consist of
installment contracts. Under an installment contract the seller retains legal
title to the property and enters into an agreement with the purchaser for
payment of the purchase price, plus interest, over the term of the installment
contract. Only after full performance by the borrower of the contract is the
seller obligated to convey title to the real estate to the purchaser. During the
period that the installment contract is in effect, the purchaser is generally
responsible for maintaining the property in good condition and for paying real
estate taxes, assessments and hazard insurance premiums associated with the
property.
The seller's enforcement of an installment contract varies from state to
state. Generally, installment contracts provide that upon a default by the
purchaser, the purchaser loses his or her right to occupy the property, the
entire indebtedness is accelerated, and the purchaser's equitable interest in
the property is forfeited. The seller in this situation does not have to
foreclose in order to obtain title to the property, although in some cases a
quiet title action is in order if the purchaser has filed the installment
contract in local land records and an ejectment action may be necessary to
recover possession. In a few states, particularly in cases of purchaser default
during the early years of an installment contract, the courts will permit
ejectment of the purchaser and a forfeiture of his or her interest in the
property.
However, most state legislatures have enacted provisions by analogy to
mortgage law protecting borrowers under installment contracts from the harsh
consequences of forfeiture. Under those statutes, a judicial or nonjudicial
foreclosure may be required, the seller may be required to give notice of
default and the borrower may be granted some grace period during which the
contract may be reinstated upon full payment of the default amount and the
purchaser may have a post-foreclosure statutory redemption right. In other
states, courts in equity may permit a purchaser with significant investment in
the property under an installment contract for the sale of real estate to share
in the proceeds of sale of the property after the indebtedness is repaid or may
otherwise refuse
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to enforce the forfeiture clause. Nevertheless, generally speaking, the seller's
procedures for obtaining possession and clear title under an installment
contract for the sale of real estate in a given state are simpler and less
time-consuming and costly than are the procedures for foreclosing and obtaining
clear title to a mortgaged property.
LEASES AND RENTS
A mortgage that encumbers an income-producing property often contains an
assignment of rents and leases and/or may be accompanied by a separate
assignment of rents and leases. Under an assignment of rents and leases, the
borrower assigns to the lender the borrower's right, title and interest as
landlord under each lease and the income derived from each lease. However, the
borrower retains a revocable license to collect the rents, provided there is no
default and the rents are not directly paid to the lender. If the borrower
defaults, the license terminates and the lender is entitled to collect the
rents. Local law may require that the lender take possession of the property
and/or obtain a court-appointed receiver before becoming entitled to collect the
rents.
In most states, hotel and motel room rates are considered accounts
receivable under the UCC. Room rates are generally pledged by the borrower as
additional security for the loan when a mortgage loan is secured by a hotel or
motel. In general, the lender must file financing statements in order to perfect
its security interest in the room rates and must file continuation statements,
generally every five years, to maintain that perfection. Mortgage loans secured
by hotels or motels may be included in one of our trusts even if the security
interest in the room rates was not perfected or the requisite UCC filings were
allowed to lapse. A lender will generally be required to commence a foreclosure
action or otherwise take possession of the property in order to enforce its
rights to collect the room rates following a default, even if the lender's
security interest in room rates is perfected under applicable nonbankruptcy law.
In the bankruptcy setting, the lender will be stayed from enforcing its
rights to collect hotel and motel room rates. However, the room rates will
constitute cash collateral and cannot be used by the bankrupt borrower--
o without a hearing or the lender's consent, or
o unless the lender's interest in the room rates is given adequate
protection.
For purposes of the foregoing, the adequate protection may include a cash
payment for otherwise encumbered funds or a replacement lien on unencumbered
property, in either case equal in value to the amount of room rates that the
bankrupt borrower proposes to use. See "--Bankruptcy Laws" below.
PERSONALTY
Some types of income-producing real properties, such as hotels, motels and
nursing homes, may include personal property, which may, to the extent it is
owned by the borrower and not previously pledged, constitute a significant
portion of the property's value as security. The creation and enforcement of
liens on personal property are governed by the UCC. Accordingly, if a borrower
pledges personal property as security for a mortgage loan, the lender generally
must file UCC financing statements in order to perfect its security interest in
the personal property and must file continuation statements, generally every
five years, to maintain that perfection. Mortgage loans secured in part by
personal property may be included in one of our trusts even if the security
interest in the personal property was not perfected or the requisite UCC filings
were allowed to lapse.
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FORECLOSURE
General. Foreclosure is a legal procedure that allows the lender to recover
its mortgage debt by enforcing its rights and available legal remedies under the
mortgage. If the borrower defaults in 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 security at public auction to satisfy the
indebtedness.
Foreclosure Procedures Vary From State to State. The two primary methods of
foreclosing a mortgage are--
o judicial foreclosure, involving court proceedings, and
o nonjudicial foreclosure under a power of sale granted in the mortgage
instrument.
Other foreclosure procedures are available in some states, but they are
either infrequently used or available only in limited circumstances.
A foreclosure action is subject to most of the delays and expenses of other
lawsuits if defenses are raised or counterclaims are interposed. A foreclosure
action sometimes requires several years to complete.
Judicial Foreclosure. A judicial foreclosure proceeding is conducted in a
court having jurisdiction over the mortgaged property. Generally, a lender
initiates the action by the service of legal pleadings upon--
o all parties having a subordinate interest of record in the real
property, and
o all parties in possession of the property, under leases or otherwise,
whose interests are subordinate to the mortgage.
Delays in completion of the foreclosure may occasionally result from
difficulties in locating defendants. When the lender's right to foreclose is
contested, the legal proceedings can be time-consuming. The court generally
issues a judgment of foreclosure and appoints a referee or other officer to
conduct a public sale of the mortgaged property upon successful completion of a
judicial foreclosure proceeding. The proceeds of that public sale are used to
satisfy the judgment. The procedures that govern these public sales vary from
state to state.
Equitable and Other Limitations on Enforceability of Particular 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 these principles, a court may:
o alter the specific terms of a loan to the extent it considers
necessary to prevent or remedy an injustice, undue oppression or
overreaching;
o 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;
o require the lender to reinstate a loan or recast a payment schedule in
order to accommodate a borrower that is suffering from a temporary
financial disability; or
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o limit the right of the lender to foreclose in the case of a
nonmonetary default, such as--
1. a failure to adequately maintain the mortgaged property, or
2. an impermissible further encumbrance of the mortgaged property.
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--
o upheld the reasonableness of the notice provisions, or
o found that a public sale under a mortgage providing for a power of
sale does not involve sufficient state action to trigger
constitutional protections.
In addition, some states may have statutory protection such as the right of
the borrower to reinstate its mortgage loan after commencement of foreclosure
proceedings but prior to a foreclosure sale.
Nonjudicial Foreclosure/Power of Sale. In states permitting nonjudicial
foreclosure proceedings, foreclosure of a deed of trust is generally
accomplished by a nonjudicial trustee's sale under a power of sale typically
granted in the deed of trust. A power of sale may also be contained in any other
type of mortgage instrument if applicable law so permits. A power of sale under
a deed of trust allows a nonjudicial public sale to be conducted generally
following--
o a request from the beneficiary/lender to the trustee to sell the
property upon default by the borrower, and
o notice of sale is given in accordance with the terms of the deed of
trust and applicable state law.
In some states, prior to a nonjudicial public sale, the trustee under the
deed of trust must--
o record a notice of default and notice of sale, and
o send a copy of those notices to the borrower and to any other party
who has recorded a request for a copy of them.
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. Some
states require a reinstatement period during which the borrower or junior
lienholder may have the right 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 has only the right to pay off the entire debt
to prevent the foreclosure sale. Generally, state law governs the procedure for
public sale, the parties entitled to notice, the method of giving notice and the
applicable time periods.
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Public Sale. A third party may be unwilling to purchase a mortgaged
property at a public sale because of--
o the difficulty in determining the exact status of title to the
property due to, among other things, redemption rights that may exist,
and
o the possibility that physical deterioration of the property may have
occurred during the foreclosure proceedings.
As a result of the foregoing, it is common for the lender to purchase the
mortgaged property and become its owner, subject to the borrower's right in some
states to remain in possession during a redemption period. In that case, the
lender will 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 repairs necessary to render the property suitable
for sale. The costs of operating and maintaining a commercial or multifamily
residential property may be significant and may be greater than the income
derived from that property. The lender also will commonly obtain the services of
a real estate broker and pay the broker's commission in connection with the sale
or lease of the property. Whether, the ultimate proceeds of the sale of the
property equal the lender's investment in the property depends upon market
conditions. Moreover, because of the expenses associated with acquiring, owning
and selling a mortgaged property, a lender could realize an overall loss on the
related 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. In addition, it
may be obliged to keep senior mortgage loans current in order to avoid
foreclosure of its interest in the property. Furthermore, if the foreclosure of
a junior mortgage triggers the enforcement of a due-on-sale clause contained in
a senior mortgage, the junior mortgagee could be required to pay the full amount
of the senior mortgage indebtedness or face foreclosure.
Rights of Redemption. The purposes of a foreclosure action are--
o to enable the lender to realize upon its security, and
o to bar the borrower, and all persons who have interests in the
property that are subordinate to that of the foreclosing lender, from
exercising 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 to the foreclosure proceeding in order
for their equity of redemption to be terminated.
The equity of redemption is a common-law, nonstatutory right which should
be distinguished from post-sale statutory rights of redemption. In some states,
the borrower and foreclosed junior lienors are given a statutory period in which
to redeem the property after sale under a deed of trust or foreclosure of a
mortgage. 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. A statutory right of
redemption will 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
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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 underlying a
series of offered certificates may be nonrecourse loans. Recourse in the case of
a default on a non-recourse mortgage loan will be limited to the mortgaged
property and any other assets that were pledged to secure the mortgage loan.
However, even if a mortgage loan by its terms provides for recourse to the
borrower's other assets, a lender's ability to realize upon those assets may be
limited by state law. For example, in some states, a lender cannot obtain a
deficiency judgment against the borrower following foreclosure or sale under a
deed of trust. A deficiency judgment is a personal judgment against the former
borrower equal to the difference between the net amount realized upon the public
sale of the real property and the amount due to the lender. Other statutes may
require the lender to exhaust the security afforded under a mortgage before
bringing a personal action against the borrower. In other states, the lender has
the option of bringing a personal action against the borrower on the debt
without first exhausting the security, but in doing so, the lender may be deemed
to have elected a remedy and thus may be precluded from foreclosing upon the
security. Consequently, lenders will usually proceed first against the security
in states where an election of remedy provision exists. Finally, other statutory
provisions limit any deficiency judgment to the excess of the outstanding debt
over the fair market value of the property at the time of the sale. These other
statutory provisions are intended to protect borrowers from exposure to large
deficiency judgments that might result from bidding at below-market values at
the foreclosure sale.
Leasehold Considerations. Some or all of the mortgage loans underlying a
series of offered certificates may be secured by a mortgage on the borrower's
leasehold interest under a ground lease. Leasehold mortgage loans are subject to
some risks not associated with mortgage loans secured by a lien on the fee
estate of the borrower. The most significant of these risks is that if the
borrower's leasehold were to be terminated upon a lease default, the leasehold
mortgagee would lose its security. This risk may be lessened if the ground
lease:
o requires the lessor to give the leasehold mortgagee notices of lessee
defaults and an opportunity to cure them;
o permits the leasehold estate to be assigned to and by the leasehold
mortgagee or the purchaser at a foreclosure sale; and
o contains other protective provisions typically required by prudent
lenders to be included in a ground lease.
Some mortgage loans underlying a series of offered certificates, however,
may be secured by ground leases which do not contain these provisions.
Cooperative Shares. Some or all of the mortgage loans underlying a series
of offered certificates may be secured by a security interest on the borrower's
ownership interest in shares, and the proprietary leases belonging to those
shares, allocable to cooperative dwelling units that may be vacant or occupied
by nonowner tenants. Loans secured in this manner are subject to some risks not
associated with mortgage loans secured by a lien on the fee estate of a borrower
in real property. Loans secured in this manner typically are subordinate to the
mortgage, if any, on the cooperative's building. That mortgage, if foreclosed,
could extinguish the equity in the building and the proprietary leases of the
dwelling units derived from ownership of the shares of the cooperative. Further,
transfer of shares in a cooperative is subject to various regulations as well as
to restrictions under the governing documents of the cooperative. The shares may
be canceled in the event that associated maintenance charges due under the
related proprietary leases are not paid. Typically, a recognition agreement
between the lender and the cooperative provides, among other things, that the
lender may cure a default under a proprietary lease.
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Under the laws applicable in many states, "foreclosure" on cooperative
shares is accomplished by a sale in accordance with the provisions of Article 9
of the UCC and the security agreement relating to the shares. Article 9 of the
UCC requires that a sale be conducted in a commercially reasonable manner, which
may be dependent upon, among other things, the notice given the debtor and the
method, manner, time, place and terms of the sale. Article 9 of the UCC provides
that the proceeds of the sale will be applied first to pay the costs and
expenses of the sale and then to satisfy the indebtedness secured by the
lender's security interest. A recognition agreement, however, generally provides
that the lender's right to reimbursement is subject to the right of the
cooperative corporation to receive sums due under the proprietary leases.
BANKRUPTCY LAWS
Operation of the U.S. Bankruptcy Code and related state laws may interfere
with or affect the ability of a lender to realize upon collateral or to enforce
a deficiency judgment. For example, under the U.S. 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. Often, no interest or principal payments are made during the course of
the bankruptcy case. The delay caused by an automatic stay and its consequences
can be significant. Also, under the U.S. Bankruptcy Code, the filing of a
petition in bankruptcy by or on behalf of a junior lienor may stay the senior
lender from taking action to foreclose out the junior lien.
Under the U.S. Bankruptcy Code, the amount and terms of a mortgage loan
secured by a lien on property of the debtor may be modified provided that
substantive and procedural safeguards protective of the lender are met. A
bankruptcy court may, among other things--
o reduce the secured portion of the outstanding amount of the loan to
the then-current value of the property, thereby leaving the lender a
general unsecured creditor for the difference between the then-current
value of the property and the outstanding balance of the loan;
o reduce 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;
o extend or shorten the term to maturity of the loan;
o permit the bankrupt borrower to cure of the subject loan default by
paying the arrearage over a number of years; or
o permit the bankrupt borrower, through its rehabilitative plan, to
reinstate the loan payment schedule even if the lender has obtained a
final judgment of foreclosure prior to the filing of the debtor's
petition.
Federal bankruptcy law may also interfere with or affect the ability of a
secured lender to enforce the borrower's assignment of rents and leases related
to the mortgaged property. A lender may be stayed from enforcing the assignment
under the U.S. Bankruptcy Code. In addition, the legal proceedings necessary to
resolve the issue could be time-consuming, and result in delays in the lender's
receipt of the rents. However, recent amendments to the U.S. Bankruptcy Code may
minimize the impairment of the lender's ability to enforce the borrower's
assignment of rents and leases. In addition to the inclusion of hotel revenues
within the definition of cash collateral as noted above, the amendments provide
that a pre-petition security interest in rents or hotel revenues is designed to
overcome those cases holding that a security interest in rents is unperfected
under the laws of some states until the lender has taken some further action,
such as commencing foreclosure or obtaining a receiver prior to activation of
the assignment of rents.
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A borrower's ability to make payment on a mortgage loan may be impaired by
the commencement of a bankruptcy case relating to the tenant under a lease of
the related property. Under the U.S. Bankruptcy Code, the filing of a petition
in bankruptcy by or on behalf of a tenant results in a stay in bankruptcy
against the commencement or continuation of any state court proceeding for--
o past due rent,
o accelerated rent,
o damages, or
o a summary eviction order with respect to a default under the lease
that occurred prior to the filing of the tenant's bankruptcy petition.
In addition, the U.S. Bankruptcy Code generally provides that a trustee or
debtor-in-possession may, subject to approval of the court--
o assume the lease and either retain it or assign it to a third party,
or
o reject the lease.
If the lease is assumed, the trustee, debtor-in-possession or assignee, if
applicable, must cure any defaults under the lease, compensate the lessor for
its losses and provide the lessor with adequate assurance of future performance.
These remedies may be insufficient, and any assurances provided to the lessor
may be inadequate. If the lease is rejected, the lessor will be treated, except
potentially to the extent of any security deposit, as an unsecured creditor with
respect to its claim for damages for termination of the lease. The U.S.
Bankruptcy Code also limits a lessor's damages for lease rejection to--
o the rent reserved by the lease without regard to acceleration for the
greater of one year, or 15%, not to exceed three years, of the
remaining term of the lease, plus
o unpaid rent to the earlier of the surrender of the property or the
lessee's bankruptcy filing.
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 or disposal
activity. Those environmental risks include the possible diminution of the value
of a contaminated property or, as discussed below, potential liability for
clean-up costs or other remedial actions that could exceed the value of the
property or the amount of the lender's loan. In some circumstances, a lender may
decide to abandon a contaminated real property as collateral for its loan rather
than foreclose and risk liability for clean-up costs.
Superlien Laws. Under the laws of many states, contamination on a property
may give rise to a lien on the property for clean-up costs. In several states,
that 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 that
superlien.
CERCLA. The federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, imposes strict liability on present and past
"owners" and "operators" of contaminated real property for the costs of
clean-up. A secured lender may be liable as an "owner" or "operator" of a
contaminated
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mortgaged property if agents or employees of the lender have participated in the
management of the property or the operations of the borrower. 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 the
contaminated mortgaged property through foreclosure, deed in lieu of foreclosure
or otherwise. Moreover, liability is not limited to the original or unamortized
principal balance of a loan or to the value of the property securing a loan.
Excluded from CERCLA's definition of "owner" or "operator," however, is a person
who, without participating in the management of the facility, holds indicia of
ownership primarily to protect his security interest. This is the so called
"secured creditor exemption."
The Asset Conservation, Lender Liability and Deposit Insurance Act of 1996
amended, among other things, the provisions of CERCLA with respect to lender
liability and the secured creditor exemption. The Lender Liability Act offers
substantial protection to lenders by defining the activities in which a lender
can engage and still have the benefit of the secured creditor exemption. In
order for a lender to be deemed to have participated in the management of a
mortgaged property, the lender must actually participate in the operational
affairs of the property of the borrower. The Lender Liability Act provides that
"merely having the capacity to influence, or unexercised right to control"
operations does not constitute participation in management. A lender will lose
the protection of the secured creditor exemption only if--
o it exercises decision-making control over a borrower's environmental
compliance and hazardous substance handling and disposal practices, or
o assumes day-to-day management of operational functions of a mortgaged
property.
The Lender Liability Act also provides that a lender will continue to have
the benefit of the secured creditor exemption even if it forecloses on a
mortgaged property, purchases it at a foreclosure sale or accepts a deed-in-lieu
of foreclosure, provided that the lender seeks to sell that property at the
earliest practicable commercially reasonable time on commercially reasonable
terms.
Other Federal and State Laws. Many states have statutes similar to CERCLA,
and not all those statutes provide for a secured creditor exemption. In
addition, under federal law, there is potential liability relating to hazardous
wastes and underground storage tanks under the federal Resource Conservation and
Recovery Act.
Some federal, state and local laws, regulations and ordinances govern the
management, removal, encapsulation or disturbance of asbestos-containing
materials. These laws, as well as common law standards, may--
o impose liability for releases of or exposure to asbestos-containing
materials, and
o provide for third parties to seek recovery from owners or operators of
real properties for personal injuries associated with those releases.
Federal law requires owners of residential housing constructed prior to
1978 to disclose to potential residents or purchasers any known information in
their possession regarding the presence of lead-based paint or lead-based paint
related hazards and will impose treble damages for any failure to disclose. In
addition, the ingestion of lead-based paint chips or dust particles by children
can result in lead poisoning. If lead-based paint hazards exist at a property,
then the owner of that property may be held liable for injuries and for the
costs of removal or encapsulation of the lead-based paint.
In a few states, transfers of some types of properties are conditioned upon
cleanup of contamination prior to transfer. In these cases, a lender that
becomes the owner of a property through foreclosure, deed in lieu
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of foreclosure or otherwise, may be required to clean up the contamination
before selling or otherwise transferring the property.
Beyond statute-based environmental liability, there exist common law causes
of action related to hazardous environmental conditions on a property, such as
actions based on nuisance or on toxic tort resulting in death, personal injury
or damage to property. While it may be more difficult to hold a lender liable
under common law causes of action, unanticipated or uninsured liabilities of the
borrower may jeopardize the borrower's ability to meet its loan obligations.
Federal, state and local environmental regulatory requirements change
often. It is possible that compliance with a new regulatory requirement could
impose significant compliance costs on a borrower. These costs 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 the owner or operator who created
the environmental hazard. However, that individual or entity may be without
substantial assets. Accordingly, it is possible that the costs could become a
liability of the related trust and occasion a loss to the related
certificateholders.
If the operations on a foreclosed property are subject to environmental
laws and regulations, the lender will be required to operate the property in
accordance with those laws and regulations. This 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. This
disclosure may decrease the amount that prospective buyers are willing to pay
for the affected property, sometimes substantially.
DUE-ON-SALE AND DUE-ON-ENCUMBRANCE PROVISIONS
Some or all of the mortgage loans underlying a series of offered
certificates 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 a mortgaged property. In recent years, court decisions
and legislative actions placed substantial restrictions on the right of lenders
to enforce these clauses in many states. However, the Garn-St Germain Depository
Institutions Act of 1982 generally preempts state laws that prohibit the
enforcement of due-on-sale clauses and permits lenders to enforce these clauses
in accordance with their terms, subject to the limitations prescribed in that
Act and the regulations promulgated thereunder.
JUNIOR LIENS; RIGHTS OF HOLDERS OF SENIOR LIENS
Any of our trusts may include mortgage loans secured by junior liens, while
the loans secured by the related senior liens may not be included in that trust.
The primary risk to holders of mortgage loans secured by junior liens is the
possibility that adequate funds will not be received in connection with a
foreclosure of the related senior liens to satisfy fully both the senior loans
and the junior loan.
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In the event that a holder of a senior lien forecloses on a mortgaged
property, the proceeds of the foreclosure or similar sale will be applied as
follows:
o first, to the payment of court costs and fees in connection with the
foreclosure;
o second, to real estate taxes;
o third, in satisfaction of all principal, interest, prepayment or
acceleration penalties, if any, and any other sums due and owing to
the holder of the senior liens; and
o last, in satisfaction of all principal, interest, prepayment and
acceleration penalties, if any, and any other sums due and owing to
the holder of the junior mortgage loan.
SUBORDINATE FINANCING
Some mortgage loans underlying a series of offered certificates may not
restrict the ability of the borrower to use the mortgaged property as security
for one or more additional loans, or the restrictions may be unenforceable.
Where a borrower encumbers a mortgaged property with one or more junior liens,
the senior lender is subjected to the following additional risks:
o the borrower may have difficulty servicing and repaying multiple
loans;
o 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;
o acts of the senior lender that prejudice the junior lender or impair
the junior lender's security, such as the senior lender's agreeing to
an increase in the principal amount of or the interest rate payable on
the senior loan, may create a superior equity in favor of the junior
lender;
o 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; and
o 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. They
may also contain provisions that prohibit prepayments for a specified period
and/or condition prepayments upon the borrower's payment of prepayment premium,
fee or charge. In some states, there are or may be specific limitations upon the
late charges that a lender may collect from a borrower for delinquent payments.
Some 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 premiums, fees and charges upon an
involuntary prepayment is unclear under the laws of many states.
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APPLICABILITY OF USURY LAWS
Title V of the Depository Institutions Deregulation and Monetary Control
Act of 1980 provides that state usury limitations shall not apply to various
types of residential, including multifamily, first mortgage loans originated by
particular 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 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. Some states have taken action to reimpose interest
rate limits and/or to limit discount points or other charges.
AMERICANS WITH DISABILITIES ACT
Under Title III of the Americans with Disabilities Act of 1990 and rules
promulgated thereunder, in order to protect individuals with disabilities,
owners of public accommodations, such as hotels, restaurants, shopping centers,
hospitals, schools and social service center establishments, must remove
architectural and communication barriers which are structural in nature from
existing places of public accommodation to the extent "readily achievable." In
addition, under the ADA, alterations to a place of public accommodation or a
commercial facility are to be made so that, to the maximum extent feasible, the
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 property owner, landlord or other applicable
person. In addition to imposing a possible financial burden on the borrower in
its capacity as owner or landlord, the ADA may also impose requirements on a
foreclosing lender who succeeds to the interest of the borrower as owner or
landlord. Furthermore, because the "readily achievable" standard may vary
depending on the financial condition of the owner or landlord, a foreclosing
lender that is financially more capable than the borrower of complying with the
requirements of the ADA may be subject to more stringent requirements than those
to which the borrower is subject.
SERVICEMEMBERS' CIVIL RELIEF ACT
Under the terms of the Servicemembers' Civil Relief Act, a borrower who
enters military service after the origination of the borrower's mortgage loan,
including a borrower who was in reserve status and is called to active duty
after origination of the mortgage loan, may not be charged interest, including
fees and charges, above an annual rate of 6% during the period of the borrower's
active duty status, unless a court 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 assigned to duty with the military. Because the
Relief Act applies to individuals who enter military service, including
reservists who are called to active duty, after origination of the related
mortgage loan, no information can be provided as to the number of loans with
individuals as borrowers that may be affected by the Relief Act.
Application of the Relief Act would adversely affect, for an indeterminate
period of time, the ability of a master servicer or special servicer to collect
full amounts of interest on an affected mortgage loan. Any shortfalls in
interest collections resulting from the application of the Relief Act would
result in a reduction of the amounts payable to the holders of certificates of
the related series, and would not be covered by advances or, unless otherwise
specified in the related prospectus supplement, any form of credit support
provided in connection with the certificates. In addition, the Relief Act
imposes limitations that would impair the ability of a master servicer or
special servicer to foreclose on an affected mortgage loan during the borrower's
period of active duty status and, under some circumstances, during an additional
three month period after the active duty status ceases.
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FORFEITURES IN DRUG, RICO AND MONEY LAUNDERING PROCEEDINGS
Federal law provides that property purchased or improved with assets
derived from criminal activity or otherwise tainted, or used in the commission
of certain offenses can be seized by 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 Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the
"USA Patriot Act") and the regulations issued pursuant to the USA Patriot Act,
as well as the narcotic drug laws. Under procedures contained in the
Comprehensive Crime Control Act of 1984, the government may seize the property
even before conviction. The government must publish notice of the forfeiture
proceeding and may give notice to all parties "known to have an alleged interest
in the property," including the holders of mortgage loans.
A lender may avoid forfeiture of its interest in the property if it
establishes that--
o its mortgage was executed and recorded before commission of the
illegal conduct from which the assets used to purchase or improve the
property were derived or before any other crime upon which the
forfeiture is based, or
o the lender was, at the time of execution of the mortgage, "reasonably
without cause to believe" that the property was subject to
forfeiture."
However, there is no assurance that such 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 unsafe or unsound practice or violates a law, rule or regulation
applicable to such bank. If a bank is a servicer and/or a mortgage loan seller
for a series and the OCC, which has primary regulatory authority over banks,
were to find that any obligation of a bank under the related pooling and
servicing agreement or other agreement or any activity of a bank constituted an
unsafe or unsound practice or violated any law, rule or regulation applicable to
it, the OCC could order that bank, among other things, to rescind such
contractual obligation or terminate such activity.
In March 2003, the OCC issued a termporary 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 we do not believe that the OCC would consider, with respect to any
series (a) provisions relating to a bank acting as a servicer under the related
pooling and servicing agreement, (b) the payment or amount of the servicing
compensation payable to a bank or (c) any other obligation of a bank under the
related pooling and servicing agreement or other contractual agreement under
which we may purchase mortgage loans from a 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 no conclude otherwise. If the OCC did
not reach such a conclusion, and ordered a particular bank to rescind or amend
any such agreement, payments on offered certificates could be delayed or
reduced.
FEDERAL INCOME TAX CONSEQUENCES
GENERAL
This is a general discussion of the material federal income tax
consequences of owning the offered certificates. This discussion is directed to
certificateholders that hold the offered certificates as capital assets within
the meaning of Section 1221 of the Internal Revenue Code. It does not discuss
all federal income tax consequences that may be relevant to owners of offered
certificates, particularly as to investors subject to special treatment under
the Internal Revenue Code, including--
o banks,
o insurance companies, and
o foreign investors.
Further, this discussion and any legal opinions referred to in this
discussion are based on authorities that can change, or be differently
interpreted, with possible retroactive effect. No rulings have been or will be
sought from the IRS with respect to any of the federal income tax consequences
discussed below. Accordingly, the IRS may take contrary positions.
Investors and preparers of tax returns 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--
o given with respect to events that have occurred at the time the advice
is rendered, and
o is directly relevant to the determination of an entry on a tax return.
Accordingly, even if this discussion addresses an issue regarding the tax
treatment of the owner of the offered certificates, investors should consult
their own tax advisors regarding that issue. Investors should do so not only as
to federal taxes, but also state and local taxes. See "State and Other Tax
Consequences."
The following discussion addresses securities of three general types:
o REMIC certificates, representing interests in a trust, or a portion of
the assets of that trust, as to which a specified person or entity
will make a real estate mortgage investment conduit, or REMIC,
election under Sections 860A through 860G of the Internal Revenue
Code;
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o FASIT certificates, representing interests in a trust, or a portion of
the assets of that trust, as to which a specified person or entity
will make a financial asset securitization investment trust, or FASIT,
election within the meaning of Section 860L(a) of the Internal Revenue
Code; and
o grantor trust certificates, representing interests in a trust, or a
portion of the assets of that trust, as to which no REMIC or FASIT
election will be made.
We will indicate in the prospectus supplement for each series of offered
certificates whether the related trustee, another party to the related Governing
Document or an agent appointed by that trustee or other party will act as tax
administrator for the related trust. If the related tax administrator is
required to make a REMIC or FASIT election, we also will identify in the related
prospectus supplement all regular interests, residual interests and/or ownership
interests, as applicable, in the resulting REMIC or FASIT.
The following discussion is limited to certificates offered under this
prospectus. In addition, this discussion applies only to the extent that the
related trust holds only mortgage loans. If a trust holds assets other than
mortgage loans, such as mortgage-backed securities, we will disclose in the
related prospectus supplement the tax consequences associated with those other
assets being included. In addition, if agreements other than guaranteed
investment contracts are included in a trust to provide interest rate protection
for the related offered certificates, the anticipated material tax consequences
associated with those agreements also will be discussed in the related
prospectus supplement. See "Description of the Trust Assets--Arrangements
Providing Reinvestment, Interest Rate and Currency Related Protection."
The following discussion is based in part on the rules governing original
issue discount in Sections 1271-1273 and 1275 of the Internal Revenue Code and
in the Treasury regulations issued under those sections. It is also based in
part on the rules governing REMICs in Sections 860A-860G of the Internal Revenue
Code and the rules governing FASITs in Sections 860H-860L of the Internal
Revenue Code and in the Treasury regulations issued or proposed under those
sections. The regulations relating to original issue discount do not adequately
address all issues relevant to, and in some instances provide that they are not
applicable to, securities such as the offered certificates.
REMICS
General. With respect to each series of offered certificates as to which
the related tax administrator will make a REMIC election, our counsel will
deliver its opinion generally to the effect that, assuming compliance with all
provisions of the related Governing Document, and subject to any other
assumptions set forth in the opinion:
o the related trust, or the relevant designated portion of the trust,
will qualify as a REMIC; and
o those offered certificates will represent--
1. regular interests in the REMIC, or
2. residual interests in the REMIC.
Any and all offered certificates representing interests in a REMIC will be
either--
o REMIC regular certificates, representing regular interests in the
REMIC, or
o REMIC residual certificates, representing residual interests in the
REMIC.
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If an entity electing to be treated as a REMIC fails to comply with the
ongoing requirements of the Internal Revenue Code for REMIC status, it may lose
its REMIC status. If so, the entity may become taxable as a corporation.
Therefore, the related certificates may not be given the tax treatment
summarized below. Although the Internal Revenue Code authorizes the Treasury
Department to issue regulations providing relief in the event of an inadvertent
termination of REMIC status, the Treasury Department has not done so. Any relief
mentioned above, moreover, may be accompanied by sanctions. These sanctions
could include the imposition of a corporate tax on all or a portion of a trust's
income for the period in which the requirements for REMIC status are not
satisfied. The Governing Document with respect to each REMIC will include
provisions designed to maintain its status as a REMIC under the Internal Revenue
Code.
Characterization of Investments in REMIC Certificates. Unless we state
otherwise in the related prospectus supplement, the offered certificates that
are REMIC certificates will be treated as--
o "real estate assets" within the meaning of Section 856(c)(5)(B) of the
Internal Revenue Code in the hands of a real estate investment trust,
and
o "loans secured by an interest in real property" or other assets
described in Section 7701(a)(19)(C) of the Internal Revenue Code in
the hands of a thrift institution,
in the same proportion that the assets of the related REMIC are so treated.
However, to the extent that the REMIC assets constitute mortgage loans on
property not used for residential or other prescribed purposes, the related
offered certificates will not be treated as assets qualifying under Section
7701(a)(19)(C). If 95% or more of the assets of the REMIC qualify for any of the
foregoing characterizations at all times during a calendar year, the related
offered certificates will qualify for the corresponding status in their entirety
for that calendar year.
In addition, unless we state otherwise in the related prospectus
supplement, offered certificates that are REMIC regular certificates will be:
o "qualified mortgages" within the meaning of Section 860G(a)(3) of the
Internal Revenue Code in the hands of another REMIC if such REMIC
regular certificates are transferred to another REMIC on its startup
day in exchange for regular or residual interests in that other REMIC;
and
o "permitted assets" for a FASIT under Section 860L(c)(1)(G) of the
Internal Revenue Code.
Finally, interest, including original issue discount, on offered
certificates that are REMIC regular certificates, and income allocated to
offered certificates that are REMIC residual certificates, will be interest
described in Section 856(c)(3)(B) of the Internal Revenue Code if received by a
real estate investment trust, to the extent that these certificates are treated
as "real estate assets" within the meaning of Section 856(c)(5)(B) of the
Internal Revenue Code.
The related tax administrator will determine the percentage of the REMIC's
assets that constitute assets described in the above-referenced sections of the
Internal Revenue Code with respect to each calendar quarter based on the average
adjusted basis of each category of the assets held by the REMIC during that
calendar quarter. The related tax administrator will report those determinations
to certificateholders in the manner and at the times required by applicable
Treasury regulations.
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The assets of the REMIC will include, in addition to mortgage loans--
o collections on mortgage loans held pending payment on the related
offered certificates, and
o any 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 these assets otherwise would receive the same treatment as the
mortgage loans for purposes of the above-referenced sections of the Internal
Revenue Code. In addition, in some instances, the mortgage loans may not be
treated entirely as assets described in those sections of the Internal Revenue
Code. If so, we will describe in the related prospectus supplement those
mortgage loans that are characterized differently. The Treasury regulations do
provide, however, that cash received from collections on mortgage loans held
pending payment is considered part of the mortgage loans for purposes of Section
856(c)(5)(B) of the Internal Revenue Code, relating to real estate investment
trusts.
To the extent a REMIC certificate represents ownership of an interest in a
mortgage loan that is secured in part by the related borrower's interest in a
bank account, that mortgage loan is not secured solely by real estate.
Accordingly:
o a portion of that certificate may not represent ownership of "loans
secured by an interest in real property" or other assets described in
Section 7701(a)(19)(C) of the Internal Revenue Code;
o a portion of that certificate may not represent ownership of "real
estate assets" under Section 856(c)(5)(B) of the Internal Revenue
Code; and
o the interest on that certificate may not constitute "interest on
obligations secured by mortgages on real property" within the meaning
of Section 856(c)(3)(B) of the Internal Revenue Code.
Tiered REMIC Structures. For some series of REMIC certificates, the related
tax administrator may make two or more REMIC elections as to the related trust
for federal income tax purposes. As to each of these series of REMIC
certificates, our counsel will opine that each portion of the related trust as
to which a REMIC election is to be made will qualify as a REMIC. Each of these
series will be treated as one REMIC solely for purposes of determining:
o whether the related REMIC certificates will be "real estate assets"
within the meaning of Section 856(c)(5)(B) of the Internal Revenue
Code;
o whether the related REMIC certificates will be "loans secured by an
interest in real property" under Section 7701(a)(19)(C) of the
Internal Revenue Code; and
o whether the interest/income on the related REMIC certificates is
interest described in Section 856(c)(3)(B) of the Internal Revenue
Code.
Taxation of Owners of REMIC Regular Certificates.
General. Except as otherwise stated in this discussion, the Internal
Revenue Code treats REMIC regular certificates as debt instruments issued by the
REMIC and not as ownership interests in the REMIC or its assets.
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Holders of REMIC regular certificates that otherwise report income under the
cash method of accounting must nevertheless report income with respect to REMIC
regular certificates under the accrual method.
Original Issue Discount. Some REMIC regular certificates may be issued with
original issue discount within the meaning of Section 1273(a) of the Internal
Revenue Code. Any holders of REMIC regular certificates issued with original
issue discount generally will have to include original issue discount in income
as it accrues, in accordance with a constant yield method, prior to the receipt
of the cash attributable to that income. The IRS has issued regulations under
Sections 1271 to 1275 of the Internal Revenue Code generally addressing the
treatment of debt instruments issued with original issue discount. Section
1272(a)(6) of the Internal Revenue Code provides special rules applicable to the
accrual of original issue discount on, among other things, REMIC regular
certificates. The Treasury Department has not issued regulations under that
section. You should be aware, however, that Section 1272(a)(6) and the
regulations under Sections 1271 to 1275 of the Internal Revenue Code do not
adequately address all issues relevant to, or are not applicable to, prepayable
securities such as the offered certificates. We recommend that you consult with
your own tax advisor concerning the tax treatment of the offered certificates.
The Internal Revenue Code requires, in computing the accrual of original
issue discount on REMIC regular certificates, that a reasonable assumption be
used concerning the rate at which borrowers will prepay the mortgage loans held
by the related REMIC. Further, adjustments must be made in the accrual of that
original issue discount to reflect differences between the prepayment rate
actually experienced and the assumed prepayment rate. The prepayment assumption
is to be determined in a manner prescribed in Treasury regulations that the
Treasury Department has not yet issued. The Committee Report indicates that the
regulations should provide that the prepayment assumption used with respect to a
REMIC regular certificate is determined once, at initial issuance, and must be
the same as that used in pricing. 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 we nor any other person will make any
representation that the mortgage loans underlying any series of REMIC regular
certificates will in fact prepay at a rate conforming to the prepayment
assumption or at any other rate or that the IRS will not challenge on audit the
prepayment assumption used.
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 those certificates are
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 related date of initial issuance of those
certificates, the issue price for that class will be the fair market value of
that class on the date of initial issuance.
Under the Treasury regulations, the stated redemption price of a REMIC
regular certificate is equal to the total of all payments to be made on that
certificate other than qualified stated interest. Qualified stated interest is
interest that is unconditionally payable at least annually, during the entire
term of the instrument, at--
o a single fixed rate,
o a "qualified floating rate,"
o an "objective rate,"
o a combination of a single fixed rate and one or more "qualified
floating rates,"
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o a combination of a single fixed rate and one "qualified inverse
floating rate," or
o a combination of "qualified floating rates" that does not operate in a
manner that accelerates or defers interest payments on the REMIC
regular certificate.
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 of that discount will vary according to the
characteristics of those certificates. If the original issue discount rules
apply to those certificates, we will describe in the related prospectus
supplement the manner in which those rules will be applied with respect to those
certificates in preparing information returns to the certificateholders and the
IRS.
Some classes of REMIC regular certificates may provide that the first
interest payment with respect to those certificates be made more than one month
after the date of initial issuance, a period that is longer than the subsequent
monthly intervals between interest payments. Assuming the accrual period for
original issue discount is the monthly period that ends on each payment date,
then, as a result of this long first accrual period, some or all interest
payments may be required to be included in the stated redemption price of the
REMIC regular certificate and accounted for as original issue discount. Because
interest on REMIC regular certificates must in any event be accounted for under
an accrual method, applying this analysis would result in only a slight
difference in the timing of the inclusion in income of the yield on the REMIC
regular certificates.
In addition, if the accrued interest to be paid on the first payment date
is computed with respect to a period that begins prior to the date of initial
issuance, a portion of the purchase price paid for a REMIC regular certificate
will reflect that accrued interest. In those cases, information returns provided
to the certificateholders and the IRS will be based on the position that the
portion of the purchase price paid for the interest accrued prior to the date of
initial issuance is treated as part of the overall cost of the REMIC regular
certificate. Therefore, the portion of the interest paid on the first payment
date in excess of interest accrued from the date of initial issuance to the
first payment date is included in the stated redemption price of the REMIC
regular certificate. However, the Treasury regulations state that all or some
portion of this accrued interest may be treated as a separate asset, the cost of
which is recovered entirely out of interest paid on the first payment date. It
is unclear how an election to do so would be made under these regulations and
whether this 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
certificate multiplied by its weighted average maturity. For this purpose, the
weighted average maturity of a REMIC regular certificate is computed as the sum
of the amounts determined, as to each payment included in the stated redemption
price of the certificate, by multiplying:
o the number of complete years, rounding down for partial years, from
the date of initial issuance, until that payment is expected to be
made, presumably taking into account the prepayment assumption, by
o a fraction--
1. the numerator of which is the amount of the payment, and
2. the denominator of which is the stated redemption price at
maturity of the certificate.
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Under the Treasury regulations, original issue discount of only a de
minimis amount, other than de minimis original issue discount attributable to a
so-called "teaser" interest rate or an initial interest holiday, will be
included in income as each payment of stated principal is made, based on the
product of:
o the total amount of the de minimis original issue discount, and
o a fraction--
1. the numerator of which is the amount of the principal payment,
and
2. the denominator of which is the outstanding stated principal
amount of the subject REMIC regular certificate.
The Treasury regulations also would permit you to elect to accrue de
minimis original issue discount into income currently based on a constant yield
method. See "--REMICs--Taxation of Owners of REMIC Regular Certificates--Market
Discount" below for a description of that election under the applicable Treasury
regulations.
If original issue discount on a REMIC regular certificate is in excess of a
de minimis amount, the holder of the 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 the 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 described below in this "--Original Issue Discount" subsection.
As to each accrual period, the related tax administrator will calculate the
original issue discount that accrued during that accrual period. For these
purposes, an accrual period is, unless we otherwise state in the related
prospectus supplement, the period that begins on a date that corresponds to a
payment date, or in the case of the first accrual period, begins on the date of
initial issuance, and ends on the day preceding the immediately following
payment date. The portion of original issue discount that accrues in any accrual
period will equal the excess, if any, of:
o the sum of--
1. the present value, as of the end of the accrual period, of all of
the payments remaining to be made on the subject REMIC regular
certificate, if any, in future periods, presumably taking into
account the prepayment assumption, and
2. the payments made on that certificate during the accrual period
of amounts included in the stated redemption price, over
o the adjusted issue price of the subject REMIC regular certificate at
the beginning of the accrual period.
The adjusted issue price of a REMIC regular certificate is:
o the issue price of the certificate, increased by
o the aggregate amount of original issue discount previously accrued on
the certificate, reduced by
o the amount of all prior payments of amounts included in its stated
redemption price.
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The present value of the remaining payments referred to in item 1. of the
second preceding sentence will be calculated:
o assuming that payments on the REMIC regular certificate will be
received in future periods based on the related mortgage loans being
prepaid at a rate equal to the prepayment assumption;
o using a discount rate equal to the original yield to maturity of the
certificate, based on its issue price and the assumption that the
related mortgage loans will be prepaid at a rate equal to the
prepayment assumption; and
o taking into account events, including actual prepayments, that have
occurred before the close of the accrual period.
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 that day.
A subsequent purchaser of a REMIC regular certificate that purchases the
certificate at a cost, excluding any portion of that cost attributable to
accrued qualified stated interest, that is 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 the certificate.
However, the daily portion will be reduced, if the cost is in excess of its
adjusted issue price, in proportion to the ratio that the excess bears to the
aggregate original issue discount remaining to be accrued on the certificate.
The adjusted issue price of a REMIC regular certificate, as of any date of
determination, equals the sum of:
o 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 which includes that date of determination, and
o the daily portions of original issue discount for all days during that
accrual period prior to that date of determination.
If the foregoing method for computing original issue discount results in a
negative amount of original issue discount as to any accrual period with respect
to a REMIC regular certificate held by you, the amount of original issue
discount accrued for that accrual period will be zero. You may not deduct the
negative amount currently. Instead, you will only be permitted to offset the
negative amount against future positive original issue discount, if any,
attributable to the certificate. Although not free from doubt, it is possible
that you may be permitted to recognize a loss to the extent your basis in the
certificate exceeds the maximum amount of payments that you could ever receive
with respect to the certificate. However, any such loss may be a capital loss,
which is limited in its deductibility. The foregoing considerations are
particularly relevant to certificates that have no, or a disproportionately
small, amount of principal because they can have negative yields if the mortgage
loans held by the related REMIC prepay more quickly than anticipated. See "Risk
Factors--The Investment Performance of Your Offered Certificate Will Depend Upon
Payments, Defaults and Losses on the Underlying Mortgage Loans; and Those
Payments, Defaults and Losses May Be Highly Unpredictable."
The Treasury 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 you may be able to
select a method for recognizing original issue discount that differs from that
used by the trust in preparing reports to you and the IRS. Prospective
purchasers of the REMIC regular certificates should consult their tax advisors
concerning the tax treatment of these certificates in this regard.
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Market Discount. You will be considered to have purchased a REMIC regular
certificate at a market discount if--
o in the case of a certificate issued without original issue discount,
you purchased the certificate at a price less than its remaining
stated principal amount, or
o in the case of a certificate issued with original issue discount, you
purchased the certificate at a price less than its adjusted issue
price.
If you purchase a REMIC regular certificate with more than a de minimis
amount of market discount, you will recognize gain upon receipt of each payment
representing stated redemption price. Under Section 1276 of the Internal Revenue
Code, you generally will be required to allocate the portion of each payment
representing some or all of the stated redemption price first to accrued market
discount not previously included in income. You must recognize ordinary income
to that extent. You 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 made, this election will apply to all market discount bonds
acquired by you on or after the first day of the first taxable year to which
this election applies.
The Treasury regulations also permit you to elect to accrue all interest
and discount, including de minimis market or original issue discount, in income
as interest, and to amortize premium, based on a constant yield method. Your
making this election with respect to a REMIC regular certificate with market
discount would be deemed to be an election to include currently market discount
in income with respect to all other debt instruments with market discount that
you acquire during the taxable year of the election or thereafter, and possibly
previously acquired instruments. Similarly, your making this election as to a
certificate acquired at a premium would be deemed to be an election to amortize
bond premium, with respect to all debt instruments having amortizable bond
premium that you own or acquire. See "--REMICs--Taxation of Owners of REMIC
Regular Certificates--Premium" below.
Each of the elections described above to accrue interest and discount, and
to amortize premium, with respect to a certificate on a constant yield method or
as interest would be irrevocable except with the approval of the IRS.
However, market discount with respect to a REMIC regular certificate will
be considered to be de minimis for purposes of Section 1276 of the Internal
Revenue Code if the market discount is less than 0.25% of the remaining stated
redemption price of the certificate multiplied by the number of complete 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 Treasury regulations refer to the weighted average maturity of
obligations. 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 "--REMICs--Taxation of Owners of REMIC Regular
Certificates--Original Issue Discount" above. This 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 Internal Revenue 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 by the Treasury Department,
the relevant rules described in the Committee Report apply. The Committee Report
indicates that in each accrual period, you may accrue market discount on a REMIC
regular certificate held by you, at your option:
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o on the basis of a constant yield method;
o in the case of a 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 in the accrual period bears to
the total amount of stated interest remaining to be paid on the
certificate as of the beginning of the accrual period; or
o in the case of a 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 amount of original issue discount remaining on the
certificate at the beginning of the accrual period.
The prepayment assumption used in calculating the accrual of original issue
discount is also used in calculating the accrual of market discount.
To the extent that REMIC regular certificates provide for monthly or other
periodic payments 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 the 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 the 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, Section 1277 of the Internal Revenue Code may require you to defer
a portion of your 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 deferred interest expense would not exceed
the market discount that accrues during the related taxable year and is, in
general, allowed as a deduction not later than the year in which the related
market discount is includible in income. If you have elected, however, to
include market discount in income currently as it accrues, the interest deferral
rule described above would not apply.
Premium. A REMIC regular certificate purchased at a cost, excluding any
portion of the cost attributable to accrued qualified stated interest, that is
greater than its remaining stated redemption price will be considered to be
purchased at a premium. You may elect under Section 171 of the Internal Revenue
Code to amortize the premium under the constant yield method over the life of
the certificate. If you elect to amortize bond premium, bond premium would be
amortized on a constant yield method and would be applied as an offset against
qualified stated interest. If made, this election will apply to all debt
instruments having amortizable bond premium that you own or subsequently
acquire. The IRS has issued regulations on the amortization of bond premium, but
they specifically do not apply to holders of REMIC regular certificates.
The Treasury regulations also permit you to elect to include all interest,
discount and premium in income based on a constant yield method, further
treating you as having made the election to amortize premium generally. See
"--Taxation of Owners of REMIC Regular Certificates--Market Discount" above. The
Committee Report states that the same rules that apply to accrual of market
discount and require the use of a prepayment assumption in accruing market
discount with respect to REMIC regular certificates without regard to whether
those certificates have original issue discount, will also apply in amortizing
bond premium under Section 171 of the Internal Revenue Code.
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Whether you will be treated as holding a REMIC regular certificate with
amortizable bond premium will depend on--
o the purchase price paid for your offered certificate, and
o the payments remaining to be made on your offered certificate at the
time of its acquisition by you.
If you acquire an interest in any class of REMIC regular certificates
issued at a premium, you should consider consulting your own tax advisor
regarding the possibility of making an election to amortize the premium.
Realized Losses. Under Section 166 of the Internal Revenue Code, if you are
either a corporate holder of a REMIC regular certificate or a noncorporate
holder of a REMIC regular certificate that acquires the certificate in
connection with a trade or business, you should be allowed to deduct, as
ordinary losses, any losses sustained during a taxable year in which your
offered certificate becomes wholly or partially worthless as the result of one
or more realized losses on the related mortgage loans. However, if you are a
noncorporate holder that does not acquire a REMIC regular certificate in
connection with a trade or business, it appears that--
o you will not be entitled to deduct a loss under Section 166 of the
Internal Revenue Code until your offered certificate becomes wholly
worthless, which is when its principal balance has been reduced to
zero, and
o the loss will be characterized as a short-term capital loss.
You will also have to accrue interest and original issue discount with
respect to your REMIC regular certificate, without giving effect to any
reductions in payments attributable to defaults or delinquencies on the related
mortgage loans, until it can be established that those payment reductions are
not recoverable. As a result, your taxable income in a period could exceed your
economic income in that period. If any of those amounts previously included in
taxable income are not ultimately received due to a loss on the related mortgage
loans, you should be able to recognize a loss or reduction in income. However,
the law is unclear with respect to the timing and character of this loss or
reduction in income.
Taxation of Owners of REMIC Residual Certificates.
General. Although a REMIC is a separate entity for federal income tax
purposes, the Internal Revenue Code does not subject a REMIC to entity-level
taxation, except with regard to prohibited transactions and the other
transactions described under "--REMICs--Prohibited Transactions Tax and Other
Taxes" below. Rather, a holder of REMIC residual certificates must generally
take in income the taxable income or net loss of the related REMIC. Accordingly,
the Internal Revenue Code treats the REMIC residual certificates much
differently than it would if they were direct ownership interests in the related
mortgage loans or as debt instruments issued by the related REMIC.
Holders of REMIC residual certificates generally will be required to report
their daily portion of the taxable income or, subject to the limitations noted
in this discussion, the net loss of the related REMIC for each day during a
calendar quarter that they own those certificates. 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 we otherwise disclose in the related prospectus
supplement. These daily amounts then will be allocated among the holders of the
REMIC residual certificates in proportion to their respective ownership
interests on that day. Any amount included in the certificateholders' gross
income or allowed as a loss to them by virtue of this paragraph will be treated
as ordinary income or loss. The taxable
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income of the REMIC will be determined under the rules described below in
"--REMICs--Taxation of Owners of REMIC Residual Certificates--Taxable Income of
the REMIC." Holders of REMIC residual certificates must report the taxable
income of the related REMIC without regard to the timing or amount of cash
payments by the REMIC until the REMIC's termination. Income derived from the
REMIC residual certificates will be "portfolio income" for the purposes of the
limitations under Section 469 of the Internal Revenue Code on the deductibility
of "passive losses."
A holder of a REMIC residual certificate that purchased the certificate
from a prior holder also will be required to report on its federal income tax
return amounts representing its daily share of the taxable income, or net loss,
of the related REMIC for each day that it holds the REMIC residual certificate.
These daily amounts generally will equal the amounts of taxable income or net
loss determined as described above. The Committee Report indicates that
modifications of the general rules may be made, by regulations, legislation or
otherwise to reduce, or increase, the income of a holder of a REMIC residual
certificate. These modifications would occur when a holder purchases the REMIC
residual certificate from a prior holder at a price other than the adjusted
basis that the REMIC residual certificate would have had in the hands of an
original holder of that certificate. The Treasury regulations, however, do not
provide for these modifications.
Tax liability with respect to the amount of income that holders of REMIC
residual certificates will be required to report, will often exceed the amount
of cash payments received from the related REMIC for the corresponding period.
Consequently, you should have--
o other sources of funds sufficient to pay any federal income taxes due
as a result of your ownership of REMIC residual certificates, or
o unrelated deductions against which income may be offset.
See, however, the rules discussed below relating to:
o excess inclusions,
o residual interests without significant value, and
o noneconomic residual interests.
The fact that the tax liability associated with this income allocated to
you may exceed the cash payments received by you for the corresponding period
may significantly and adversely affect their after-tax rate of return. This
disparity between income and payments may not be offset by corresponding losses
or reductions of income attributable to your REMIC residual certificates until
subsequent tax years. Even then, the extra income may not be completely offset
due to changes in the Internal Revenue Code, tax rates or character of the
income or loss. Therefore, REMIC residual certificates will ordinarily have a
negative value at the time of issuance. See "Risk Factors--Residual Interests'
in a `Real Estate Mortgage Investment Conduit' Have Adverse Tax Consequences."
Taxable Income of the REMIC. The taxable income of a REMIC will equal:
o the income from the mortgage loans and other assets of the REMIC; plus
o any cancellation of indebtedness income due to the allocation of
realized losses to those REMIC certificates constituting regular
interests in the REMIC; less the following items--
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1. the deductions allowed to the REMIC for interest, including
original issue discount but reduced by any premium on issuance,
on any class of REMIC certificates constituting regular interests
in the REMIC, whether offered or not,
2. amortization of any premium on the mortgage loans held by the
REMIC,
3. bad debt losses with respect to the mortgage loans held by the
REMIC, and
4. except as described below in this "--Taxable Income of the REMIC"
subsection, servicing, administrative and other expenses.
For purposes of determining its taxable income, a REMIC will have an
initial aggregate basis in its assets equal to the sum of the issue prices of
all REMIC certificates, or in the case of REMIC certificates not sold initially,
their fair market values. The 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
hereby will be determined in the manner described above under
"--REMICs--Taxation of Owners of REMIC Regular Certificates--Original Issue
Discount." The issue price of a REMIC certificate received in exchange for an
interest in mortgage loans or other property will equal the fair market value of
the interests in the mortgage loans or other property. Accordingly, if one or
more classes of REMIC certificates are retained initially rather than sold, the
related tax administrator may be required to estimate the fair market value of
these interests in order to determine the basis of the REMIC in the mortgage
loans and other property held by the REMIC.
Subject to possible application of the de minimis rules, the method of
accrual by a 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. That method is a constant yield method taking into account the
prepayment assumption. However, a REMIC that acquires loans at a market discount
must include that market discount in income currently, as it accrues, on a
constant yield basis. See "--REMICs--Taxation of Owners of REMIC Regular
Certificates" above, which describes a method for accruing the 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 REMIC will acquire a mortgage loan with discount, or premium, to the
extent that the REMIC's basis, determined as described in the preceding
paragraph, is different from its stated redemption price. Discount will be
includible in the income of the REMIC as it accrues, in advance of receipt of
the cash attributable to that income, under a method similar to the method
described above for accruing original issue discount on the REMIC regular
certificates. A REMIC probably will elect under Section 171 of the Internal
Revenue Code to amortize any premium on the mortgage loans that it holds.
Premium on any mortgage loan to which this election applies may be amortized
under a constant yield method, presumably taking into account the prepayment
assumption.
A REMIC will be allowed deductions for interest, including original issue
discount, on all of the certificates that constitute regular interests in the
REMIC, whether or not offered hereby, as if those certificates were indebtedness
of the REMIC. Original issue discount will be considered to accrue for this
purpose as described above under "--REMICs--Taxation of Owners of REMIC Regular
Certificates--Original Issue Discount." However, the de minimis rule described
in that section will not apply in determining deductions.
If a class of REMIC regular certificates is issued at a price in excess of
the stated redemption price of that class, the net amount of interest deductions
that are allowed to the REMIC in each taxable year with respect to those
certificates will be reduced by an amount equal to the portion of that excess
that is considered to be amortized in that year. It appears that this excess
should be amortized under a constant yield method in a manner
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analogous to the method of accruing original issue discount described above
under "--REMICs--Taxation of Owners of REMIC Regular Certificates--Original
Issue Discount."
As a general rule, the taxable income of a REMIC will be determined 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 "--REMICs--Prohibited Transactions Tax and Other Taxes" below. Further, the
limitation on miscellaneous itemized deductions imposed on individuals by
Section 67 of the Internal Revenue Code will not be applied at the REMIC level
so that the REMIC will be allowed full deductions for servicing, administrative
and other non-interest expenses in determining its taxable income. All those
expenses will be allocated as a separate item to the holders of the related
REMIC certificates, subject to the limitation of Section 67 of the Internal
Revenue Code. See "--REMICs--Taxation of Owners of REMIC Residual
Certificates--Possible Pass-Through of Miscellaneous Itemized Deductions" below.
If the deductions allowed to the REMIC exceed its gross income for a calendar
quarter, the 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:
o the amount paid for that REMIC residual certificate;
o increased by, amounts included in the income of the holder of that
REMIC residual certificate; and
o decreased, but not below zero, by distributions made, and by net
losses allocated, to the holder of that REMIC residual certificate.
A holder of a REMIC residual certificate is not allowed to take into
account any net loss for any calendar quarter to the extent that the net loss
exceeds the adjusted basis to that holder as of the close of that calendar
quarter, determined without regard to that net loss. 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.
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 the REMIC residual certificate. To the extent a distribution
on a REMIC residual certificate exceeds the holder's adjusted basis, it will be
treated as gain from the sale of that REMIC residual certificate.
A holder's basis in a REMIC residual certificate will initially equal the
amount paid for the certificate and will be increased by that holder's allocable
share of taxable income of the related REMIC. However, these increases in basis
may not occur until the end of the calendar quarter, or perhaps the end of the
calendar year, with respect to which the related REMIC's taxable income is
allocated to that holder. To the extent the initial basis of the holder of a
REMIC residual certificate is less than the distributions to that holder, and
increases in the initial basis either occur after these distributions or,
together with the initial basis, are less than the amount of these payments,
gain will be recognized to that holder on these distributions. This gain will be
treated as gain from the sale of its REMIC residual certificate.
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The effect of these rules is that a holder of a REMIC residual certificate
may not amortize its basis in a REMIC residual certificate, but may only recover
its basis--
o through distributions,
o through the deduction of any net losses of the REMIC, or
o upon the sale of its REMIC residual certificate.
See "--REMICs--Sales of REMIC Certificates" below.
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 see "--REMICs--Taxation of Owners of REMIC Residual
Certificates--General" above. These adjustments could require a holder of a
REMIC residual certificate to account for any difference between the cost of the
certificate to the holder and the adjusted basis of the certificate would have
been in the hands of an original holder.
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 daily portions of REMIC taxable income allocable to that
certificate, over
o the sum of the daily accruals for each day during the quarter that the
certificate was held by that holder.
The daily accruals of a holder of a REMIC residual certificate will be
determined by allocating to each day during a calendar quarter its ratable
portion of a numerical calculation. That calculation is 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 of
initial issuance. For this purpose, the adjusted issue price of a REMIC residual
certificate as of the beginning of any calendar quarter will be equal to--
o the issue price of the certificate, increased by
o the sum of the daily accruals for all prior quarters, and decreased,
but not below zero, by
o any payments made with respect to the certificate before the beginning
of that quarter.
The issue price of a REMIC residual certificate is the initial offering
price to the public at which a substantial amount of the REMIC residual
certificates were sold, but excluding sales to bond houses, brokers and
underwriters or, if no sales have been made, their initial value. 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.
Although it has not done so, the Treasury Department has authority to issue
regulations that would treat the entire amount of income accruing on a REMIC
residual certificate as excess inclusions if the REMIC residual interest
evidenced by that certificate is considered not to have significant value.
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For holders of REMIC residual certificates, excess inclusions--
o will not be permitted to be offset by deductions, losses or loss
carryovers from other activities,
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
applicable tax treaty with respect to the 30% United States
withholding tax imposed on payments to holders of REMIC residual
certificates that are foreign investors.
See, however, "--REMICs--Foreign Investors in REMIC Certificates" below.
Furthermore, for purposes of the alternative minimum tax--
o excess inclusions will not be permitted to be offset by the
alternative tax net operating loss deduction, and
o alternative minimum taxable income may not be less than the taxpayer's
excess inclusions.
This last rule has the effect of preventing non-refundable tax credits from
reducing the taxpayer's income tax to an amount lower than the alternative
minimum tax on excess inclusions.
In the case of any REMIC residual certificates held by a real estate
investment trust, or REIT, the aggregate excess inclusions with respect to these
REMIC residual certificates will be allocated among the shareholders of the REIT
in proportion to the dividends received by the shareholders from the REIT. Any
amount so allocated will be treated as an excess inclusion with respect to a
REMIC residual certificate as if held directly by the shareholder. The aggregate
excess inclusions referred to in the previous sentence will be reduced, but not
below zero, by any REIT taxable income, within the meaning of Section 857(b)(2)
of the Internal Revenue Code, other than any net capital gain. Treasury
regulations yet to be issued could apply a similar rule to--
o regulated investment companies,
o common trusts, and
o some cooperatives.
The Treasury regulations, however, currently do not address this subject.
Noneconomic REMIC Residual Certificates. Under the Treasury 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 a
transfer is disregarded, the purported transferor will continue to remain liable
for any taxes due with respect to the income on the noneconomic REMIC residual
certificate. The Treasury regulations provide that a REMIC residual certificate
is noneconomic unless, based on the prepayment assumption and on any required or
permitted clean up calls, or required liquidation provided for in the related
Governing Document:
o the present value of the expected future payments on the REMIC
residual certificate equals at least the present value of the expected
tax on the anticipated excess inclusions; and
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o the transferor reasonably expects that the transferee will receive
payments 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 present value calculation referred to above is calculated using the
applicable Federal rate for obligations whose term ends on the close of the last
quarter in which excess inclusions are expected to accrue with respect to the
REMIC residual certificate. This rate is computed and published monthly by the
IRS.
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 Governing Document that are intended
to reduce the possibility of any transfer being disregarded. These restrictions
will require an affidavit:
o from each party to the transfer, stating that no purpose of the
transfer is to impede the assessment or collection of tax,
o from the prospective transferee, providing representations as to its
financial condition, and
o from the prospective transferor, stating that it has made a reasonable
investigation to determine the transferee's historic payment of its
debts and ability to continue to pay its debts as they come due in the
future.
The Treasury Department has issued regulations providing a safe harbor for
transfers of REMIC residual certificates. In order to qualify for the safe
harbor, two additional requirements must be satisfied: (i) the transferee must
represent that it will not cause income from the noneconomic REMIC residual
interest to be attributable to a foreign permanent establishment or fixed base
(within the meaning of an applicable income tax treaty, hereafter a "foreign
branch") of the transferee or another U.S. taxpayer and (ii) the transfer must
satisfy either the "asset test" or the "formula test" provided under the REMIC
regulations.
In order for a transfer to qualify for the "asset test":
o the transferee must be a domestic "C" corporation (generally, a
corporation other than a corporation exempt from taxation or a
regulated investment company, real estate investment trust or REMIC)
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, exclusive, in each case of any
obligations of certain related persons);
o the transferee must agree in writing that any subsequent transfer of
the residual interest would meet the requirements for the asset test
under the REMIC Regulations and the transferor does not know or have
reason to know that the transferee will not honor these restrictions
on subsequent transfers; and
o a reasonable person would not conclude, based on the facts and
circumstances known to the transferor on or before the date of the
transfer (specifically including the amount of consideration paid in
connection with the transfer of the noneconomic residual interest)
that the taxes associated with ownership of the residual interest will
not be paid by the transferee.
In addition, the direct or indirect transfer of the residual interest to a
foreign branch of a domestic corporation is not treated as a transfer to an
eligible corporation under the asset test.
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Under the "formula test," a transfer qualifies for the safe harbor if the
present value of the anticipated tax liabilities associated with holding the
residual interest were less than or equal to the sum of--
o the present value of any consideration given to the transferee to
acquire the interest,
o the present value of the expected future distributions on the
interest, and
o the present value of the anticipated tax savings associated with the
holding of the interest as the REMIC generates losses.
Present values would be computed using a discount rate equal to an
applicable Federal short-term rate prescribed under Section 1274(d) of the
Internal Revenue Code. If the transferee has been subject to the alternative
minimum tax in the preceding two years and will compute its taxable income in
the current taxable year using the alternative minimum tax rate, then it may use
the alternative minimum tax rate in lieu of the corporate tax rate. In addition,
the direct or indirect transfer of the residual interest to a foreign branch of
a domestic corporation is not treated as a transfer to an eligible corporation
under the formula test.
The Governing Document requires that all transferees of residual
certificates furnish an affidavit as to the applicability of one of the safe
harbors under the REMIC Regulations, unless the transferor waives the
requirement that the transferee do so.
Prospective investors should consult their own tax advisors as to the
applicability and effect of these alternative safe harbor tests.
Prior to purchasing a REMIC residual certificate, prospective purchasers
should consider the possibility that a purported transfer of a REMIC residual
certificate to another party at some future date may be disregarded in
accordance with the above-described rules. This would result in the retention of
tax liability by the transferor with respect to that purported transfer.
We will disclose in the related prospectus supplement whether the offered
REMIC residual certificates may be considered noneconomic residual interests
under the Treasury regulations. However, we will base any disclosure that a
REMIC residual certificate will not be considered noneconomic upon various
assumptions. Further, we will make no representation that a REMIC residual
certificate will not be considered noneconomic for purposes of the
above-described rules.
See "--REMICs--Foreign Investors in REMIC Certificates" below for
additional restrictions applicable to transfers of REMIC residual certificates
to foreign persons and to United States partnerships, the beneficial owners of
which are foreign persons.
Inducement Fees. The Treasury Department has issued final regulations that
address the federal income tax treatment of "inducement fees" received by
transferees of noneconomic REMIC residual interests. The final regulations
require inducement fees to be included in income over a period reasonably
related to the period in which the related REMIC residual interest is expected
to generate taxable income or net loss allocable to the holder. The final
regulations provide two safe harbor methods that permit transferees to include
inducement fees in income either (i) in the same amounts and over the same
period that the taxpayer uses for financial reporting purposes, provided that
such period is not shorter than the period the REMIC is expected to generate
taxable income or (ii) ratably over the remaining anticipated weighted average
life of all the regular and residual interests issued by the REMIC, determined
based on actual distributions projected as remaining to be made on such
interests under the prepayment assumption. If the holder of a REMIC residual
interest sells or otherwise disposes of the residual interest, any unrecognized
portion of the inducement fee must be taken into account at the time of
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the sale or disposition. The final regulations also provide that an inducement
fee shall be treated as income from sources within the United States. In
addition, the IRS has issued administrative guidance addressing the procedures
by which transferees of noneconomic REMIC residual interests may obtain
automatic consent from the IRS to change the method of accounting for REMIC
inducement fee income to one of the safe harbor methods provided in these final
regulations (including a change from one safe harbor method to the other safe
harbor method). Prospective purchasers of the REMIC residual certificates should
consult with their tax advisors regarding the effect of these final regulations
and the related guidance regarding the procedures for obtaining automatic
consent to change the method of accounting.
Mark-to-Market Rules. Regulations under Section 475 of the Internal Revenue
Code require that a securities dealer mark to market securities held for sale to
customers. This mark-to-market requirement applies to all securities owned by a
dealer, except to the extent that the dealer has specifically identified a
security as held for investment. These regulations provide that for purposes of
this mark-to-market requirement, a REMIC residual certificate is not treated as
a security for purposes of Section 475 of the Internal Revenue Code. Thus, a
REMIC residual certificate is not subject to the mark-to-market rules. We
recommend that prospective purchasers of a REMIC residual certificate consult
their tax advisors regarding these regulations.
Transfers of REMIC Residual Certificates to Investors That Are Foreign
Persons. Unless we otherwise state in the related prospectus supplement,
transfers of REMIC residual certificates to investors that are foreign persons,
to United States partnerships, the beneficial owners of which are foreign
persons under the Internal Revenue Code, or to a foreign permanent establishment
or fixed base (within the meaning of an applicable income tax treaty) of a U.S.
Person, will be prohibited under the related Governing Documents.
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 these fees and expenses should be allocated to the holders of the
related REMIC regular certificates. Unless we state otherwise in the related
prospectus supplement, however, these 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.
If the holder of a REMIC certificate receives an allocation of fees and
expenses in accordance with the preceding discussion, and if that holder is--
o an individual,
o an estate or trust, or
o a Pass-Through Entity beneficially owned by one or more individuals,
estates or trusts,
then--
o an amount equal to this individual's, estate's or trust's share of
these fees and expenses will be added to the gross income of this
holder, and
o the individual's, estate's or trust's share of these fees and expenses
will be treated as a miscellaneous itemized deduction allowable
subject to the limitation of Section 67 of the Internal Revenue Code,
which permits the deduction of these fees and expenses only to the
extent they exceed, in aggregate, 2% of a taxpayer's adjusted gross
income.
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In addition, Section 68 of the Internal Revenue Code currently provides
that the amount of itemized deductions otherwise allowable for an individual
whose adjusted gross income exceeds a specified amount will be reduced .
Furthermore, in determining the alternative minimum taxable income of a
holder of a REMIC certificate that is--
o an individual,
o an estate or trust, or
o a Pass-Through Entity beneficially owned by one or more individuals,
estates or trusts,
no deduction will be allowed for the holder's allocable portion of servicing
fees and other miscellaneous itemized deductions of the REMIC, even though an
amount equal to the amount of these fees and other deductions will be included
in the holder's gross income.
The amount of additional taxable income reportable by holders of REMIC
certificates that are subject to the limitations of either Section 67 or Section
68 of the Internal Revenue Code, or the complete disallowance of the related
expenses for alternative minimum tax purposes, may be substantial.
Accordingly, REMIC certificates to which these expenses are allocated will
generally not be appropriate investments for--
o an individual,
o an estate or trust, or
o a Pass-Through Entity beneficially owned by one or more individuals,
estates or trusts.
We recommend that prospective investors consult with their tax advisors
prior to making an investment in a REMIC certificate to which these expenses are
allocated.
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--
o the cost of the certificate to that certificateholder, increased by
o income reported by that certificateholder with respect to the
certificate, including original issue discount and market discount
income, and reduced, but not below zero, by
o payments on the certificate received by that certificateholder,
amortized premium and realized losses allocated to the certificate and
previously deducted by the certificateholder.
The adjusted basis of a REMIC residual certificate will be determined as
described above under "--REMICs--Taxation of Owners of REMIC Residual
Certificates--Basis Rules, Net Losses and Distributions." Except as described
below in this "--Sales of REMIC Certificates" subsection, any gain or loss from
your sale of a REMIC certificate will be capital gain or loss, provided that you
hold the certificate as a capital asset within the meaning of Section 1221 of
the Internal Revenue Code, which is generally property held for investment.
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In addition to the recognition of gain or loss on actual sales, the
Internal Revenue Code requires the recognition of gain, but not loss, upon the
constructive sale of an appreciated financial position. A constructive sale of
an appreciated financial position occurs if a taxpayer enters into a transaction
or series of transactions that have the effect of substantially eliminating the
taxpayer's risk of loss and opportunity for gain with respect to the financial
instrument. Debt instruments that--
o entitle the holder to a specified principal amount,
o pay interest at a fixed or variable rate, and
o are not convertible into the stock of the issuer or a related party,
cannot be the subject of a constructive sale for this purpose. Because most
REMIC regular certificates meet this exception, Section 1259 will not apply to
most REMIC regular certificates. However, REMIC regular certificates that have
no, or a disproportionately small, amount of principal, can be the subject of a
constructive sale.
Finally, a taxpayer may elect to have net capital gain taxed at ordinary
income rates rather than capital gains rates in order to include the net capital
gain in total net investment income for the taxable year. A taxpayer would do so
because 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.
As of the date of this prospectus, the Internal Revenue Code provides for
lower rates as to long-term capital gains than those applicable to the
short-term capital gains and ordinary income recognized or received by
individuals. No similar rate differential exists for corporations. In addition,
the distinction between a capital gain or loss and ordinary income or loss is
relevant for other purposes to both individuals and corporations.
Gain from the sale of a REMIC regular certificate that might otherwise be a
capital gain will be treated as ordinary income to the extent that the 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 that REMIC regular certificate assuming that income had
accrued on the certificate at a rate equal to 110% of the applicable
Federal rate determined as of the date of purchase of the certificate,
which is a rate based on an average of current yields on Treasury
securities having a maturity comparable to that of the certificate
based on the application of the prepayment assumption to the
certificate, over
o the amount of ordinary income actually includible in the seller's
income prior to that sale.
In addition, gain recognized on the sale of a REMIC regular certificate by
a seller who purchased the certificate at a market discount will be taxable as
ordinary income in an amount not exceeding the portion of that discount that
accrued during the period the certificate was held by the seller, reduced by any
market discount included in income under the rules described above under
"--REMICs--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 Internal Revenue Code, so that gain or loss
recognized from the sale of a REMIC certificate by a bank or thrift institution
to which that section of the Internal Revenue Code 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 a holder holds the certificate as part of a "conversion transaction" within
the meaning of Section 1258 of the Internal Revenue Code. A conversion
transaction
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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, if substantially
all of the taxpayer's return is attributable to the time value of the taxpayer's
net investment in that transaction. 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.
Except as may be provided in Treasury regulations yet to be issued, a loss
realized on the sale of a REMIC residual certificate will be subject to the
"wash sale" rules of Section 1091 of the Internal Revenue Code, if during the
period beginning six months before, and ending six months after, the date of
that sale the seller of that certificate--
o reacquires that same REMIC residual certificate,
o acquires any other residual interest in a REMIC, or
o acquires any similar interest in a taxable mortgage pool, as defined
in Section 7701(i) of the Internal Revenue Code.
In that event, any loss realized by the holder of a REMIC residual
certificate on the sale will not be recognized or deductible currently, but
instead will be added to that holder's adjusted basis in the newly-acquired
asset.
Prohibited Transactions Tax and Other Taxes. The Internal Revenue Code
imposes a tax on REMICs equal to 100% of the net income derived from prohibited
transactions. In general, subject to specified exceptions, a prohibited
transaction includes:
o the disposition of a non-defaulted mortgage loan;
o the receipt of income from a source other than a mortgage loan or
other permitted investments;
o the receipt of compensation for services; or
o the gain from the disposition of an asset purchased with collections
on the mortgage loans for temporary investment pending payment on the
REMIC certificates.
It is not anticipated that any REMIC will engage in any prohibited
transactions as to which it would be subject to this tax.
In addition, some 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 related
Governing Document will include provisions designed to prevent the acceptance of
any contributions that would be subject to this 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 REITs. The related Governing Documents may permit the special
servicer to conduct activities with respect to a mortgaged property acquired by
one of our trusts in a manner that causes the trust to incur this tax, if doing
so would, in the reasonable discretion of the special servicer, maximize the net
after-tax proceeds to certificateholders. However, under no circumstance
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will the special servicer allow the acquired mortgaged property to cease to be a
"permitted investment" under Section 860G(a)(5) of the Internal Revenue Code.
Unless we otherwise disclose 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 we state otherwise in the related prospectus supplement, and to the
extent permitted by then applicable laws, any tax on prohibited transactions,
particular contributions or Net Income From Foreclosure Property, and any state
or local income or franchise tax, that may be imposed on the REMIC will be borne
by the related trustee, tax administrator, master servicer, special servicer or
manager, in any case out of its own funds, provided that--
o the person has sufficient assets to do so, and
o the tax arises out of bad faith, willful misfeasance or gross
negligence on the part of that person in performing its obligations
under select provisions of the related Governing Document.
Any tax not borne by one of these persons would be charged against the
related trust resulting in a reduction in amounts payable to holders of the
related REMIC certificates.
Tax and Restrictions on Transfers of REMIC Residual Certificates to
Particular Organizations. If a REMIC residual certificate is transferred to a
Disqualified Organization, a tax will be imposed in an amount equal to the
product of--
o the present value of the total anticipated excess inclusions with
respect to the REMIC residual certificate for periods after the
transfer, and
o the highest marginal federal income tax rate applicable to
corporations.
The value of the anticipated excess inclusions is discounted using the
applicable Federal rate for obligations whose term ends on the close of the last
quarter in which excess inclusions are expected to accrue with respect to the
REMIC residual certificate.
The anticipated excess inclusions must be determined as of the date that
the REMIC residual certificate is transferred and must be based on:
o events that have occurred up to the time of the transfer;
o the prepayment assumption; and
o any required or permitted clean up calls or required liquidation
provided for in the related Governing Document.
The tax on transfers to Disqualified Organizations generally would be
imposed on the transferor of the REMIC residual certificate, except when the
transfer is through an agent for a Disqualified Organization. In that case, the
tax would instead be imposed on the agent. However, a transferor of a REMIC
residual certificate would in no event be liable for the tax with respect to a
transfer if:
o the transferee furnishes to the transferor an affidavit that the
transferee is not a Disqualified Organization; and
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o as of the time of the transfer, the transferor does not have actual
knowledge that the affidavit is false.
In addition, if a Pass-Through Entity includes in income excess inclusions
with respect to a REMIC residual certificate, and a Disqualified Organization is
the record holder of an interest in that entity, then a tax will be imposed on
that entity equal to the product of:
o the amount of excess inclusions on the certificate that are allocable
to the interest in the Pass-Through Entity held by the Disqualified
Organization, and
o 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 that Pass-Through Entity
furnishes to that Pass-Through Entity:
o the holder's social security number and a statement under penalties of
perjury that the social security number is that of the record holder;
or
o a statement under penalties of perjury that the record holder is not a
Disqualified Organization.
If an Electing Large Partnership holds a REMIC residual certificate, all
interests in the Electing Large Partnership are treated as held by Disqualified
Organizations for purposes of the tax imposed on Pass-Through Entities described
in the second preceding paragraph. This tax on Electing Large Partnerships must
be paid even if each record holder of an interest in that partnership provides a
statement mentioned in the prior paragraph.
In addition, a person holding an interest in a Pass-Through Entity as a
nominee for another person will, with respect to that interest, be treated as a
Pass-Through Entity.
Moreover, an entity will not qualify as a REMIC unless there are reasonable
arrangements designed to ensure that:
o the residual interests in the entity are not held by Disqualified
Organizations; and
o the information necessary for the application of the tax described in
this prospectus will be made available.
We will include in the related Governing Document restrictions on the
transfer of REMIC residual certificates and other provisions that are intended
to meet this requirement, and we will discuss those restrictions and provisions
in any prospectus supplement relating to the offering of any REMIC residual
certificate.
Termination. A REMIC will terminate immediately after the payment date
following receipt by the REMIC of the final payment with respect to the related
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 payment 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 payment on that
certificate is less than the REMIC residual certificateholder's adjusted basis
in the certificate, that holder should, but may not, be treated as realizing a
capital loss equal to the amount of that difference.
Reporting and Other Administrative Matters. Solely for purposes of the
administrative provisions of the Internal Revenue Code, a REMIC will be treated
as a partnership and holders of the related REMIC residual
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certificates will be treated as partners. Unless we otherwise state in the
related prospectus supplement, the related tax administrator will file REMIC
federal income tax returns on behalf of the REMIC, and will be designated as and
will act as or on behalf of the tax matters person with respect to the REMIC in
all respects.
As, or as agent for, the tax matters person, the related tax administrator,
subject to applicable notice requirements and various restrictions and
limitations, generally will have the authority to act on behalf of the REMIC and
the holders of the REMIC residual certificates in connection with the
administrative and judicial review of the REMIC's--
o income,
o deductions,
o gains,
o losses, and
o classification as a REMIC.
Holders of REMIC residual certificates generally will be required to report
these REMIC items consistently with their treatment on the related REMIC's tax
return. In addition, these holders may in some circumstances be bound by a
settlement agreement between the related tax administrator, as, or as agent for,
the tax matters person, and the IRS concerning any REMIC item. Adjustments made
to the REMIC's tax return may require these holders to make corresponding
adjustments on their returns. An audit of the REMIC's tax return, or the
adjustments resulting from that audit, could result in an audit of a holder's
return.
No REMIC will be registered as a tax shelter under Section 6111 of the
Internal Revenue Code. 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 that
other person, as well as 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 or made readily available through electronic means to
individual holders of REMIC regular certificates and the IRS. Holders of REMIC
regular certificates that are--
o corporations,
o trusts,
o securities dealers, and
o various other non-individuals,
will be provided interest and original issue discount income information and the
information set forth in the following paragraphs. This information will be
provided upon request in accordance with the requirements of the applicable
regulations. The information must be provided by the later of--
o 30 days after the end of the quarter for which the information was
requested, or
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o two weeks after the receipt of the request.
Reporting with respect to REMIC residual certificates, including--
o income,
o excess inclusions,
o investment expenses, and
o 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, the regulations only require that
information pertaining to the appropriate proportionate method of accruing
market discount be provided. See "--REMICs--Taxation of Owners of REMIC Regular
Certificates--Market Discount."
Unless we otherwise specify in the related prospectus supplement, the
responsibility for complying with the foregoing reporting rules will be borne by
the related tax administrator for the subject REMIC.
Backup Withholding with Respect to REMIC Certificates. Payments of interest
and principal, as well as payments of proceeds from the sale of REMIC
certificates, may be subject to a backup withholding tax under Section 3406 of
the Internal Revenue Code if recipients of these payments--
o fail to furnish to the payor certain information, including their
taxpayer identification numbers, or
o otherwise fail to establish an exemption from this tax.
Any amounts deducted and withheld from a payment to a recipient would be
allowed as a credit against the recipient's federal income tax. Furthermore,
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. Unless we otherwise disclose in
the related prospectus supplement, a holder of a REMIC regular certificate that
is--
o a foreign person, and
o 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 that certificate,
will normally not be subject to United States federal income or withholding tax
with respect to a payment on a REMIC regular certificate. To avoid withholding
or tax, that holder must comply with certain identification requirements. These
requirements include delivery of a statement, signed by the certificateholder
under penalties of perjury, certifying that the certificateholder is a foreign
person and providing the name, address and such other information with respect
to the certificateholder as may be required by the Treasury regulations.
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For these purposes, a foreign person is anyone other than a U.S. Person.
It is possible that the IRS may assert that the foregoing tax exemption
should not apply with respect to a REMIC regular certificate held by a person or
entity that owns directly or indirectly a 10% or greater interest in the related
REMIC residual certificates. If the holder does not qualify for exemption,
payments of interest, including payments in respect of accrued original issue
discount, to that holder may be subject to a tax rate of 30%, subject to
reduction under any applicable tax treaty.
It is possible, under regulations promulgated under Section 881 of the
Internal Revenue Code concerning conduit financing transactions, that the
exemption from withholding taxes described above may also not be available to a
holder who is a foreign person and either--
o owns 10% or more of one or more underlying mortgagors, or
o if the holder is a controlled foreign corporation, is related to one
or more mortgagors in the applicable trust.
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, it is recommended that certificateholders
who are nonresident alien individuals consult their tax advisors concerning this
question.
Unless we otherwise state in the related prospectus supplement, the related
Governing Document will prohibit transfers of REMIC residual certificates to
investors that are--
o foreign persons, or
o U.S. Persons, if classified as a partnership under the Internal
Revenue Code, unless all of their beneficial owners are U.S. Persons.
FASITS
General. An election may be made to treat the trust for a series of offered
certificates or specified assets of that trust, as a financial asset
securitization investment trust, or FASIT, within the meaning of Section 860L(a)
of the Internal Revenue Code. The election would be noted in the applicable
prospectus supplement. If a FASIT election is made, the offered certificates
will be designated as classes of regular interests in that FASIT, and there will
be one class of ownership interest in the FASIT. With respect to each series of
offered certificates as to which the related tax administrator makes a FASIT
election, and assuming, among other things--
o the making of an appropriate election, and
o compliance with the related Governing Document,
our counsel will deliver its opinion generally to the effect that--
o the relevant assets will qualify as a FASIT,
o those offered certificates will be FASIT regular certificates,
representing FASIT regular interests in the FASIT, and
135
o one class of certificates of the same series will be the FASIT
ownership certificates, representing the sole class of ownership
interest in the FASIT.
Only FASIT regular certificates are offered by this prospectus. If so
specified in the applicable prospectus supplement, a portion of the trust for a
series of certificates as to no FASIT election is made may be treated as a
grantor trust for federal income tax purposes. See "--Grantor Trusts."
On February 4, 2000, the Treasury Department issued proposed regulations
relating to FASITs. References to the "FASIT proposed regulations" in this
discussion refer to those proposed regulations. The proposed regulations have
not been adopted as final and, in general, are not proposed to be effective as
of the date of this prospectus. They nevertheless are indicative of the rules
the Treasury Department currently views as appropriate with regard to the FASIT
provisions.
Characterization of Investments in FASIT Regular Certificates. FASIT
regular certificates held by a real estate investment trust will, unless
otherwise provided in the related prospectus supplement, constitute "real estate
assets" within the meaning of Section 856(c)(4)(A) of the Internal Revenue Code
and interest on the FASIT regular certificates will 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 Internal Revenue
Code in the same proportion, for both purposes, that the assets and income of
the FASIT would be so treated. FASIT regular certificates held by a domestic
building and loan association will be treated as "regular interest[s] in a
FASIT" under Section 7701(a)(19)(C)(xi) of the Internal Revenue Code, but only
in the proportion that the FASIT holds "loans secured by an interest in real
property which is . . . residential real property" within the meaning of Section
7701(a)(19)(C)(v) of the Internal Revenue Code. For this purpose, mortgage loans
secured by multifamily residential housing should qualify. It is also likely
that mortgage loans secured by health care related facilities would qualify as
"loans secured by an interest in . . . health institutions or facilities,
including structures designed or used primarily for residential purposes for . .
.. persons under care" within the meaning of Section 7701(a)(19)(C)(vii) of the
Internal Revenue Code. If at all times 95% or more of the assets of the FASIT or
the income on those assets qualify for the foregoing treatments, the FASIT
regular certificates will qualify for the corresponding status in their
entirety. Mortgage loans which have been defeased with Treasury obligations and
the income from those loans will not qualify for the foregoing treatments.
Accordingly, the FASIT regular certificates may not be a suitable investment for
you if you require a specific amount or percentage of assets or income meeting
the foregoing treatments. For purposes of Section 856(c)(4)(A) of the Internal
Revenue Code, payments of principal and interest on a mortgage loan that are
reinvested pending distribution to holders of FASIT regular certificates should
qualify for that treatment. FASIT regular certificates held by a regulated
investment company will not constitute "government securities" within the
meaning of Section 851(b)(4)(A)(i) of the Internal Revenue Code. FASIT regular
certificates held by various financial institutions will constitute an "evidence
of indebtedness" within the meaning of Section 582(c)(1) of the Internal Revenue
Code.
Qualification as a FASIT.
General. In order to qualify as a FASIT, the trust for a series of offered
certificates or specified assets of that trust must comply with the requirements
set forth in the Internal Revenue Code on an ongoing basis. The FASIT must
fulfill an asset test, which requires that substantially all of the assets of
the FASIT, as of, and at all times following, the close of the third calendar
month beginning after the FASIT's startup day, which for purposes of this
discussion is the date of the initial issuance of the FASIT regular
certificates, be permitted assets for a FASIT.
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Permitted assets for a FASIT include--
o cash or cash equivalents,
o specified types of debt instruments, other than debt instruments
issued by the owner of the FASIT or a related party, and contracts to
acquire those debt instruments,
o hedges and contracts to acquire hedges,
o foreclosure property, and
o regular interests in another FASIT or in a REMIC.
As discussed below in this "--Qualification as a FASIT" subsection,
specified restrictions apply to each type of permitted asset.
Under the FASIT proposed regulations, the "substantially all" requirement
would be met if at all times the aggregate adjusted basis of the permitted
assets is more than 99 percent of the aggregate adjusted basis of all the assets
held by the FASIT, including assets deemed to be held by the FASIT under Section
860I(b)(2) of the Internal Revenue Code because they support a regular interest
in the FASIT.
The FASIT provisions also require the FASIT ownership interest to be held
only by some fully taxable domestic corporations and do not recognize transfers
of "high-yield regular interests," as described in "--Permitted Interests"
below, to taxpayers other than fully taxable domestic corporations or other
FASITs. The related Governing Document will provide that no legal or beneficial
interest in the ownership interest or in any class or classes of certificates
that we determine to be high-yield regular interests may be transferred or
registered unless all applicable conditions designed to prevent violation of
this requirement, are met.
Permitted Assets. The proposed regulations enumerate the types of debt that
qualify as permitted assets for a FASIT. The FASIT provisions provide that
permitted debt instruments must bear interest, if any, at a fixed or qualified
variable rate. Under the FASIT proposed regulations, the definition of debt
permitted to be held by a FASIT, would include--
o REMIC regular interests,
o regular interests of other FASITs,
o inflation indexed debt instruments,
o credit card receivables, and
o some stripped bonds and coupons.
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However, under the FASIT proposed regulations, equity linked debt
instruments and defaulted debt instruments would not be permitted assets for a
FASIT. In addition, a FASIT may not hold--
o debt of the owner of the FASIT ownership interest,
o debt guaranteed by the owner of the FASIT ownership interest in
circumstances such that the owner is in substance the primary obligor
on the debt instrument, or
o debt issued by third parties that is linked to the performance or
payments of debt instruments issued by the owner or a related person.
Finally, debt that is traded on an established securities market and
subject to a foreign withholding tax is not a permitted asset for a FASIT.
Permitted hedges include interest rate or foreign currency notional
principal contracts, letters of credit, insurance, guarantees of payment default
and similar instruments. These hedges must be reasonably required to guarantee
or hedge against the FASIT's risks associated with being the obligor on
interests issued by the FASIT. The FASIT proposed regulations do not include a
list of specified permitted hedges or guarantees, but rather focus on the
intended function of a hedge and permit the contract to offset the following
risk factors:
o fluctuations in market interest rates;
o fluctuations in currency exchange rates;
o the credit quality of, or default on, the FASIT's assets or debt
instruments underlying the FASIT's assets; and
o the receipt of payments on the FASIT's assets earlier or later than
originally anticipated.
The FASIT proposed regulations prohibit a hedge or guarantee from
referencing assets other than permitted assets, indices, economic indicators or
financial averages that are not both widely disseminated and designed to
correlate closely with the changes in one or more of the risk factors described
above. However, under the FASIT proposed regulations, FASIT owners will be able
to hold hedges or guarantees inside a FASIT that do not relate to the already
issued regular interests, or to assets the FASIT already holds, if the FASIT
expects to issue regular interests, or expects to hold assets, that are related
to the hedge or guarantee in question. The proposed regulations also place
restrictions on hedges and guarantees entered into with the holder of the FASIT
ownership interest or a related party.
Property acquired in connection with the default or imminent default of a
debt instrument held by a FASIT may qualify both as foreclosure property and as
a type of permitted asset under the FASIT provisions. It will in general
continue to qualify as foreclosure property during a grace period that runs
until the end of the third taxable year beginning after the taxable year in
which the FASIT acquires the foreclosure property. Under the FASIT proposed
regulations, if the foreclosure property also would qualify as another type of
permitted asset, it may be held beyond the close of that grace period. However,
at the close of the grace period, gain, if any, on the property must be
recognized as if the property had been contributed by the owner of the FASIT on
that date. In addition, the FASIT proposed regulations provide that, after the
close of the grace period, disposition of the foreclosure property is
potentially subject to a 100% prohibited transactions tax, without the benefit
of an exception to this tax applicable to sales of foreclosure property.
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Permitted Interests. In addition to the foregoing, interests in a FASIT
also must meet specified requirements. All of the interests in a FASIT must be
either of the following:
o a single class of ownership interest, or
o one or more classes of regular interests.
An ownership interest is an interest in a FASIT other than a regular
interest that is issued on the startup day, is designated an ownership interest
and is held by a single, fully-taxable, domestic corporation. A regular interest
is an interest in a FASIT that is issued on or after the startup day with fixed
terms, is designated as a regular interest, and--
1. unconditionally entitles the holder to receive a specified principal
amount or other similar amount,
2. provides that interest payments or other similar amounts, if any, at
or before maturity either are payable based on a fixed rate or a
qualified variable rate,
3. has a stated maturity of not longer than 30 years,
4. has an issue price not greater than 125% of its stated principal
amount, and
5. has a yield to maturity not greater than 5 percentage points higher
than the applicable Federal rate, as defined in Section 1274(d) of the
Internal Revenue Code, for Treasury obligations of a similar maturity.
A regular interest that is described in the preceding sentence except that
it fails to meet one or more of requirements 1, 4 or 5, is a "high-yield regular
interest." Further, to be a high-yield regular interest, an interest that fails
requirement 2 must consist of a specified portion of the interest payments on
the permitted assets, determined by reference to the rules related to permitted
rates for REMIC regular interests that have no, or a disproportionately small,
amount of principal. An interest in a FASIT may be treated as a regular interest
even if payments of principal with respect to that interest are subordinated to
payments on other regular interests or the ownership interest in the FASIT, and
are contingent on--
o the absence of defaults or delinquencies on permitted assets,
o lower than reasonably expected returns on permitted assets,
o unanticipated expenses incurred by the FASIT, or
o prepayment interest shortfalls.
Cessation of FASIT. If an entity fails to comply with one or more of the
ongoing requirements of the Internal Revenue Code for status as a FASIT during
any taxable year, the Internal Revenue Code provides that the entity or
applicable portion of that entity, will not be treated as a FASIT thereafter. In
this event, any entity that holds mortgage loans and is the obligor with respect
to debt obligations with two or more maturities will be classified, presumably,
as a taxable mortgage pool under general federal income tax principles, and the
FASIT regular certificates may be treated as equity interests in the entity.
Under the FASIT proposed regulations, the underlying
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arrangement generally cannot reelect FASIT status and any election a FASIT owner
made, other than the FASIT election, and any method of accounting adopted with
respect to the FASIT assets, binds the underlying arrangement as if the
underlying arrangement itself had made those elections or adopted that method.
In the case of an inadvertent cessation of a FASIT, under the FASIT proposed
regulations, the Commissioner of the IRS may grant relief from the adverse
consequences of that cessation, subject to those adjustments as the Commissioner
may require the FASIT and all holders of interests in the FASIT to accept with
respect to the period in which the FASIT failed to qualify as such.
Under the proposed FASIT regulation, apart from failure to qualify as a
FASIT, a FASIT may not revoke its election or cease to be a FASIT without the
consent of the Commissioner of the IRS.
Regular interest holders, in the case of cessation of a FASIT, are treated
as exchanging their FASIT regular interests for new interests in the underlying
arrangement. The FASIT proposed regulations would classify the new interests
under general principles of Federal income tax law, for example, as interests in
debt instruments, as interest in a partnership or interests in an entity subject
to corporate taxation, depending on what the classification of those interests
would have been in the absence of a FASIT election. On the deemed receipt of
that new interest, under the FASIT proposed regulations, you would be required
to mark the new interests to market and to recognize gain, but would not be
permitted to recognize loss, as though the old interest had been sold for an
amount equal to the fair market value of the new interest. Your basis in the new
interest deemed received in the underlying arrangement would equal your basis in
the FASIT regular interest exchanged for it, increased by any gain you
recognized on the deemed exchange.
Taxation of FASIT Regular Certificates. The FASIT regular certificates
generally will be treated for federal income tax purposes as newly-originated
debt instruments. In general, subject to the discussion below concerning
high-yield regular interests--
o interest, original issue discount and market discount on a FASIT
regular certificate will be treated as ordinary income to the holder
of that certificate, and
o principal payments, other than principal payments that do not exceed
accrued market discount, on a FASIT regular certificate will be
treated as a return of capital to the extent of the holder's basis
allocable thereto.
You must use the accrual method of accounting with respect to FASIT regular
certificate, regardless of the method of accounting you otherwise use.
Except as set forth in the applicable prospectus supplement and in the
immediately following discussion concerning high-yield regular interests, the
discussions above under the headings "--REMICs--Taxation of Owners of REMIC
Regular Certificates--Original Issue Discount," "--Market Discount,"
"--Premium," and "--Realized Losses" will apply to the FASIT regular
certificates. The discussion under the headings "--REMICs--Sale of REMIC Regular
Certificates" will also apply to the FASIT regular certificates, except that the
treatment of a portion of the gain on a REMIC regular interest as ordinary
income to the extent the yield on those certificates did not exceed 110% of the
applicable Federal rate will not apply.
High Yield Regular Interests; Anti-Avoidance Excise Taxes on Tiered
Arrangements. The taxable income, and the alternative minimum taxable income, of
any holder of a high-yield regular interest may not be less than the taxable
income from all high-yield regular interests and FASIT ownership interests that
it holds, together with any excess inclusions with respect to REMIC residual
interests that it owns.
High yield regular interests may only be held by fully taxable, domestic C
corporations or another FASIT. Any attempted transfer of a high-yield regular
interest to any other type of taxpayer will be disregarded, and the transferor
will be required to include in its gross income the amount of income
attributable to the high-yield
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interest notwithstanding its attempted transfer. The related Governing Document
will contain provisions and procedures designed to assure that, in general, only
domestic C corporations or other FASITs may acquire high-yield regular
interests. There is an exception allowing non-corporate taxpayers that hold
high-yield regular interest exclusively for sale to customers in the ordinary
course of business to do so, subject to an excise tax imposed at the corporate
income tax rate if the holder ceases to be a dealer or begins to hold the
high-yield regular interest for investment. Unless otherwise specified in the
prospectus supplement, the related Governing Document will also allow those
holders to hold high-yield regular interests.
To prevent the avoidance of these rules through tiered arrangements, an
excise tax is imposed on any Pass-Through Entity, which, under the FASIT
proposed regulations, includes a REMIC, that:
o holds any FASIT regular interest, whether or not that FASIT regular
interest is a high-yield regular interest; and
o issues a debt or equity interest that is--
1. supported by that FASIT regular interest, and
2. has a yield, higher than the yield on that FASIT regular
interest, that would cause that debt or equity interest to be a
high yield regular interest if it had been issued by a FASIT.
Under the statute, the amount of that tax, which is imposed on the
Pass-Through Entity, is the highest corporate income tax rate applied to the
income of the holder of the debt or equity interest properly attributable to the
FASIT regular interest that supports it. The proposed FASIT regulations provide
that the tax is an excise tax that must be paid on or before the due date of the
Pass-Through Entity's tax return for the taxable year in which it issues that
debt or equity interest. This appears to contemplate a one-time payment on all
future income from the FASIT regular interest that is projected to be properly
attributable to the debt or equity interest it supports. It is not clear how
this amount is to be determined.
Prohibited Transactions and Other Taxes. Income or gain from prohibited
transactions by a FASIT are taxable to the holder of the ownership interest in
that FASIT at a 100% rate. Prohibited transactions generally include, under the
FASIT statutory provisions and proposed FASIT regulations:
o the receipt of income from other than permitted assets;
o the receipt of compensation for services;
o the receipt of any income derived from a loan originated by the FASIT;
or
o the disposition of a permitted asset, including disposition in
connection with a cessation of FASIT status, other than for--
1. foreclosure, default, or imminent default of a qualified
mortgage,
2. bankruptcy or insolvency of the FASIT,
3. substitution for another permitted debt instrument or
distribution of the debt instrument to the holder of the
ownership interest to reduce overcollateralization, but only if a
principal purpose of acquiring the debt instrument which is
disposed of was not the recognition of
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gain, or the reduction of a loss, on the withdrawn asset as a
result of an increase in the market value of the asset after its
acquisition by the FASIT, or
4. the retirement of a class of FASIT regular interests.
The proposed regulations presume that some transactions will be loan
originations, but also provide safe harbors for loans originated by the FASIT.
The proposed safe harbors apply in the following circumstances:
o if the FASIT acquires the loan from an established securities market
as described in Treasury regulation Sections 1.1273-2(f)(2) through
(4);
o if the FASIT acquires the loan more than one year after the loan was
issued;
o if the FASIT acquires the loan from a person that regularly originates
similar loans in the ordinary course of business;
o if the FASIT receives any new loan from the same obligor in exchange
for the obligor's original loan in the context of a work out; and
o when the FASIT makes a loan under a contract or agreement in the
nature of a line of credit the FASIT is permitted to hold.
The FASIT provisions generally exclude from prohibited transactions the
substitution of a debt instruments for another debt instrument which is a
permitted asset and the distribution of a debt instrument contributed by the
holder of the ownership interest to that holder in order to reduce
over-collateralization of the FASIT. In addition, the FASIT proposed regulations
also exclude transactions involving the disposition of hedges from the category
of prohibited transactions. However, the proposed regulations deem a
distribution of debt to be carried out principally to recognize gain, and to be
a prohibited transaction, if the owner or related person sells the substituted
or distributed debt instrument at a gain within 180 days of the substitution or
distribution. It is unclear the extent to which tax on those transactions could
be collected from the FASIT directly under the applicable statutes rather than
from the holder of the ownership interest. However, under the related Governing
Document, any prohibited transactions tax that is not payable by a party thereto
as a result of its own actions will be paid by the FASIT. It is not anticipated
that the FASIT will engage in any prohibited transactions.
Taxation of Foreign Investors. The federal income tax treatment of non-U.S.
Persons who own FASIT regular certificates that are not high-yield regular
interests is the same as that described above under "--REMICs--Foreign Investors
in REMIC Regular Certificates." However, if you are a non-U.S. Person and you
hold a regular interest, either directly or indirectly, in a FASIT, you should
note that under the FASIT proposed regulations, interest paid or accrued on a
debt instrument held by the FASIT is treated as being received by you directly
from a conduit debtor for purposes of Subtitle A of the Internal Revenue Code
and the regulations thereunder if:
o you are a 10% shareholder of an obligor on a debt instrument held by
the FASIT;
o you are a controlled foreign corporation to which an obligor on a debt
instrument held by the FASIT is a related person; or
o you are related to such an obligor that is a corporation or
partnership, in general, having common ownership to a greater than 50%
extent.
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If you believe you may be in one of these categories, you should consult
with your tax advisors, in particular concerning the possible imposition of
United States withholding taxes at a 30% rate on interest paid with respect to a
FASIT regular interest under these circumstances.
High-yield FASIT regular certificates may not be sold to or beneficially
owned by non-U.S. Persons. Any purported transfer to a non-U.S. Person will be
null and void and, upon the related trustee's discovery of any purported
transfer in violation of this requirement, the last preceding owner of those
FASIT regular certificates will be restored to ownership as completely as
possible. The last preceding owner will, in any event, be taxable on all income
with respect to those FASIT regular certificates for federal income tax
purposes. The related Governing Document will provide that, as a condition to
transfer of a high-yield FASIT regular certificate, the proposed transferee must
furnish an affidavit as to its status as a U.S. Person and otherwise as a
permitted transferee.
Backup Withholding. Payments made on the FASIT regular certificates, and
proceeds from the sale of the FASIT regular certificates to or through some
brokers, may be subject to a backup withholding tax under Section 3406 of the
Internal Revenue Code in the same manner as described under "--REMICs--Backup
Withholding with Respect to REMIC Certificates" above.
Reporting Requirements. Reports of accrued interest, original issue
discount, if any, and information necessary to compute the accrual of any market
discount on the FASIT regular certificates will be made annually to the IRS and
to investors in the same manner as described above under "--REMICs--Reporting
and Other Administrative Matters" above.
GRANTOR TRUSTS
Classification of Grantor Trusts. With respect to each series of grantor
trust certificates, our counsel will deliver its opinion to the effect that,
assuming compliance with all provisions of the related Governing Document, the
related trust, or relevant portion of that trust, will be classified as a
grantor trust under subpart E, part I of subchapter J of the Internal Revenue
Code and not as a partnership or an association taxable as a corporation.
A grantor trust certificate may be classified as either of the following
types of certificate:
o a "grantor trust fractional interest certificate," which represents an
undivided equitable ownership interest in the principal of the
mortgage loans constituting the related grantor trust, together with
interest, if any, on those loans at a pass-through rate;
o a "grantor trust strip interest certificate," which represents
ownership of all or a portion of the difference between--
1. interest paid on the mortgage loans constituting the related
grantor trust, minus
2. the sum of:
o normal administration fees, and
o interest paid to the holders of grantor trust fractional interest
certificates issued with respect to that grantor trust.
A grantor trust strip certificate may also evidence a nominal ownership
interest in the principal of the mortgage loans constituting the related grantor
trust.
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Characterization of Investments in Grantor Trust Certificates.
Grantor Trust Fractional Interest Certificates. Unless we otherwise
disclose in the related prospectus supplement, any offered certificates that are
grantor trust fractional interest certificates will generally represent
interests in:
o "loans...secured by an interest in real property" within the meaning
of Section 7701(a)(19)(C)(v) of the Internal Revenue Code, but only to
the extent that the underlying mortgage loans have been made with
respect to property that is used for residential or other prescribed
purposes;
o "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)
of the Internal Revenue Code;
o "permitted assets" within the meaning of Section 860L(c) of the
Internal Revenue Code; and
o "real estate assets" within the meaning of Section 856(c)(5)(B) of the
Internal Revenue Code.
In addition, interest on offered certificates that are 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 Internal
Revenue Code.
Grantor Trust Strip Certificates. Even if grantor trust strip certificates
evidence an interest in a grantor trust--
o consisting of mortgage loans that are "loans . . . secured by an
interest in real property" within the meaning of Section
7701(a)(19)(C)(v) of the Internal Revenue Code,
o consisting of mortgage loans that are "real estate assets" within the
meaning of Section 856(c)(5)(B) of the Internal Revenue Code, and
o 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
Internal Revenue Code,
it is unclear whether the grantor trust strip certificates, and the income from
those certificates, will be so characterized. We recommend that prospective
purchasers to which the characterization of an investment in grantor trust strip
certificates is material consult their tax advisors regarding whether the
grantor trust strip certificates, and the income from those certificates, will
be so characterized.
The grantor trust strip certificates will be--
o "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 Internal Revenue Code, and
o in general, "permitted assets" within the meaning of Section 860L(c)
of the Internal Revenue Code.
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Taxation of Owners of Grantor Trust Fractional Interest Certificates.
General. Holders of a particular series of grantor trust fractional
interest certificates generally--
o will be required to report on their federal income tax returns their
shares of the entire income from the underlying mortgage loans,
including amounts used to pay reasonable servicing fees and other
expenses, and
o will be entitled to deduct their shares of any reasonable servicing
fees and other expenses.
Because of stripped interests, market or original issue discount, or
premium, the amount includible in income on account of a grantor trust
fractional interest certificate may differ significantly from interest paid or
accrued on the underlying mortgage loans.
Section 67 of the Internal Revenue Code allows an individual, estate or
trust holding a grantor trust fractional interest certificate directly or
through some types of pass-through entities a deduction for any reasonable
servicing fees and expenses only to the extent that the aggregate of the
holder's miscellaneous itemized deductions exceeds two percent of the holder's
adjusted gross income.
Section 68 of the Internal Revenue Code reduces the amount of itemized
deductions otherwise allowable for an individual whose adjusted gross income
exceeds a specified amount.
The amount of additional taxable income reportable by holders of grantor
trust fractional interest certificates who are subject to the limitations of
either Section 67 or Section 68 of the Internal Revenue Code may be substantial.
Further, certificateholders, other than corporations, subject to the alternative
minimum tax may not deduct miscellaneous itemized deductions in determining
their alternative minimum taxable income.
Although it is not entirely clear, it appears that in transactions in which
multiple classes of grantor trust certificates, including grantor trust strip
certificates, are issued, any fees and expenses should be allocated among those
classes of grantor trust certificates. The method of this allocation should
recognize that each class benefits from the related services. In the absence of
statutory or administrative clarification as to the method to be used, we
currently expect that information returns or reports to the IRS and
certificateholders will be based on a method that allocates these fees and
expenses among classes of grantor trust certificates with respect to each period
based on the payments made to each 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 Internal Revenue Code. Grantor trust
fractional interest certificates may be subject to those rules if--
o a class of grantor trust strip certificates is issued as part of the
same series, or
o we or any of our affiliates retain, for our or its own account or for
purposes of resale, a right to receive a specified portion of the
interest payable on an underlying mortgage loan.
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
mortgage loans that constitutes a stripped coupon. We will include in the
related prospectus supplement information regarding servicing fees paid out of
the assets of the related trust to--
o a master servicer,
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o a special servicer,
o any sub-servicer, or
o their respective affiliates.
With respect to certain categories of debt instruments, Section 1272(a)(6)
of the Internal Revenue Code requires the use of a reasonable prepayment
assumption in accruing original issue discount, and adjustments in the accrual
of original issue discount when prepayments do not conform to the prepayment
assumptions.
Section 1272(a)(6) of the Internal Revenue Code covers investments in any
pool of debt instruments the yield on which may be affected by reason of
prepayments. Its precise application to pools of debt instruments is unclear in
certain respects. For example, it is uncertain whether a prepayment assumption
will be applied collectively to all a taxpayer's investments in these pools of
debt instruments, or on an investment-by-investment basis. Similarly, it is not
clear whether the assumed prepayment rate as to investments in grantor trust
fractional interest certificates is to be determined based on conditions at the
time of the first sale of the certificate or, with respect to any holder, at the
time of purchase of the certificate by that holder.
We recommend that certificateholders consult their tax advisors concerning
reporting original issue discount, market discount and premium with respect to
grantor trust fractional interest certificates.
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
Internal Revenue Code. This is subject, however, to the discussion below
regarding--
o the treatment of some stripped bonds as market discount bonds, and
o de minimis market discount.
See "--Grantor Trusts--Taxation of Owners of Grantor Trust Fractional
Interest Certificates--Market Discount" below.
The holder of a grantor trust fractional interest certificate will report
income from its grantor trust fractional interest certificate for each month to
the extent it constitutes "qualified stated interest" in accordance with its
normal method of accounting. See "REMICs--Taxation of Owners of REMIC Regular
Certificates--Original Issue Discount" above for a definition of "qualified
stated interest."
The original issue discount on a grantor trust fractional interest
certificate will be the excess of the 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 that
purchaser of 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 that certificate, other than qualified stated
interest, if any, and the certificate's share of reasonable servicing fees and
other expenses.
See "--Grantor Trusts--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 that income that accrues
in any month would equal the product of--
o the holder's adjusted basis in the grantor trust fractional interest
certificate at the beginning of the related month, as defined in
"--Grantor Trusts--Sales of Grantor Trust Certificates," and
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o the yield of that grantor trust fractional interest certificate to the
holder.
The yield would be computed at the rate, that, if used to discount the
holder's share of future payments on the related mortgage loans, would cause the
present value of those future payments to equal the price at which the holder
purchased the certificate. This rate is compounded based on the regular interval
between payment dates. In computing yield under the stripped bond rules, a
certificateholder's share of future payments on the related mortgage loans will
not include any payments made with respect to any ownership interest in those
mortgage loans retained by us, a master servicer, a special servicer, a
sub-servicer or our or their respective affiliates, but will include the
certificateholder's share of any reasonable servicing fees and other expenses
and is based generally on the method described in Section 1272(a)(6) of the
Internal Revenue Code. The precise means of applying that method is uncertain in
various respects. See "--Grantor Trusts--Taxation of Owners of Grantor Trust
Fractional Interest Certificates--General."
In the case of a grantor trust fractional interest certificate acquired at
a price equal to the principal amount of the related mortgage loans allocable to
that 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 price less than or greater than the principal amount,
respectively, the use of a reasonable prepayment assumption would increase or
decrease the yield. Therefore, the use of this prepayment assumption would
accelerate or decelerate, respectively, the reporting of income.
In the absence of statutory or administrative clarification, we currently
expect that information reports or returns to the IRS and certificateholders
will be based on--
o a prepayment assumption determined when certificates are offered and
sold hereunder, which we will disclose in the related prospectus
supplement, and
o a constant yield computed using a representative initial offering
price for each class of certificates.
However, neither we nor any other person will make any representation
that--
o the mortgage loans in any of our trusts will in fact prepay at a rate
conforming to the prepayment assumption used or any other rate, or
o the prepayment assumption will not be challenged by the IRS on audit.
Certificateholders also should bear in mind that the use of a
representative initial offering price will mean that the information returns or
reports that we send, 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, some stripped bonds are to be
treated as market discount bonds. Accordingly, any purchaser of that 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--
o there is no original issue discount or only a de minimis amount of
original issue discount, or
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o 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 related mortgage loans, before subtracting any
servicing fee or any stripped coupon.
If interest payable on a grantor trust fractional interest certificate is
more than one percentage point lower than the gross interest rate payable on the
related mortgage loans, we will disclose that fact in the related prospectus
supplement. If the original issue discount or market discount on a grantor trust
fractional interest certificate determined under the stripped bond rules is less
than the product of:
o 0.25% of the stated redemption price, and
o the weighted average maturity of the related mortgage loans,
then the original issue discount or market discount will be considered to be de
minimis. 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 "--Grantor Trusts--Taxation of Owners
of Grantor Trust Fractional Interest Certificates--If Stripped Bond Rules Do Not
Apply" and "--Market Discount" below.
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 related mortgage loans in
accordance with the certificateholder's normal method of accounting. In that
case, the original issue discount rules will apply, even if the stripped bond
rules do not 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 mortgage loans will equal the
difference between--
o the stated redemption price of the mortgage loans, and
o their issue price.
For a definition of "stated redemption price", see "--REMICs--Taxation of
Owners of REMIC Regular Certificates--Original Issue Discount" above. 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. If the borrower
separately pays points to the lender that are not paid for services provided by
the lender, such as commitment fees or loan processing costs, the amount of
those points paid reduces the issue price.
The stated redemption price of a mortgage loan will generally equal its
principal amount. The determination as to whether original issue discount will
be considered to be de minimis will be calculated using the same test as in the
REMIC discussion. See "--REMICs--Taxation of Owners of REMIC Regular
Certificates--Original Issue Discount" above.
In the case of mortgage loans bearing adjustable or variable interest
rates, we will describe in the related prospectus supplement the manner in which
these rules will be applied with respect to the mortgage loans by the related
trustee or master servicer, as applicable, in preparing information returns to
certificateholders and the IRS.
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 generally on the method
described in Section 1272(a)(6) of the Internal Revenue Code. The precise means
of applying that method is
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uncertain in various respects, however. See "--Grantor Trusts--Taxation of
Owners of Grantor Trust Fractional Interest Certificates--General."
A purchaser of a grantor trust fractional interest certificate may purchase
the grantor trust fractional interest certificate at a cost less than the
certificate's allocable portion of the aggregate remaining stated redemption
price of the underlying mortgage loans. In that case, the purchaser will also be
required to include in gross income the certificate's daily portions of any
original issue discount with respect to those mortgage loans. However, each
daily portion will be reduced, if the cost of the grantor trust fractional
interest certificate to the purchaser is in excess of the certificate's
allocable portion of the aggregate adjusted issue prices of the underlying
mortgage loans. The reduction will be approximately in proportion to the ratio
that the excess bears to the certificate's allocable portion of the aggregate
original issue discount remaining to be accrued on those mortgage loans.
The adjusted issue price of a mortgage loan on any given day equals the sum
of:
o the adjusted issue price or the issue price, in the case of the first
accrual period, of the mortgage loan at the beginning of the accrual
period that includes that day, and
o the daily portions of original issue discount for all days during the
accrual period prior to that day.
The adjusted issue price of a mortgage loan at the beginning of any accrual
period will equal--
o the issue price of the mortgage loan, increased by
o the aggregate amount of original issue discount with respect to the
mortgage loan that accrued in prior accrual periods, and reduced by
o the amount of any payments made on the mortgage loan in prior accrual
periods of amounts included in its stated redemption price.
In the absence of statutory or administrative clarification, we currently
expect that information reports or returns to the IRS and certificateholders
will be based on--
o a prepayment assumption determined when the certificates are offered
and sold hereunder and disclosed in the related prospectus supplement,
and
o a constant yield computed using a representative initial offering
price for each class of certificates.
However, neither we nor any other person will make any representation
that--
o the mortgage loans will in fact prepay at a rate conforming to the
prepayment assumption or any other rate, or
o the prepayment assumption will not be challenged by the IRS on audit.
Certificateholders also should bear in mind that the use of a
representative initial offering price will mean that the 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.
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Market Discount. If the stripped bond rules do not apply to a grantor trust
fractional interest certificate, a certificateholder may be subject to the
market discount rules of Sections 1276 through 1278 of the Internal Revenue Code
to the extent an interest in a mortgage loan is considered to have been
purchased at a market discount. A mortgage loan is considered to have been
purchased at a market discount if--
o in the case of a mortgage loan issued without original issue discount,
it is purchased at a price less than its remaining stated redemption
price, or
o in the case of a mortgage loan issued with original issue discount, it
is purchased at a price less than its adjusted issue price.
If market discount is in excess of a de minimis amount, the holder
generally must include in income in each month the amount of the discount that
has accrued, under the rules described in the next paragraph, through that month
that has not previously been included in income. The inclusion will be limited,
in the case of the portion of the discount that is allocable to any mortgage
loan, to the payment of stated redemption price on the mortgage loan that is
received by or, for accrual method certificateholders, due to the trust in that
month. A certificateholder may elect to include market discount in income
currently as it accrues, under a constant yield method based on the yield of the
certificate to the holder, rather than including it on a deferred basis in
accordance with the foregoing. This market discount will be accrued based
generally on the method described in Section 1272(a)(6) of the Internal Revenue
Code. The precise means of applying that method is uncertain in various
respects, however. See "--Grantor Trusts--Taxation of Owners of Grantor Trust
Fractional Interest Certificates--General."
We recommend that certificateholders consult their own tax advisors
concerning accrual of market discount with respect to grantor trust fractional
interest certificates. Certificateholders should also refer to the related
prospectus supplement to determine whether and in what manner the market
discount will apply to the underlying mortgage loans purchased at a market
discount.
To the extent that the underlying mortgage loans provide for periodic
payments of stated redemption price, you may be required to include market
discount in income at a rate that is not significantly slower than the rate at
which that discount would be included in income if it were original issue
discount.
Market discount with respect to mortgage loans may be considered to be de
minimis and, if so, will be includible in income under de minimis rules similar
to those described under "--REMICs--Taxation of Owners of REMIC Regular
Certificates--Original Issue Discount" above.
Further, under the rules described under "--REMICs--Taxation of Owners of
REMIC Regular Certificates--Market Discount" above, 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 underlying mortgage loans.
Premium. If a certificateholder is treated as acquiring the underlying
mortgage loans at a premium, which is a price in excess of their remaining
stated redemption price, the certificateholder may elect under Section 171 of
the Internal Revenue Code to amortize the portion of that premium allocable to
mortgage loans originated after September 27, 1985 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. However,
premium allocable to mortgage loans originated before September 28, 1985 or to
mortgage loans for which an amortization election is not made, should--
150
o be allocated among the payments of stated redemption price on the
mortgage loan, and
o be allowed as a deduction as those payments are made or, for an
accrual method certificateholder, due.
It appears that a prepayment assumption should be used in computing
amortization of premium allowable under Section 171 of the Internal Revenue Code
similar to that described for calculating the accrual of market discount of
grantor trust fractional interest certificates, based generally on the method
described in Section 1272(a)(6) of the Internal Revenue Code. The precise means
of applying that method is uncertain in various respects, however. See
"--Grantor Trusts--Taxation of Owners of Grantor Trust Fractional Interest
Certificates--General" above.
Taxation of Owners of Grantor Trust Strip Certificates. The stripped coupon
rules of Section 1286 of the Internal Revenue Code will apply to the grantor
trust strip certificates. Except as described above under "--Grantor
Trusts--Taxation of Owners of Grantor Trust Fractional Interest Certificates--If
Stripped Bond Rules Apply," no regulations or published rulings under Section
1286 of the Internal Revenue 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, we recommend that you consult your tax advisors
concerning the method to be used in reporting income or loss with respect to
those certificates.
The Treasury regulations promulgated under the original discount rules do
not apply to stripped coupons, although they provide general guidance as to how
the original issue discount sections of the Internal Revenue Code will be
applied.
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, you would include as
interest income in each month an amount equal to the product of your adjusted
basis in the grantor trust strip certificate at the beginning of that month and
the yield of the grantor trust strip certificate to you. This yield would be
calculated based on--
o the price paid for that grantor trust strip certificate by you, and
o the projected payments remaining to be made on that grantor trust
strip certificate at the time of the purchase, plus
o an allocable portion of the projected servicing fees and expenses to
be paid with respect to the underlying mortgage loans.
Such yield will accrue based generally on the method described in Section
1272(a)(6) of the Internal Revenue Code. The precise means of applying that
method is uncertain in various respects, however. See "--Grantor
Trusts--Taxation of Owners of Grantor Trust Fractional Interest
Certificates--General" above.
If the method for computing original issue discount under Section
1272(a)(6) results in a negative amount of original issue discount as to any
accrual period with respect to a grantor trust strip certificate, the amount of
original issue discount allocable to that accrual period will be zero. That is,
no current deduction of the negative amount will be allowed to you. You will
instead only be permitted to offset that negative amount against future positive
original issue discount, if any, attributable to that certificate. Although not
free from doubt, it is possible that you may be permitted to deduct a loss to
the extent his or her basis in the certificate exceeds the maximum amount of
payments you could ever receive with respect to that certificate. However, the
loss may be a capital loss, which is limited in its deductibility. The foregoing
considerations are particularly relevant to grantor trust
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certificates with no, or disproportionately small, amounts of principal, which
can have negative yields under circumstances that are not default related. See
"Risk Factors--The Investment Performance of Your Offered Certificates Will
Depend Upon Payments, Defaults and Losses on the Underlying Mortgage Loans; and
Those Payments, Defaults and Losses May be Highly Unpredictable".
The accrual of income on the grantor trust strip certificates will be
significantly slower using a prepayment assumption than if yield is computed
assuming no prepayments. In the absence of statutory or administrative
clarification, we currently expect that information returns or reports to the
IRS and certificateholders will be based on--
o the prepayment assumption we will disclose in the related prospectus
supplement, and
o a constant yield computed using a representative initial offering
price for each class of certificates.
However, neither we nor any other person will make any representation
that--
o the mortgage loans in any of our trusts will in fact prepay at a rate
conforming to the prepayment assumption or at any other rate, or
o the prepayment assumption will not be challenged by the IRS on audit.
We recommend that prospective purchasers of the grantor trust strip
certificates consult their tax advisors regarding the use of the prepayment
assumption.
Certificateholders also should bear in mind that the use of a
representative initial offering price will mean that the 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.
Sales of Grantor Trust Certificates. Any gain or loss recognized on the
sale or exchange of a grantor trust certificate by an investor who holds that
certificate as a capital asset, will be capital gain or loss, except as
described below in this "--Sales of Grantor Trust Certificates" subsection. The
amount recognized equals the difference between--
o the amount realized on the sale or exchange of a grantor trust
certificate, and
o its adjusted basis.
The adjusted basis of a grantor trust certificate generally will equal--
o its cost, increased by
o any income reported by the seller, including original issue discount
and market discount income, and reduced, but not below zero, by
o any and all previously reported losses, amortized premium, and
payments with respect to that grantor trust certificate.
As of the date of this prospectus, the Internal Revenue Code provides for
lower rates as to long-term capital gains, than those applicable to the
short-term capital gains and ordinary income realized or received by
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individuals. No similar rate differential exists for corporations. In addition,
the distinction between a capital gain or loss and ordinary income or loss
remains relevant for other purposes.
Gain or loss from the sale of a grantor trust certificate may be partially
or wholly ordinary and not capital in some circumstances. Gain attributable to
accrued and unrecognized market discount will be treated as ordinary income.
Gain or loss recognized by banks and other financial institutions subject to
Section 582(c) of the Internal Revenue Code will be treated as ordinary income.
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 Internal Revenue 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, if substantially all of the taxpayer's
return is attributable to the time value of the taxpayer's net investment in the
transaction. 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.
The Internal Revenue Code requires the recognition of gain upon the
constructive sale of an appreciated financial position. A constructive sale of
an appreciated financial position occurs if a taxpayer enters into a transaction
or series of transactions that have the effect of substantially eliminating the
taxpayer's risk of loss and opportunity for gain with respect to the financial
instrument. Debt instruments that--
o entitle the holder to a specified principal amount,
o pay interest at a fixed or variable rate, and
o are not convertible into the stock of the issuer or a related party,
cannot be the subject of a constructive sale for this purpose. Because most
grantor trust certificates meet this exception, this Section will not apply to
most grantor trust certificates. However, some grantor trust certificates have
no, or a disproportionately small amount of, principal and these certificates
can be the subject of a constructive sale.
Finally, a taxpayer may elect to have net capital gain taxed at ordinary
income rates rather than capital gains rates in order to include the net capital
gain in total net investment income for the relevant taxable year. This election
would be done 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.
Grantor Trust Reporting. Unless otherwise provided in the related
prospectus supplement, the related tax administrator will furnish or make
readily available through electronic means to each holder of a grantor trust
certificate with each payment a statement setting forth the amount of the
payment allocable to principal on the underlying mortgage loans and to interest
on those loans at the related pass-through rate. In addition, the related tax
administrator will furnish, within a reasonable time after the end of each
calendar year, to each person or entity that was the holder of a grantor trust
certificate at any time during that year, information regarding:
o the amount of servicing compensation received by a master servicer or
special servicer, and
o all other customary factual information the reporting party deems
necessary or desirable to enable holders of the related grantor trust
certificates to prepare their tax returns.
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The reporting party 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 grantor trust certificates are uncertain in various respects, there is no
assurance the IRS will agree with the information reports of those items of
income and expense. Moreover, those 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 the reports.
On June 20, 2002, the Service published proposed regulations, which will,
when effective, establish a reporting framework for interests in "widely held
fixed investment trusts" similar to that for regular interests in REMICs. A
widely-held fixed investment trust is defined as any entity that is a U.S.
Person and is 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--
o a custodian of a person's account,
o a nominee, and
o a broker holding an interest for a customer in street name.
These regulations are proposed to be effective on January 1, 2004.
Backup Withholding. In general, the rules described under "--REMICs--Backup
Withholding with Respect to REMIC Certificates" above will also apply to grantor
trust certificates.
Foreign Investors. In general, the discussion with respect to REMIC regular
certificates under "--REMICs--Foreign Investors in REMIC Certificates" above
applies to grantor trust certificates. However, unless we otherwise specify in
the related prospectus supplement, grantor trust certificates will be eligible
for exemption from U.S. withholding tax, subject to the conditions described in
the discussion above, only to the extent the related mortgage loans were
originated after July 18, 1984.
To the extent that interest on a grantor trust certificate would be exempt
under Sections 871(h)(1) and 881(c) of the Internal Revenue Code from United
States withholding tax, and the certificate is not held in connection with a
certificateholder's trade or business in the United States, the certificate will
not be subject to United States estate taxes in the estate of a nonresident
alien individual.
STATE AND OTHER TAX CONSEQUENCES
In addition to the federal income tax consequences described in "Federal
Income Tax Consequences," potential investors should consider the state and
local tax consequences concerning the offered certificates. State tax law may
differ substantially from the corresponding federal law, and the discussion
above does not purport to describe any aspect of the tax laws of any state or
other jurisdiction. Therefore, we recommend that prospective investors consult
their tax advisors with respect to the various tax consequences of investments
in the offered certificates.
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ERISA CONSIDERATIONS
GENERAL
ERISA and the Internal Revenue Code impose various requirements on--
o Plans, and
o persons that are fiduciaries with respect to Plans,
in connection with the investment of the assets of a Plan. For purposes of this
discussion, Plans may include individual retirement accounts and annuities,
Keogh plans and collective investment funds and separate accounts, including as
applicable, insurance company general accounts, in which other Plans are
invested.
Governmental plans and, if they have not made an election under Section
410(d) of the Internal Revenue Code, church plans are not subject to ERISA
requirements. Accordingly, assets of those plans may be invested in the offered
certificates without regard to the considerations described below in this "ERISA
Considerations" section, subject to the provisions of other applicable federal
and state law. Any of those plans which is qualified and exempt from taxation
under Sections 401(a) and 501(a) of the Internal Revenue Code, however, is
subject to the prohibited transaction rules in Section 503 of that Code.
ERISA imposes general fiduciary requirements on a fiduciary that is
investing the assets of a Plan, including--
o investment prudence and diversification, and
o compliance with the investing Plan's governing the documents.
A fiduciary of an investing Plan is any person who--
o has discretionary authority or control over the management or
disposition of the assets of that Plan, or
o provides investment advice with respect to the assets of that Plan for
a fee.
Section 406 of ERISA and Section 4975 of the Internal Revenue Code also
prohibit a broad range of transactions involving the assets of a Plan and a
Party in Interest with respect to that Plan, unless a statutory or
administrative exemption exists. The types of transactions between Plans and
Parties in Interest that are prohibited include:
o sales, exchanges or leases of property;
o loans or other extensions of credit;
o the furnishing of goods and services; and
o the use of the assets of a Plan by or for the benefit of a Party in
Interest.
155
Parties in Interest that participate in a prohibited transaction may be
subject to an excise tax imposed under Section 4975 of the Internal Revenue Code
or a penalty imposed under Section 502(i) of ERISA, unless a statutory or
administrative exemption is available. In addition, the persons involved in the
prohibited transaction may have to cancel the transaction and pay an amount to
the affected Plan for any losses realized by that Plan or profits realized by
those persons. In addition, individual retirement accounts involved in the
prohibited transaction may be disqualified which would result in adverse tax
consequences to the owner of the account.
PLAN ASSET REGULATIONS
A Plan's investment in offered certificates may cause the underlying
mortgage assets and other assets of the related trust to be treated as assets of
that Plan. Section 2510.3-101 of the Plan Asset Regulations provides that when a
Plan acquires an equity interest (such as an offered certificate) in an entity,
the assets of that Plan or arrangement include both that equity interest and an
undivided interest in each of the underlying assets of the entity, unless an
exception applies. One such exception is that the equity participation in the
entity by benefit plan investors, which include both Plans and some employee
benefit plans not subject to ERISA, is not significant. The equity participation
by benefit plan investors will be significant on any date if 25% or more of the
value of any class of equity interests in the entity is held by benefit plan
investors. The percentage owned by benefit plan investors is determined by
excluding the investments of the following persons:
1. those with discretionary authority or control over the assets of the
entity;
2. those who provide investment advice directly or indirectly for a fee
with respect to the assets of the entity; and
3. those who are affiliates of the persons described in the preceding
clauses 1. and 2.
In the case of one of our trusts, investments by us, by an underwriter, by
the related trustee, the related master servicer, the related special servicer
or any other party with discretionary authority over the related trust assets,
or by the affiliates of these persons, will be excluded.
If none of the exceptions contained in the Plan Asset Regulation applies,
the mortgages and other assets included in the related trust will be treated as
assets of each Plan investing. In that case, any party exercising management or
discretionary control regarding those assets, such as the related trustee,
master servicer or special servicer, or affiliates of any of these parties, may
be--
o deemed to be a fiduciary with respect to the investing Plan, and
o subject to the fiduciary responsibility provisions of ERISA.
In addition, if the mortgages and other assets included in one of our
trusts are Plan assets, then the operation of that trust may involve prohibited
transactions under ERISA or the Internal Revenue Code. For example, if a
borrower with respect to a mortgage loan in that trust is a Party in Interest to
an investing Plan, then the purchase by that Plan of offered certificates
evidencing interests in that trust, could be a prohibited loan between that Plan
and the Party in Interest.
The Plan Asset Regulation provides that when a Plan purchases a "guaranteed
governmental mortgage pool certificate," the assets of that Plan include the
certificate but do not include any of the mortgages underlying the certificate.
The Plan Asset Regulation includes in the definition of a "guaranteed
governmental mortgage pool certificate" some certificates issued and/or
guaranteed by Freddie Mac, Ginnie Mae, Fannie Mae or Farmer Mac. Accordingly,
even if these types of mortgaged-backed securities were deemed to be assets of a
Plan, the
156
underlying mortgages would not be treated as assets of that Plan. Private label
mortgage participations, mortgage pass-through certificates or other
mortgage-backed securities are not "guaranteed governmental mortgage pool
certificates" within the meaning of the Plan Asset Regulation.
The related prospectus supplement will discuss whether any of the
exceptions set forth in the Plan Asset Regulation are expected to be applicable
with respect to the offered certificates.
In addition, the acquisition or holding of offered certificates by or on
behalf of a Plan could give rise to a prohibited transaction if we or the
related trustee, master servicer or special servicer or any related underwriter,
sub-servicer, tax administrator, manager, borrower or obligor under any credit
enhancement mechanism, or one of their affiliates, is or becomes a Party in
Interest with respect to an investing Plan.
If you are the fiduciary or any other person investing assets of a Plan,
you should consult your counsel and review the ERISA discussion in the related
prospectus supplement before purchasing any offered certificates.
UNDERWRITER EXEMPTION
The Department of Labor has granted to certain underwriters individual
administrative exemptions from application of certain of the prohibited
transaction provisions of ERISA and Section 4975 of the Internal Revenue Code.
It is expected that Citigroup Global Markets Inc. will be the sole, lead or
co-lead underwriter in each underwritten offering of certificates made by this
prospectus. The U.S. Department of Labor issued the Underwriter Exemption to a
predecessor in interest to Citigroup Global Markets Inc. Subject to the
satisfaction of the conditions specified in the Underwriter Exemption, this
exemption generally exempts from the application of the prohibited transaction
provisions of ERISA and the Internal Revenue Code, various transactions relating
to, among other things--
o the servicing and operation of some mortgage assets pools, such as the
types of mortgage asset pools that will be included in our trusts, and
o the purchase, sale and holding of some certificates evidencing
interests in those pools that are underwritten by Citigroup Global
Markets Inc. or any person affiliated with Citigroup Global Markets
Inc., such as particular classes of the offered certificates.
Whether the conditions of the Underwriter Exemption will be satisfied as to
the offered certificates of any particular class will depend on the facts and
circumstances at the time the Plan acquires certificates of that class. The
related prospectus supplement will state whether the Underwriter Exemption, as
amended, is or may be available with respect to any offered certificates.
OTHER POSSIBLE EXEMPTIONS
If for any reason the Underwriter Exemption is not available, then, in
connection with your deciding whether to purchase any of the offered
certificates on behalf of a Plan, you should consider the availability of one of
the following prohibited transaction class exemptions issued by the U.S.
Department of Labor:
o Prohibited Transaction Class Exemption 75-1, which exempts particular
transactions involving Plans and broker-dealers, reporting dealers and
banks;
o Prohibited Transaction Class Exemption 90-1, which exempts particular
transactions between insurance company separate accounts and Parties
in Interest;
157
o Prohibited Transaction Class Exemption 91-38, which exempts particular
transactions between bank collective investment funds and Parties in
Interest;
o Prohibited Transaction Class Exemption 84-14, which exempts particular
transactions effected on behalf of a Plan by a "qualified professional
asset manager;"
o Prohibited Transaction Class Exemption 95-60, which exempts particular
transactions between insurance company general accounts and Parties in
Interest; and
o Prohibited Transaction Class Exemption 96-23, which exempts particular
transactions effected on behalf of a Plan by an "in-house asset
manager."
We cannot provide any assurance that any of these class exemptions will
apply with respect to any particular investment by or on behalf of a Plan in any
class of offered certificates. Furthermore, even if any of them were deemed to
apply, that particular class exemption may not apply to all transactions that
could occur in connection with the investment. The prospectus supplement with
respect to the offered certificates of any series may contain additional
information regarding the availability of other exemptions, with respect to
those certificates.
INSURANCE COMPANY GENERAL ACCOUNTS
Section 401(c) of ERISA provides that the fiduciary and prohibited
transaction provisions of ERISA and the Internal Revenue Code do not apply to
transactions involving an insurance company general account where the assets of
the general account are not assets of a Plan.
A Department of Labor regulation issued under Section 401(c) of ERISA
provides guidance for determining, in cases where insurance policies supported
by an insurer's general account are issued to or for the benefit of a Plan on or
before December 31, 1998, which general account assets are Plan assets. That
regulation generally provides that, if the specified requirements are satisfied
with respect to insurance policies issued on or before December 31, 1998, the
assets of an insurance company general account will not be Plan assets.
Any assets of an insurance company general account that support insurance
policies issued to a Plan after December 31, 1998, or issued to a Plan on or
before December 31, 1998 for which the insurance company does not comply with
the requirements set forth in the Department of Labor regulation under Section
401(c) of ERISA, may be treated as Plan assets. In addition, because Section
401(c) of ERISA and the regulation issued under Section 401(c) of ERISA do not
relate to insurance company separate accounts, separate account assets are still
treated as Plan assets, invested in the separate account. If you are an
insurance company and are contemplating the investment of general account assets
in offered certificates, you should consult your legal counsel as to the
applicability of Section 401(c) of ERISA.
INELIGIBLE PURCHASERS
Even if an exemption is otherwise available, certificates in a particular
offering generally may not be purchased with the assets of a Plan that is
sponsored by or maintained by an underwriter, the depositor, the trustee, the
related trust, the master servicer, the special servicer or any of their
respective affiliates. Offered certificates may not be purchased with the assets
of a Plan if the depositor, the trustee, the related trust fund, a master
servicer, the special servicer, the fiscal agent, the mortgage loan seller, or
any of their respective affiliates or any employees thereof: (a) has investment
discretion with respect to the investment of such Plan assets; or (b) has
authority or responsibility to give or regularly gives investment advice with
respect to such Plan assets for a fee, pursuant to an agreement or understanding
that such advice will serve as a primary basis for investment
158
decisions with respect to such Plan assets and that such advice will be based on
the particular investment needs of the Plan. A party with the discretion,
authority or responsibility is described in clause (a) or (b) of the preceding
sentence is a fiduciary with respect to a Plan, and any such purchase might
result in a "prohibited transaction" under ERISA and the Internal Revenue Code.
CONSULTATION WITH COUNSEL
If you are a fiduciary for or any other person investing assets of a Plan
and you intend to purchase offered certificates on behalf of or with assets of
that Plan, you should:
o consider your general fiduciary obligations under ERISA, and
o consult with your legal counsel as to--
1. the potential applicability of ERISA and the Internal Revenue
Code to that investment, and
2. the availability of any prohibited transaction exemption in
connection with that investment.
TAX EXEMPT INVESTORS
A Plan that is exempt from federal income taxation under Section 501 of the
Internal Revenue Code will be subject to federal income taxation to the extent
that its income is "unrelated business taxable income" within the meaning of
Section 512 of the Internal Revenue Code. All excess inclusions of a REMIC
allocated to a REMIC residual certificate held by a tax-exempt Plan will be
considered unrelated business taxable income and will be subject to federal
income tax.
See "Federal Income Tax Consequences--REMICs--Taxation of Owners of REMIC
Residual Certificates--Excess Inclusions" in this prospectus.
LEGAL INVESTMENT
If and to the extent specified in the related prospectus supplement,
certain classes of the offered certificates of any series will constitute
mortgage related securities for purposes of the Secondary Mortgage Market
Enhancement Act of 1984.
159
Generally, the only classes of offered certificates that will qualify as
"mortgage related securities" will be those that: (1) are rated in one of 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 specified types of
originators and secured by first liens on real estate. The appropriate
characterization of offered certificates not qualifying as "mortgage related
securities" for purposes of SMMEA under various legal investment restrictions,
and thus the ability of investors subject to these restrictions to purchase such
certificates, may be subject to significant interpretive uncertainties. 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. Mortgage related securities are legal investments for persons, trusts,
corporations, partnerships, associations, business trusts, and business
entities, including depository institutions, insurance companies, trustees and
pension funds--
o that are created or existing under the laws of the United States or
any state, including the District of Columbia and Puerto Rico, and
o whose authorized investments are subject to state regulations,
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 are legal investments for those entities.
Under SMMEA, a number of states enacted legislation, on or prior to the
October 3, 1991 cut-off for those enactments, limiting to various extents the
ability of some 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, certificates satisfying the rating and qualified originator
requirements for "mortgage related securities," but evidencing interests in a
trust fund consisting, in whole or in part, of first liens on one or more
parcels of real estate upon which are located one or more commercial structures,
states were authorized to enact legislation, on or before September 23, 2001,
specifically referring to Section 347 and prohibiting or restricting the
purchase, holding or investment by state-regulated entities in those types of
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:
o 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 by
those securities; and
o federal credit unions may invest in mortgage related securities and
national banks may purchase mortgage related securities for their own
account without regard to the limitations generally applicable to
investment securities prescribed in 12 U.S.C. 24 (Seventh),
subject in each case to the regulations that the applicable federal regulatory
authority may prescribe.
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
160
general standards in 12 C.F.R. ss.1.5 concerning "safety and soundness" and
retention of credit information, some Type IV securities, which are defined in
12 C.F.R. ss.1.2(m) to include some commercial mortgage-related securities and
residential mortgage-related securities. As defined, "commercial
mortgage-related security" and "residential mortgage-related security" mean, in
relevant part, a 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," we make no representation as to whether any class of offered
certificates will qualify as commercial mortgage-related securities, and thus as
Type IV securities, for investment by national banks.
The 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) under limited
circumstances, 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. ss.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. ss. 742.4(b)(2).
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" of the Federal Financial
Institutions Examination Council, which has been adopted by the Board of
Governors of the Federal Reserve System, the FDIC, the OCC and the OTS effective
May 26, 1998, and by the NCUA effective October 1, 1998. That statement sets
forth general guidelines which depository institutions must follow in managing
risks, including market, credit, liquidity, operational (transaction), and legal
risks, applicable to all securities, including mortgage pass-through securities
and mortgage-derivative products used for investment purposes.
Investors whose investment activities are subject to regulation by federal
or state authorities should review rules, policies, and guidelines adopted from
time to time by 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
statues, 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 that
may restrict or prohibit investment in securities that are not
"interest-bearing" or "income-paying," and, with regard to any offered
certificates issued in book-entry form, provisions that may restrict or prohibit
investments in securities that are issued in book-entry form.
Except as to the status of some classes as "mortgage related securities,"
we make no representations as to the proper characterization of any class of
offered certificates for legal investment, financial institution regulatory or
other purposes. Also, we make no representations as to the ability of particular
investors to purchase any class of offered certificates under applicable legal
investment restrictions. These uncertainties (and any unfavorable future
determinations concerning legal investment or financial institution regulatory
characteristics of the
161
certificates) may adversely affect the liquidity of any class of offered
certificates. Accordingly, if your investment activities are subject to legal
investment laws and regulations, regulatory capital requirements or review by
regulatory authorities, you should consult with your legal advisor in
determining whether and to what extent--
o the offered certificates of any class and series constitute legal
investments or are subject to investment, capital or other
restrictions, and
o if applicable, SMMEA has been overridden in your State.
USE OF PROCEEDS
Unless otherwise specified in the related prospectus supplement, the net
proceeds to be received from the sale of the offered certificates of any series
will be applied by us to the purchase of assets for the related trust or will be
used by us to cover expenses related to that purchase and the issuance of those
certificates. We expect to sell the offered certificates from time to time, but
the timing and amount of offerings of those certificates will depend on a number
of factors, including the volume of mortgage assets acquired by us, prevailing
interest rates, availability of funds and general market conditions.
METHOD OF DISTRIBUTION
The certificates offered by this prospectus and the related prospectus
supplements will be offered in series through one or more of the methods
described in the next paragraph. The prospectus supplement prepared for the
offered certificates of each series will describe the method of offering being
utilized for those certificates and will state the net proceeds to us from the
sale of those certificates.
We intend that offered certificates will be offered through the following
methods from time to time. We further intend that offerings may be made
concurrently through more than one of these methods or that an offering of the
offered certificates of a particular series may be made through a combination of
two or more of these methods. The methods are as follows:
1. by negotiated firm commitment or best efforts underwriting and public
offering by one or more underwriters specified in the related
prospectus supplement;
2. by placements by us with institutional investors through dealers; and
3. by direct placements by us with institutional investors.
In addition, if specified in the related prospectus supplement, the offered
certificates of a series may be offered in whole or in part to the seller of the
mortgage assets that would back those certificates. Furthermore, the related
trust assets for any series of offered certificates may include other
securities, the offering of which was registered under the registration
statement of which this prospectus is a part.
If underwriters are used in a sale of any offered certificates, other than
in connection with an underwriting on a best efforts basis, the offered
certificates will be acquired by the underwriters for their own account. These
certificates may be resold from time to time in one or more transactions,
including negotiated transactions, at fixed public offering prices or at varying
prices to be determined at the time of sale or at the time of commitment
therefor. The managing underwriter or underwriters with respect to the offer and
sale of offered certificates of a
162
particular series will be described on the cover of the prospectus supplement
relating to the series and the members of the underwriting syndicate, if any,
will be named in the relevant prospectus supplement.
Underwriters may receive compensation from us or from purchasers of the
offered certificates in the form of discounts, concessions or commissions.
Underwriters and dealers participating in the payment of the offered
certificates may be deemed to be underwriters in connection with those
certificates. In addition, any discounts or commissions received by them from us
and any profit on the resale of those offered certificates by them may be deemed
to be underwriting discounts and commissions under the Securities Act of 1933,
as amended.
It is anticipated that the underwriting agreement pertaining to the sale of
the offered certificates of any series will provide that--
o the obligations of the underwriters will be subject to various
conditions precedent,
o the underwriters will be obligated to purchase all the certificates if
any are purchased, other than in connection with an underwriting on a
best efforts basis, and
o in limited circumstances, we will indemnify the several underwriters
and the underwriters will indemnify us against civil liabilities
relating to disclosure in our registration statement, this prospectus
or any of the related prospectus supplements, including liabilities
under the Securities Act of 1933, as amended, or will contribute to
payments required to be made with respect to any liabilities.
The prospectus supplement with respect to any series offered by placements
through dealers will contain information regarding the nature of the offering
and any agreements to be entered into between us and purchasers of offered
certificates of that series.
We anticipate that the offered certificates will be sold primarily to
institutional investors. Purchasers of offered certificates, including dealers,
may, depending on the facts and circumstances of the purchases, be deemed to be
"underwriters" within the meaning of the Securities Act of 1933, as amended, in
connection with reoffers and sales by them of offered certificates. Holders of
offered certificates should consult with their legal advisors in this regard
prior to any reoffer or sale.
LEGAL MATTERS
Unless otherwise specified in the related prospectus supplement, particular
legal matters in connection with the certificates of each series, including some
federal income tax consequences, will be passed upon for us by--
o Sidley Austin Brown & Wood LLP; or
o Thacher Proffitt & Wood LLP.
163
FINANCIAL INFORMATION
A new trust will be formed with respect to each series of offered
certificates. None of those trusts will engage in any business activities or
have any assets or obligations prior to the issuance of the related series of
offered certificates. Accordingly, no financial statements with respect to any
trust will be included in this prospectus or in the related prospectus
supplement. We have determined that our financial statements will not be
material to the offering of any offered certificates.
RATING
It is a condition to the issuance of any class of offered certificates
that, at the time of issuance, at least one nationally recognized statistical
rating organization has rated those certificates in one of its generic rating
categories which signifies investment grade. Typically, the four highest rating
categories, within which there may be sub-categories or gradations indicating
relative standing, signify investment grade.
Ratings on mortgage pass-through certificates address the likelihood of
receipt by the holders of all payments of interest and/or principal to which
they are entitled. These ratings address the structural, legal and
issuer-related aspects associated with the certificates, the nature of the
underlying mortgage assets and the credit quality of any third-party credit
enhancer. The rating(s) on a class of offered certificates will not represent
any assessment of:
o whether the price paid for those certificates is fair;
o whether those certificates are a suitable investment for any
particular investor;
o the tax attributes of those certificates or of the related trust;
o the yield to maturity or, if they have principal balances, the average
life of those certificates;
o the likelihood or frequency of prepayments of principal on the
underlying mortgage loans;
o the degree to which the amount or frequency of prepayments on the
underlying mortgage loans might differ from those originally
anticipated;
o whether or to what extent the interest payable on those certificates
may be reduced in connection with interest shortfalls resulting from
the timing of voluntary prepayments;
o the likelihood that any amounts other than interest at the related
mortgage interest rates and principal will be received with respect to
the underlying mortgage loans; or
o if those certificates provide solely or primarily for payments of
interest, whether the holders, despite receiving all payments of
interest to which they are entitled, would ultimately recover their
initial investments in those certificates.
A security rating is not a recommendation to buy, sell or hold securities
and may be subject to revision or withdrawal at any time by the assigning rating
organization. Each security rating should be evaluated independently of any
other security rating.
164
GLOSSARY
The following capitalized terms will have the respective meanings assigned
to them in this "Glossary" section whenever they are used in this prospectus.
"ADA" means the Americans with Disabilities Act of 1990, as amended.
"CERCLA" means the federal Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended.
"Clearstream" means Clearstream Banking Luxembourg.
"Committee Report" means the Conference Committee Report accompanying the
Tax Reform Act of 1986.
"CPR" means an assumed constant rate of prepayment each month, which is
expressed on a per annum basis, relative to the then outstanding principal
balance of a pool of mortgage loans for the life of those loans.
"Disqualified Organization" means:
o the United States,
o any State or political subdivision of the United States,
o any foreign government,
o any international organization,
o any agency or instrumentality of the foregoing, except for
instrumentalities described in Section 168(h)(2)(D) of the Internal
Revenue Code or Freddie Mac,
o any organization, other than a cooperative described in Section 521 of
the Internal Revenue Code, that is exempt from federal income tax,
except if it is subject to the tax imposed by Section 511 of the
Internal Revenue Code, or
o any organization described in Section 1381(a)(2)(C) of the Internal
Revenue Code.
"ECS" means Euroclear Clearance System Public Limited Company.
"Electing Large Partnership" means any partnership having more than 100
members during the preceding tax year which elects to apply simplified reporting
provisions under the Internal Revenue Code, except for some service partnerships
and commodity pools.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Plan" means any employee benefit plan, or other retirement plan that
is subject to the fiduciary responsibility provisions of ERISA.
165
"Euroclear Operator" means Euroclear Bank S.A./N.V., as operator of the
Euroclear System, or any successor to Euroclear Bank S.A./N.V. in that capacity.
"Euroclear Terms and Conditions" means the Terms and Conditions Governing
Use of Euroclear and the related Operating Procedures of the Euroclear System
and, to the extent that it applies to the operation of the Euroclear System,
Belgian law.
"Fannie Mae" means the Federal National Mortgage Association.
"Farmer Mac" means the Federal Agricultural Mortgage Corporation.
"FASIT" means a financial asset securitization trust, within the meaning
of, and formed in accordance with, the Small Business Job Protection Act of 1996
and Sections 860I through 860L of the Internal Revenue Code.
"FDIC" means the Federal Deposit Insurance Corporation.
"Financial Intermediary" means a brokerage firm, bank, thrift institution
or other financial intermediary that maintains an account of a beneficial owner
of securities.
"Freddie Mac" means the Federal Home Loan Mortgage Corporation.
"Ginnie Mae" means the Government National Mortgage Association.
"Governing Document" means the pooling and servicing agreement or other
similar agreement or collection of agreements, which governs the issuance of a
series of offered certificates.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended.
"IRS" means the Internal Revenue Service.
"Lender Liability Act" means the Asset Conservation Lender Liability and
Deposit Insurance Act of 1996, as amended.
"Net Income From Foreclosure Property" means income from foreclosure
property other than qualifying rents and other qualifying income for a REIT.
"NCUA" means the National Credit Union Administration.
"OCC" means the Office of the Comptroller of the Currency.
"OTS" means the Office of Thrift Supervision.
"Party in Interest" means any person that is a "party in interest" within
the meaning of ERISA or a "disqualified person" as defined in Section 4975 of
the Internal Revenue Code.
"Pass-Through Entity" means any:
o regulated investment company,
166
o real estate investment trust,
o trust,
o partnership, or
o other entities described in Section 860E(e)(6) of the Internal Revenue
Code.
"Plan" means any ERISA Plan or any other employee benefit or retirement
plan, arrangement or account, including any individual retirement account or
Keogh plan that is subject to Section 4975 of the Internal Revenue Code.
"Plan Asset Regulation" means the regulation issued by the United States
Department of Labor concerning whether a Plan's assets will be considered to
include an undivided interest in each of the underlying assets of an entity,
such as the trust, for purposes of the general fiduciary provisions of ERISA and
the prohibited transaction provisions of ERISA and the Internal Revenue Code, if
the Plan acquires an "equity interest," such as an offered certificate, in an
entity.
"REIT" means a real estate investment trust within the meaning of Section
856(a) of the Internal Revenue Code.
"Relief Act" means the Servicemembers' Civil Relief Act.
"REMIC" means a real estate mortgage investment conduit, within the meaning
of, and formed in accordance with, the Tax Reform Act of 1986 and Sections 860A
through 860G of the Internal Revenue Code.
"Safe Harbor Regulations" means the final Treasury regulations issued on
July 18, 2002.
"SEC" means the Securities and Exchange Commission.
"SMMEA" means the Secondary Mortgage Market Enhancement Act of 1984, as
amended.
"SPA" means standard prepayment assumption.
"UCC" means, for any jurisdiction, the Uniform Commercial Code as in effect
in that jurisdiction.
"Underwriter Exemption" means Prohibited Transaction Exemption 91-23, as
amended by Prohibited Transaction Exemption 2000-58 and Prohibited Transaction
Exemption 2002-41.
"U.S. Person" means:
o a citizen or resident of the United States;
o a corporation, partnership or other entity created or organized in, or
under the laws of, the United States, any state or the District of
Columbia;
o an estate whose income from sources without the United States is
includible in gross income for United States federal income tax
purposes regardless of its connection with the conduct of a trade or
business within the United States; or
167
o a trust as to which--
1. a court in the United States is able to exercise primary
supervision over the administration of the trust, and
2. one or more U.S. Persons have the authority to control all
substantial decisions of the trust.
In addition, to the extent provided in the Treasury Regulations, a trust
will be a U.S. Person if it was in existence on August 20, 1996 and it elected
to be treated as a U.S. Person.
"USA Patriot Act" means the Uniting and Strengthening of America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of
2001.
168
The attached diskette contains one spreadsheet file that can be put on a
user-specified hard drive or network drive. This spreadsheet file is "CGCMT
2004-C1 Annex A.xls". The spreadsheet file "CGCMT 2004-C1 Annex A.xls" is a
Microsoft Excel(1) spreadsheet. The file provides, in electronic format, some
of the statistical information that appears under the caption "Description of
the Mortgage Pool" in, and on Annexes A-1 and A-3 to, this prospectus
supplement. Capitalized terms used, but not otherwise defined, in the
spreadsheet file will have the respective meanings assigned to them in this
prospectus supplement. All the information contained in the spreadsheet file is
subject to the same limitations and qualifications contained in the prospectus
supplement. Prospective investors are strongly urged to read this prospectus
supplement and accompanying prospectus in its entirety prior to accessing the
spreadsheet file.
- ----------
1 Micrososft Excel is a registered trademark of Microsoft Corporation.
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PROSPECTUS SUPPLEMENT
Important Notice About the Information Contained
in this Prospectus Supplement and the
Accompanying Prospectus....................................S-4
Summary of Prospectus Supplement............................S-5
Risk Factors...............................................S-39
Capitalized Terms Used in this Prospectus
Supplement................................................S-58
Forward-Looking Statements.................................S-58
Description of the Mortgage Pool...........................S-59
Servicing of the Underlying Mortgage Loans.................S-98
Description of the Offered Certificates...................S-133
Yield and Maturity Considerations.........................S-164
Federal Income Tax Consequences...........................S-170
ERISA Considerations......................................S-174
Legal Investment..........................................S-178
Method of Distribution....................................S-178
Legal Matters.............................................S-180
Ratings...................................................S-180
Glossary..................................................S-182
ANNEX A-1--Certain Characteristics of the
Underlying Mortgage Loans and the Mortgaged
Real Properties..........................................A-1-1
ANNEX A-2--Summary Characteristics of the
Underlying Mortgage Loans and the Mortgaged
Real Properties..........................................A-2-1
ANNEX A-3--Characteristics of the Multifamily
Mortgaged Real Properties................................A-3-1
ANNEX B--Description of Twenty Largest Mortgage Loans,
Groups of Cross-Collateralized Mortgage Loans and/or
Groups of Borrower Affiliated Mortgage Loans...............B-1
ANNEX C--Decrement Tables...................................C-1
ANNEX D--Form of Payment Date Statement.....................D-1
ANNEX E--Class X-2 Reference Rate Schedule..................E-1
ANNEX F--Global Clearance, Settlement And Tax
Documentation Procedures ..................................F-1
PROSPECTUS
Important Notice About the Information Presented
in this Prospectus...........................................2
Available Information; Incorporation by Reference.............2
Summary of Prospectus.........................................4
Risk Factors.................................................14
Capitalized Terms Used in this Prospectus....................35
Description of the Trust Assets..............................35
Yield and Maturity Considerations............................65
Citigroup Commercial Mortgage Securities Inc.................71
Description of the Certificates..............................72
Description of the Governing Documents.......................82
Description of Credit Support................................92
Legal Aspects of Mortgage Loans..............................94
Federal Income Tax Consequences.............................109
State and Other Tax Consequences............................154
ERISA Considerations........................................155
Legal Investment............................................159
Use of Proceeds.............................................162
Method of Distribution......................................162
Legal Matters...............................................163
Financial Information.......................................164
Rating......................................................164
Glossary....................................................165
UNTIL , 2004 ALL DEALERS THAT EFFECT TRANSACTIONS IN THE OFFERED
CERTIFICATES, WHETHER OR NOT PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO
DELIVER THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS. THIS
DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
================================================================================
================================================================================
$1,086,347,000
(APPROXIMATE)
CITIGROUP COMMERCIAL
MORTGAGE TRUST 2004-C1
CLASS A-1, CLASS A-2, CLASS A-3,
CLASS A-4, CLASS B, CLASS C,
CLASS D AND CLASS E
SERIES 2004-C1 COMMERCIAL
MORTGAGE PASS-THROUGH
CERTIFICATES
PROSPECTUS SUPPLEMENT
Citigroup
Wachovia Securities
CDC Securities
Deutsche Bank Securities
, 2004
================================================================================